/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010402.MBX C L A S S A C T I O N R E P O R T E R Monday, April 2, 2001, Vol. 3, No. 64 Headlines ASCHE TRANSPORTATION: Investor Alleges Securities Law Violations BANKRATE.COM, INC: Announces Dismissal of Shareholder Lawsuit in N.Y. CVS: NY Judge Certifies Suit over Procurement of Prescription Records DOUBLECLICK INC: Emerges from N.Y. Lawsuit over Personal Information DYFS: Witnesses from Division Differ On Audits Of Foster Child Abuse HOLOCAUST VICTIMS: U.S. and Germany in Agreement on Legal Guarantees HOLOCAUST VICTIMS: U.S. State Dept to Support Dismissal of Lawsuit INCO LTD: Ontario Confirms Carcinogenic Deposits in Port Colborne Soil LASON, INC: Reports Delay in Filing Year-End 2000 Form 10-K MOBIL AUSTRALIA: Awaits ATSB Verdict To Decide on Altona Avgas Plant MOBIL AUSTRALIA: Federal Government To Assess Aircraft Fuel Regulation MOTOROLA: Tells of SEC Inquiry into Disclosure to Some Analysts NORTEL NETWORKS: Roth Says Co. Has Become The Victim Of Its Prominence NRG ENERGY: Tells Investors about CA Lawsuit over Wholesale Prices OPEC: US Judge Orders to Rescind Oil Output Cuts under Antitrust Laws RED HAT: Sirota & Sirota Announce Securities Lawsuit Filed in N.Y. SMITHFIELD FOODS: NC Ct Dismisses Suit over Hog Farm Pollution of River U.S., MEXICO: Mexican Govt Records Contradict Assertions over Lost Wages WORLDCOM INC: Settles Overbilling Suit of Predecessor MCI for $90 Mil * FL Justice Asks Why State Can Fund Viagra But Not Abortion * IL House Approves Scaled-Back Girls' Abortion Notification Bill ********* ASCHE TRANSPORTATION: Investor Alleges Securities Law Violations ---------------------------------------------------------------- An investor sued former directors and auditors of Asche Transportation Services, Inc. (Nasdaq: ASHE), charging them with illegally inflating the company's results by $6 million, Berman DeValerio & Pease LLP announced. The class action, filed March 29 in the United States District Court for the Northern District of Illinois and captioned Axelson v. Larry L. Asche et al, charges violations federal securities laws. It was brought on behalf of all investors who purchased Asche common stock between March 30, 1998 and April 7, 2000 (the "Class Period"). The company, which at one time was also known as Aasche Transportation Services, Inc., filed for bankruptcy last year and therefore is not named as a defendant. The complaint accuses the defendants, which include accounting firm Ernst & Young LLP, with filing or certifying false and misleading financial results during the Class Period. According to the plaintiff, improper accounting practices at a subsidiary, Asche Transfer, Inc. inflated the company's net worth by $5 million. Defendants Larry Asche and Diane Asche are accused of misappropriating another $1 million from the company. Asche Transportation Services used the pumped-up stock to raise $15 million in private placements, prepay $2,225,000 of debt and acquire another company. During the two-year Class Period, Asche stock sold for as high as $8-15/32 a share. After the truth slowly emerged, Asche was delisted from the Nasdaq stock market. Its stock is now next-to-worthless. Contact: Chauncey D. Steele IV, Esq., of Berman DeValerio & Pease LLP, 800-516-9926, bdplaw@bermanesq.com BANKRATE.COM, INC: Announces Dismissal of Shareholder Lawsuit in N.Y. --------------------------------------------------------------------- Bankrate, Inc. (OTCBB:RATE), the parent company of Bankrate.com (www.bankrate.com), the Internet's leading consumer finance marketplace, announced that on March 29, 2001, the United States District Court of the Southern District of New York dismissed the shareholders class action suit in its entirety with prejudice. As previously disclosed, on April 3rd, 2000, a shareholder class action lawsuit was filed against the Company and certain of its officers, directors, auditor and underwriters in the United States District Court for the Southern District of New York on March 28, 2000. "It is with great pleasure that I can announce that the trial judge, having found the suit without merit, dismissed it," explained Elisabeth DeMarse, President and CEO of Bankrate, Inc. "We are delighted with this result and are aggressively moving forward with our corporate objectives," noted Jeff Cunningham, Chairman of the Board for Bankrate.com. About Bankrate.com Bankrate.com is owned and operated by Bankrate, Inc. (OTCBB:RATE). Bankrate.com is the Internet's leading consumer finance marketplace, with an average of 1.6 million unique visitors per month connecting with over 4,000 financial institutions in 126 markets in 50 states. Bankrate operates a portfolio of personal finance channels, including banking, investing, taxes and small business finance. It is the leading aggregator of 100 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CD's, checking and ATM fees, home equity loans and online banking fees. Bankrate provides financial applications and information to a network of over 130 partners including MSN (Nasdaq:MSFT), Yahoo (Nasdaq:YHOO), America Online (NYSE:AOL), CNN and Smart Money. The company's information is also distributed through more than 100 national and state publications. CVS: NY Judge Certifies Suit over Procurement of Prescription Records --------------------------------------------------------------------- A lawsuit charging CVS with obtaining prescription records without the customer's consent when it bought a Manhattan pharmacy, Trio Drugs, was certified as a class action by a New York judge. The anonymous plaintiff, who has AIDS, also alleges that CVS requires pharmacies selling their business and patient lists not to inform their customers, so the customers don't switch drugstores before the changeover. (The Washington Post, March 30, 2001) DOUBLECLICK INC: Emerges from N.Y. Lawsuit over Personal Information -------------------------------------------------------------------- A New York federal judge has dismissed a class action against DoubleClick Inc., ruling that the company's collection of personal information over the Internet does not violate three federal statutes. The ruling is the first to address whether the use of cookies, electronic files with unique identification numbers that track users' activity on the Internet, violates consumer privacy. While the ruling is a victory for DoubleClick, some legal scholars say it is not the definitive word on the subject since the decision did not address the application of state law to such activities. "This is the first volley," said Joel Reidenberg, a professor at Fordham University School of Law who specializes in privacy issues. "The real activity will be under state law." But DoubleClick attorney Lori Schechter, a partner at Morrison & Foerster, said the court's ruling with regard to federal statutes is applicable to state law. "The court rejected plaintiffs' contention that a violation occurs every time a Web site accesses a cookie on a computer user's hard drive," Schechter said. The suit, In re DoubleClick Inc. Privacy Litigation, 00-0641, is a consolidation of 13 federal class actions. Five class actions brought against DoubleClick in California have been consolidated into one proceeding now pending in Marin County Superior Court. Another state class action is pending in Texas. In the federal class action, plaintiffs claimed that DoubleClick, the largest Internet advertising service, was liable for invasion of privacy, unjust enrichment and trespass under three federal statutes. They include the Electronic Communications Privacy Act, which is aimed at preventing hackers from obtaining, altering or destroying certain stored electronic communications; the Federal Wiretap Act; and the Computer Fraud and Abuse Act. Judge Naomi Buchwald of the U.S. District Court for the Southern District of New York said she found no evidence "in the legislative or judicial history of these acts to suggest that Congress intended to prohibit conduct like DoubleClick's. "To the contrary, the histories of these statutes reveal specific congressional goals -- punishing destructive hacking, preventing wiretapping for criminal or tortious purposes, securing the operations of electronic communication service providers -- that are carefully embodied in these criminal statutes and their corresponding civil rights of action." With regard to the electronic privacy statute, Buchwald agreed with DoubleClick that its use of cookies to collect information met an exception to the law, namely that such activity was authorized by its affiliated Web sites and intended for their use. DoubleClick collects demographic information about users through its cookies in order to provide targeted banner advertisements to more than 11,000 affiliated Web sites. "Cookie identification numbers are much akin to computer bar-codes or identification numbers placed on 'business reply cards' found in magazines," Buchwald wrote in her 71-page opinion. "The barcodes and identification numbers that appear on the cards are purely internal administrative data for the companies. The cookie identification numbers are every bit as internal to DoubleClick as the bar-codes and identification numbers are to business reply mailers." As to the wiretap law, Buchwald found that DoubleClick-affiliated Web consent to DoubleClick's interception of communications and that plaintiffs failed to show the interceptions were for a "criminal or tortious" purpose. Finally, regarding claims for damages under the Computer Fraud and Abuse Act, Buchwald ruled that while the demographic information collected by DoubleClick is highly valued, it has not been shown to result in economic loss to consumers or unjust enrichment to collectors. Reidenberg said the judge's opinion on unwarranted access under the electronic privacy statute is extremely contorted. "This decision is clearly not going to be a definitive statement on the scope of that offense," he said. As to her application of the other statutes, Reidenberg said that "by and large" the judge was right in her finding that DoubleClick's activities were not tortious under the wiretap statute. But he added that some states may find otherwise. "It's an open question in 47 states whether misappropriation of" personal information for business gain is tortious, Reidenberg said. The judge declined to exercise her discretion to address state claims. If plaintiffs wish to pursue these claims they will have to bring suit in a state court. Schechter is optimistic that DoubleClick will prevail at the state level as well. "I believe that there are no state claims that can validly be brought against DoubleClick," Schechter said. Marin County Superior Court Judge Lynn Taylor issued a ruling on the California consolidated class action in February, dismissing some claims against DoubleClick and allowing plaintiffs to amend several others, including trespass and violation of privacy. Plaintiffs' attorneys could not be reached for comment. They include Alan Mansfield, a partner in Milberg Weiss Bershad Hynes & Lerach's San Diego office, Seth Lesser, partner at New York's Bernstein Litowitz Berger & Grossmann, and Bryan Clobes, a partner in the Philadelphia office of Chicago- based Miller Faucher and Cafferty. (The Recorder, March 30, 2001) DYFS: Witnesses from Division Differ On Audits Of Foster Child Abuse -------------------------------------------------------------------- An assistant supervisor for the state Division of Youth and Family Services contradicted her boss in U.S. District Court last Thursday March 29, raising the question of whether her superior was lying about the reason for an officewide review of child abuse cases. At issue is whether the division is doctoring its files to mask problems at the division should the records become evidence in a lawsuit against the agency. LuJuanna Morton, an assistant supervisor in Camden, testified that the audit of cases of children in foster care is intended to bring those files up to date. Her boss, Bettye Fowler, Camden district office manager, told the court last Wednesday March 28 that the ongoing audit is supposed to make files neater and give caseworkers practice in filling out forms and reading case records. Fowler also said the reviews are routine and were not instituted in response to the lawsuit, filed by Children's Rights Inc., a New York City-based advocacy agency. Fowler testified that she had ordered a similar review two years ago, but Morton said it was the first of its kind that she could remember in the six years she has worked in the Camden office. The lawsuit was filed in 1999. Fowler and Morton were both witnesses for the state. But Morton's testimony was more in line with the opposition's witness, Zanete Coates, a rookie caseworker who testified that she was ordered to complete forms documenting incidents of which she had no personal knowledge. The case, being heard by U.S. District Judge Garrett E. Brown Jr., focuses on whether the division is tampering with records that could be used as evidence in the lawsuit. The suit charges the division fails to protect thousands of abused and neglected children. Eric Thompson, attorney for Children's Rights Inc., wants Brown to order the division to stop the audits, which are being conducted in at least three offices: Newark, Camden and Cape May. The records represent a child's history and are vital when workers are trying to figure out if a child is being abused and what services should be provided to children and families. Current, accurate files are especially important because workers often have to cover cases for other workers who are sick or on vacation. And a 32 percent turnover rate among caseworkers means files are often handed from worker to worker. But testimony presented over the past two weeks suggests that DYFS files are often missing important documents and workers can fall months or years behind in keeping files current. Also testifying was DYFS Director Charlie Venti. He denied any widespread problem with case records. He also 1 said he issued no orders to conduct reviews to get records in shape should they become evidence in the lawsuit. He said supervisors have always routinely reviewed records. "Caseworkers, supervisor, and clerical staff periodically update records," Venti said. Venti also said the division is already considering changes to its policy on dating documents, along with other changes in the way forms are filled out. He also noted the division is in the process of spending $ 39 million on a new computer system that will make it easier for caseworkers to keep current, accurate records. The Children's Rights Inc. lawsuit charges that DYFS fails to protect abused and neglected children. It asks the court to appoint a panel of experts to recommend and oversee reform efforts at the division. Last year, Brown limited the scope of the suit to apply only to certain children in foster care, group homes, or other out-of-home placements. This year, Children's Rights Inc. 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 is pending. Trenton Bureau Correspondent Nancy Parello's e-mail address is parello(at)northjersey.com (The Record (Bergen County, NJ), March 30, 2001) HOLOCAUST VICTIMS: U.S. and Germany in Agreement on Legal Guarantees -------------------------------------------------------------------- Hamburg: Germany and the United States are in agreement that legal guarantees must be provided as quickly as possible for German companies in connection with compensation payments to former forced labourers. The governments of both countries are interested in an early start of the payment of the money to those affected, Chancellor Gerhard Schroeder (Social Democratic Party of Germany) told ARD on Thursday evening 29 March . According to Schroeder, the US administration made it clear during the talks in Washington that it will also point out its foreign policy interest in legal guarantees to the courts. Yet the chancellor added that both governments "cannot and do not want to influence" the decisions of independent courts directly. One reason for the delay in the payment of the money to former Nazi-era slave labourers is that a US judge in New York has not dismissed class-action suits by victims. The German industry only wants to transfer the promised 5 billion German marks once the lawsuits have been rejected. (BBC Monitoring Europe - Political Supplied by BBC Worldwide Monitoring, March 30, 2001) HOLOCAUST VICTIMS: U.S. State Dept to Support Dismissal of Lawsuit ------------------------------------------------------------------ The U.S. State Department said it will support an appeal of a judge's decision not to dismiss a class-action lawsuit filed by Nazi-era slave and forced labourers that is holding up a billion-dollar compensation deal from Germany. "The United States has decided to file a brief in support of those appeals," State Department spokesman Richard Boucher said in a written response to questions asked March 29 at the State Department's daily news briefing. He said quick payments to the ageing victims under a deal reached last year were paramount, leading to the decision to support the appeal in the Second Circuit Court of Appeals in New York. "As we have said many times, our goal is to have German foundation payments commence as soon as possible," he said. The circuit court is to hear in early April an appeal of a decision from U.S. District Court judge Shirley Kram not to dismiss the suit brought by former slave labourers against German and Austrian banks. (AFX European Focus, March 30, 2001) INCO LTD: Ontario Confirms Carcinogenic Deposits in Port Colborne Soil ----------------------------------------------------------------------The Ontario Ministry of the Environment ("MOE") has just confirmed that "nickel oxide is the predominate form of nickel present in Port Colborne soils." In late March, residents launched a $750 million dollar class action lawsuit based in large part on exposure to nickel oxide. Inco President Scott Hand explicitly denied the charge, and stated that the claim "has no merit and the allegations are not supported by the facts." However, the MOE report explicitly states that its conclusions are based on "three independent sets of analyses...carried out by the Ontario Ministry of Mines and Northern Development, INCO and Jacques Whitford Environmental Limited" (a consulting firm also retained by Inco). Nickel oxide is identified by Health Canada as a high risk Group One carcinogen, known to cause cancer in humans. Health Canada states "the probability of harm...exists at any level of exposure." "This is just further, undeniable evidence that conclusively establishes the primary basis for the class action claim", said class action lawyer Eric Gillespie. "Given Inco's complete denials on Tuesday, we are also deeply concerned by the confirmation that Inco and Inco's consultants appear to have known full well that a carcinogen has in fact been spread by Inco over Port Colborne." In a surprising development, Inco is also being ordered to remediate properties in the Rodney Street area, where Inco has previously not accepted any responsibility for high levels of contamination in landfill materials. (Canada NewsWire, March 30, 2001) LASON, INC: Reports Delay in Filing Year-End 2000 Form 10-K ----------------------------------------------------------- Lason, Inc. (OTCBB:LSON) announced that it is filing with the Securities and Exchange Commission (SEC), under Rule 12b-25, a notification of late filing of its Form 10-K for the year ended December 31, 2000. Due to the ongoing evaluation of past financial statements, as stated in the Company's Form 8-K filed with the SEC on March 26, 2001, the Company will not be in a position to timely file its Form 10-K for the year ended December 31, 2000. The Company does not know, at this time, when the Form 10-K will be completed and filed. About the Company LASON is a leading provider of integrated information management services, transforming data into effective business communication, through capturing, transforming and activating critical documents. LASON has operations in the United States, Canada, Mexico, India, Mauritius and the Caribbean. The company currently has over 85 multi-functional imaging centers and operates over 60 facility management sites located on customers' premises. MOBIL AUSTRALIA: Awaits ATSB Verdict To Decide on Altona Avgas Plant -------------------------------------------------------------------- Mobil has yet to decide if it will ever resume production of avgas at its Altona plant following the air fuel contamination scare which grounded planes across the nation. Mobil spokesman Alan Bailey said the company had been waiting for the release of the Australian Transport safety Bureau ATSB report into the 1999 incident before making a decision. The report found the safety scare was caused by small amounts of an anti-corrosion chemical which Mobil failed to remove from its aviation fuel. Mr Bailey said Altona ceased production of avgas soon after the problem became apparent when contaminated fuel forced the grounding of light aircraft across Eastern Australia. "At this stage no definite decision been reached as to whether we are going to back into manufacturing avgas or not," he told AAP. "It will take the ATSB recommendations into account a long with other commercial considerations." Mr Bailey said Mobil was considering the ATSB report and would comment on the recommendations in due course. "We certainly take all incident investigations very seriously and use them as an opportunity to learn and improve our operation," he said "We have had people from our worldwide organisation reviewing processes at Altona over the last year and we are confident we have processes and testing systems in place to ensure we can continue to deliver a product that meets all quality requirements." Mr Bailey said Mobil had already paid out $ 21.5 million compensation for repair costs and economic loss to some 600 aircraft operators. However, the company is still fighting a class action instigated by Melbourne lawyers Slater and Gordon. That was listed in court and adjourned pending the outcome of Mobil's High Court appeal on whether the Victorian Supreme Court has jurisdiction to hear the case. "We have a compensation program. We are happy to deal with people directly," Mr Bailey said. "We do not believe the class action is the necessary or appropriate way for people to go." (Asia Pulse, March 30, 2001) MOBIL AUSTRALIA: Federal Government To Assess Aircraft Fuel Regulation ---------------------------------------------------------------------- According to AAP news from Canberra, the federal government will consider new regulations to monitor aircraft fuel quality in the wake of the 1999 avgas contamination crisis which grounded 3,100 light planes. The move comes after a March 30 report found the safety scare, one of the worst of its kind in the world, was caused by small amounts of an anti-corrosion chemical which Mobil failed to remove from its aviation fuel. The report said it was lucky no-one had been killed during the scare. Transport Minister John Anderson said regular testing of aviation fuel quality ceased in 1991 and there was currently no regulatory oversight of fuel production. He said federal and state agencies all held roles but no single body had overall responsibility for ensuring standards were met. "I have tasked my department with convening an urgent meeting of these regulatory agencies to consider their roles in regulating the quality of aviation fuel and to make recommendations to the federal and state governments," Mr Anderson said in a statement. Mr Anderson said the Australian Transport Safety Bureau (ATSB) investigation found the key United States and United Kingdom standards for aviation fuel were also inadequate. He said he would write to his counterparts in the US and UK proposing an overhaul. The ATSB found the contamination stemmed from a temporary variation in the production process at Mobil's Altona, Melbourne, refinery, in late 1999. An anti-corrosion chemical called EDA was not fully removed from the final production avgas, used in smaller piston-engined aircraft. ATSB executive director Kym Bills said normal tests conducted according to international standards did not detect the small quantity of contaminant. But there was enough to react with aircraft components, producing a sticky black gunk which clogged fuel systems. Mr Bills said it was extremely lucky no-one died as planes lost power in the sky. "There were a number of aircraft incidents involving power loss, but there were no serious injuries or fatalities," he said. "It could have been much worse." The ATSB made 24 recommendations aimed at fuel producers, regulators and international fuel standard bodies. Mobil halted avgas production at Altona soon after the problems emerged. Company spokesman Alan Bailey said they would consider the ATSB report and economic issues before deciding whether to resume avgas production. "We certainly take all incident investigations very seriously and use them as an opportunity to learn and improve our operation," he said. "We have had people from our worldwide organisation reviewing processes at Altona over the last year and we are confident we have processes and testing systems in place to ensure we can continue to deliver a product that meets all quality requirements." Mobil has already paid $21.5 million compensation to 1,400 claimants. However, the company still faces a class action instigated by Melbourne lawyers Slater and Gordon. Aircraft Owners and Pilots Association president Bill Hamilton said the contamination crisis was an expensive but isolated incident and extra regulation was not needed. "It was financially ruinous for us. There were serious safety problems," he said. "But without us going into a vast regulatory overkill which somebody eventually has to pay for, it is highly unlikely that something like this will happen again." (AAP Newsfeed, March 30, 2001) MOTOROLA: Tells of SEC Inquiry into Disclosure to Some Analysts --------------------------------------------------------------- Motorola said the Securities and Exchange Commission has opened an informal inquiry into discussions between officials with the mobile-phone maker and some analysts this month. The investigation is one of about a half-dozen into suspected violations of Regulation Fair Disclosure, enacted in October. The SEC developed the rule to prevent companies from disclosing information to selected analysts before telling other investors. (The Washington Post, March 30, 2001) NORTEL NETWORKS: Roth Says Co. Has Become The Victim Of Its Prominence ---------------------------------------------------------------------- A Louisiana-based law firm filed a class-action lawsuit against Nortel Networks, joining others suing Canada's high-tech giant over its stock market dive in recent months. LeBlanc & Waddell accused Nortel of U.S. securities fraud. The Louisiana firm said it is seeking "damages for violations of the federal securities laws on behalf of all investors who bought Nortel common stock between Nov. 1, 2000, and Feb. 15, 2001." The law firm also said that before a Feb. 15 revenue warning, senior management sold "substantial amounts of Nortel stock" for proceeds of more than $7 million US. Nortel trades on the Toronto and New York stock exchanges. While there are several suits against the company in the U.S., at least two have been filed in Canada. The Louisiana suit comes just two days after the telecom equipment maker downsized its revenue outlook for the second time this year, saying it expects a loss from operations of between 10 and 12 cents a share in the first quarter. Nortel has been slapped with about a dozen lawsuits since mid-February, when it slashed its forecasts for 2001 because of deferred spending by its customers. The company now says it's too difficult to give a forecast for its full-year performance, given the uncertain economic conditions. The warning in mid-February came as a shock to the market and wiped billions off its market value. In previous weeks, Nortel had repeatedly reassured investors it would meet its first-quarter targets despite economic uncertainty, and would have strong growth for 2001. Meanwhile, Nortel's top boss fired back at his company's Canadian critics -- the media in particular -- saying the chorus of condemnation would never have happened if Nortel were a U.S. company. John Roth, Nortel's CEO, said the flurry of "trashing" aimed at Brampton, Ont.-based Nortel may drive the company into U.S. hands by scaring off Canadian investors. "If I was in the States, I'd just be one more company: Intel, Sun (Microsystems), Dell, Compaq," Roth said. "In Canada, you'd think we created a recession. Nortel and its top boss have received plenty of accolades in recent years for creating jobs, sales results, stock performance, and its climb to the top of its highly competitive field. But with tougher times now prevailing, Roth suggested the company has become a victim of its prominence. (The Calgary Sun, March 30, 2001) NRG ENERGY: Tells Investors about CA Lawsuit over Wholesale Prices ------------------------------------------------------------------ NRG Energy and other power generators and power traders have been named as defendants in certain private plaintiff class actions filed in the Superior Court of the State of California for the County of San Diego in San Diego, California on November 27, 2000 (Pamela R. Gorden v. Reliant Enegy, Inc., et al.) and November 29, 2000 (Ruth Hendricks v. Dynegy Power Marketing Inc., et al.), and in the Superior Court of the State of California, City and County of San Francisco (Pier 23 Restaurant v. PG&E Energy Trading, et al., filed January 16, 2001 in the Superior Court of the State of California for the County of San Diego, brought by three California water districts, as consumers of electricity (Sweetwater Authority v. Dynegy Inc., et al.), and in a suit filed on January 18, 2001 in Superior Court of the State of California, County of San Francisco, brought by the San Francisco City Attorney on behalf of the People of the State of California (The People of the State of California v. Dynegy Power Marketing, Inc., et al.). Although the complaints contain a number of allegations, the basic claim is that, by underbidding forward contracts and exporting electricity to surrounding markets, the defendants, acting in collusion, were able to drive up wholesale prices on the Real Time and Replacement Reserve markets, through the Western Systems Coordinating Council and otherwise. The complaints allege that the conduct violated California antitrust and unfair competition laws. NRG Energy does not believe that it has engaged in any illegal activities, and intends to vigorously defend these lawsuits. While these cases are in too preliminary a stage to speculate on their outcome, if they were ultimately resolved adversely to the defendants it could have a material adverse effect on NRG Energy's results of operations and financial condition. OPEC: US Judge Orders to Rescind Oil Output Cuts under Antitrust Laws --------------------------------------------------------------------- A US federal judge has issued an injunction against the Organisation of Petroleum Exporting Countries ordering it to refrain from further oil production cuts, which are hurting US purchasers of petroleum products. A class action case was brought by Prewitt Enterprises, an Alabama-based petroleum products seller, which filed a complaint last April that it was suffering from high oil prices caused by the cuts. Senior US District Judge Charles R. Weiner, presiding over the Northern District of Alabama, found after year-long proceedings that Opec was in violation of US antitrust laws. The court also found fault with Opec's member states and "co-conspirators" such as non-Opec oil producers Mexico, Russia, Norway and Oman. Michael Straus, a partner at the Birmingham-based law firm Straus & Boies representing Prewitt and the defendant class, said the next round of production cuts, which take effect on April 1, would be a test of Opec's response. Opec has so far not responded to the lawsuit. Under US federal anti-trust laws, indirect purchasers cannot sue for damages but can sue for injunctive relief. (Financial Times (London), March 30, 2001) RED HAT: Sirota & Sirota Announce Securities Lawsuit Filed in N.Y. ------------------------------------------------------------------ The law firms of Sirota & Sirota, LLP ((212) 425-9055 or www.sirotalaw.com) and Lovell & Stewart, LLP ((212) 608-1900 or www.lovellstewart.com) filed a class action lawsuit on March 29, 2001 on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of Red Hat, Inc. (Nasdaq:RHAT) between August 11, 1999 and March 19, 2001 inclusive. The lawsuit asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and seeks to recover damages. Any member of the class may move the Court to be named lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than May 28, 2001. The action, Saul A. Kassin v. Red Hat, Inc., et al., is pending in the U.S. District Court for the Southern District of New York (500 Pearl Street, New York, New York), Docket No. 01-CV-2712 (LTS) and has been assigned to the Hon. Laura Taylor Swain, U.S. District Judge. The complaint alleges that Red Hat, Inc., Robert F. Young, Red Hat's Chairman, Matthew J. Szulik, its Chief Executive Officer, and Marc Ewing, one of its directors, violated the federal securities laws by issuing and selling Red Hat common stock pursuant to the August 11, 1999 IPO without disclosing to investors that at least one of the lead underwriters and two of the other underwriters in the offering had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, lead underwriter The Goldman Sachs Group, Inc. and underwriters Credit Suisse First Boston Corp. and Merrill Lynch, Pierce, Fenner & Smith, Inc. allocated Red Hat shares to customers at the IPO price of $14 per share. To receive the allocations (i.e., the ability to purchase shares) at $14, the defendant underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Red Hat stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive Red Hat's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying stock at the $14 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $56.75 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration Statement filed with the SEC in order to gain regulatory approval for the Red Hat offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO transaction and failed to disclose the additional commissions and "laddering" scheme discussed above. Contact: Lovell & Stewart, LLP, New York Christopher Lovell, Victor E. Stewart, Christopher J. Gray, 212/608-1900 sklovell@aol.com or Sirota & Sirota, LLP, New York Howard B. Sirota or Saul Roffe, 212/425-9055 info@sirotalaw.com SMITHFIELD FOODS: NC Ct Dismisses Suit over Hog Farm Pollution of River ----------------------------------------------------------------------- A North Carolina state judge dismissed two lawsuits against Smithfield, Va.-based Smithfield Foods, the nation's largest pork processor, saying citizens who contended that waste from the company's hog farms polluted rivers failed to make their case. (The Washington Post, March 30, 2001) U.S., MEXICO: Mexican Govt Records Contradict Assertions over Lost Wages ------------------------------------------------------------------------Most of the millions of dollars deducted as savings from the paychecks of Mexican laborers who came to the United States during the 1940s was later repaid, according to Mexican government records that contradict key assertions of a growing reparations movement. Thousands of surviving migrants on both sides of the border contend they were cheated out of money that they earned toiling in fields and rail yards to replace U.S. workers drafted in World War II. As an incentive for their return to Mexico, under the agreement between the two nations, 10% of each worker's wages was deducted from the migrant's paychecks to be forwarded to a Mexican bank. Allegations that wages were unpaid have triggered international protests, an upcoming Mexican congressional investigation and legal action in the United States. Some advocates have said the workers are owed as much as $ 1 billion, but documents culled from archives in both countries show the actual amount is far less. About $ 28 million was paid to workers by 1946, according to records examined by The Times, and about $ 6 million is unaccounted for. The analysis of the savings fund was part of a wide-ranging, 120-page government review of the WWII-era guest worker program. Titled "Los Braceros," the study examined salaries and recruitment, and included a survey of returning workers. The findings present good and bad news for the men, who were among more than 300,000 Mexican railroad and agricultural workers known as braceros. Given problems acknowledged in the government reports, and the relatively small sums each man was owed at the time, the unaccounted-for funds could bolster assertions that thousands of workers were not repaid their savings. But records also suggest that the total amounts outstanding are not the hundreds of millions of dollars--including interest--that some have said. Still, many of the men--now in their 70s and 80s--hope to recover something. "We were fighting in the fields so people could eat. . . . I just want my money," said 76-year-old Manuel Renteria, who came to pick crops in 1943. Renteria lives on a $ 500 monthly Social Security check in a tiny downtown Los Angeles apartment furnished only with a bed. He said he was never informed about the payroll deductions--echoing assertions by many other retired workers. Earlier his month, attorneys representing several of the men filed a class-action lawsuit in federal court in San Francisco seeking the back wages. The suit names the United States and Mexican governments, as well as several banks responsible for transferring and disbursing the funds. Jonathan Rothstein, a lawyer representing the workers, said he was undeterred by the Mexican reports showing that most of the money had been repaid. He said his clients will demand such detailed documentation as contemporaneous bank records to support the Mexican government's conclusions. "Until we would receive a full accounting, we are not prepared to accept those numbers as authoritative or accurate," said Rothstein of the Chicago law firm of Gessler, Hughes & Socol. "That's why we filed a lawsuit. We want to get to the bottom line." He said that if only $ 10 million of the money had not been returned, it would be worth as much as $ 200 million in today's dollars. The lawsuit comes as some U.S. lawmakers push for a new guest worker program. President Bush and Mexican President Vicente Fox are exploring the idea, among other cross-border initiatives. In response to protests in Los Angeles, Mexico City and elsewhere, Mexican federal officials are launching a multi-agency commission to find out how much money was owed and how much was repaid. The investigation is expected to begin this spring. "There are a lot of workers who did not receive anything. The commission has to find out how many," said Alberto Leyva, a legislative aide to Michoacan Rep. Sergio Acosta. The congressman from the Democratic Revolution Party is helping to lead the investigation. The commission, which has been endorsed by Fox, is expected to issue a report later this year. Any investigation will be hindered by the passage of time and the difficulty of retrieving documents more than 50 years old. Under agreements adopted after the bombing of Pearl Harbor, the braceros came north to work while Americans went off to war. About $ 34 million in savings from the braceros was received by Mexican banks through mid-1946, according to an analysis that year by the Mexican secretary of labor's office. The report, located in agricultural library archives at the University of Wisconsin, appears to be one of the most authoritative available. It shows that savings deductions ceased in January 1946. Other records indicate that the payroll deductions might have continued until as late as 1949. The newly located Mexican reports appear to support a key assertion by lawyers seeking reparations: that Mexican and U.S. officials ignored warnings that many workers were not getting their money. U.S. wartime agencies were supposed to ensure that the payroll records were sent to Mexican banks. But U.S. officials failed to do so promptly, records show. As a result, many workers waited weeks in Mexico City for their funds, only to be told the banks had no record of their accounts. The average account was only a few hundred dollars, and many of the migrants ended up spending what little money they had traveling to the Mexican capital to collect, according to a 1945 report published by the Mexican secretary of Agriculture. The unsuccessful trips to retrieve their savings left those workers in debt. The report notes many workers were poorly educated peasants who were intimidated by the forms and correspondence needed to claim their money. Some fell victim to con artists, and others collected only part of their savings. Frustrated, a number of workers wrote to U.S. officials during and after the war, according to letters obtained from the National Archives in Maryland. "They have only given me a little more than 100 pesos," rail worker Efren Corona wrote U.S. officials in February 1946. He said he was owed more than 1,500 pesos--about $ 300. Like others, Corona received a form letter from the War Manpower Commission. The panel told him he would have to take up the matter with his former U.S. employer--despite the international accord that made the United States responsible for guarding the interests of Mexican workers. Jose Diaz wrote the U.S. government, demanding that it pay him more than $ 200 in missing savings. "Send me the money," he said in his 1946 letter. He, too, was told to contact the railroad where he worked. It's not clear whether either man recovered his money. Even as such letters were being received, Mexican government officials had already been alerted that the program was failing some workers. "Much of the money will never be completely returned," concluded the 1945 agricultural office report. Recurring administrative problems, it said, showed that the design of the savings programs "was a mistake." (Los Angeles Times, March 30, 2001) WORLDCOM INC: Settles Overbilling Suit of Predecessor MCI for $90 Mil --------------------------------------------------------------------- As many as 5 million MCI long-distance customers may be entitled to refunds under a $ 90 million settlement approved between MCI successor WorldCom Inc. and lawyers suing the company on behalf of customers. But with a month to go to file for a refund, most eligible customers have not made a claim, probably because they aren't aware they are eligible. The average refund is about $ 100 for customers who were overbilled for dialing long distance starting in 1996. Unlike many other such settlements, those applying for refunds will get a check instead of coupons, discounts or credits. The settlement, approved in federal court in East St. Louis, is the largest under federal telecommunication laws, said San Francisco lawyer Daniel Girard, one of the lead counsels on the case. "Someone might claim to have a settlement for a higher amount with a coupon, but this is $ 90 million cash," he said after the hearing. "We worked very hard to make (the settlement) accessible to class members." Five lawyers and an economist objected, most complaining about the fees that Girard and others will make. Lawyers who sued MCI can expect to make about $ 25 million. That's spread among at least 16 law firms from across the country, including a Swansea firm of seven partners that has filed several prominent class actions in federal court in East St. Louis -- Carr, Korein, Tillery, Kunin, Montroy, Cates & Glass. U.S. District Judge David R. Herndon approved the fees and settlement, noting that his oversight of the case since it was filed in 1999 allowed him a distinct advantage in ensuring the settlement was fair. "I find absolutely no reason to reject the settlement," he said. The suit arose over MCI's practice of applying its higher non-subscriber rate, which it calls its "casual calling" rate, and surcharges to many of its long-distance customers. The practice began in February 1996 and continued through October 2000. Mailed notices went out to 5.3 million households about the possible settlement. But according to lawyers representing the customers, only 371,000 people have filed claims with a month to go before the final deadline. That's about 7 percent of the estimated number of people identified as eligible for refunds. One lawyer objected because customers can't tell just from looking at their phone bills whether they are being charged non-subscriber rates, even though they are asked to swear under oath that they were charged the wrong rate. Jonathan Arnold, an economist from Chicago, expects to be refunded $ 300 for four telephone lines. But he burned half of that flying here for the hearing to object to the fees the lawyers requested. "Over-compensating attorneys encourages excessive litigation, which results in higher costs of products," he said. "I'm doing this for my own personal satisfaction." Another sticking point among objectors is unclaimed refund money. MCI wants it returned to the company, as does Arnold. He said it will keep his phone rates lower. As much as $ 20 million may be left in the fund after the last claims are processed. But the leftovers could go to charity or be channeled into a further effort to distribute it to customers. MCI or WorldCom customers interested in checking their eligibility for refunds can call 800-967-9425 or check via the Internet at www.rateclaims.com. Those who cannot remember their phone numbers that had MCI service can opt for a flat $ 75 payment. (St. Louis Post-Dispatch, March 30, 2001) * FL Justice Asks Why State Can Fund Viagra But Not Abortion ------------------------------------------------------------ One justice asks why the state can fund Viagra for men but not abortion for women. The Florida Supreme Court took up the abortion issue March 29, hearing arguments in an 8-year-old case that asks whether poor women should be allowed to get Medicaid-paid abortions. Bonnie Scott Jones, an attorney for the Center for Reproductive Law and Policy, argued that the state unconstitutionally pressures women in its Medicaid program to choose childbirth over abortions that are medically necessary. It pays for childbirth but not abortion. And the state, via Medicaid funding, forces women to "endanger their own health in order to rear children," Jones said. That violates the state Constitution's right to privacy, she said. Bill Roberts, the attorney for the state Agency for Health Care Administration, which administers Medicaid, argued that Florida's Constitution does not require the state to fund the rights it guarantees citizens. The question of whether Medicaid should pay for abortions deals with poverty, not constitutional rights, he told justices. "The state did not create poverty, and it's not constitutionally obligated to do away with poverty," Roberts said. But that didn't satisfy Justice Leander Shaw, who questioned the state's policy of covering all medically necessary reproductive procedures for men under Medicaid but not for women. "It just doesn't meet the smell test that the state would fund Viagra for men, but for women a medically necessary abortion would not be covered," Shaw said. Of the seven current justices, Shaw alone was also a justice in 1989 when the court overturned a law requiring teenagers seeking abortions to have the permission of a parent. Shaw wrote that ruling, which concluded that the law violated the privacy provision of the state Constitution. The U.S. Supreme Court has upheld the federal law limiting the use of federal tax dollars. Like the federal government, Florida bans spending its share of Medicaid money on abortions unless they're needed to save the life of the woman or to end pregnancies caused by rape or incest. That has been the state's policy at least since 1991, according to Roberts. The Center for Reproductive Law and Policy estimates that each year 7,000 Medicaid-eligible women in Florida either have pregnancy complications or have a health condition that would worsen if they became pregnant. Medicaid is the joint federal-state health care program for the poor. The class-action lawsuit was filed in 1993 in West Palm Beach. Last year, the 1st District Court of Appeal upheld the state's rules restricting Medicaid abortions. Jones argued that the state's policy of not paying for medically necessary abortions had the effect and intent of preventing poor women from getting abortions. "The (state's) interest in potential life is not a compelling one until viability" of the fetus, Jones said. Roberts agreed that the state did, in fact, intend to protect fetuses. He added that was permitted as long as the state didn't create any legal barriers that keep women from getting an abortion. "The state is not prohibited from favoring a position. The state has a compelling interest here. It's the preservation of life," and that begins at conception, he said. The state could refuse to fund any reproductive services for women such as childbirth - assuming it got a waiver from the federal government - and still not violate the Constitution, Roberts added. (Information from the Associated Press was used in this report; published in St. Petersburg Times, March 30, 2001) * IL House Approves Scaled-Back Girls' Abortion Notification Bill ----------------------------------------------------------------- Setting the stage for an ideological clash, the Illinois House approved a drastically weakened version of legislation requiring girls to inform their parents before they get abortions. House lawmakers voted 96-15 March 29 for the revised measure, but its sponsor predicted the Republican-controlled Senate would restore the original language and send it back for another battle. The measure originally barred abortions for girls under 18 unless they had informed their parents or secured a judge's approval. But abortion-rights supporters changed it so that parents and legal guardians were not the only ones who could be notified. The new version includes grandparents, aunts and uncles, siblings and even clergy. They argued the original bill was not practical for girls from troubled families. The weakened version now moves to the Senate. (The Associated Press, March 30, 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. 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. 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