/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010403.MBX C L A S S A C T I O N R E P O R T E R Tuesday, April 3, 2001, Vol. 3, No. 65 Headlines AUTHENTIC FITNESS: Tortfeasor Agr. Releases Maker of Defective Goggles AVANT! CORP: Announces Tentative Resolution of Stockholder Suit in CA CALIFORNIA AMPLIFIER: Milberg Weiss Files Securities Suit in CA CALIFORNIA AMPLIFIER: Scott + Scott Files Securities Lawsuit in CA E.W. BLANCH: Schatz & Nobel Announces Filing of Securities Suit in MN FOREST SERVICE: Judge OKs Settlement for Workplace Sexual Harassment HEARTLAND ADVISORS: Judge Names Lead Plaintiff in High-Yield Funds Case HOLOCAUST VICTIMS: Appeals Ct in NY Holds Hearing IASIAWORKS, INC: Bull & Lifshitz Files Securities Suit in New York INTERSHOP COMMUNICATIONS: Schubert & Reed Files Securities Suit in CA JNI CORP: Milberg Weiss Files Securities Suit in California KEITHLEY INSTRUMENTS: Bull & Lifshitz Files Securities Lawsuit in Ohio KEITHLEY INSTRUMENTS: Cauley Geller Tells of Securities Suit Filed in OH KEITHLEY INSTRUMENTS: Faces Securities Suit, Says Schiffrin & Barroway KEITHLEY INSTRUMENTS: Milberg Weiss Files Securities Suit in Ohio LBP INC.: Balance of Impac Investment Sold; Derivative Suit Withdrawn ORACLE CORP: Savett Frutkin Announces Securities Lawsuit Filed in CA RITE AID: MVFRL Action Is on its Way to Cumberland County TOBACCO LITIGATION: L.A. County Readies For Its 1st Trial U OF MI: CNN Coverage on Whether Affirmative Action Is Coming to an End VENTRO CORP: Milberg Weiss Files Securities Suit in California ********* AUTHENTIC FITNESS: Tortfeasor Agr. Releases Maker of Defective Goggles ---------------------------------------------------------------------- Feeney v. Authentic Fitness Co., PICS Case No. 01-0563 (C.P. Philadelphia Feb. 15, 2001) Temin, J. (6 pages). Where, in a products liability action brought against the manufacturer and the seller of allegedly defective goggles, plaintiff signed a joint tortfeasor agreement releasing the manufacturer in exchange for $ 1.5 million shortly before trial, that release operated as a release of any liability that the seller, a mere "conduit" for the product, might have had to plaintiff. Affirmance recommended. Plaintiff purchased a pair of goggles from defendant Gold Medal Sporting Goods Inc. (Gold Medal). The package containing the goggles indicated that they were "anti-fog." The manufacturer of the goggles was defendant Authentic Fitness Co. (Authentic Fitness). Prior to purchasing the goggles, plaintiff asked Gold Medal's sales clerk whether the goggles were suitable for use while water-skiing. The sales clerk said that they were. While plaintiff was water-skiing, the goggles fogged up, and plaintiff sustained injuries. Plaintiff sued the Authentic Fitness and Gold Medal under Section 402A of the Restatement of Torts. Gold Medal filed a cross-claim for indemnity against Authentic Fitness. Prior to trial, plaintiff entered into a joint tortfeasor agreement with Authentic Fitness in which Authentic Fitness agreed to pay plaintiff $ 1.5 million. Another judge bifurcated the indemnity claim from the other claims. After hearing the evidence, the jury found that the goggles were defective and that the defect was a substantial factor in causing plaintiff's injuries. The jury awarded plaintiff $ 11.8 million. With regard to the remaining issues, the court determined that Authentic Fitness was the manufacturer of the goggles and that Gold Medal was the seller. The court determined, however, that Gold Medal was "merely a conduit" for the transfer of the goggles from Authentic Fitness to plaintiff and therefore was only secondarily liable. With regard to the joint tortfeasor agreement, the court held that it "operates as a release of any liability that defendant Gold Medal may have to plaintiff." Consequently, the court concluded that Gold Medal was not liable for any money damages to plaintiff. (Pennsylvania Law Weekly, April 2, 2001) AVANT! CORP: Announces Tentative Resolution of Stockholder Suit in CA --------------------------------------------------------------------- Avant! Corporation (Nasdaq: AVNT) announced on March 31 that it has reached an agreement with attorneys for the plaintiffs to resolve the two class action stockholder lawsuits currently pending against the Company. Under the terms of the agreement, Avant! will pay $47.5 million in cash to the plaintiffs, which will result in the dismissal of all of their claims against the Company with prejudice. The United States District Court for the Northern District of California preliminarily approved the settlement on March 29, 2001. The proposed resolution of these cases is subject to final court approval and certain other contingencies following notice to the affected stockholders. The two lawsuits, brought by Paul and Helen Margetis and by Joanne Hoffman on behalf of certain purchasers of Avant! common stock, were filed in the United States District Court in 1995 and 1997, respectively. "This proposed resolution is beneficial to Avant! and its stockholders," said Gerald C. Hsu, Avant!'s chairman, CEO and president. "Our company's top priority is to provide the best technology and service to our customers. We now have concluded four significant litigation matters within the past four months, allowing the Company to focus on providing the best technology and service to our customers." In accordance with Statement of Financial Accounting Standards (SFAS) No. 5, Accounting for Contingencies, these class action settlements are subsequent loss events occurring after December 31, 2000, and prior to the issuance of the Company's financial statements. Consequently, the Company will accrue the entire settlement amount as a special one-time charge as of December 31, 2000, and for the quarter and year then ended. This will result in a reported loss per diluted share of $0.18 for the fourth quarter and reported diluted earnings per share of $1.32 for the full year. The pro forma diluted earnings per share excluding merger, in-process research and development expenses, venture capital investment gains and the above special charge for fourth quarter 2000 and full year 2000 remain the same as previously announced at $0.47 and $1.77, respectively. About Avant! Avant! Corporation develops, markets, and supports integrated circuit (IC) design automation software solutions (from system definition to mask synthesis) for the rapid design of multimillion gate products including system on chip (SoC). Avant! is a trademark of Avant! Corporation. CALIFORNIA AMPLIFIER: Milberg Weiss Files Securities Suit in CA --------------------------------------------------------------- Milberg Weiss (http://www.milberg.com/calamp/)announced on March 30 that a class action has been commenced in the United States District Court for the Central District of California on behalf of purchasers of California Amplifier, Inc. ("California Amplifier") (NASDAQ:CAMP) publicly traded securities during the period between April 7, 2000 and March 28, 2001 (the "Class Period"). The complaint charges California Amplifier with violations of the Securities Exchange Act of 1934. California Amplifier designs, manufactures and markets microwave components used in both defense and commercial markets. The Company's products are used for the amplification and conversion of microwave signals for satellite television, Global Positioning Satellite, wireless cable, two-way voice and data communications, and broadband applications. On March 29, 2001, California Amplifier announced that it will restate its fiscal 2000 financial statements because of accounting misstatements. The press release issued in connection with the announcement stated, in part: "California Amplifier Inc. today announced that during preparation for the Company's fiscal year 2001 audit examination, the Company's corporate controller abruptly resigned and advised by letter that in fiscal year 2000 he made certain adjustments to the Company's accounting records that caused a reduction in recorded expenses which may have resulted in overstating net income for the fiscal year ended Feb. 26, 2000 by as much as $2.2 million, or $.18 per basic share. The Company is actively investigating the circumstances reported by the controller but has not yet been able to interview the controller fully and, as a result, is unable at this time to reach any definitive conclusions as to the exact expenses or fiscal year 2000 quarters that are affected by this alleged overstatement... Due to these developments, the previously scheduled release of earnings for the fourth quarter and the fiscal year ended March 3, 2001 on April 19, 2001 will be postponed to a future date to be announced. If the investigation ultimately confirms an overstatement of income in fiscal year 2000, the Company will be required to restate its fiscal year 2000 consolidated financial statements." On this news, trading in California Amplifier shares was halted at $5.03 -- or more than 90% lower than the Class Period high of $59.25. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@milberg.com CALIFORNIA AMPLIFIER: Scott + Scott Files Securities Lawsuit in CA ------------------------------------------------------------------ Scott + Scott, LLC (scottlaw@scott-scott.com), a Connecticut-based law firm (telephone: 800-404-7770), filed suit in the United States District Court for the Central District of California on behalf of all persons who purchased the publicly traded securities of California Amplifier, Inc. (Nasdaq: CAMP) from April 7, 2000 to March 28, 2001. California Amplifier designs, manufactures and markets microwave components used in both defense and commercial markets. The Company's products are used for the amplification and conversion of microwave signals for satellite television, Global Positioning Satellite, wireless cable, two-way voice and data communications and broadband applications. You can contact Scott + Scott LLC at 800-404-7770 to speak with an attorney regarding any questions about this lawsuit. Scott + Scott's complaint charges California Amplifier and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that on March 29, 2001, the Company announced that it would restate its fiscal 2000 financial statements because of accounting misstatements. The Camarillo, Calif.-based company said its controller abruptly resigned during preparation for the 2001 audit, and advised by letter that he may have overstated net income for the 12 months ended Feb. 26, 2000, by as much as $2.2 million, or 18 cents per basic share. The company said the controller reported he made certain adjustments to the company's accounting records that caused a reduction in recorded expenses, causing, in turn, the overstatement of net income. The company said it was investigating the circumstances reported by the controller but had not yet been able to interview him fully. As a result, the company said, it was unable to reach any definite conclusions at this time as to the exact expenses. The company said that its 2001 audit was underway but that, due to the developments, the previously scheduled release of earnings for the fourth quarter and the fiscal year ended March 3, 2001, planned for April 19, will be postponed to a future date to be announced. Trading in the company's stock on the Nasdaq market was halted before the market opened, pending news dissemination. The price of the shares was halted at $5.03 -- or more than 90% lower than the Class Period high of $59.25. Contact: David R. Scott or Neil Rothstein, both of Scott + Scott, LLC, 800-404-7770, or nrothstein@scott-scott.com E.W. BLANCH: Schatz & Nobel Announces Filing of Securities Suit in MN --------------------------------------------------------------------- A lawsuit seeking class action status has been filed in the United States District Court for the District of Minnesota on behalf of all persons who purchased, or otherwise acquired, the common stock of E.W. Blanch Holdings, Inc. (NYSE: EWB) between February 25, 1999 and March 20, 2000, inclusive (the "Class Period"). The lawsuit alleges that E.W. Blanch provides integrated risk management and distribution services, including reinsurance intermediary services. The Company was involved with Unicover Managers, Inc.'s ("Unicover") controversial system for sharing premiums and risk in underwriting reinsurance for a workers compensation pool. When the Unicover pool ran into trouble, the Company did not take a charge to earnings. The Company also misled investors by stating that it would be unlikely to experience any adverse impact in connection with Unicover. On March 20, 2000, when the Company revealed that it would be negatively impacted by the Unicover reinsurance scandal, the price of the Company's stock dropped 64%. In addition, certain of the Company's senior officers sold over $ 24.7 million of the Company's stock during the Class Period while in possession of information they had not disclosed to investors. The lawsuit further alleges that the Company and certain senior officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Plaintiff seeks to recover damages on behalf of all Class members. Contact: Andrew M. Schatz or Jeffrey S. Nobel or Robert W. Cassot of Schatz & Nobel, 800-797-5499, sn06106@aol.com FOREST SERVICE: Judge OKs Settlement for Workplace Sexual Harassment -------------------------------------------------------------------- A U.S. District Court judge has given his consent to the settlement of a class action lawsuit filed against the U.S. Forest Service. A pair of female workers who revealed a "pattern of sexual harassment" within the agency's California region offices prompted the civil action. Agency spokesman Matt Mathes told FEA that the judge verbally approved the settlement and plans to sign it in the coming weeks. The settlement will impact about 6,000 female Forest Service employees. Among the terms of the settlement for the complaint initiated in 1995 by employees Lesa Donnelly and Ginelle O'Connor, the agency is required to establish a monitoring council, Mathes said. The council would oversee the agency's progress and equal employment opportunity programs. A neutral mediator will chair the council. Representatives chosen by the agency and members of the lawsuit will make up the remaining seats. (Federal EEO Advisor, March 29, 2001) HEARTLAND ADVISORS: Judge Names Lead Plaintiff in High-Yield Funds Case ----------------------------------------------------------------------- A group led by Walter T. Kirkbride, former chief investment officer of Conseco Inc., was appointed as lead plaintiff in the class action suit brought against Heartland Advisors Inc., the manager of two high-yield municipal bond funds that suffered catastrophic losses last year. U.S. District Court Judge J.P. Stadtmueller, who was assigned to the case for the Eastern District of Wisconsin in Milwaukee, approved Kirkbride and the three other litigants in his party and their chosen lead counsel, Burt & Pucillo of West Palm Beach, Fla., and liaison counsel Hale & Wagner of Milwaukee. The court "is satisfied that the two firms have the talent and experience necessary to pursue this litigation vigorously," Stadtmueller wrote in the court order. Burt & Pucillo specializes in class action, securities, corporate, antitrust, and consumer litigation. Citing concerns that the lead plaintiff equitably represent and fend for all members of the class action group, Stadtmueller wrote in the court order that the Kirkbride group was chosen because it was the only party with losses of its size, and with members that were personally invested in the two high-yield municipal bond funds that suffered one-day net asset value markdowns of 70% and 44%. Heartland announced that the markdowns were a result of a new security pricing methodology adopted by the firm that would better incorporate the illiquidity of the high-yield market. The complaint filed by the Kirkbride group in November, however, alleged that the net asset value of the funds was materially inflated due to the over-valuation of securities and that as a result, performance was also misstated. The Kirkbride group's losses totaled $1.31 million, of which Kirkbride alone lost $824,232 -- mostly in Heartland's High Yield Municipal Bond Fund. Kirkbride remains invested, unlike most investors who fled the two high-yield funds after the net asset value markdowns that prompted the litigation. The funds themselves were named as defendants in the 19 lawsuits originally filed against Heartland Advisors. Also named in the suits were its parent company, Heartland Group Inc.; its president, William J. Nasgovitz; former and current portfolio managers; the board of directors; and the funds' independent auditor. Although attorneys representing other plaintiffs seeking lead counsel argued that Kirkbride would have a "debilitating conflict of interest" as lead plaintiff because he still owns shares in the funds, Stadtmueller wrote in the court order that it is doubtful that recovery would be permitted against them. "The funds are owned by innocent shareholders, many if not most of whom are class members," he wrote. "To the extent they are not 'owned' by the alleged wrongdoers, then, the rules against indemnity in securities fraud actions would prohibit the actual offenders from looking to the funds for recourse." Lead counsel C. Oliver Burt 3d could not be reached for comment. Another litigating attorney on the case, Karl Cambronne, a partner at Chestnut & Cambronne in Minneapolis, said that the filing of a consolidated amended complaint can be expected to follow. After that, a motion to certify the class will be filed, and once the court has resolved any motions for dismissal, the attorneys will be able to proceed with the discovery process, Cambronne said. (The Bond Buyer, April 2, 2001) HOLOCAUST VICTIMS: Appeals Ct in NY Holds Hearing ------------------------------------------------- The attempts to win legal clearance for last year's landmark DM10bn (Pounds 3.1bn) settlement between German industry and Nazi-era slave labourers enters a critical phase when an appeals court in New York holds a first hearing on the case. It is a condition of the settlement that no money is paid to survivors until "legal peace" for German companies has been secured in the US. That requires the dismissal of all the class action lawsuits brought against German companies for complicity in the Holocaust. Several judges have agreed to dismiss the cases, while lawyers suing IBM for its alleg-ed role in the Holocaust last week agreed to withdraw their suit. However, Judge Shirley Wohl Kram, a New York federal judge, last month refused to dismiss the lawsuit against German banks. She did so despite a request from the US State Department. Lawyers for the German companies and their former labourers are seeking a rarely used writ of mandamus from the appeals court, which would force Judge Kram to change her decision. The State Department is supporting the effort. It would be virtually impossible now to renegotiate the entire settlement, which involved the governments of several east European countries as well as Israel, Germany and the US, and covers claims against German financial institutions for their role in the "Aryanisation" of Jewish property and slave labour. Half the money is to come from the government, the rest from German companies. Lawyers on both sides have criticised the judge strongly for her decision, saying that she overreached her powers and delayed the payment of money needed by Holocaust survivors. Judge Kram raised two concerns with the agreement. The first was that it had not been fully funded - a problem that has since been resolved by German companies, which have entered into a formal guarantee making the money available. Her second objection, and now the most important, concerned claims against German banks on behalf of Austrian banks, concerning alleged plunder during the war years. These were assigned to Holocaust survivors suing Bank Austria and Creditanstalt, the largest Austrian banks, in a separate case that was settled in 1999. Judge Kram also presided over that case. The settlement was brokered by a former US senator, Alfonse D'Amato, who was appoin-ted as a "special master" by the judge. It involved a pay-out by the banks of Dollars 40m (Pounds 27.7m) and provoked criticism from some of the lawyers for the plaintiffs, who said the sum was inadequate. That led to more attention for the claims against the German banks, which were also assigned to the plaintiffs as part of the settlement. The judge is now concerned that some of the lawyers who worked in the lawsuits against both the German and the Austrian banks had a conflict of interest, and that claimants against the Austrian banks have been given a poor deal. She appointed Jack Dweck, a New York lawyer, to act as "co-lead attorney" for the assigned claims last year. He has since sued the German banks on behalf of Holocaust survivors. The lawyers appealing against her decision claim that she was mistaken to link the Austrian and German cases in this way. They also point to postwar treaties between Germany and Austria that waive claims by Austrian individuals or companies against Germany for war-era looting. Lawyers for the defendant banks said she should withdraw from the Austrian case because she had stated publicly that she thought the assigned claims had value. Holocaust survivors themselves seem ambivalent. The deal involves small payments to individuals, and many US survivors express support for Judge Kram for looking at the settlement so critically. Leo Rechter, the chairman of the National Association of Child Survivors of the Holocaust, said that negotiators should never have included claims against banks, which mostly refer to their role in seizing property rather than to slave labour. He said: "Everyone wanted legal peace and nobody wanted to pay for it. That's natural but that doesn't mean they can be allowed to get away with it." He recommended that the settlement for slave labourers should be cleared, so that their payments could start, leaving the way clear to "thrash it out" with banks and insurance companies. Roman Kent, the chairman of the American Gathering of Holocaust Survivors and a member of the negotiating team that agreed the settlement, said the German government should show good faith by paying its half of the DM10bn without waiting for legal peace. He said: "It's just a token. But many of the people would like to see the token of payment before they die." (Financial Times (London), April 2, 2001) IASIAWORKS, INC: Bull & Lifshitz Files Securities Suit in New York ------------------------------------------------------------------ According to news release by the law firm Bull & Lifshitz, LLP, on March 30, 2001, a securities class action lawsuit was filed in the United States District Court for the Southern District of New York against Iasiaworks, Inc. ("IAWK")(NASDAQ: IAWK), certain officers and directors of the Company, and the underwriters of its IPO on behalf of all persons who acquired the Company's common stock between August 3, 2000 and November 27, 2000, inclusive (the "Class Period"). The Complaint alleges that defendants violated the federal securities laws, including the Securities Act of 1933, by issuing a materially false and misleading Registration Statement and Prospectus (the "Prospectus"). Contact: Bull & Lifshitz, LLP classlaw@bellatlantic.net Peter D. Bull, Esq. Joshua M. Lifshitz, Esq. Telephone: (212) 869-9449 Facsimile: (212) 869-5632 INTERSHOP COMMUNICATIONS: Schubert & Reed Files Securities Suit in CA --------------------------------------------------------------------- A class action suit alleging securities fraud has been filed in the United States District Court for the Northern District of California against Intershop Communications AG (NASDAQ:ISHP) ("Intershop" or "the Company") and others by the San Francisco law firm of Schubert & Reed LLP. The case was filed on behalf of all persons who purchased Intershop shares during the period May 2, 2000 to January 3, 2001 (the "Class Period"), including shares issued pursuant to and/or traceable to the Company's September 29, 2000 initial public offering of American Depositary Shares. The complaint alleges claims under Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that the defendants made material misrepresentations and omissions of material facts concerning the Company's business performance. According to the complaint, throughout the Class Period, defendants repeatedly assured investors that the Company's United States operations were performing well; that the Company was enjoying strong growth in the United States; and that the Company's shares were undervalued. The complaint alleges that while defendants were making these representations to the market, defendants knew or recklessly disregarded that Intershop was falling dramatically below the Company's publicly stated business plan and that significant shortfalls in the sales of its software in the United States undermined the Company's stated expectations at all relevant times. The complaint also charges defendants with issuing a materially false and misleading Registration Statement and Prospectus in connection with its initial public offering on September 29, 2000, which misleadingly described the Company's success and future prospects. When the Company finally disclosed the problems with its business on January 1, 2001, the price of the Company's shares fell by over $10 to $4.8125 on trading volume ten times the Company's daily average. Plaintiff seeks to recover damages suffered by class members and is represented by the law firm of Schubert & Reed LLP, which has extensive experience and expertise in prosecuting securities class actions on behalf of defrauded investors. Intershop purchasers during the period 5/2/2000 to 1/3/2001 may join the action online by submitting their information at http://www.schubert-reed.com(Click on "Class Actions"). Contact: Schubert & Reed LLP, San Francisco Juden Justice Reed, 415/788-4220 mail@schubert-reed.com JNI CORP: Milberg Weiss Files Securities Suit in California ----------------------------------------------------------- Milberg Weiss (http://www.milberg.com/jni/)announced on April 2 that a class action has been commenced in the United States District Court for the Southern District of California on behalf of purchasers of JNI Corp. (NASDAQ:JNIC) common stock during the period between Oct. 16, 2000 and Jan. 24, (the "Class Period") including stock purchased pursuant to JNI's 10/19/00 Secondary Offering. The complaint charges JNI and certain of its officers and directors with violations of the Securities Exchange Act of 1934. JNI designs and supplies Fibre Channel hardware and software products that connect servers and data storage devices to form storage area networks ("SANs"). The complaint alleges that during the Class Period, JNI made false statements about its business and results causing its stock to trade at artificially inflated levels. As a result of this inflation, JNI was able to complete a $382 million stock offering (including the over-allotment) pursuant to a Registration Statement and Prospectus dated 10/19/00. JNI's stock price declined in early 11/00 due to stories appearing in the press questioning the Company's competitive position and the pending resignation of its CEO. However, the stock continued to be inflated as defendants asserted there were no problems with the business and it was "business as usual," and the CEO asserted that he would stay actively involved with the Company as a member of the board. Then, on 1/24/01, JNI reported 4thQ 00 revenues of only $30.7 million and analysts reduced 2001 EPS estimates to $0.80. Upon this disclosure, JNI's stock dropped to as low as $20, 84% below the Class Period high, on volume of 4.4 million shares. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@mwbhl.com KEITHLEY INSTRUMENTS: Bull & Lifshitz Files Securities Lawsuit in Ohio ---------------------------------------------------------------------- New release by Bull & Lifshitz, LLP says that on March 30, 2001, a securities class action lawsuit was filed in the United States District Court for the Northern District of Ohio against Keithley Instruments, Inc. (NYSE:KEI), and certain officers and directors of the Company on behalf of all persons who acquired the Company's common stock between January 18, 2001 and March 9, 2001, inclusive (the "Class Period"). The Complaint alleges that defendants violated the federal securities laws, including Sections 10(b) and 20a of the Securities Exchange Act of 1934, by issuing materially false and misleading information concerning the Company's financial condition and prospects. Contact: Bull & Lifshitz, LLP Peter D. Bull, Esq. Joshua M. Lifshitz, Esq. Telephone: (212) 869-9449 Facsimile: (212) 869-5632 classlaw@bellatlantic.net KEITHLEY INSTRUMENTS: Cauley Geller Tells of Securities Suit Filed in OH ------------------------------------------------------------------------ The Law Firm of Cauley Geller Bowman & Coates, LLP announced on March 30 that a class action has been filed in the United States District Court for the Northern District of Ohio on behalf of purchasers of Keithley Instruments, Inc. (NYSE: KEI) ("Keithley Instruments" or the "Company") common stock between January 18, 2001 and March 9, 2001, inclusive (the "Class Period"). The complaint charges Keithley instruments and certain of its officers and directors with issuing false and misleading statements concerning the Company's business and financial condition. Specifically, the complaint alleges that on January 18, 2001, defendants reported record revenue for the 1st quarter 2001, the three months ended December 31, 2000, touting Keithley's eight consecutive quarter of record pre-tax earnings and sixth consecutive quarter of record sales. Defendants further stated that their "record backlog" and current business will lead to 2nd quarter pre-tax earnings in excess of those reported in the 1st quarter. Defendants repeated these positive statements concerning the in-progress fiscal 2nd quarter of 2001 on February 13, 2001 in a press release and on February 14, 2001, in Keithley's SEC Form 10-Q. The complaint further alleges that defendants failed to disclose the Keithley was suffering from reduced new equipment orders, delays in scheduled deliveries, and with respect to semiconductor customers, canceled orders, all of which would lead to reduced sales and earnings in the second quarter of 2001. On March 12, 2001, before the market opened, defendants issued a press release disclosing that 2nd fiscal quarter 2001 sales and earnings would be below the levels of the 1st fiscal quarter of 2001. As a result of this announcement, the price of Keithley stock fell from a closing price of $20.76 on March 9, 2001 to a closing price of $14.95 on March 12, 2001. Contact: Charlie Gastineau or Sue Null, both of Cauley Geller Bowman & Coates, LLP, 888-551-9944 KEITHLEY INSTRUMENTS: Faces Securities Suit, Says Schiffrin & Barroway ---------------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP announces on March 30 that a class action lawsuit was filed in the United States District Court for the Northern District of Ohio on behalf of all purchasers of the common stock of Keithley Instruments, Inc. (NYSE: KEI) from January 18, 2001 through March 9, 2001, inclusive (the "Class Period"). The complaint charges Keithley Instruments and certain of its officers and directors with issuing false and misleading statements concerning the Company's business and financial condition. Specifically, the complaint alleges that on January 18, 2001, defendants reported record revenue for the 1st quarter 2001, the three months ended December 31, 2000, touting Keithley's eighth consecutive quarter of record pre-tax earnings and sixth consecutive quarter of record sales. Defendants further stated that their "record backlog" and current business will lead to 2nd quarter pre-tax earnings in excess of those reported in the 1st quarter. Defendants repeated these positive statements concerning the in-progress fiscal 2nd quarter of 2001 on February 13, 2001 in a press release and on February 14, 2001, in Keithley's SEC Form 10-Q. The complaint further alleges that defendants failed to disclose that Keithley was suffering from reduced new equipment orders, delays in scheduled deliveries, and with respect to semiconductor customers, canceled orders, all of which would lead to reduced sales and earnings in the second fiscal quarter of 2001. On March 12, 2001, before the market opened, defendants issued a press release disclosing that 2nd fiscal quarter 2001 sales and earnings would be below the levels of the 1st fiscal quarter of 2001. As a result of this announcement, the price of Keithley stock fell from a closing price of $20.76 on March 9, 2001 to a closing price of $14.95 of March 12, 2001. Contact: Marc A. Topaz, Esq. or Robert B. Weiser, Esq. of Schiffrin & Barroway, LLP, 888-299-7706 or 610-667-7706, or info@sbclasslaw.com KEITHLEY INSTRUMENTS: Milberg Weiss Files Securities Suit in Ohio ----------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on March 30, 2001, on behalf of purchasers of the securities of Keithley Instruments, Inc. (NYSE:KEI) between January 18, 2001, and March 9, 2001, inclusive. A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' Web site at: http://www.milberg.com/keithley/ The action, numbered 1:01 cv 764, is pending in the United States District Court for the Northern District of Ohio, located at 201 Superior Avenue, NE, Cleveland, OH 44114, against defendants Keithley and Joseph P. Keithley ("J. Keithley"). The Honorable Paul R. Matia is the Judge presiding over the case. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 18, 2001 and March 9, 2001 regarding the demand for the Company's products and its expected revenues. Specifically, defendants stated that they anticipated that second quarter revenues would exceed those of the first quarter, in part, because of strong demand for the Company's products and the Company's record backlog. As alleged in the complaint, these statements were false and misleading when made because defendants knew that Keithley was suffering from reduced new equipment orders, delays in scheduled deliveries and, with respect to semiconductor customers, canceled orders, all of which would lead to reduced sales and earnings in the second quarter of 2001. As further alleged in the complaint, defendants' statements that Keithley's backlog was sufficiently large to overcome any softness in the economy and would lead to increased sales and earnings for the second quarter of 2001 were also materially false and misleading because defendants knew but did not disclose that the backlog was not a true measure of sales revenue because the backlog was subject to cancellation or delayed shipment at the "buyer's" discretion. Finally, on March 12, 2001, before the market opened for trading, defendants issued a press release announcing that sales and earnings for the first quarter of 2001 would be less than expected and 25% below the sales levels of the first quarter of 2001. The market's reaction to this announcement was immediate and punitive. Shares of Keithley stock closed on Monday, March 12, 2001, at $14.95, from a previous close on Friday, March 9, 2001, of $20.76, on reported volume of approximately 2.2 million shares. Prior to this disclosure, defendant J. Keithley sold shares of Keithley stock for proceeds of approximately $3.2 million, while other insiders sold shares for proceeds in excess of $5 million. Contact: Milberg Weiss, New York Steven G. Schulman or Samuel H. Rudman Phone number: 800/320-5081 Email: keithleycase@milbergNY.com Web site: http://www.milberg.com LBP INC.: Balance of Impac Investment Sold; Derivative Suit Withdrawn --------------------------------------------------------------------- LBP, Inc. (OTC Bulletin Board: LBPI) on March 30 announced that it had agreed to sell the remaining $5 million investment in the 10.5% Cumulative Convertible Preferred Stock of Impac Mortgage Holdings ("IMH") to Impac Funding Corporation, a subsidiary of IMH for $5.25 million. Closing of the transaction will take place on or before April 30, 2001. Upon the closing of the transaction all of LBP's assets, which are estimated to be approximately $29.7 million, will consist of cash or cash equivalents. In another development LBP announced that the purported class action and derivative action lawsuit against LBP Inc. and its directors, was withdrawn after LBP filed its motion to dismiss the lawsuit. There were no payments or other consideration made by LBP in connection with the withdrawal. In January 2001, LBP announced its intention to liquidate. If the Plan of Liquidation is approved by stockholders at the Company's May 16, 2001 Annual Stockholders meeting to be held in Dallas Texas, the Company will shortly thereafter make an initial liquidating distribution in an amount to be determined by the Board of Directors. ORACLE CORP: Savett Frutkin Announces Securities Lawsuit Filed in CA -------------------------------------------------------------------- Savett Frutkin Podell & Ryan, P.C. today announced that a class action has been commenced in the United States District Court for the Northern District of California, located at 450 Golden Gate Ave., San Francisco, CA 94102, Civil Action No. C 01-1268 WDR, on behalf of purchasers of Oracle Corporation (NASDAQ:ORCL) publicly traded securities during the period between December 15, 2000 and March 1, 2001 (the "Class Period"). The complaint charges Oracle and Lawrence J. Ellison ("Ellison") with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 promulgated thereunder. Oracle supplies software for enterprise information management. The complaint alleges that at the beginning of the Class Period, defendants represented that Oracle would have sequential EPS growth of 9%, or $0.12, and revenue of over $2.9 billion for its Q3 2001. Defendants assured investors that Oracle's new 11i Suite required no programming systems integration to implement the product and that using the product internally saved the Company $1 billion. The complaint further alleges that defendant Ellison actually knew that the Suite had massive technical problems, including giant gaps in its CRM modules, and required expensive systems integration work to implement. Ellison also knew that Oracle's so-called billion dollar savings was not the result of the synergies created by Oracle's 11i product, but rather, his decision to terminate more than 2,000 employees, many of whom would "support" Oracle's new software. Throughout January and February 2001, defendants repeatedly stated that Oracle's Q3 2001 estimates were easily achievable, that Oracle's pipeline was "never stronger," its applications growth was "accelerating," its database and application sales were rapidly growing and that the slowing economy was showing no impact on Oracle's Q3 2001 performance. During this period defendant Ellison sold nearly$900 million worth of his own Oracle shares at prices as high as $32 per share, or 50% higher than the price to which Oracle shares dropped as Oracle's true prospects began to reach the market. On March 1, 2001, Oracle revealed that, contrary to prior assurances by defendants of Oracle's continuing "strong" revenue and EPS growth, including defendants' assurances less than two weeks earlier that demand remained strong, Oracle would post a major revenue shortfall and EPS declines, sending Oracle's shares into a free fall. This disclosure shocked the market, causing Oracle's stock to decline to less than $17 per share before closing at $16.88 per share on March 2, 2001, on record volume of more than 221 million shares. Contact: Savett Frutkin Podell & Ryan, P.C. Barbara A. Podell Robert P. Frutkin Renee C. Nixon Telephone: 215/923-5400 or 800/993-3233 E-mail: mail@savettlaw.com RITE AID: MVFRL Action Is on its Way to Cumberland County --------------------------------------------------------- Cumberland County will play host to a class action lawsuit against Rite Aid Corp., Fayette County Common Pleas Court Judge Ralph C. Warman has decided, because its centralized location makes it a convenient meeting point for the parties. The plaintiff fought for jurisdiction of the cases to remain in Fayette County, where he filed his class action. But Warman, who coordinated Myers v. Rite Aid Corp, PICS Case No. 01-0606 (C.P. Fayette March 12, 2001) Warman, J. (21 pages), with a class action suit against Rite Aid filed in Cumberland County, disagreed his county was the appropriate jurisdiction. "We believe that because the class members are expected to be located throughout the commonwealth, Cumberland County, by virtue of its more centralized location, offers a more accessible forum for said members," Warman said. "Fayette County, by contrast, is located in the southwestern corner of the state which is therefore less convenient to a potential class located throughout the state."W arner also noted that Rite Aid's headquarters are in Cumberland County and all of its corporate designees are from there. Alleged MVFRL Violations The plaintiff, Kenneth Myers, was injured in a motor vehicle accident. He was insured through Horace Mann Insurance Co., which provided him with first party medical benefits in accordance with MVFRL in the amount of $ 5,000. As a result of the accident, Myers said he suffered acute cervical pain and other injuries. His doctor prescribed several medications, including Naproxen. On March 11, 1996, Myers purchased his medication at the Rite Aid pharmacy in Grindstone, Fayette County. He claimed the pharmacist told him he would have to pay the full amount for Naproxen because the drugstore would not automatically bill Horace Mann or any auto insurer. Myers said he was told he would have to submit a claim to his insurer for reimbursement. Myers did purchase the Naproxen and paid the full amount, $ 31.98. However, under MVFRL, Horace Mann only reimbursed Myers $ 25.58. Myers followed by filing a complaint including class action allegations that Rite Aid had violated MVFRL and the Consumer Protection Law. In his complaint, Myers claimed Section 1797 of MVFRL states that all providers of prescription medication must bill auto insurers directly for medicine provided to an insured and that they cannot accept or require payment of more than 80 percent of the customary cost of the medicine. Myers also claimed that under the same section, prescription medication providers may not accept or require the difference between the full charge for the medication and 80 percent of the full charge. So Myers claimed Rite Aid engaged in a "deceptive and illegal" practice under the CPL, Warman said. Myers also asserted deceit as a cause of action, arguing Rite Aid accepted auto insurance claims on assignment for prescription medication provided to insureds and complied with MVFRL's requirement of billing insurers directly between August 1992 and April 1995. Myers alleged Rite Aid changed its corporate policy, which no longer complied with MVFRL, in April 1995. Under the new policy, Myers said, Rite Aid charged insureds the full amount in cash for prescription medications. Myers asked the court to certify his claim as a class of all Rite Aid customers who had first party medical coverage under MVFRL and were charged in full for prescription meds. A similar case, Walker v. Rite Aid Corp., was filed in Cumberland County in October 1999, Warman said. Walker alleged unjust enrichment, conversion, fraudulent nondisclosure and intentional concealment. The plaintiff, Tammy Walker, also alleged Rite Aid failed to inform her of the limitations of Section 1797, charged her in excess of the MVFRL limitations and failed to bill her insurer directly. In November 2000, Myers filed a motion for coordination of his action with Walker's. Warman said that under Pennsylvania civil procedure Rule 213.1, he was required to look at whether coordination was warranted and, if so, in which jurisdiction the cases should be heard. Coordination, Convenience Warman said the two actions did involve "common questions of law." "The plaintiffs in both actions propose to represent exactly the same class and it is clear from the class action allegations, as contained in each complaint, that each plaintiff would be a member of the class alleged by the other," Warman said. "On behalf of the identically defined classes, each plaintiff seeks remedies for what they allege is Rite Aid's uniform, state-wide, illegal policy of overcharging insured customers purchasing medications prescribed for injuries sustained in automobile accidents." Therefore, Warman said the coordination was warranted, opining that the coordination would promote the settlement process. "Further, since the actions involve common questions of law, we believe that coordination is necessary to avoid duplicative rulings concerning the legal issues presented in each case," Warman said. As for which jurisdiction the cases should be heard in, Rite Aid argued it should be Cumberland County. Rite Aid said Cumberland County would be more convenient for the parties; jurisdiction in Fayette County would result in an unreasonable delay because there has been no docket activity since March 1998; and coordination in Cumberland County would result in a more just ruling because Walkers' counsel has filed a similar case there against a different pharmacy chain. Warman said there was no evidence that jurisdiction in Fayette County would result in an unreasonable delay or that the Cumberland County Court would be more just. "Although [the other case filed by Walker's attorney] also alleged violations of the cost containment provisions of the MVFRL, it is not assigned to the Honorable Judge Edgar B. Bailey who was assigned to the Walker action," Warman said.However, his ultimate ruling hinged on the convenience issue, which weighed in favor of Cumberland County. (Pennsylvania Law Weekly, April 2, 2001) TOBACCO LITIGATION: L.A. County Readies For Its 1st Trial --------------------------------------------------------- Richard Boeken started smoking at the age of 13, and now is 56 and gravely ill with cancer--a sad but familiar tale. Unlike thousands of others who have suffered in silence, Boeken's story is about to be told to a jury, in the first smoking and health case ever tried in Los Angeles County. Opening arguments were expected April 2 in Los Angeles Superior Court in Boeken's fraud and negligence suit against Philip Morris Inc., whose Marlboro cigarettes, the world's most popular brand, were Boeken's favorites during his 40 years of smoking. Three other tobacco trials simultaneously will be in session this week in New York, New Jersey and Florida. Boeken, a self-employed securities broker from Topanga, was diagnosed 18 months ago with lung cancer that has since spread to his brain. He says he became hooked as a boy in the 1950s, when there were no warnings on cigarettes, and athletes and celebrities pushed smoking on TV as virile and suave. Boeken is seeking compensatory and punitive damages from Philip Morris, the nation's biggest cigarette maker, claiming the company along with its rivals lied to smokers and the government about the hazards and addictive nature of smoking. Philip Morris says Boeken understood the risks, made a choice to go on smoking and is not entitled to damages. The trial before Superior Court Judge Charles W. McCoy and 12 jurors is expected to last four to six weeks. Although the tobacco industry's pockets are too deep for it to worry about any single lawsuit, the Boeken case will be closely watched by the industry and Wall Street analysts, amid signs that California courts may be uniquely hostile territory. The only two tobacco cases tried in the state since the lifting of a lengthy ban on such suits resulted in dramatic defeats for Big Tobacco. In 1999, a San Francisco jury ordered Philip Morris to pay $ 51.5 million to lung cancer victim and former Marlboro smoker Patricia Henley--an award trimmed by the trial judge to $ 26.5 million. Then in March 2000, another San Francisco jury ordered Philip Morris and R.J. Reynolds Tobacco Co. to pay $ 21.7 million to lung cancer patient Leslie J. Whiteley. Whiteley did not begin smoking until the 1970s--after warnings were placed on cigarette packs--making her victory all the more alarming to the industry. She died last summer at the age of 40, after the cancer had spread to her liver and her brain. Appeals are pending in both the Henley and Whiteley cases and in a third big West Coast case -- a $ 32-million verdict against Philip Morris in Portland, Ore. The Boeken case is significant "because the last two cases in California were major losses for the U.S. tobacco industry," said Martin Feldman, an analyst with Salomon Smith Barney. A successful defense would be a shot in the arm for cigarette makers, since their image in California is worse than almost anywhere else in the country, Feldman said. On the other hand, a Boeken victory, on top of the other plaintiff wins, would "send a very strong message to plaintiffs' firms" in California that anti-tobacco cases are viable, said Ed Sweda of the Tobacco Products Liability Project, a Boston-based group that promotes suits against the industry. For a decade, tobacco companies were immune from lawsuits in California, under a 1987 tort reform law that became notorious as "the napkin deal" because it was sketched out on a napkin at a Sacramento restaurant. The benefits to Big Tobacco became apparent almost as soon as legislators lifted the ban, when both Henley and Whiteley won their cases. In the Boeken case, plaintiffs' lawyer Michael Piuze will argue that Boeken became a heavy smoker in the late 1950s, when there were no health warnings and smoking by young males "was not only accepted but expected." >From the 1960s through the 1990s, Boeken allegedly made numerous efforts to quit--trying hypnosis, smoking cessation classes and nicotine patches and gum, but he never managed to stop for more than a few weeks. Piuze also will argue that the industry's aggressive efforts to belittle the scientific evidence found a willing audience in Boeken and others who were eager to rationalize their habit. "When people are addicted to things," they are apt "to tell themselves stories," Piuze said. "Nicotine . . . is an extraordinarily powerful addictive force." Philip Morris contends that any public statements by the industry were drowned out in the tidal wave of anti-smoking messages from the government, health groups and news media. "Smoking is unpopular and tobacco companies are unpopular, and that makes our job more challenging," said Maurice A. Leiter of Arnold & Porter, lead trial counsel for Philip Morris. "But we believe that nothing Philip Morris said or did made Mr. Boeken smoke or prevented him from quitting." The case begins with cigarette makers on a modest winning streak after their crushing defeat in the Engle case in Miami last July, when jurors ordered the companies to pay $ 144.8 billion in punitive damages to an immense class of Florida smokers who became sick or died after becoming addicted to smoking. The award was many times larger than any prior civil verdict, and it is under appeal in the Florida courts. Cigarette makers have won several individual trials since then. Along with Boeken, opening arguments are expected Monday in a New Jersey case against Philip Morris and R.J. Reynolds by a man whose wife died of lung cancer. Meanwhile, the fraud and racketeering trial of Empire Health Choice (formerly Blue Cross & Blue Shield of New Jersey) against the tobacco industry is beginning its second week in U.S. District Court in Brooklyn. And in Miami, a verdict may come as early as this week in the first of more than 3,000 suits by flight attendants who claim they were sickened breathing the air in smoky airline cabins. A class-action suit on behalf of the flight attendants was settled in 1997 for $ 349 million, but without a penny going to class members. The deal provided $ 300 million for health research and $ 49 million for legal fees, and set ground rules for resolving claims of individual attendants. Those rules bar the flight attendants from seeking punitive damages. But they also require the companies to carry the burden of proving secondhand smoke does not cause disease, and to waive the time limit on filing of claims. The first individual trial, that of former Trans World Airlines flight attendant Marie J. Fontana, 59, is nearing an end in Miami-Dade Circuit Court. Fontana suffers from sarcoidosis and other respiratory ailments. In court, she has been tethered to an oxygen tank, and at one point she had to halt her testimony because she was coughing up blood. (Los Angeles Times, April 2, 2001) U OF MI: CNN Coverage on Whether Affirmative Action Is Coming to an End ----------------------------------------------------------------------- (Broadcast on Cable New Network on March 30, 2001) GUESTS: Ken Blackwell, Al Sharpton BYLINE: Robert Novak, Robert Reich HIGHLIGHT: Ohio Secretary of State Ken Blackwell, and Al Sharpton, president of the National Action Network, discuss affirmative action. ROBERT NOVAK, CO-HOST: Tonight, taking action against affirmative action. California has done it. So has the state of Washington. Now, a federal judge in Michigan has weighed in. Is affirmative action coming to an end? ANNOUNCER: Live from Washington, CROSSFIRE. On the left, Bill Press; on the right, Robert Novak. In the crossfire, in New York, Reverend Al Sharpton, president of the National Action Network, and in Columbus, Ohio, Ken Blackwell, Ohio's Republican secretary of state. NOVAK: Good evening. Welcome to CROSSFIRE. In 1997, a 43-year-old woman named Barbara Grutter sought and was denied admission to the University of Michigan Law School. She sued, claiming the law school's affirmative action procedures kept her out because she is white. This week, Federal Judge Bernard Friedman ruled that the law school's admission policies are unconstitutional because -- quote -- "The focus must be upon the merit of individual applicants, not upon assumed characteristics of racial groups" -- end quote. President Lee Bollinger called the judge's decision an American tragedy and announced the University of Michigan would appeal. This and other similar cases are inevitably heading to the Supreme Court, where big issues will be decided. Can reverse racial discrimination be practiced in the interest of racial diversity? If it cannot, will the progress of African-Americans and other minority groups be impeded? And can there be a level playing field without racial preferences? Robert Reich, former secretary of labor and author of the new book "The Future of Success," is sitting in on the left -- Bob. ROBERT REICH, CO-HOST: I have a question for Secretary Blackwell. You can clear up a lot of confusion, make it very simple for us. You have advised George W. Bush on affirmative action, and here's the question: What is wrong with taking into consideration -- it's just one factor in deciding the admission of somebody to law school or to university -- just one factor, race? Among many factors. We're not talking about a quota. The Supreme Court has said in the Bakke decision that you can consider race as one of many factors. If you're trying to achieve diversity, what's wrong with it? KEN BLACKWELL (R), OHIO SECRETARY OF STATE: Absolutely nothing, Bob. The reality is that the president and I and other advisers to the president were looking for some common ground around the whole notion of affirmative action. What we concluded was affirmative access was, one, a George Bush original, but really did speak to an issue that not too many intellectuals in the colleges and universities across this country want to speak to. And that is the fact that affirmative action, as it has become known contemporarally and practiced, really does deal with middle-income African-Americans and Latinos. What the president wanted was something that would speak to leveling the playing field and giving access to lower-income minorities that have been excluded from the American dream. So those people who were denied access to credit and capital, those who were locked into dysfunctional schools, as well as those who didn't have access to adequate health care, could in fact be given affirmative access through some market-oriented initiatives. First... REICH: But there's -- there's an inherent contradiction. BLACKWELL: It's not a contradiction. Essentially what it is it says that affirmative action with lower case levels is as American as apple pie. It is only when you use affirmative action with capital letters where it becomes a means of fixing a quota and using race... REICH: But Mr. Secretary... BLACKWELL: ... a sole -- as the sole factor that you then run into problems. REICH: Mr. Secretary, if I may, I just want you to decode a little bit what you mean by capital letters, lower-case letters. You've advised the Bush administration on affirmative access, you call it, not affirmative action. Would, under the rubric of affirmative access, would this particular scheme that the University of Michigan Law School has used to just use race as one factor to achieve diversity, would that pass muster or is the Bush administration going to come out against this? BLACKWELL: Well, I don't know what the Bush administration is going to do. I think it would meet our original criteria, because race is not the sole factor and it is not fixed to a particular quota system. NOVAK: We will be joined by the Reverend Sharpton shortly. But Secretary Blackwell, there is no question that many people in the African-American community -- you know this as well as I do... BLACKWELL: Right. NOVAK: ... say that your people cannot make progress if they are competing against whites and Asians on an even basis, that they have to have a little leg up. What do you say to that? BLACKWELL: I say that's nonsense. I say that there are Americans of all colors who have been denied a level playing field. And let me just make it a bit personal. My children grew up in a middle-income family. They went to good public schools and fine private schools, and they can compete with anyone. And they shouldn't be given special consideration just because of their race while a youngster in West Virginia who is the son or the daughter of a West Virginia coal miner is denied access to opportunity. And so I think this notion that the only people who are sitting in the classrooms and law schools and medical schools in this country who are people of color are there because of affirmative access or affirmative action is nonsense. But there are people of all colors who I think are deserving of a -- of a -- of this sort of enabling action, affirmative action or affirmative access, that we're talking about this evening. NOVAK: In the Michigan case, Secretary Blackwell, the judge said that 10 percent of the slots for the law school of Michigan had been set aside for racial minorities. Is that a racial quota, which the Supreme Court has said is unconstitutional, or is that just a part of affirmative action? BLACKWELL: Well, no, I think -- I think once you begin to set fixed numbers you are talking about -- you're talking about a quota. And I can tell you, Bob, as you and I have discussed on other occasions, sometimes you have unintended consequences, that the question is going to become "Who are the preferred minorities?" Are we talking about Cuban-Americans, Mexican-Americans, African- Americans? At what point do you begin to weight "minorityness"? And that's -- that's a problem that you can run into when you have fixed numbers. REICH: Nobody is arguing, I don't think, for quotas. The real issue is whether race can be one factor. BLACKWELL: But Bob -- but Bob, I think, you know, Bob Novak just raised the issue that when you start talking about a specific number, 10 percent are assigned to racial minorities, you are talking about a quota. REICH: Oh, yeah. When you're talking about -- absolutely. A fixed number. BLACKWELL: Absolutely. REICH: But will you agree... BLACKWELL: And again... REICH: Let's just get to the core issue here. BLACKWELL: Let's cut to the chase. I said it earlier... REICH: Cut to the chase. BLACKWELL: You asked me to be very simple, very straightforward. When race is one factor that is considered, that is a legitimate factor when an educational institution has found educational value in diversity. You and I both know, I went through -- I was a fellow at the Institute of Politics at the Harvard School of Government. I know that at Harvard they make some decisions based on geographical diversity. I know they have slots that they save for legacies. You know, if, in fact, you use more than one consideration to achieve an educational value, that is a legitimate public policy that I think should be supported. But when you begin to say that, one, race is the only factor and the race is the only factor that is used to assign to a fixed quota, then you run into a situation... NOVAK: What do you think... (CROSSTALK) I'm sorry. BLACKWELL: ... that is unconstitutional. REICH: Well, I just -- you mentioned legacies. You know, I'm always amused that you have a lot of people going to college these days, being admitted, like George W. Bush, in part not because they were such brilliant students, but because their father and grandfather went to Yale. And that is presumably one reason why George W. Bush went to Yale. If that's the case, why shouldn't you be able to use race as well as rich and influential alumni parents? BLACKWELL: What you're (UNINTELLIGIBLE) is looking for an opportunity to argue with me, and we're not going to argue on that point. (LAUGHTER) NOVAK: Ken Blackwell... BLACKWELL: The fact -- Bob, let me just -- let me just say to you, what I find that most liberals don't want to address is what George Bush is addressing in his affirmative access, and that is that when you talk about people not having access to capital and credit, not having access to quality education, and when you begin to use remedies like charter schools and vouchers and medical savings accounts that will give people access to these quality of life, you know, activities and services, all of a sudden, people start to say, well, that's not affirmative action. That is affirmative action bigtime. NOVAK: Ken Blackwell, let me ask you a simple question. Bob Reich asked you a simple question. I'll ask you a simple question, too. I find that Judge Friedman's decision is something that even somebody as dense as I am in legal matters can understand. He writes in English, which many judges don't. What do you think of that decision? He says that if race is a -- is a factor -- he didn't say the only factor -- he said if race is a factor in selecting who gets into the University of Michigan Law School, it's un -- the process is unconstitutional. What do you think of that? BLACKWELL: I think he's wrong, Bob. I think that the judge in this same case in December in a different court... NOVAK: Different judge. BLACKWELL: ... different judge -- had it about right. When it is narrowly tailored and race is one factor, and it is going against an educational objective like diversity, the question becomes, "Is there real value in a diverse student population?" NOVAK: What do you think? BLACKWELL: I think the answer to that -- I think the answer to that question is absolutely yes. REICH: Of course. NOVAK: OK. We're going to have to take a break, and when we come back, we're going to go into the question of whether the agitation for racial quotas for African-Americans is based on a perception that they're not up to the job of competing in America. (COMMERCIAL BREAK) REICH: Welcome back to CROSSFIRE. I'm Robert Reich, sitting in on Bob Novak's left. (LAUGHTER) This week, a federal judge ruled that the University of Michigan Law School cannot give even a slight edge in admitting someone because he or she is a minority. And this is a case that's almost surely to go to the Supreme Court. So is this the beginning of the end of affirmative action in America? With us tonight, Ken Blackwell, Ohio secretary of state, who's advised George W. Bush on affirmative action, and soon the Reverend Al Sharpton of the National Action Network. Let me just pursue one question that we were pursuing a moment ago, Mr. Secretary of State in Ohio. BLACKWELL: Yes, sir. REICH: And that has to do with politics. You are a politician. I have been a politician. We know that Ted Olson has been nominated by George W. Bush to be solicitor general of the United States. That nomination is going to be heard by the Senate next Thursday. Ted Olson was the lawyer who argued on behalf of the white plaintiffs in the University of Texas case that parallels this Michigan case against affirmative action, and he won. He did that free of charge. He did it because he believes, presumably, that there should not be even any scintilla of race in any selection process. What does this mean to you about the future of affirmative action with regard to the Bush administration? BLACKWELL: Read my lips, Bob. (LAUGHTER) The Bush administration has, I think, a very, very aggressive plan called affirmative access that will, in fact, level the playing field. It is not solely race-based, but it is geared toward making sure that people who have been denied, or who don't have adequate access to health care, quality education in our public schools as well as access to capital and credit, will be given, you know, more access through market-driven solutions. REICH: I'm reading your lips, Ken. I'm reading your lips, Ken. BLACKWELL: So what happens -- so what happens, Bob, is that as opposed to just talking about something that benefits the African- American and Latino and Asian middle class, he's talking about leveling the playing field and giving people access to the American dream. REICH: I can understand that. BLACKWELL: And I think -- and I think people are going to be very, very responsive to it. So I feel very good about the Bush administration, because I think he's a leader that has demonstrated that while he doesn't believe in quotas and he doesn't believe in racial preferences, he does believe in even playing fields and giving people access to the American dream. NOVAK: Reverend Sharpton, welcome. I'd like to read from you the -- a part of the opinion in the University of Michigan Law School case by Judge Friedman. Quote -- and I'm going to put it up on the screen. Quote: "All racial distinctions are inherently suspect and presumptively invalid. Whatever the solution the law school elects to pursue, it must be race-neutral" -- end quote. Now, isn't that the end of affirmative action in America on the basis of the Constitution of the United States? AL SHARPTON, PRESIDENT, NATIONAL ACTION NETWORK: Well, no. I think that what it is saying is that America -- there are some Americans that are going to try and act like an uneven playing field is now all right, and that we're going to forget that it is uneven, we're going to forget the history that led to that, and we're going to now call race neutral cementing an imbalance in the social fabric of this country. The medium income level between blacks and whites is still an over 20 percent gap. You cannot deal with the disparity that has come out of a historic discriminatory policy, which was government- sanctioned, and act like now we're going to call things equal because we're tired of dealing with a situation that we caused in the first place. NOVAK: But Reverend Sharpton, what you're saying is that a woman like Mrs. Grutter, who filed this suit -- a mother, an older woman -- you're saying that even though her test scores are higher than some African-Americans, she should be kept out of the University of Michigan Law School because she's white? Is that something the American... SHARPTON: No. That's not at all what I'm saying. No, what I'm saying is that Ms. Grutter and others have to deal with the fact that people that had test scores higher than hers had no right to go to that university for many years because the government had laws barring them. And because the government had those laws in place, the government must remedy that by saying that we have to have a basement on making sure that blacks now can catch up, because it was government action that put them in a disadvantage in the first place. Affirmative action is a conservative remedy to a government program of discrimination. Discrimination in this country, Novak, was not a custom or tradition. It was law, it was government-enforced, and government must remedy what government did! NOVAK: Reverend Sharpton, let's be very frank on this. You're for racial quotas, are you not? SHARPTON: No, I'm for affirmative action. NOVAK: You want to set a -- well, in this case, at the University of Michigan Law School, Judge Friedman says 10 percent of the membership was set aside for minority groups. That is a quota, is it not? SHARPTON: No. That is a goal to try and remedy the fact that zero percent was what the law of blacks until just a generation ago. You can't erase history. You can't agree we must repair everyone that we've done in around the world other than those that built the country inside as Americans of African descent. You can't have it both ways. You can't repair enemies of war and not repair people that you discriminated against. I'm not even talking about slavery. My mother couldn't vote until she was grown. I'm the first generation in my family that finished high school or college. By law in Alabama what happened to my mother! So you can't just erase history and say we're going to start with an imbalance and make it right. I think what Mr. Bush is proposing in terms of affirmative access, in all due respect to my friend who is on tonight, who has done good in Ohio -- I think again, without enforcing laws, we are depending on the goodwill of people who have not demonstrated historically having goodwill. REICH: Ken Blackwell, what do you say to that? Do you think that you can't really have diversity without some sort of affirmative action? BLACKWELL: Well, I think you can. I want to go back to what Bob asked, and that is whether or not all the folks, the African-Americans and Latinos sitting in the Michigan Law School classrooms are there because of affirmative action. That is a misnomer. Many of them are there because they have competitive scores. The question to the plaintiff in this case has to be whether or not she was kept out of that seat because she was white, or was it because she was from a particular geographical area, or was it because she wasn't a legacy. You know, who, in fact, kept her out of that seat? It was the overall goal of the law school to seek diversity. I do think -- and I disagree with Reverend Sharpton -- that, you know, once you set a 10 percent goal -- or not goal, a quota -- it is a quota. And you can't call it anything else. And that's where you run into a problem. NOVAK: A quick response? BLACKWELL: Excuse me? NOVAK: That's going to have to be the last word. I'm sorry. Thank you very much, Ken Blackwell. BLACKWELL: Thank you. NOVAK: Thank you very much, Reverend Al Sharpton. And Professor Reich -- can I call you professor? REICH: You may call me anything. Your highness. NOVAK: We'll be back with a really new twist on this subject in closing comments. (COMMERCIAL BREAK) REICH: Bob, you know, all these cases are going to the Supreme Court, Sandra Day O'Connor is going to be the swing vote. And the real issue is whether diversity is a compelling state interest. I don't know about you, I think it is a compelling state interest and I don't think the Bush administration is going to support it. NOVAK: I don't think it is a compelling state interest. And the interesting thing, the irony, Bob, is that you have a situation where for years the high court was the liberal anchor against a more conservative administration, more conservative Congress. Now, the Congress and I think the administration is afraid to act against affirmative action, against racial quotas, and the Supreme Court may on a 5-4 decision end it rather than mend it. REICH: Well, they'll call it affirmative access, but you know as well as I do these words mean whatever you want them to mean. They are not going -- they don't want any even -- even slight use of race at all. NOVAK: It's a quota system. You know there's quota systems all over the place, Bob.. REICH: It's not a quota system. It is not, Bob. It is just simply using race as one, one element, one element of deciding who should be in college. NOVAK: That disappoints me, Bob. REICH: Anyway, from the lively left, I'm Robert Reich. Good night for CROSSFIRE. NOVAK: From the right, I'm Robert Novak. Join us again next time for another edition of CROSSFIRE. Go Terps! VENTRO CORP: Milberg Weiss Files Securities Suit in California -------------------------------------------------------------- Milberg Weiss (http://www.milberg.com/ventro/)on March 30 announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of Ventro Corp. ("Ventro") (NASDAQ:VNTR) common stock during the period between Feb. 15, 2000 and Dec. 6, 2000 (the "Class Period"). The complaint charges Ventro and certain of its officers and directors with violations of the Securities Exchange Act of 1934. During the Class Period, Ventro built and operated platforms for vertical business-to-business ("B2B") e-commerce marketplace companies. The complaint alleges that by December 1999, defendants knew that Ventro's existing business model did not work. Moreover, by the beginning of the Class Period it was evident to defendants that Ventro did not possess the technology to successfully compete as a marketplace. Defendants knew this would severely impair Ventro's future revenue growth. However, defendants wanted to raise additional money through debt offerings before the bottom fell out of Ventro's stock price. Thus, defendants continued to make positive but false statements about Ventro's business and future revenues. As a result, Ventro's stock traded as high as $243-1/2 per share during the Class Period. Then, on Dec. 6, 2000, Ventro announced a restructuring in which it closed down two out of three of its main B2B marketplaces. In early 2001, it was revealed that Ventro's CEO and the other defendants had realized by December 1999 that Ventro's business model of independent marketplaces didn't make sense and it was revealed that even Ventro's partners were not satisfied with Ventro's technology for operating the marketplaces. By this time Ventro's stock had declined to less than $2 per share, inflicting billions of dollars of damage on plaintiff and the Class. Defendants' misconduct has wiped out over $4 billion in market capitalization as Ventro stock has fallen 99% from its Class Period high of over $243 per share as the truth about Ventro, its operations and prospects began to reach the market. Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach, 800/449-4900 wsl@milberg.com ********* 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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