/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010430.MBX C L A S S A C T I O N R E P O R T E R Monday, April 30, 2001, Vol. 3, No. 84 Headlines BEAR STEARNS: Faces New Lawsuit Over Failed Manhattan Hedge Fund BRITISH NUCLEAR: BNFL Faces Legal Action Over Czech Plant Safety CALIFORNIA AMPLIFIER: Cauley Geller Expands Period for Securities Suit COMMONWEALTH MANAGEMENT: Atty. Sanctioned over Repayment in Ponzi Case DCI TELECOMMUNICATIONS: Dreier Baritz Files Securities Suit in New York FIRSTMARK CORP: Investment house settles out of suit re Retirees Bilking FREEMARKETS, INC: Accused of Defrauding Investors, Berman DeValerio Says GENERAL MOTORS: LA Ap Ct Refuses to Take Over Jurisdiction In Truck Case GUN MANUFACTURERS: Top NY Court Ruling Limits Liability INGALLS SHIPBUILDING: Employees Claim Racial Harassment, Discrimination LITTLEFIELD CORP: Decries Merit of Threatened AC Suit re Video Gambling MEYER REAL: Plaintiffs Quit lawsuit over tax on Linen Service at Beach PARTSBASE.COM, INC: Cauley Geller Announces Securities Lawsuit in FL PARTSBASE.COM, INC: Milberg Weiss Announces Securities Suit in FL PARTSBASE.COM, INC: Shareholder Suit Filed By Schiffrin & Barroway in FL PRESERVATIVE MAKERS: Judge Approves Settlement of Wisconsin Suit PURCHASEPRO.COM, INC: Weiss & Yourman Files Securities Lawsuit RITALIN MAKERS: Judge Dismisses Suit over Conspiracy with APA and CHADD SMART WORLD: Bragar Wexler Announces Securities Lawsuit Filed in N. Y. WACHOVIA CORP: Angry Shareholder Sues to Block Buyout by First Union ********* BEAR STEARNS: Faces New Lawsuit Over Failed Manhattan Hedge Fund ---------------------------------------------------------------- Investors in the Manhattan Investment Fund, the failed hedge fund, will get another crack at Bear Stearns, the US investment bank that served as its prime broker. The trustee for the fund's estate filed a new lawsuit against Bear earlier this month, days after a US judge threw out a complaint launched by former investors in the fund. Although the facts are largely the same in the two suits, the most recent one is being filed in a different venue, bankruptcy court, and therefore will pursue a different legal argument. Rather than trying to prove Bear directly participated in the fraud, attorneys will argue that Bear is guilty of "fraudulent conveyance". Essentially, they will try to establish that Bear caused the fund's assets to be depleted by charging it expensive fees after they knew it was insolvent, therefore depriving creditors of an adequate recovery when the fund failed. If the Manhattan estate wins, a substantial portion of the Dollars 1.9bn it is seeking is likely to be shared among former investors in the fund. The verdict could also re-draw the lines in the debate over how much responsibility a broker has for the fraudulent conduct of hedge funds and other clients whose trades it processes. It is a question that is receiving growing attention as the unregulated hedge fund industry grows rapidly and, along with it, incidents of fraud. Michael Berger, the head of Manhattan, pleaded guilty last year to securities fraud. Mr Berger forged performance results for the hedge fund to conceal huge losses it incurred by taking short positions against technology stocks in the mid-1990s. The scheme ultimately cost investors more than Dollars 400m. Helen Gredd, the court-appointed trustee for the estate, claims Bear officials knew about the fraud but continued to lend money to the fund and clear its trades because it paid millions of dollars in commissions. Bear also used this information to tip off certain clients about the fund, according to her suit. "Bear Stearns knew or should have known that by continuing to do business with Berger's fund, it was enabling a massive fraud to continue," the complaint said. Bear Stearns said the legal theories in the claim were "novel and unsupportable", and that the trustee was seeking to recover four times the fund's losses. "We believe that this lawsuit is without merit and intend to defend it vigorously." Judge Denise Cote dismissed a class action lawsuit against Bear earlier this month, ruling that the investors did not sufficiently prove that Bear aided and abetted the fraud. Legal experts were lukewarm on the new complaint's chances. "Fraudulent conveyance claims are very difficult to prove," said Peter Chapman, president of Bankruptcy Creditors' Service. "But they are frequently swept under the rug and settled." That is what happened when bondholders sued Federated Department Stores and a subsidiary after they accused it of selling Brooks Brothers and Ann Taylor stores at low prices in the 1980s to help fund a leveraged buyout. Although bondholders sought Dollars 1.3bn, they settled for Dollars 360m in cash. (Financial Times (London), April 27, 2001) BRITISH NUCLEAR: BNFL Faces Legal Action Over Czech Plant Safety ---------------------------------------------------------------- A subsidiary of British Nuclear Fuels (BNFL) is facing legal action from protesters concerned about the safety of a nuclear power plant in the Czech Republic. Ed Fagan, an American lawyer who has won billions of pounds in settlements for the relatives of Holocaust victims, says he is preparing to sue Westinghouse, an American company wholly owned by BNFL, over its role in upgrading the Temelin nuclear power plant in the Czech Republic. He wants it to release vital safety documents relating to its work. The latest setback for BNFL follows the on-going repercussions of the discovery, revealed by The Independent 18 months ago, that its workers had faked safety data relating to nuclear fuel destined for Japan. The company was left fighting to win vital Japanese fuel contracts. Without them, BNFL is finding it difficult to justify a new pounds 450m nuclear fuel plant at Sellafield which has yet to receive an operating licence from the Government. The Czech government caused a storm by building a Soviet-designed reactor, originally planned under communism, at Temelin, just 30 miles from the Austrian border. The Austrian government last year threatened to veto Czech membership of the European Union over the reactor, and the German government demanded safety changes to the plant. Westinghouse's role at Temelin was to design a new instrumentation and control system to Western standards. But environmental groups, including Greenpeace, say the finished station is not safe. It is undergoing testing, and is scheduled to start full operation later this year. It has been shut down for technical reasons 17 times in the past six months. "I hope a lawsuit will not be necessary, but frankly I fear it will," Mr Fagan told The Independent. He is representing two Austrian environmental groups who wrote to Westinghouse asking to see the documents. The company refused, saying some of the information was "commercially sensitive". The Austrian national nuclear watchdog, which is preparing an independent report on Temelin under an agreement between the Czech and Austrian governments, has complained that the Czech authorities are preventing it from seeing important documents. Mr Fagan says he is preparing a lawsuit against the Czech authorities, under Czech law. But it is unlikely to succeed: the Czech courts are far from independent. He admits he is going after Westinghouse because he can file under US law. Mr Fagan was the first lawyer to issue a class action against Swiss banks in 1996 for withholding money in the accounts of Holocaust victims from their heirs. He secured billions of pounds in pay-outs to relatives from German and Austrian companies who used forced and slave labour during the Second World War. "I'm not an activist, I'm a practical lawyer," says Mr Fagan. "I got involved in Temelin because from all I can see the facility is dangerous. I can only go on what the experts tell me. My mandate is to get them these documents." A spokesman for Westinghouse said the company had answered more than 2,000 technical questions and provided tens of thousands of pages of information. "The International Atomic Energy Agency has inspected Temelin 10 times and deemed that it is safe to operate," he added. (The Independent (London), April 27, 2001) CALIFORNIA AMPLIFIER: Cauley Geller Expands Period for Securities Suit ---------------------------------------------------------------------- The Law Firm of Cauley Geller Bowman & Coates, LLP announced that it had filed a class action in the United States District Court for the Central District of California on behalf of all individuals and institutional investors that purchased the publicly traded securities of California Amplifier, Inc. (Nasdaq: CAMP) between April 7, 2000 and March 28, 2001, inclusive (the "Class Period"). The Class Period is being expanded to include purchases between June 11, 1999 and March 28, 2001, inclusive. The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by providing materially false and misleading information about the Company's financial condition, and as a result of these false and misleading statements the Company's stock traded at artificially inflated prices during the class period. 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. 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 February 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, 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: media, Charlie Gastineau or Sue Null, both of Cauley Geller Bowman & Coates, LLP, 888-551-9944 COMMONWEALTH MANAGEMENT: Atty. Sanctioned over Repayment in Ponzi Case ---------------------------------------------------------------------- Two attorneys have been sanctioned for seeking an $ 11.5 million writ of attachment while failing to disclose that most of the money had already been returned by the defendants. Southern District Judge John S. Martin yesterday ordered James D. Fornari of New York and Mark F. Cohn of California to pay $ 2,500 each for their role in obtaining an ex parte writ of attachment from the judge in February. Judge Martin said that "false and misleading," papers were filed in Four Star Financial Services v. Commonwealth Management Associates, 01 Civ. 1276, by Mr. Fornari, of counsel at Traub, Bonacquist & Fox, and Mr. Cohn, general counsel of Four Star Financial Services, a California firm that claims it was the victim of a high-yield investment "Ponzi scheme." Judge Martin also castigated the attorneys for submitting a verified complaint that was "totally misleading," in that it represented that one of the defendants, Martin D. Fife, was on the brink of absconding with the $ 11.5 million. "The question that naturally arises is: 'How could the court grant plaintiff a writ of attachment in the amount of $ 11.5 million when the plaintiff had made an investment of only $ 11.75 million and $ 9.6 million had already been returned?' The answer is that the papers in support of the application were false and misleading," Judge Martin said. Moreover, Judge Martin said, the verified complaint "contains the false statement: 'No funds have been received by the plaintiff.' " On Feb. 21, Four Star Financial filed its verified complaint, sworn to by Mr. Cohn, suing Commonwealth Management Associates, the Brite Business Corporation and several others, including Mr. Fife, who Four Star claimed was to oversee an investment program promising high returns. Mr. Cohn claimed that the recipients diverted some of the $ 11.75 million to other purposes and threatened to put the remainder out of Four Star's reach by moving the money offshore. Attorneys for the defendants, telling the court that most of the money had been returned, immediately moved to vacate the attachment. At a hearing on March 8, Judge Martin vacated the attachment and told Four Star it would have to pay the fees of defense counsel incurred in attacking the writ -- an amount he later found to be just over $ 70,000. Judge Martin also ordered Mr. Cohn and Mr. Fornari to show cause why they should not be sanctioned under Rule 11 of the Federal Rules of Civil Procedure. A hearing was held on the sanctions issue on March 29. Neither Mr. Fornari nor Mr. Cohn could be reached for comment. In their response to the order to show cause, the judge said, the attorneys "admit that the verified complaint contains misstatements of fact and acknowledge an understanding of why the court would consider it misleading and be upset by their conduct." Nonetheless, he said, the lawyers contended they acted in good faith "on the belief they had been defrauded by defendants, and that defendants had told them that they were moving their assets offshore." After hearing the attorney's "strained explanation," about the omission of the repaid monies, Judge Martin wrote, he questioned Mr. Cohn as to why he indicated that Mr. Fife, a long-time resident of New York who is on the board of the Dreyfus Fund Incorporated, might be at risk of absconding with the money. Mr. Cohn had represented that Mr. Fife had no permanent residence in his name in state of New York, although Mr. Fife has long lived in a Central Park West apartment that is in his wife's name. "In this regard, the verified complaint conveyed a picture of defendants as itinerant swindlers without roots in New York who continuously promised to return the plaintiff's investment but never made any of the promised payments," the judge said. "Here, no reasonable attorney could believe that a judge would issue an ex parte order of attachment against Fife in the amount of $ 11.5 million if informed Fife resided in an apartment in New York City which was owned by his wife and that he had been responsible for returning $ 9.6 million of plaintiff's original investment," he said. Judge Martin said that the lawyers, in making an ex parte application for a writ of attachment, knew "the court would be required to place particular trust in the truth of the verified complaint's sworn statements," since the other side was not represented in the application process. Therefore, the judge said, the lawyers had a "heightened obligation to insure that the facts were accurately portrayed." "Sanctions must be imposed to make it clear to all who practice in the federal courts that when they come before a judge seeking extraordinary relief ex parte, they will be held to the highest standards of candor," he said. "It is not a defense to claim that, while factual statements to the court were materially misleading, they were not literally false." Judge Martin chose not to identify the sanctioned attorneys by name in the decision, but their names were part of the court record. Donald S. Zakarin, of Pryor Cashman Sherman & Flynn, represented Mr. Fife. W. Hans Kobelt, of Pollack & Kaminsky, represented Raymond James Financial Services Inc., and Morris K. Mitrani represented Commonwealth Management Associates. (New York Law Journal, April 18, 2001) DCI TELECOMMUNICATIONS: Dreier Baritz Files Securities Suit in New York ----------------------------------------------------------------------- Dreier Baritz & Federman has commenced a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of DCI Telecommunications, Inc. (Pink Sheets: DCTC) securities between April 21, 1998 through June 23, 2000 (the "Class Period"). The complaint charges DCTC, certain of its officers and directors and auditors with violations of sections 10(b) and 20(a) of the Securities Act of The complaint alleges accounting fraud and that DCTC issued materially false and misleading financial information concerning its expected and its purportedly-achieved revenues and earnings during the Class Period. The complaint alleges that as a result of such misleading information, DCTC's securities traded at artificially inflated prices during the Class Period. Specifically, the complaint alleges that, throughout the Class Period, defendants, including DCTC's auditors, Schnitzer & Kondub, P.C., participated in improper accounting for various acquisitions and grossly overvaluing a purported $15 million contract and $5 million promissory notes. It is further alleged that these accounting improprieties caused DCTC's financial statements to be materially false and misleading. Contact: William B. Federman of Dreier Baritz & Federman, 405-235-1560, or fax, 405-239-2112 FIRSTMARK CORP: Investment house settles out of suit re Retirees Bilking ------------------------------------------------------------------------ One of three remaining defendants in a class action tied to the infamous Firstmark Corp. bankruptcy has agreed with plaintiffs to pay $ 1.15 million in exchange for an opportunity to wash its hands of charges it conspired to bilk $ 57 million in investments from unknowing retirees. Judge S. Hugh Dillin, of the U.S. District Court, Southern District of Indiana, has given his blessing to a settlement agreement filed March 29 between Raffensperger Hughes and Co. and a group of nine elderly investors who lost millions when Firstmark Corp. went bankrupt in 1988. That leaves Barnes & Thornburg and Catherine L. Bridge as the lone remaining defendants in the suit. Bridge served as the law firms lead attorney in its representation of Firstmark the former parent company of a retirement fund that handled nearly 3,000 investment accounts before dissolving in a bankruptcy that left former investors with pennies on the dollar. Neither Hugh G. Baker Jr., attorney for the plaintiffs, nor Roger Taylor, attorney for Raffensperger Hughes, were willing to discuss the process leading to the settlement. However, the two sides wrote in their joint motion seeking approval for the agreement, To avoid the costs and uncertainties of litigation, and without making any admissions as to the merits of their respective positions, Plaintiffs and Raffensperger desire to settle all matters pending between them. Judge Dillin denied Raffenspergers motion to dismiss the plaintiffs fifth amended complaint Nov. 6, 2000, the same day he denied a motion for summary judgment filed by Bridge and Barnes & Thornburg. Those entries laid the path to a jury trial, with only a January mediation session offering a way out. Plaintiffs alleged that Raffensperger and the law firm were aware of wrongdoing by Firstmark, which allegedly took capital invested by retirees and used it to pay down interest on other investments. In doing so, Raffensperger allegedly knew of fund manager practices and recommended they set deceptively low yields to allay fears of typically skeptical elderly investors. The plaintiffs also alleged Raffensperger knew the portfolios would likely wither away to a fraction of their original investment value and that Firstmark insiders were siphoning off the assets. In the bankruptcy, investors recouped about 17.5 percent of the original investment. A separate group of investors, known as the Harden class action, reached a settlement with a group of 20 defendants valued at $ 3 million. The plaintiffs in the action at hand, known by the name of top plaintiff Virginia E. Brouwer, had collected $ 5 million through settlements with a host of other defendants, including former Firstmark heads Leonard and Jeffrey Rochwarger, and law firms Kavinoky & Cook and Ancel & Dunlap. The cases against Raffensperger, Barnes & Thornburg and Bridge were removed from the original suit in the mid-1990s. Judge Dillin granted Raffenspergers motion to dismiss in 1994, and motions for summary judgment filed by the firm and Bridge in early 1997. All three were granted on grounds that their alleged involvement didnt rise to the level of liability outlined in the federal Racketeering Influenced and Corrupt Organizations Act (RICO). The 7th Circuit reversed Dillins findings with the three defendants in January 2000, holding that their alleged conduct would qualify for damages under the RICO act. According to language in the settlement agreement, any eventual award the plaintiffs could expect to win may not have covered the costs of the prolonged litigation. Plaintiffs and their counsel have considered the expense and length of time necessary to prosecute an action the defenses asserted the uncertainties inherent in complex litigation; and the desire to assure the benefit provided by the proposed settlement to the Class, the joint motion reads. Plaintiffs and their counsel have concluded that it is in the best interest to settle the Action. Likewise, the motion reads, Raffensperger has concluded that, despite its belief that it is are (sic) not liable for the claims and it has good defenses to such claims, it will enter into this Settlement Agreement to avoid further expense, inconvenience and the burden of protracted litigation, and to avoid the risks and uncertainties inherent in complex litigation. A fairness hearing will be held June 5 at the U.S. Courthouse in Indianapolis, where plaintiffs and class members who also held Firstmark notes at the time bankruptcy was granted may comment on the fairness of the settlement agreement. Class members will have until Aug. 6 to file a claim seeking a portion of the fund. On June 5, the court will also rule on Bakers application for attorneys fees and costs, which would be awarded out of the $ 1.15 million paid into escrow by Raffensperger under the agreement. (The Indiana Lawyer, April 25, 2001) FREEMARKETS, INC: Accused of Defrauding Investors, Berman DeValerio Says ------------------------------------------------------------------------ Shareholders on April 27 filed a federal class action charging FreeMarkets, Inc. (Nasdaq: FMKT) with securities fraud, the law firm of Berman DeValerio & Pease said. The lawsuit was filed in the United States District Court for the Western District of Pennsylvania and is captioned Pehrson v. FreeMarkets, Inc. et al., Civil Action No. 01:0746. It seeks damages for violations of federal securities laws on behalf of all investors who bought FreeMarkets, Inc. common stock between July 24, 2000 and April 23, 2001 (the "Class Period"). Berman DeValerio & Pease has represented investors in class actions for nearly two decades. To review the complaint and learn more about becoming a lead plaintiff, visit our Website at www.bermanesq.com. FreeMarkets is charged with improperly accounting for its financial results for the second, third and fourth quarters and the year of fiscal 2000. In reporting its financial results during the Class Period, the Company failed to properly account for a warrant that it had provided to one of its largest customers, Visteon Corporation ("Visteon"). Consequently, FreeMarkets was able to report artificially-inflated revenues during the Class Period. On April 23, 2001, FreeMarkets revealed that the Securities and Exchange Commission had informed the Company that its payments from Visteon should not be classified as revenue, but as money paid for the warrant. As a result, absent an appeal, the Company announced its intention to amend its financial statements to eliminate all the revenue it had received from Visteon during the Class Period. FreeMarkets' stock price fell from a close of $10.29 per share on April 23, 2001 to $9.30 on April 24, 2001. The suit names FreeMarkets' chief executive officer and chief financial officer as defendants. These officers are charged with collectively selling thousands of shares of FreeMarkets common stock during the Class Period for proceeds totaling over $17 million. Contact: Alicia Duff, Esq. of Berman DeValerio & Pease, 800-516-9926 or bdplaw@bermanesq.com GENERAL MOTORS: LA Ap Ct Refuses to Take Over Jurisdiction In Truck Case ------------------------------------------------------------------------ General Motors (NYSE: GM) was dealt a significant blow when an appeals court in Louisiana refused on April 26 to hear GM's request to take over jurisdiction of pending disputes in the administration of the class action settlement involving 5.8 million GM pickup trucks with sidesaddle fuel tanks. "This is a serious setback for GM in its relentless effort to renege on its settlement agreement," said Don Barrett of The Barrett Law Firm in Lexington, Mississippi and Nashville, Tennessee, lead class counsel. "GM has been totally thwarted and will be forced to honor the certificates." Instead, the appeals court ruled that the matter remain with the 18th district court in Plaquemine which was going to hold a hearing on the settlement's administration on Friday, April 27 at 1 p.m. CDT. The administrative dispute involves the question of transferability and whether or not class counsel can act on behalf of the class members and take possession of the certificates and sell them on their behalf, thereby creating a secondary market as contemplated in the circuit court's decision last November. The matter also involves Certificate Redemption Group of Houston, which is offering to purchase certificates to create a secondary market. Contact: Marc Ehrhardt of The Ehrhardt Group, 504-558-1845, or pager, 800-329-4190, or cellular, 504-481-5975, for Class Counsel GUN MANUFACTURERS: Top NY Court Ruling Limits Liability ------------------------------------------------------- The state Court of Appeals set back efforts to hold gun makers broadly responsible for gun-related violence in a unanimous ruling on April 26 that limited manufacturers' liability. In the case, Hamilton vs. Beretta U.S.A. Corp., victims of gunshots or their relatives tried to hold the gun industry liable because of negligent marketing and sales. A clearly sympathetic court refrained. Civil law does not allow such a finding, and legal change is a matter for other bodies, the justices declared, 7-0. Wrote Judge Richard Wesley, "We should be cautious in imposing novel theories of tort liability while the difficult problem of illegal gun sales in the United States remains the focus of a national policy debate." The decision does provide a road map for assembling the evidence in such a case in the future, said one of the plaintiffs' lawyers, Marc Elovitz. Similar lawsuits against gun makers by the state, the city, the NAACP and others are pending. In this case, the plaintiffs in 1999 had won in U.S. District Court in Brooklyn, the first jury verdict in the country holding gun makers responsible for injuries caused by negligent marketing and sales. The decision was appealed to the U.S. Court of Appeals, which asked the state's highest court to settle two questions of New York civil law. First, do the defendants have "a duty to exercise reasonable care in the marketing and distribution of the handguns they manufacture?" And second, can liability be assigned based on market share? The lengthy opinion dissected tort law, which governs lawsuits for harms caused by wrongful actions, and explored legal theories being developed to tackle entire industries, such as pharmaceutical firms, and to assign liability based on a company's market share. The widely watched case drew briefs, pro and con, from many groups, including gun control advocates and the American Meat Institute. The case now goes back to federal court. In 1995, Stephen Fox of Queens and relatives of six homicide victims, all from New York, sued 25 gun makers from around the country. Because the manufacturer of only one gun was identified, the plaintiffs tried to blame much of the industry for the illegal handgun market. The jury found 15 of the manufacturers negligent, but awarded damages against only the three it found had "proximately caused" the injuries to Fox, whose brain was permanently damaged, and his mother. Although damages totaled $4 million, the jury assigned blame according to the share of the national market for handguns held by each gun maker. Fox and the relatives argued that the gun makers oversupplied gun dealers in states with weak gun control laws, particularly in the Southeast. This surplus, they said, fed a pipeline to the illegal market serving minors and criminals in New York. In the past, as now, the state Court of Appeals has been cautious about making parties liable for the actions of others because of concerns about practicality and fairness. The pool of possible plaintiffs-thousands of gun victims-is vast and the chain of responsibility from manufacturer to criminal to victim is "remote," the court said. Nor had it been proven, the court ruled, that the gun makers could have prevented the tragedies with different marketing techniques. But with an eye toward the future, the court declared, "This case challenges us to rethink traditional notions of duty, liability and causation." (Newsday (New York, NY), April 27, 2001) INGALLS SHIPBUILDING: Employees Claim Racial Harassment, Discrimination ----------------------------------------------------------------------- Litton Ingalls Shipbuilding in Pascagoula is accused in a class-action lawsuit of failing to deal with a racially hostile work place and routinely passing over blacks for promotions. The lawsuit, filed April 26 in U.S. District Court in Biloxi, lists as plaintiffs 10 Ingalls employees, one former employee and a group called Ingalls Workers for Justice. The workers initially filed suit March 21, accusing the shipyard of general failure to promote blacks, said attorney Sandra Jaribu Hill of the Mississippi Workers Center for Human Rights, one of the groups representing the employees. After further investigation, they decided to add other allegations, including "systematic steering of black workers to the filthiest, most unappealing and dangerous jobs and an endorsement of a racially hostile atmosphere," the workers said in a press release. Ingalls, which recently became part of global aerospace and defense company Northrop Grumman Corp., is Mississippi's largest private employer with 10,000 workers. Ingalls spokesman Den Knecht said the lawsuit had no merit and that the U.S. Equal Employment Opportunity Commission had already investigated the complaints. Knecht would not discuss the racial composition of the work force. "The commission...ruled earlier this year that there was no reasonable cause to support these same or similar accusations," Knecht said in a statement. "Ingalls does not tolerate discrimination." Hill, however, disputed Knecht's assessment of the EEOC's findings. She produced a copy of an EEOC document dated Dec. 20 that stated, "there is reasonable cause to believe the aggrieved parties have been subjected to a racially hostile environment" because of graffiti in some areas of the shipyard. The plaintiffs claim the graffiti includes racial slurs, references to the Ku Klux Klan and drawings of black people with nooses around their necks. Benjamin Bradley, area director of the EEOC in Jackson, said he couldn't comment on the matter. Knecht told the Associated Press that Ingalls has a program to eliminate graffiti, and the company has strengthened that effort since late last year. In September, Ingalls settled a lawsuit with a 46-year-old electrician who alleged she was treated with hostility because she is black. Earlean Bell filed a federal lawsuit in 1997 that said a white male co-worker in 1994 sneaked up behind her on the job, placed a noose around her neck and tightened it. In court papers, Bell said she was particularly upset because, as a child, she was often told tales of her relatives being lynched in the 1930s. Terms of the Bell settlement were not announced. (The Associated Press State & Local Wire, April 27, 2001) LITTLEFIELD CORP: Decries Merit of Threatened AC Suit re Video Gambling ----------------------------------------------------------------------- Joan Caldwell Johnson, et al v. Collins Music Company, et al, Civil Action No. 3:97-22136-17, United States District Court for the District of South Carolina, Columbia. In November 1997, one of the Company�s subsidiaries was named a defendant (among many other amusements operators) in a purported class action brought by Plaintiffs allegedly arising out of fraudulent and unlawful promotion and operation of video gambling devices. Plaintiffs filed a Motion to Amend the Complaint to add the Company and several Company subsidiaries as Defendants. The Company and its named subsidiaries have yet to be added to this lawsuit and the present status of this case is merely one of threatened litigation. There have been settlement discussions with Plaintiffs counsel for the purported class but the company found the settlement demand unreasonable. If the Company and its subsidiaries were added to this case, the case would be litigated to the fullest extent possible. In the event that Plaintiffs were to prevail on their claims, the range of potential loss could exceed several million dollars because the Plaintiffs seek to recoup all profits Defendants made from 1991 through the present. The Company believes that this action is completely without merit and will defend itself vigorously. If this case were to be decided against the Company, it would likely have a material adverse effect on the financial position and operations of the Company. Also, the impact of the cessation of amusements in South Carolina will have some effect on this matter and as of December 31, 2000 the impact has not materialized or been disclosed to the Company. MEYER REAL: Plaintiffs Quit lawsuit over tax on Linen Service at Beach ---------------------------------------------------------------------- A lawsuit over a $2.97 tax on linen service at beach condominiums, which the plaintiff hoped to turn into a class action case against a real estate company, has been thrown out of court. In the suit, filed in December in Baldwin County Circuit Court, Birmingham-area resident Marlin Hood claimed that Meyer Real Estate charged him $2.97 in tax for linen service valued at $27. The suit claimed that worked out to an 11 percent tax, exceeding the actual tax rate of 3.5 percent. Lawyers for the company challenged Hood's contention. "We were collecting the taxes imposed by the state of Alabama," said George Irvine, a lawyer for Meyer. Irvine filed a motion to dismiss the case in January, and Baldwin Circuit Judge Robert Wilters tossed it out after both sides agreed. "There were probably some legitimate defenses that came up," acknowledged Sam Hill, one of Hood's attorneys. Lawyers for Hood had said the suit might have forced Meyer to refund overpayments to thousands of families who had rented condominiums for their beach vacations if it had been granted class action status. Hill said he was not aware of all aspects of the state's tax laws when he filed the suit. "This one, quite frankly, we decided it wasn't worth the fight," he said. (The Associated Press State & Local Wire, April 27, 2001) PARTSBASE.COM, INC: Cauley Geller Announces Securities Lawsuit in FL -------------------------------------------------------------------- The Law Firm of Cauley Geller Bowman & Coates, LLP announced on April 27 that it has filed a class action in the United States District Court for the Southern District of Florida on behalf of all individuals and institutional investors that purchased the common stock of PartsBase.com, Inc. (Nasdaq:PRTS) issued pursuant to the prospectus and registration statement (the "Registration Statement") filed in connection with PartsBase's March 2000, initial public offering (the "IPO"). The complaint charges PartsBase, certain of its officers and directors, and the two lead underwriters for the IPO, Roth Capital Partners, Inc. and PMG Capital Corp., with violations of the Securities Act of 1933. The complaint alleges that during 1999, defendants issued and sold more than $45 million of PartsBase stock in its IPO. Thereafter, in connection with PartsBase issuing its first earnings press release, defendants revealed facts confirming that the Registration Statement issued by defendants in connection with the IPO had been false when issued. In the Registration Statement, defendants claimed that PartsBase had "over 13,000 members." Substantially all of the Company's revenues are generated through member subscription fees. The Complaint charges that the Registration Statement failed to disclose that PartsBase actually had about 3,000 paying members. The Company offered a free trial membership that lasted a few days after which the "trial members'" access codes were revoked if they did not agree to become paying members. As alleged in the Complaint, the vast majority of the so-called "13,000 members" were, in fact, "trial members" whose trial membership had lapsed. Defendants continued to count the "trial members" as members, even though they did not pay and had their access to the PartsBase website revoked. In addition, many of the 3,000 "paying" subscribers never actually paid PartsBase any money, but had merely given a company purchase order for the membership based on promises from the Company's salespersons that the purchase order did not need to be paid if the customer was not satisfied with the membership. Contact: Cauley Geller Bowman & Coates, LLP, Little Rock, Ark. For Media: Charlie Gastineau or Sue Null, 888/551-9944 PARTSBASE.COM, INC: Milberg Weiss Announces Securities Suit in FL ----------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes' Lerach LLP announces that a class action lawsuit was filed on April 26, 2001, on behalf of purchasers of the securities of PartsBase.com, Inc. ("PartsBase.com" or the "Company") (NASDAQ:PRTS) who purchased these securities pursuant and/ or traceable to PartsBase.com's March 22, 2000 initial public offering ("IPO") through April 25, 2000, inclusive. A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: http://www.milberg.com/partsbase/ The action, numbered 01-8376, is pending in the United States District Court, Southern District of Florida, located at 301 N. Miami Ave, Miami, FL 33128, against defendants PartsBase.com, Robert A. Hammond, Jr., Steven R. Spencer, Michael W. Siegel, Yves C. Duplan, Kevin J. Steil, Louis W. Storms, IV, Thomas C. Van Hare, David G. Fessler, Pierre A. Narath, Roth Capital Partners, Inc., PMG Capital Corp. (formerly Penn Management Group, Ltd.) and Michael Naparstek. The Honorable Donald L. Graham is the Judge presiding over the case. The Complaint alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a materiallyfalse and misleading Prospectus and Registration Statement (collec|ively, "the Prospectus") to the market in connection with its IPO. Specifically, throughout the Prospectus, PartsBase.com repeatedly stressed its dependency on revenue from its member base which it represented as consisting of 13,000 members. Among other things, in the Prospectus, defendants failed to properly distinguish between paying and non-paying members. This distinction finally ca e to light, however, when on April 25, 2000, slightly more than one month after its IPO, the Company disclosed in its first earnings release that as of March 31, 2000 the Company only had 3,100 paying members - a significant departure from its earlier representation of 13,000 members. Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or Samuel H. Rudman Phone number: (800) 320-5081 Email: partsbasecase@milbergNY.com Website: http://www.milberg.com PARTSBASE.COM, INC: Shareholder Suit Filed By Schiffrin & Barroway in FL ------------------------------------------------------------------------ A class action lawsuit was filed in the United States District Court for the Southern District of Florida, on behalf of all purchasers of the common stock of PartsBase.com, Inc. (Nasdaq: PRTS) ("PartsBase" or the "Company") pursuant to the prospectus and registration statement (the "Registration Statement") filed in connection with PartsBase's initial public offering ("IPO") on March 20, 2000, up to and including April 25, 2000 (the "Class Period"). The complaint charges PartsBase, certain of its officers and directors, and the two lead underwriters for the IPO, Roth Capital Partners, Inc. and PMG Capital Corp., with violations of the Securities Act of 1933. Specifically, the complaint alleges that during 1999, defendants issued and sold more than $45 million of PartBase stock in its IPO. Thereafter, in connection with PartsBase issuing its first earnings press release, defendants revealed facts confirming that the Registration Statement issued by defendants in connection with the IPO had been false when issued. In the Registration Statement, defendants claimed that PartsBase had "over 13,000 members." Substantially all of the Company's revenues are generated through member subscription fees. The complaint further alleges that the Registration Statement failed to disclose that PartsBase actually had approximately 3,000 paying members. The Company offered a free trial membership that lasted a few days after which the "trial members" access codes were revoked if they did not agree to become paying members. As alleged in the complaint, the vast majority of the so- called "13,000 members" were, in fact, "trial members" whose trial membership had lapsed. Defendants continued to count the "trial members" as members, even though they did not pay and had their access to the PartsBase website revoked. In addition, many of the 3,000 " paying" subscribers never actually paid PartsBase any money, but had merely given a company purchase order for the membership based on promises from the Company's salespersons that the purchase order did not need to be paid if the customer was not satisfied with the membership. Contact: Marc A. Topaz, Esq. or Stuart L. Berman, Esq. of Schiffrin & Barroway, LLP, 888-299-7706 or 610-667-7706, info@sbclasslaw.com PRESERVATIVE MAKERS: Judge Approves Settlement of Wisconsin Suit ---------------------------------------------------------------- Attorneys for two Wisconsin companies announced April 26 that a Dane County judge gave preliminary approval to a $ 7.8 million settlement in their class-action lawsuit against several companies that make preservatives used in cheeses, baked goods, jams, jellies and other processed foods. "I think it was a good and fair settlement," said Austin Cohen, a Philadelphia attorney for Kelley Supply of Colby and Imperial Flavors of Milwaukee. The firms sued on behalf of themselves and others who bought the food preservative ingredients, called sorbates, from 1979 through 1997. They alleged that sorbate producers engaged in an unlawful conspiracy to fix, raise and maintain sorbate prices during that period, Cohen said. The defendants were identified as Eastman Chemical Co., Hoechst AG, Nutrinova Nutrition Specialties and Food Ingredients GmbH, CNA Holdings, Nutrinova, Daicel Chemical Industries, Daicel and Nippon Gohsei Industries. The companies have denied any wrongdoing or liability. Moreover, they denied that companies that bought sorbates for use in food products paid more because of the alleged conspiracy. Judge John C. Albert gave preliminary approval to the settlement in February, Cohen said. The settlement was announced on April 26 because attorneys began notifying members of the plaintiff class about it. The class includes anyone who bought the food preservatives or products containing them from 1979 to 1997 in Wisconsin, Arizona, Maine, Michigan, Minnesota, Mississippi, New Mexico, North Carolina, North Dakota, South Dakota, West Virginia and the District of Columbia. (The Wisconsin State Journal, April 27, 2001) PURCHASEPRO.COM, INC: Weiss & Yourman Files Securities Lawsuit -------------------------------------------------------------- Weiss & Yourman announced that it has filed a class action complaint on behalf of all persons who acquired PurchasePro.com, Inc. (Nasdaq: PPRO) securities between July 19, 2000, and April 25, 2001, inclusive (the "Class Period"). The complaint charges PurchasePro and certain officers/directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alleging that they made numerous positive representations throughout the Class Period regarding the financial and business prospects of the Company, while knowing and withholding that the Company was improperly recognizing revenue in order to artificially inflate the trading value of PurchasePro securities for their own personal benefit. According to the complaint, since the disclosure of these, and other, adverse facts would have caused a severe collapse in the price of the Company's securities, defendants set out on a scheme to artificially inflate PurchasePro's stock price so that they could maintain their lucrative positions and earn ill-gotten gains through their insider trading practices, among other things. As a result of defendants' false statements, misrepresentations, and omissions, the price of PurchasePro's securities was artificially inflated during the Class Period. In fact, the Company's securities closed as high as $ 44.95 on September 22, 2000, and were maintained at an artificially inflated level until the Company disclosed its dismal financial condition on or about April 25, 2001. These disclosures caused the stock price of PurchasePro to plummet approximately 35% in one day from $6.22 to $4.05 on April 25, 2001, on volume of over 11 million shares. If you are a member of the class described above, you may, no later than June 25, 2001, move the Court to serve as lead plaintiff, if you so choose. If you wish to discuss this action, or have any questions concerning this notice, or your rights or interests with respect to this matter, please contact: Jennifer Williams of Weiss & Yourman, 10940 Wilshire Blvd., 24th Floor, Los Angeles, CA 90024. Telephone: (310) 208-2800 or Toll-free: (800) 437-7918. E-mail: info@wyca.com. Contact: Weiss & Yourman, 10940 Wilshire Blvd., 24th Floor, Los Angeles, CA 90024, Telephone: (310) 208-2800 or (800) 437-7918, E-mail: info@wyca.com RITALIN MAKERS: Judge Dismisses Suit over Conspiracy with APA and CHADD ----------------------------------------------------------------------- On April 26, Novartis Pharmaceuticals Corporation, the manufacturer of Ritalin (R) (methylphenidate), learned that U.S. District Judge Rudi M. Brewster reaffirmed his earlier ruling to dismiss the class action lawsuit claiming the company conspired with the American Psychiatric Association (APA) and Children and Adults with Attention- Deficit/Hyperactivity Disorder (CHADD) to promote the diagnosis of Attention Deficit/Hyperactivity Disorder (ADHD). The case was dismissed under California's anti-SLAPP statute that provides for dismissal of lawsuits that attack defendants for their speech about an issue of public interest. "We applaud Judge Brewster's dismissal of the California class action," said Novartis General Counsel, Dorothy Watson. "The plaintiff's claim is ludicrous and warrants no consideration. This ruling supports Novartis' position that this lawsuit and others like it are an unmerited attempt to promote an agenda that flies in the face of scientific and medical consensus." In a March 8 ruling, Judge Brewster dismissed the complaint against Novartis and co-defendants and held the plaintiff's complaint was so vague and unclear, that it did not even state a legal claim. Further, Judge Brewster also held that if the defects in the complaint were not rectified by the parties who brought the lawsuit he would dismiss the case entirely under the anti-SLAPP statute. The plaintiff did not make any attempt to correct the defects in their complaint, but rather announced their intent to appeal the judge's ruling. Had the plaintiff issued a new complaint, it would have been the third attempt to state a valid claim in this litigation. Novartis is confident that this appeal will be no more successful than the first two complaints. The California lawsuits and similar suits filed in Texas, Florida, New Jersey and Puerto Rico claimed Novartis had conspired with the APA and CHADD to broaden or expand the diagnosis and diagnostic criteria for ADHD. Contrary to the position advanced in the lawsuits, ADHD is a real and serious disorder. It is a well-established and valid diagnosis recognized by the leading medical authorities in the U.S., including the American Medical Association, American Psychiatric Association, American Academy of Pediatrics, the U.S. Food and Drug Administration and the U.S. Surgeon General. Ritalin has helped generations of children and adults and has been shown to be an effective and safe medication for more than 45 years. It has been scientifically evaluated in more than 200 studies involving over 6,000 school- aged children. "Ritalin and similar treatments are among the most widely studied therapies available," said Watson. "We are heartened that an overwhelming body of scientific evidence cannot just be litigated away by lawyers and anti- psychiatry advocates." Ritalin is a mild central nervous system stimulant that helps to address the neurochemical problems underlying ADHD. Novartis Pharmaceuticals Corporation researches, develops, manufactures and markets leading innovative prescription drugs used to treat a number of diseases and conditions, including central nervous system disorders, organ transplantation, cardiovascular diseases, dermatological diseases, respiratory disorders, cancer and arthritis. The company's mission is to improve people's lives by pioneering novel healthcare solutions. Located in East Hanover, New Jersey, Novartis Pharmaceuticals Corporation, is an affiliate of Novartis AG, a world leader in Life Sciences with core businesses in Healthcare, Agribusiness, and Consumer Health. SMART WORLD: Bragar Wexler Announces Securities Lawsuit Filed in N. Y. ---------------------------------------------------------------------- The law firm of Bragar Wexler Eagel & Morgenstern, LLP announces that a class action lawsuit was filed on February 19, 2001, on behalf of a purchaser and all other similarly situated purchasers of Smart World Technologies, LLC (the "Company") securities from November 1, 1999 through June 29, 2000, inclusive (the "Class Period"). The Complaint seeks remedies for violations of Section 12(a)(1) and (a)(2) of the Securities Act of 1933 against the defendants as control persons pursuant to Section 15 of the Securities Act. The action is pending in the Southern District of New York, and a copy of the Complaint is available from the Court. The Complaint alleges that during the Class Period, the Company failed to register the Company's offering of securities with the Securities and Exchange Commission as required by Sections 6 and 7 of the Securities Act, and no exemption from registration was applicable to the Company's securities offering. In addition, the Complaint alleges that in connection with the offering, the Company made misstatements of material facts, and omitted material facts from its disclosures required so as not to make the disclosures misleading, all in connection with the Company's financial condition, and prospects for financing the Company's business. On June 29, 2000, the Company and two of its subsidiaries filed for protection under chapter 11 of the Bankruptcy Code. Contact: Bragar Wexler Eagel & Morgenstern, LLP, New York Paul D. Wexler , Esq., 212/308-5858 Wexler@BragarWexler.com WACHOVIA CORP: Angry Shareholder Sues to Block Buyout by First Union -------------------------------------------------------------------- A Wachovia Corp. shareholder, angry about the bank's pending merger with First Union, sued Wachovia to halt the union. The deal's $ 13.4 billion price tag is "wholly inadequate" and offers "virtually no premium" for Wachovia shareholders, said the suit filed in late April in federal court in Greensboro. Charlotte-based First Union will give two of its shares for each Wachovia share under the terms of the deal announced in late April. The offer gave Wachovia shareholders a 6 percent premium the day the deal was announced. Since then, stock in the Winston-Salem based bank has traded for more than what First Union would pay for every Wachovia share -- a sign that some investors believe another bank will offer to pay more. However, analysts say chances of a hostile bidder surfacing are low. The suit, filed by Virginia investor Jerry Krim, seeks class-action status. Both Wachovia and First Union declined to comment, citing long-standing policies of not discussing lawsuits against their companies. Wachovia's Chief Executive L.M. "Bud" Baker and director Morris Offit were named as defendants along with the banking company. The suit alleges that they have "breached their fiduciary duties" and they should have tried to "obtain or seek competing bids from other potential suitors." Officials at both banks have been highlighting what they see as the deal's strong points to analysts, investors and their employees since the day it was announced. They say the combined company would be more efficient than the separate banks are and would hold the majority of deposits in key East Coast markets. It would also have excess capital to invest in fee-rich businesses geared toward wealthy customers. On April 26, First Union chief executive Ken Thompson and chief financial officer Bob Kelly met with groups of analysts in New York to further tout the deal and answer questions. "They're really trying to make their case for this deal," said Marni Pont O'Doherty, analyst with Keefe Bruyette & Woods Inc. who met with the First Union executives. "They know the market is still questioning them" because many analysts aren't certain that First Union, which just completed a major restructuring, is ready to take on buying a bank. The combined company would be the nation's fourth-largest bank, with $ 324 billion in assets and 19 million customers. It would bear the Wachovia name with headquarters in Charlotte. The merger, if approved by shareholders and regulators, is expected to close by Sept. 30. (The Charlotte Observer, April 27, 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. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *