/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010529.mbx C L A S S A C T I O N R E P O R T E R Tuesday, May 29 2001, Vol. 3, No. 104 Headlines ADAM.COM: Five Year-Old Motion to Dismiss Securities Suit Pending APRIA HEALTHCARE: Mounts Defense Against Suits in Fed And State Court AREMISSOFT CORPORATION: Berger & Montague Files Securities Suit In NJ ATI TECHNOLOGIES: Milberg Weiss Files Securities Suit In Pennsylvania BENCHMARK ELECTRONICS: Denies Allegations in Texas Securities Lawsuit BOSTON SCIENTIFIC: Motion to Dismiss Mass. Securities Suit Undecided CALLAWAY GOLF: Sued For Violating Kansas/Tennessee Antitrust Laws CHECKERS DRIVE-IN: Plaintiff Voluntarily Drops Lawsuit in Delaware CITRIX SYSTEMS: Still Denies Allegations in Florida Securities Suit ESCALON MEDICAL: Opts to Settle Securities Suit in NY For $500,000 FINOVA GROUP: Lead Plaintiff to File Second Amended Complaint GLIATECH INC.: Asks Court To Consolidate 10 Sec's Suits In ND Ohio IMPERIAL CREDIT: Hearing On Motions For Summary Judgment Not Yet Set IMPERIAL CREDIT: Court Orders Plaintiffs Further Notify Class Members INTERMEDIA COMMUNICATIONS: Settlement Is Final As Appeal Deadline Ends KANEB PIPE: Court Orders Consolidation Of All Pipeline Rupture Suits MARINER POST: Requests Rehearing Of Lawsuit Filed In Colorado MBNA CORPORATION: Expects Court to Accept $8 Million Settlement Offer MBNA CORPORATION: Summary Judgment In New York Lawsuit Still Pending MICROFINANCIAL INC.: Files Opposition To Class Certification In Mass. NANOPHASE TECHNOLOGIES: Court Approves $4 Million Settlement Deal NANOPHASE TECHNOLOGIES: Separate Securities Suit Undergoing Discovery NCI BUILDING: Lockridge Grindal Commences Securities Suit in S.D.Texas NETWORK COMMERCE: Settles Suit Filed by Mall.com For $49 Million ORTHOLOGIC CORPORATION: $3.9 M Cash & Stock Settlement Awaits Court Nod OWENS CORNING: Jefferson County Asbestos-Tobacco Link Suit Dismissed PARAMETRIC TECHNOLOGY: Case Closed as Deadline For Appeal Expires PHYCOR INC.: Consolidated Securities Suit Goes to Trial on November 6 PLC SYSTEMS: Settles Securities Suit in Mass. For Unspecified Amount PRIMEBUY NETWORK: Keller Rohrback Commences Securities Suit in Idaho PROVELL INC.: Suit Alleging Consumer Law Violations in Discovery Stage PROVELL INC.: Ex-workers' Suit Won't Affect Finance, Operations PTEK HOLDINGS: Answers Amended Complaint Lodged in N.D. Georgia RALLY'S HAMBURGERS: Motions For Summary Judgment Remains Undecided ROYAL CARIBBEAN: Too Early to Assess Impact of Suit Filed by Crew SKYMALL INC.: Continues Defense Against Securities Suit in Arizona THQ INC.: CA Court Modifies Dismissal, Allows Third Amended Complaint TRANS-WORLD AIRLINES: Settles Sexual Harassment Suit For $2.6 Million VERSANT CORP.: Files Another Dismissal Motion For Yet Another Plaint WABASH NATIONAL: Settles Shareholders Suit in Indiana For $500,000 ********* ADAM.COM: Five Year-Old Motion to Dismiss Securities Suit Pending ----------------------------------------------------------------- On April 25, 1996, a class action lawsuit in Fulton County Superior Court in Atlanta, Georgia was filed against Adam.com, Inc. and certain of its then officers and directors. The complaint alleges violations of sections 11, 12(2) and 15 of the Securities Act of 1933, violations of the Georgia Securities Act and negligent misrepresentation arising out of alleged disclosure deficiencies in connection with the Company's initial public offering, which was completed on November 10, 1995. The complaint seeks compensatory damages and reimbursements for plaintiff's fees and expenses. A motion to dismiss is pending and the Company and its officers and directors are vigorously defending against the allegations. APRIA HEALTHCARE: Mounts Defense Against Suits in Fed And State Court --------------------------------------------------------------------- Apria Healthcare Group Inc. and certain of its present and former officers and/or directors are defendants in a class action lawsuit, In Re Apria Healthcare Group Securities Litigation, filed in the U.S. District Court for the Central District of California, Southern Division (Case No. SACV98-217 GLT). This case is a consolidation of three similar class actions filed in March and April 1998. Pursuant to a court order dated May 27, 1998, the plaintiffs in the original three class actions filed a Consolidated Amended Class Action Complaint on August 6, 1998. The amended complaint purports to establish a class of plaintiff shareholders who purchased Apria's common stock between May 22, 1995 and January 20, 1998. No class has been certified at this time. The amended complaint alleges, among other things, that the defendants made false and/or misleading public statements regarding Apria and its financial condition in violation of federal securities laws. The amended complaint seeks compensatory and punitive damages as well as other relief. Two similar class actions were filed during July 1998 in Superior Court of California for the County of Orange: (i) Schall v. Apria Healthcare Group Inc., et al. (Case No. 797060), and (ii) Thompson v. Apria Healthcare Group Inc., et al. (Case No. 797580). These two actions were consolidated by a court order dated October 22, 1998 (Master Case No. 797060). On June 14, 1999, the plaintiffs filed a Consolidated Amended Class Action Complaint asserting claims founded on state law and on Sections 11 and 12(2) of the 1933 Securities Act. Apria believes that it has meritorious defenses to the plaintiffs' claims and it intends to vigorously defend itself in both the federal and state cases. AREMISSOFT CORPORATION: Berger & Montague Files Securities Suit In NJ --------------------------------------------------------------------- The law firm of Berger & Montague, P.C. filed an action on behalf of an investor against AremisSoft Corporation (Nasdaq: AREM), Lycourgos K. Kyprianou, Roys Poyiadjis, and Michael Tymvios, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint was filed in the United States District Court for the District of New Jersey, in Camden and is captioned Keystone Trading Partners v. AremisSoft Corporation, et al. Plaintiff asserts its claims as class action on behalf of a class, consisting of all persons other than defendants who purchased AremisSoft securities from December 17, 1999 through May 14, 2001, inclusive. Plaintiff seeks to recover damages caused to the Class resulting from defendants' violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. During the Class Period, plaintiff alleges, defendants materially misrepresented the Company's business and operations, particularly with respect to a 1999 contract entered into with Bulgarian authorities. Specifically, plaintiff further alleges, the Bulgarian contract was worth approximately $4 million, not the $37 million defendants caused the Company to claim. As a result of these false and misleading statements, the price of AremisSoft common stock price was inflated during the Class Period, directly affecting the price of AremisSoft options as well. Plaintiff also alleges that Individual Defendants Poyiadjis and Kyprianou sold 4.8 million shares of AremisSoft stock at artificially inflated prices and exercised nearly all of 5.8 million options for AremisSoft shares which they subsequently sold, also at artificially inflated prices. When, on May 14, 2001, a report by a short-seller alerted investors to the fact that AremisSoft's representations about the Bulgarian Healthcare contract were false and misleading and that other accounting irregularities and misrepresentations during the Class Period had distorted the truth about AremisSoft's business and operations, the market reacted dramatically. Directly as a result of these revelations, the price of AremisSoft common stock plummeted from a closing price of $18.47 on May 14, 2001 to $14.55 on May 15, 2001. Daily volume on May 15, 2001 was enormous, as 12.64 million shares traded hands -- 12 times its 200-day moving average of 1.038 million shares traded per day. For further information, contact: Todd S. Collins, Esq., Joy Clairmont, Esq., Kimberly A. Walker, Investor Relations Manager: Berger & Montague, P.C. 1622 Locust Street Philadelphia, PA 19103 Phone: 888-891-2289 or 215-875-3000 Fax: 215-875-5715 Website: http://www.investorprotect.com E-mail: InvestorProtect@bm.net ATI TECHNOLOGIES: Milberg Weiss Files Securities Suit In Pennsylvania --------------------------------------------------------------------- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit on behalf of purchasers of the securities of ATI Technologies, Inc. (NASDAQ: ATYT) between January 13, 2000 and May 24, 2000, inclusive. The action, numbered 01-CV-2541, is pending in the United States District Court, Eastern District of Pennsylvania against defendants ATI, Kwok Yuen Ho, James Chwartacky and James Fleck. The Honorable Stewart Dalzell is the Judge presiding over the case. The Complaint alleges 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 13, 2000 and May 24, 2000, thereby artificially inflating the price of ATI securities. The Complaint alleges that throughout the Class Period, defendants repeatedly issued press releases highlighting the Company's strong revenue growth and industry-high gross margins. These statements were materially false and misleading because they failed to disclose that: (i) the Company was experiencing declining demand for its graphics chipset products and was decreasing its prices in order to stimulate demand; (ii) two of the Company's primary competitors, S3 Inc. and Neomagic, were flooding the market with cheaper and better products, which was rendering ATI's product offerings increasingly unattractive; (iii) the Company was failing to writedown a material portion of its inventory, which was impaired given the current conditions in the graphics chipset market. Accordingly, the Company's reported operating results were materially overstated; and (iv) that defendants' opinions, estimates and projections concerning the Company, its business and earnings were knowingly lacking in a reasonable basis at all times. Finally, on May 24, 2000, defendants issued a press release that shocked investors by announcing that ATI would be reporting lower than expected revenues. Defendants also disclosed that ATI's gross margins had declined to 21% and that the Company would be writing down $56 million worth of inventory. In response to this announcement, the price of ATI common stock declined precipitously - falling from $16.75 per share, on May 23, 2000, to $8.4375 per share on May 25, 2000. For more information, contact: Steven G. Schulman or Samuel H. Rudman, One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165. Phone number: (800) 320-5081 Email: ATIcase@milbergNY.com Website: http://www.milberg.com BENCHMARK ELECTRONICS: Denies Allegations in Texas Securities Lawsuit --------------------------------------------------------------------- On October 18, 1999, Benchmark Electronics Inc. revealed its third quarter 1999 earnings announcement would be delayed and subsequently, on October 22, the Company announced its earnings for the third quarter 1999 were below the level of the same periods during 1998 and were below expectations. Several class action lawsuits were filed in federal district court in Houston, Texas against Benchmark and two of its officers and directors alleging violations of the federal securities laws. These lawsuits were consolidated in February 2000. The Company denies the allegations in the lawsuits, however, and further denies that such allegations provide a basis for recovery of damages, as the Company believes that it has made all required disclosures on a timely basis. BOSTON SCIENTIFIC: Motion to Dismiss Mass. Securities Suit Undecided -------------------------------------------------------------------- In a recent regulatory filing with the Securities and Exchange Commission, Boston Scientific Corporation disclosed that beginning November 4, 1998, a number of shareholders of the Company, on behalf of themselves and all others similarly situated, filed purported stockholders' class action suits in the U.S. District Court for the District of Massachusetts, alleging that the Company and certain of its officers violated certain sections of the Securities Exchange Act of 1934. The complaints principally alleged that as a result of certain accounting irregularities involving the improper recognition of revenue by the Company's subsidiary in Japan, the Company's previously issued financial statements were materially false and misleading. In August 1999, lead plaintiffs and lead counsel filed a purported consolidated class action complaint adding allegations that the Company issued false and misleading statements with respect to the launch of its NIR ON(R) Ranger(TM) with Sox(TM) coronary stent delivery system and the system's subsequent recall. The Company and its officers have filed a motion to dismiss the consolidated complaint. The Plaintiffs have opposed the Company's motion to dismiss the consolidated complaint. CALLAWAY GOLF: Sued For Violating Kansas/Tennessee Antitrust Laws ----------------------------------------------------------------- On April 6, 2001, a complaint was filed against Callaway Golf Company and Callaway Golf Sales Company in The Circuit Court of Sevier County, Tennessee, case no. 2001-241-IV. The complaint seeks to assert a class action by plaintiff on behalf of himself and on behalf of consumers in Tennessee and Kansas who purchased selected Callaway Golf products on or after March 30, 2000. Specifically, the complaint alleges that the Company adopted a New Product Introduction Policy governing the introduction of certain of the Company's new products and agreed with retailers to sell those products at particular prices in violation of Tennessee and Kansas antitrust and consumer protection laws. The plaintiff is seeking damages, restitution and punitive damages. The Company intends to defend this matter vigorously. CHECKERS DRIVE-IN: Plaintiff Voluntarily Drops Lawsuit in Delaware ------------------------------------------------------------------ On September 29, 1998, a putative class action was filed in the Delaware Chancery Court in and for New Castle County, Delaware by First Albany Corp., as custodian for the benefit of Nathan Suckman, an alleged stockholder of 500 shares of Checkers Drive-In Restaurants, Inc.'s common stock. The complaint named the Company and certain of its current and former officers and directors as defendants, including William P. Foley, II, James J. Gillespie, Harvey Fattig, Joseph N. Stein, Richard A. Peabody, James T. Holder, Terry N. Christensen, Frederick E. Fisher, Clarence V. McKee, Burt Sugarman, C. Thomas Thompson and Peter C. O'Hara. The complaint arose out of the proposed merger announced on September 28, 1998 between Checkers, Rally's Hamburgers, Inc. and Giant Group Ltd. and alleged generally, that certain of the defendants engaged in an unlawful scheme and plan to permit Rally's to acquire the public shares of Checkers stock in a "going-private" transaction for grossly inadequate consideration and in breach of the defendants' fiduciary duties. The plaintiff allegedly initiated the complaint on behalf of all stockholders of Checkers as of September 28, 1998, and sought, among other relief, certain declaratory and injunctive relief against the consummation of the proposed merger, or in the event the proposed merger was consummated, rescission of the proposed merger and costs and disbursements incurred in connection with bringing the action. The plaintiff voluntarily dismissed the claim on February 23, 2001. CITRIX SYSTEMS: Still Denies Allegations in Florida Securities Suit ------------------------------------------------------------------- In June 2000, Citrix Systems Inc. and certain of its officers and directors were named as defendants in several securities class action lawsuits filed in the United States District Court for the Southern District of Florida on behalf of purchasers of the Company's Common Stock during the period October 20, 1999 to June 9, 2000. These actions have been consolidated as In Re Citrix Systems, Inc. Securities Litigation. These lawsuits generally allege that, during the class period, the defendants made misstatements to the investing public about the Company's financial condition and prospects. The complaint seeks unspecified damages and other relief. While the Company is unable to determine the ultimate outcome of these matters, the Company believes the plaintiffs' claims lack merit and intends to vigorously defend the lawsuits. ESCALON MEDICAL: Opts to Settle Securities Suit in NY For $500,000 ------------------------------------------------------------------ On or about June 8, 1995, a purported class action complaint captioned George Kozloski v. Intelligent Surgical Lasers, Inc., et al., 95 Civ. 4299, was filed in the U.S. District Court for the Southern District of New York as a "related action" to In Re Blech Securities Litigation (a lawsuit to which the Company is no longer a party). The plaintiff purports to represent a class of all purchasers of Escalon Medical Corporation stock from November 17, 1983, to and including September 21, 1994. The complaint alleges that the Company, together with certain of its officers and directors, David Blech and D. Blech & Co., Inc., issued a false and misleading prospectus in November 1993 in violation of Sections 11, 12 and 15 of the Securities Act of 1933. The complaint also asserts claims under Section 10(b) of the Securities Exchange Act of 1934 and common law. Actual and punitive damages in an unspecified amount are sought, as well as a constructive trust over the proceeds from the sale of stock pursuant to the offering. On June 6, 1996, the court denied a motion by the Company and the named officers and directors to dismiss the Kozloski complaint and, on July 22, 1996, the Company defendants filed an answer to the complaint denying all allegations of wrongdoing and asserting various affirmative defenses. In an effort to curtail its legal expenses related to this litigation, while continuing to deny any wrongdoing, the Company has reached an agreement, subject to final court approval, to settle this action on its behalf and on behalf of its former officers and directors, for $500,000. The Company's directors and officers insurance carrier has agreed to fund a significant portion of the settlement amount. FINOVA GROUP: Lead Plaintiff to File Second Amended Complaint ------------------------------------------------------------- Between March 29, 2000 and May 23, 2000, five shareowner lawsuits were filed against FINOVA GROUP INC. and Samuel Eichenfield, FINOVA's former chairman, president, and chief executive officer; two of the lawsuits also named FINOVA Capital as a defendant, and one named three other executive officers. All of the lawsuits purport to be on behalf of the named plaintiffs (William K. Steiner, Uri Borenstein, Jerry Krim, Mark Kassis, and the Louisiana School Employees Retirement System), and others who purchased FINOVA common stock during the class period of July 15, 1999, through either March 26, 2000, or May 7, 2000. The suit brought by the Louisiana School Employees Retirement System also purports to be on behalf of all those who purchased FINOVA Capital's 7.25% Notes which are due November 8, 2004, pursuant to the registration statement and prospectus supplement dated November 1, 1999. In an order by the U.S. District Court for the District of Arizona dated August 30, 2000, these five lawsuits were consolidated and captioned In re: FINOVA Group Inc. Securities Litigation. The court also selected the Louisiana School Employees Retirement System as the lead plaintiff in the consolidated cases. LSERS filed its Amended Consolidated Complaint on September 29, 2000, naming FINOVA, FINOVA Capital, Samuel Eichenfield, Matthew Breyne, and Bruno Marszowski as defendants. The consolidated amended complaint generally alleges that the defendants made materially misleading statements regarding FINOVA's loss reserves, and otherwise violated the federal securities laws in an effort to bolster FINOVA's stock price, among other reasons. Since consolidation of the original five shareowner lawsuits, other related lawsuits have been initiated against the Company and current and former officers and directors. Three shareowner lawsuits were filed in the United States District Court for the Middle District of Tennessee, in which the named plaintiffs (John Cartwright, Sirrom Partners and Sirrom G-1, and Caldwell Travel) assert claims relating to the Company's acquisition in 1999 of Sirrom Capital Corporation, and the exchange of shares of Sirrom stock for shares of FINOVA stock. The Cartwright complaint purports to be a class action lawsuit on behalf of all Sirrom shareowners that exchanged their Sirrom stock for FINOVA stock as a result of the acquisition. The defendants named are Sirrom Capital Corporation, Samuel Eichenfield, John W. Teets, Constance Curran, G. Robert Durham, James L. Johnson, Kenneth Smith, Shoshana Tancer, Bruno Marszowski, and FINOVA Group. The complaints allege that the defendants made materially misleading statements regarding FINOVA's loss reserves, and otherwise violated the federal securities laws in an effort to reduce the total consideration provided to Sirrom shareowners at the time of the acquisition. On January 4, 2001, the United States District Court for the Middle District of Tennessee granted a motion brought by FINOVA and the other defendants to transfer the Cartwright and Sirrom Partners cases to the United States District Court for the District of Arizona. The plaintiff in Caldwell Travel agreed to dismiss that case without prejudice. Pursuant to a Stipulation and Order entered in March 2001, the Cartwright case has been consolidated for all purposes with the previous five cases in the FINOVA Group Securities Litigation, and the Sirrom Partners case has been consolidated for all pre-trial purposes. The lead plaintiffs are scheduled to file a Second Amended Consolidated Complaint in May 2001, though the deadline may be extended. GLIATECH INC.: Asks Court To Consolidate 10 Sec's Suits In ND Ohio ------------------------------------------------------------------ Gliatech Inc. disclosed in a recent regulatory filing that to date it is facing ten class action lawsuits filed against certain of its officers and certain former officers in the United States District Court for the Northern District of Ohio, alleging violation of the federal securities laws. These complaints allege that the Company, certain officers and certain former officers failed to disclose material facts in connection with the termination of the merger agreement that had been entered into with Guilford and from certain inspectional observations by the FDA contained in a Form 483. For each of these class actions, the date each complaint was filed and the name of the plaintiff is as follows: Date Plaintiff ---- --------- September 5, 2000 Avrom Gart September 7, 2000 Jason Raker September 12, 2000 Jon Burgermeister September 13, 2000 Carl L. Evans September 27, 2000 WPG Merger Arbitrage Fund, L.P. and WPG Merger Arbitrage Overseas Fund, Ltd. October 4, 2000 Eric Ford October 5, 2000 Steven R. Graupner October 19, 2000 James Berman October 20, 2000 Atul Verma November 1, 2000 Daniel Triefler The Company, certain officers and certain former officers filed a motion to consolidate these actions and certain plaintiffs have moved for the appointment of lead plaintiff and lead counsel. These motions are currently pending in the United States District Court for the Northern District of Ohio. The Company has been granted leave to respond to the complaints until after appointment of lead plaintiff and the filing of a consolidated amended complaint. As of November 2000, each of these actions was pending before a single judge. IMPERIAL CREDIT: Hearing On Motions For Summary Judgment Not Yet Set -------------------------------------------------------------------- In a latest regulatory filing with the Securities and Exchange Commission, Imperial Credit Industries Inc. revealed it is a defendant in Steadfast Insurance Company v. Auto Marketing Network Inc. and Imperial Credit Industries, Inc. filed on August 12, 1997 in the Northern District of Illinois, Case No. 97-C-5696. The plaintiff is seeking damages in the amount of $27 million allegedly resulting from the fraudulent inducement to enter into, and the subsequent breach of, a motor vehicle collateral enhancement insurance policy. In May 1998, the Company filed a counterclaim against the plaintiff for $54 million in damages based on the allegation that the underlying claim was filed in bad faith. In January 1999, the Court entered a preliminary injunction that enjoined the Company from transferring assets of Auto Marketing Network, Inc., in amounts that would cause the total assets of Auto Marketing Network to be less than $20 million in value. The injunction has since been removed. The Company moved to dismiss ICII from the lawsuit and, on April 17, 2000, the Court granted ICII's motion in part and found that ICII is not liable for any of Steadfast's losses arising from payments for defaulted loans. The Court has pending a motion for partial summary judgment, filed by the plaintiff, and a motion for summary judgment filed by ICII on its counterclaim against Steadfast. Steadfast also has counter-moved for summary judgment on ICII's counterclaim, and the parties have filed motions seeking the exclusion of each other's expert witnesses. The Court cancelled a March 12, 2001 hearing on all pending motions and has not rescheduled or indicated when a written order could be expected. IMPERIAL CREDIT: Court Orders Plaintiffs Further Notify Class Members --------------------------------------------------------------------- Imperial Credit Commercial Mortgage Investment Corporation, a subsidiary of Imperial Credit Industries Inc., and three of its directors, one of whom is a director and one a former director of ICII, are defendants in a putative class action lawsuit filed on March 17, 2000, by John Huston in the United States District Court for the Central District of California, Case No. CV00-02751 ABC. The complaint alleges that ICCMIC's prospectus issued in connection with its initial public offering in October 1997 contained material omissions and misrepresentations concerning (1) the expenses to be incurred by ICCMIC, (2) ICCMIC's ability to reduce the base management fee paid to ICCMIC's management company, (3) the management agreement termination fee payable to ICCMIC's management company in the event that ICCMIC terminated the management agreement, and (4) certain conflicts of interest. The complaint alleges a claim under Section 11 of the Securities Act of 1933 and seeks the certification of a class of shareholders of ICCMIC who purchased shares of ICCMIC at any time between October 22, 1997 and October 21, 1999. On April 4, 2000, defendants moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. On June 9, 2000, the Court issued an order denying defendants' motion to dismiss. On June 23, 2000, defendants answered the complaint and asserted a number of affirmative defenses. On July 31, 2000, plaintiff moved for class certification. On October 17, 2000, the Court stayed all proceedings and certified for interlocutory appeal to the Ninth Circuit Court of Appeals its order denying defendants' motion to dismiss. On January 12, 2001, the Ninth Circuit Court of Appeal denied defendants' petition for permission to appeal. On March 26, 2001, the District Court struck plaintiff's motion for class certification and ordered plaintiff to take further action to give proper notice to potential class members. INTERMEDIA COMMUNICATIONS: Settlement Is Final As Appeal Deadline Ends ---------------------------------------------------------------------- On September 5, 2000, and thereafter, Intermedia Communications Inc., Digex, the directors of Digex, and in some cases, WorldCom, were named as defendants in a total of thirteen lawsuits in the Court of Chancery of the State of Delaware in and for New Castle County. Of those thirteen lawsuits, eight were brought as class actions on behalf of Digex public shareholders, three were brought as derivative actions, purportedly on behalf of Digex, and two advanced both class action and derivative claims. On October 17, 2000, the Court ordered that all thirteen lawsuits to be consolidated into a single combined derivative and class action. In general, the complaints advanced substantially similar allegations that the defendants breached their fiduciary duties to the class members by acting to further their own interests at the expense of Digex public stockholders, by engaging in self-dealing and by failing to act in good faith towards the Digex public stockholders. The complaints claimed that such alleged wrongdoing caused irreparable harm to such stockholders. In addition, four of the complaints alleged that the Digex board members who are also directors or executive officers of Intermedia conferred a substantial benefit on Intermedia at the expense of the Digex public stockholders by voting to waive application of Section 203 of the Delaware General Corporation Law to future transactions between WorldCom and Digex. These complaints also alleged that WorldCom aided and abetted the wrongdoing of Intermedia's and the Intermedia-affiliated directors of Digex. On February 15, 2001, a memorandum of understanding was executed on behalf of all interested parties in the consolidated actions, setting forth an agreement in principle providing for the settlement of all actions in their entirety. WorldCom will make a settlement payment of WorldCom common stock having a total value of $165.0 million for distribution to Digex common stockholders. One half of the settlement fund net of plaintiffs' attorneys fees will be distributed to record holders of Digex common stock on September 1, 2000. The balance of the settlement fund net of attorneys' fees will be paid to record holders of Digex stock at the time of the consummation of the merger. Neither Intermedia nor its affiliates will be entitled to any distribution from the settlement fund. The merger agreement between Intermedia and WorldCom will be amended to change the consideration to be paid to Intermedia shareholders in connection with the merger. All fees and expenses of all plaintiffs and all counsel representing all plaintiffs in the action will also be paid out of that settlement fund. In connection with the proposed settlement, WorldCom will reimburse Digex for certain fees and expenses incurred by Digex associated with the merger and the consolidated lawsuit in an amount not to exceed $15.0 million. WorldCom has also agreed to enter into certain commercial agreements with Digex. A further provision of the settlement will make Section 203 of the Delaware General Corporation Law inapplicable to future transactions between WorldCom and Digex. On March 2, 2001, Digex, WorldCom, and Intermedia entered into a definitive Stipulation of Settlement with all relevant parties to settle all claims related to the consolidated class action and derivative action in accordance with the terms agreed to in the February 15, 2001 memorandum of understanding. On March 5, 2001, the parties presented the settlement to the Chancery Court and on that date, the Chancery Court ordered, among other things, that the terms of the settlement be presented to record holders of shares of Digex common stock (other than the defendants in the Delaware Digex stockholders litigation and their affiliates) at any time during the period from and including August 31, 2000, through and including March 2, 2001, through published and mailed notice. At a hearing on April 6, 2001, the Court approved the settlement as presented. The Court entered the order and final judgment as final in accordance with Court of Chancery Rule 54(b). At the April 6, 2001 hearing, the Court also entered a separate award of attorneys' fees and reimbursement of expenses, relating to the Delaware Digex stockholders litigation. Under the amended merger agreement, it is a condition to the parties' obligations to complete the merger that, among other things, the order and final judgment become final and unappealable. Under Delaware law, the deadline for filing an appeal of the Chancery Court's order and final judgment approving the settlement expired May 7, 2001, and no such appeals of that order were filed before that deadline. As a result, the order and final judgment is now final and unappealable. Similarly, no timely appeals were filed with respect to the Chancery Court's separate fee award. KANEB PIPE: Court Orders Consolidation Of All Pipeline Rupture Suits -------------------------------------------------------------------- On April 7, 2000, a fuel oil pipeline in Maryland owned by Potomac Electric Power Company ruptured. The pipeline was operated by a partnership of which ST Services, a wholly owned subsidiary of Kaneb Pipe Line Partners, L.P., is general partner. As a result of the rupture, purported class actions have been filed in federal and state court in Maryland by property and/or business owners alleging damages in unspecified amounts against PEPCO and ST Services under various theories, including the federal Oil Pollution Act. The court has ordered a consolidated complaint to be filed in this action. ST Services' insurance carriers have assumed the defense of these actions. MARINER POST: Requests Rehearing Of Lawsuit Filed In Colorado ------------------------------------------------------------- On August 26, 1996, a class action complaint was asserted against GranCare, Inc., a wholly owned subsidiary of Mariner Post Acute Network Inc., in the Denver, Colorado District Court, Salas, et al v. GranCare, Inc. and AMS Properties, Inc. d/b/a Cedars Healthcare Center, Inc., case no. 96-CV-4449. On March 15, 1998, the Court entered an Order in which it certified a class action in the matter. On June 10, 1998, the Company filed a Motion to Dismiss all claims and Motion for Summary Judgment Precluding Recovery of Medicaid Funds and these motions were partially granted by the Court on October 30, 1998. Plaintiffs' Motion for Reconsideration was denied by the Court on November 19, 1998, the Court's decision was certified as a final judgment on December 10, 1998, and plaintiffs then filed a writ with the Colorado Supreme Court, which was denied, and an appeal with the Colorado Court of Appeal. In accordance with the Company's voluntary filing under chapter 11 of the Bankruptcy Code and more particularly, ss. 362 of that Code, this matter was stayed on January 18, 2000. However, the Company did agree to limited relief from the stay in order to allow for certain parts of the appeal to continue. On January 4, 2001, the Court of Appeal reversed the District Court's decision. On February 1, 2001, the Company filed a request for rehearing. The Company intends to vigorously contest all remaining allegations. MBNA CORPORATION: Expects Court to Accept $8 Million Settlement Offer --------------------------------------------------------------------- In May 1996, Andrew B. Spark filed a lawsuit against MBNA Corporation, MBNA America Bank, N.A. and certain of its officers and its subsidiary MBNA Marketing Systems, Inc. The case is pending in the United States District Court for the District of Delaware. This suit is a purported class action. The plaintiff alleges that the Bank's advertising of its cash promotional annual percentage rate program was fraudulent and deceptive. The plaintiff seeks unspecified damages including actual, treble and punitive damages and attorneys' fees for an alleged breach of contract, violation of the Delaware Deceptive Trade Practices Act and violation of the federal Racketeer Influenced and Corrupt Organizations Act. In February 1998, a class was certified by the District Court. In September 2000, the Court gave preliminary approval to a settlement of this suit for approximately $8.7 million. A hearing on final approval will be held in May 2001. MBNA CORPORATION: Summary Judgment In New York Lawsuit Still Pending -------------------------------------------------------------------- In October 1998, Gerald D. Broder filed a lawsuit against the MBNA Corporation and MBNA America Bank, N.A. in the Supreme Court of New York, County of New York. This suit is a purported class action. The plaintiff alleges that the Bank's advertising of its cash promotional annual percentage rate program was fraudulent and deceptive. The plaintiff seeks unspecified damages including actual, treble and punitive damages and attorneys' fees for an alleged breach of contract, common law fraud and violation of New York consumer protection statutes. In April 2000, summary judgment was granted to the Corporation and the Bank on the common law fraud claim and the Court certified a class. In May 2000, the Corporation and the Bank filed an appeal from the order certifying a class. In March 2001, the appellate court affirmed the order. In October 2000, plaintiff filed a motion for partial summary judgment. That motion is pending. The Corporation and the Bank believe that their advertising practices were and are proper under applicable federal and state law and intend to defend this action vigorously. MICROFINANCIAL INC.: Files Opposition To Class Certification In Mass. --------------------------------------------------------------------- On August 24, 1999, a purported class action lawsuit was filed in Middlesex Superior Court for The Commonwealth of Massachusetts against Microfinancial Inc. and its wholly owned subsidiary Leasecomm Corporation (as amended The Clark Complaint). The purported class was limited to individuals and businesses that have been sued by Leasecomm in a Massachusetts court for allegedly breaching Leasecomm's Non Cancellable Equipment Lease Agreement or Non Cancellable Lease Agreement and that, among other things, have been sued in a Massachusetts court for breach of the Lease Agreements. The Clark Complaint alleges that enforcement of the forum selection clause is not fair or reasonable because, among other things, litigation in Massachusetts is prohibitively costly and time consuming for purported class members, purported class members have no choice but to enter into the Lease Agreement's because of Leasecomm's greater bargaining power, and purported class members allegedly have valid defenses to the claims asserted against them by Leasecomm. On August 16, 2000, the Court granted the Company's motion to dismiss, resulting in the dismissal of all claims against the Company. The Court also granted Leasecomm's motion to dismiss as to all of the plaintiffs' individual claims, and as to all but one of the plaintiffs' purported class claims. As a result, the only claim that remains is a purported class claim against Leasecomm by plaintiffs against whom Leasecomm has a pending Massachusetts action, for alleged violations of Chapter 93A of the Massachusetts General Laws arising out of the inclusion of a forum selection clause in Leasecomm leases. The plaintiffs filed a revised motion for class certification in light of the Court's prior rulings. The Company has filed an opposition to the revised motion for class certification, and argument was scheduled for May 16, 2001. NANOPHASE TECHNOLOGIES: Court Approves $4 Million Settlement Deal ----------------------------------------------------------------- Five separate complaints were filed in the United States District Court for the Northern District of Illinois, each alleging that Nanophase Technologies Corporation, certain of its officers and directors, and the underwriters of the Company's initial public offering of Common Stock were liable under the federal Securities Act of 1933 for making supposedly negligent or reckless material misstatements or omissions of fact in the Registration Statement and Prospectus relating to the Offering. A consolidated complaint was filed in those cases in October 1998. The consolidated complaint alleged that the action should be maintained as (i) a plaintiff class action on behalf of certain persons who purchased the Common Stock from November 26, 1997 through January 8, 1998, and (ii) a defendant class action against the underwriters who participated in the Offering. In October 1999, the Court granted in part and denied in part defendants' motions to dismiss the consolidated complaint. In its ruling, the Court in part found that plaintiffs who did not purchase their Common Stock during the Offering could not sue under Section 12(a)(2) of the Securities Act of 1933. Each defendant's respective answer to the remaining claims in the consolidated complaint was filed in November 1999. Following certain discovery, the Company agreed to settle all claims against all defendants in the consolidated complaint for $4,025,000. The settlement is not an admission of liability by any party. The Court ordered final approval of the settlement and dismissed the consolidated complaint with prejudice as to all defendants on March 27, 2001. NANOPHASE TECHNOLOGIES: Separate Securities Suit Undergoing Discovery --------------------------------------------------------------------- The above-described settlement did not resolve a separate complaint filed in the Northern District of Illinois in November 1998, alleging that Nanophase Technologies Corporation, certain of its officers and directors, and the underwriters of the Company's Offering are liable under the federal Securities Exchange Act of 1934 for making supposedly fraudulent material misstatements and omissions of fact in connection with the solicitation of consents to proceed with the Offering from certain of the Company's preferred stockholders. The complaint alleges that the action should be maintained as a plaintiff class action on behalf of certain former preferred stockholders whose shares of preferred stock were converted into Common Stock on or about the date of the Offering. In March 1999, the preferred stockholders' complaint was reassigned to the judge hearing the consolidated complaint described above. All defendants subsequently filed a joint motion to dismiss the preferred stockholders' complaint. In August 2000, the Court denied the motion, finding that the preferred stockholders' allegations were pleaded sufficiently to permit their claims to proceed. Each defendant's respective answer to the preferred stockholders' complaint was filed in September 2000. Discovery currently is pending. NCI BUILDING: Lockridge Grindal Commences Securities Suit in S.D.Texas ---------------------------------------------------------------------- NCI Building Systems, Inc. (NYSE:NCS) and certain of its senior officers have been charged with violations of the United States securities laws in a class action lawsuit brought in the United States District Court for the Southern District of Texas. The lawsuit was brought on behalf of all persons who purchased NCI common stock on the open market during the period February 23, 2000 through April 12, 2001 inclusive. The plaintiff alleges in the action that for a period of five consecutive quarters, commencing with the first quarter of fiscal 2000, ending January 31, 2000, through the first quarter of fiscal 2001, ending January 31, 2001, defendants NCI and its five most senior officers, issued a series of materially false and misleading statements that misrepresented NCI's reported operating results. It was not until April 12, 2001 that defendants acknowledged that those reported operating results had been materially inflated by improper accounting entries that resulted in the material understatement of liabilities and the material overstatement of operating income. For fiscal 2000, ending October 31, 2000, defendants acknowledged that net income had been overstated by $8.1 million, or $0.44 per share - an overstatement of more than 18% of the restated financial results. For the first quarter of fiscal 2001, net income was overstated by $1.4 million or $0.07 per share - an overstatement of more than 53% of the restated financial results. Defendants also indicated that NCI may be required to restate its financial results for the third and fourth quarters of fiscal 1999. NCI attributed the reporting of its erroneous operating results to a computer system installed in May 1999, which routinely processed some accounting entries incorrectly, and asserted that these errors were "masked by certain improper accounting entries." In a separate announcement, one of the defendants admitted that three senior financial employees left the Company because of the disclosure of the accounting irregularities. After the true facts were disclosed, NCI common stock, which had closed at $18.30 per share on April 12, 2001, plummeted in value by almost 35%. Prior to this disclosure, the individual defendants sold thousands of shares of NCI stock and received millions of dollars in proceeds. For additional details, contact: Karen M. Hanson, Esq. Lockridge Grindal Nauen P.L.L.P. 100 Washington Avenue South Suite 2200 Minneapolis, MN 55401 (612) 339-6900 kmhanson@locklaw.com NETWORK COMMERCE: Settles Suit Filed by Mall.com For $49 Million ---------------------------------------------------------------- Network Commerce Inc. (Nasdaq:NWKC), the technology infrastructure and services company, announced last week the settlement of the $49 million lawsuit filed by Mall.com, Inc. against the company on Oct. 6, 2000. The suit was based on a contract between Mall.com, and IveBeenGood.com, Inc., which Network Commerce acquired on Aug. 24, 2000. On May 7, 2001, Network Commerce, Mall.com and Mall Acquisition Corp. entered into a Compromise and Settlement Agreement and Mutual General Release. Pursuant to the settlement agreement, Network Commerce Inc. paid Mall Acquisition Corp. the sum of $67,500, and Mall.com and Mall Acquisition Corp. assigned to Network Commerce any claims they may have against Trilogy, Inc., a former shareholder of IveBeenGood.com. Network Commerce Inc. also announced that it denies the allegations made in a putative class action lawsuit filed on May 10, 2001 titled Jan Sherman, on behalf of herself and all others similarly situated, v. Dwayne M. Walker and Network Commerce Inc. The lawsuit alleges claims under federal securities laws. Network Commerce intends to vigorously defend and seek dismissal of the lawsuit. ORTHOLOGIC CORPORATION: $3.9 M Cash & Stock Settlement Awaits Court Nod ----------------------------------------------------------------------- On or about June 20, 1996, a lawsuit entitled Norman Cooper, et. al. v. OrthoLogic, Corp., et. al, and Case No. CV 96-10799 was filed in the Superior Court, Maricopa County, and Arizona. The plaintiffs allege violations of Arizona Revised Statutes Sections 44-1991 (state securities fraud) and 44-1522 (consumer fraud) and common law fraud based upon factual allegations. The Company filed a Motion to Dismiss the Complaint in the Arizona State Court in May 1999. The Court denied the motion in July 1999, and granted the plaintiffs' motion for the class certification on November 24, 1999. In October 2000, the Company announced that it had entered into a Memorandum of Understanding regarding settlement of the remaining class action claims and the Norman Cooper lawsuits. The settlement consists of $1 million in cash and one million shares of newly issued OrthoLogic Common Stock valued at $2,969,000. The settlement is subject to approval by the lead plaintiffs and defendants; the preparation, execution and filing of the formal Stipulation of Settlement; notice to the settlement members; and final approval of the settlement by the courts at a hearing. OWENS CORNING: Jefferson County Asbestos-Tobacco Link Suit Dismissed -------------------------------------------------------------------- Continuing a series of recent legal victories for the tobacco industry, a Jefferson County, Miss., circuit court judge dismissed all claims by Owens Corning (NYSE: OWC) seeking reimbursement of funds the asbestos manufacturer has paid to former asbestos workers. In dismissing Owens Corning's claims, Judge Lamar Pickard affirmed the recommendation of Special Master Robert W. Sneed. In his report, Sneed recommended that the court find, "that under Mississippi law, and the prevailing law in virtually all jurisdictions, Owens Corning is prohibited by the remoteness doctrine from recovering from the Tobacco Defendants for an 'indirect injury' sustained by Owens Corning." Owens Corning, an asbestos manufacturer, had asserted various claims based largely on the theory that they had "overpaid" injury claims brought against them by asbestos workers. Owens Corning claimed that tobacco use, not asbestos exposure, was the cause of the alleged personal injuries. The company further claimed that failure to warn asbestos workers who smoked of the substantially increased risk of developing lung cancer caused Owens Corning both to pay for more lung cancer claims, and to pay more on individual claims. "We believe the recommendation by the special master and the decision by the judge are correct and consistent with the overwhelming weight of authority from virtually every jurisdiction that has considered third- party claims against the tobacco industry, including eight U.S. courts of appeals," said Daniel W. Donahue, senior vice president and deputy general counsel for R.J. Reynolds Tobacco Company. Donahue noted that earlier this week, the U.S. Court of Appeals for the District of Columbia Circuit dismissed a similar suit by a union health-and-welfare fund because these types of claims against the tobacco industry are: "too remote, contingent, derivative and indirect to survive." "This ruling in Mississippi is a serious blow to attempts by several other asbestos manufacturers who have filed similar suits in Jefferson County," said Jeff Raborn, attorney for Brown & Williamson Tobacco Corporation, one of the defendants in the case. "This particular venue has been targeted by plaintiffs' attorneys to sue the tobacco industry, which makes this victory all the more meaningful." "Coupled with a favorable outcome in the Falise case in Brooklyn, New York, earlier this year, in which asbestos manufacturer Johns Manville brought similar claims, these rulings should give pause to third parties before bringing these types of suits," he said. A similar action brought by Owens Corning against tobacco companies is pending in the California courts. "We of course disagree with that decision," Gregg Bronk, an Owens Corning spokesman, tells Reuters. "We are planning to appeal to the Mississippi Supreme Court." PARAMETRIC TECHNOLOGY: Case Closed as Deadline For Appeal Expires ----------------------------------------------------------------- Certain class action lawsuits were filed by shareholders in the fourth quarter of 1998 against Parametric Technology Corporation and certain of its current and former officers and directors in the U.S. District Court in Massachusetts claiming violations of the federal securities laws based on alleged misrepresentations regarding the Company's anticipated revenue and earnings for the third quarter of 1998. An amended complaint, consolidating these lawsuits into one action, was filed in the second quarter of 1999, seeking unspecified damages. In the third quarter of 1999, the Company filed a motion to dismiss the consolidated action. On March 29, 2001, the U.S. District Court for the District of Massachusetts granted the Company's motion to dismiss and entered an order dismissing the consolidated action with prejudice. The applicable appeal period has expired and the plaintiffs have not appealed, which should conclude the litigation. PHYCOR INC.: Consolidated Securities Suit Goes to Trial on November 6 --------------------------------------------------------------------- Phycor Inc. and certain of its current and former officers and directors, Joseph C. Hutts, Derril W. Reeves, Thompson S. Dent, Richard D. Wright and John K. Crawford (only Mr. Dent remains employed by the Company while he and Mr. Hutts serve as directors) have been named defendants in 10 securities fraud class actions filed in state and federal courts in Tennessee between September 8, 1998 and June 24, 1999. The factual allegations of the complaints in all 10 actions are substantially identical and assert that during various periods between April 22, 1997 and September 22, 1998, the defendants issued false and misleading statements which materially misrepresented the earnings and financial condition of the Company and its clinic operations and misrepresented and failed to disclose various other matters concerning the Company's operations in order to conceal the alleged failure of the Company's business model. Plaintiffs further assert that the alleged misrepresentations caused the Company's securities to trade at inflated levels while the individual defendants sold shares of the Company's stock at such levels. In each of the actions, the plaintiff seeks to be certified as the representative of a class of all persons similarly situated who were allegedly damaged by the defendants' alleged violations during the "class period." The federal court actions have been consolidated in the U. S. District Court for the Middle District of Tennessee. Defendants' motion to dismiss was denied. The state court actions were consolidated in Davidson County, Tennessee. The Plaintiffs' original consolidated class action compliant in state court was dismissed for failure to state a claim. Plaintiffs, however, were granted leave to file an amended complaint. The amended complaint filed by Plaintiffs asserted, in addition to the original Tennessee Securities Act claims, that Defendants had also violated Section 11 and 12 of the Securities Act of 1933 for alleged misleading statements in a prospectus released in connection with the CareWise acquisition. The amended complaint also added KPMG LLP (KPMG), the Company's independent public auditors. KPMG removed this case to federal court and its motion to dismiss has been denied. On October 20, 2000, this case was consolidated with the original federal consolidated action and a new consolidated complaint has been filed. The Company, the individual defendants and KPMG have filed an answer and the discovery process is nearing completion. On March 9, 2001, the plaintiffs filed a motion for class certification and the Company filed its response in opposition thereto on April 6, 2001. The motion is pending before the court. The trial of all the consolidated cases is set for November 6, 2001. The Company believes that it has meritorious defenses to all of the claims, and is vigorously defending against these actions. PLC SYSTEMS: Settles Securities Suit in Mass. For Unspecified Amount -------------------------------------------------------------------- In July 1997, a United States Food and Drug Administration advisory panel recommended against approval of the application by PLC SYSTEMS, INC. to market its first generation carbon dioxide TMR laser in the United States. Following this recommendation, the Company was named as defendant in 21 purported class action lawsuits filed between August 1997 and November 1997 in the United States District Court for the District of Massachusetts. The lawsuits sought an unspecified amount of damages in connection with alleged violations of the federal securities laws based on the Company's failure to obtain a favorable FDA panel recommendation in 1997. Nineteen of these complaints were consolidated by the court into a single action for pretrial purposes. Two of these suits were voluntarily dismissed. The Company moved to dismiss all claims in the federal suit. On March 26, 1999, the court issued an order dismissing some, but not all, of the claims in the federal suit. The parties filed cross motions for reconsideration and on October 12, 1999, the court dismissed additional, but not all, remaining claims in the federal suit. On February 9, 2001, the Court issued an Order approving the settlement of the federal suit and entered a judgment of dismissal. The settlement of the federal suit did not have a material impact on the Company's financial statements. PRIMEBUY NETWORK: Keller Rohrback Commences Securities Suit in Idaho -------------------------------------------------------------------- Keller Rohrback L.L.P.'s Complex Litigation Group and Cosho, Humphrey, Greener & Welsh, P.A. filed a lawsuit in the United States District Court of Idaho, Case No. CIV-01-0207-N-EJL which was assigned to Honorable Judge Lodge, on behalf of Matthew and Glen Douglas and all persons who purchased or acquired unregistered securities in the form of memberships and/or stock issued by PrimeBuy Network.com, Inc. from September 24, 1999 to the present, inclusive. The complaint alleges that, during the class period, defendants violated multiple sections of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Idaho Securities and Consumer Protection Acts, by misrepresenting and omitting material facts in connection with the operation, financial condition and prospects of PrimeBuy, and in connection with PrimeBuy securities. PrimeBuy purports to be an Internet "shopping mall," which solicits investors to purchase memberships. The Company promises investors the opportunity to participate as "Independent Sales Representatives," whereby investors purchase and customize web sites, and are led to believe that they can make a profit in the form of commissions earned on each product purchased through their web site. The complaint alleges that, in reality, defendants were conducting a classic "pyramid" scheme, in which the PrimeBuy Internet Mall was simply a multilevel marketing scheme, offering an array of shopping "opportunities" already available on the Internet. In addition, it is asserted that defendants misrepresented that the memberships and/or stock issued by PrimeBuy complied with applicable state and federal securities laws, and that the Company would be holding an initial public offering of its stock during September 2000. As a result of these false and misleading statements and omissions, investors are left holding worthless shares of unregistered stock in an allegedly illegal pyramid scheme. For further details, contact: Keller Rohrback L.L.P. Email: investor@kellerrohrback.com Website: www.SeattleClassAction.com PROVELL INC.: Suit Alleging Consumer Law Violations in Discovery Stage ---------------------------------------------------------------------- Provell Inc. disclosed in a regulatory document filed lately with the Securities and Exchange Commission that the Company was served on August 29, 2000 with a complaint styled as a class action in Minnesota State Court. The complaint is similar to complaints previously settled by the Company with the Minnesota Attorney General on December 3, 1999, but also contends that certain business practices violate other Minnesota consumer protection laws. The Company believes it has strong factual and legal defenses and is vigorously defending the allegations both on the merits and in regard to class status. The case is currently in the early stages of discovery. PROVELL INC.: Ex-workers' Suit Won't Affect Finance, Operations --------------------------------------------------------------- On April 17, 2001, a complaint styled as a class action was filed in Federal District Court in Minnesota against Provell Inc. on behalf of four former ClickShip Direct, Inc. employees, alleging that the Company failed to follow legal requirements for notice to employees and payment of wages and bonuses prior to the shutdown of ClickShip's business. ClickShip is a subsidiary of Provell Inc. The Company believes it has strong factual and legal defenses and intends to vigorously defend the allegations. Although the matter is at an early stage, management believes that the resolution of this action will not have a material adverse effect on the financial condition or results of operations of the Company. PTEK HOLDINGS: Answers Amended Complaint Lodged in N.D. Georgia --------------------------------------------------------------- PTEK HOLDINGS, INC. and certain of its officers and directors have been named as defendants in multiple shareholder class action lawsuits filed in the United States District Court for the Northern District of Georgia. Plaintiffs seek to represent a class of individuals (including a subclass of former Voice-Tel franchisees and a subclass of former Xpedite Systems, Inc. shareholders) who purchased or otherwise acquired the Company's common stock from as early as February 11, 1997 through June 10, 1998. Plaintiffs allege the Company admitted it had experienced difficulty in achieving its anticipated revenue and earnings from voice messaging services due to difficulties in consolidating and integrating its sales function. Plaintiffs allege, among other things, violation of Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12 and 15 of the Securities Act of 1933. The Company filed a motion to dismiss this complaint on April 14, 1999. On December 14, 1999, the court issued an order that dismissed the claims under Sections 10(b) and 20 of the Exchange Act without prejudice, and dismissed the claims under Section 12(a)(1) of the Securities Act with prejudice. The effect of this order was to dismiss from this lawsuit all open-market purchases by the plaintiffs. The plaintiffs filed an amended complaint on February 29, 2000. The defendants filed a motion to dismiss on April 14, 2000, which was granted in part and denied in part on December 8, 2000. The defendants filed an answer on January 8, 2001. RALLY'S HAMBURGERS: Motions For Summary Judgment Remains Undecided ------------------------------------------------------------------ In January and February 1994, two putative class action lawsuits were filed, purportedly on behalf of the stockholders of Rally's Hamburgers, Inc. in the United States District Court for the Western District of Kentucky, Louisville division, against Rally's, Burt Sugarman and Giant Group, Ltd. and certain of Rally's former officers and directors and its auditors. The cases were subsequently consolidated under the case name Jonathan Mittman et. al. vs. Rally's Hamburgers, Inc., et. al. The complaints allege that the defendants violated the Securities Exchange Act of 1934, among other claims, by issuing inaccurate public statements about Rally's in order to arbitrarily inflate the price of its common stock. On April 15, 1994, Rally's filed a motion to dismiss and a motion to strike. On April 5, 1995, the Court struck certain provisions of the complaint but otherwise denied Rally's motion to dismiss. In addition, the Court denied plaintiffs' motion for class certification; the plaintiffs renewed this motion, and despite opposition by the defendants, the Court granted such motion for class certification on April 16, 1996, certifying a class from July 20, 1992 to September 29, 1993. The parties filed motions for Summary Judgment in September 2000, and rulings by the Court are pending. The defendants deny all wrongdoing and intend to defend themselves vigorously in this matter. ROYAL CARIBBEAN: Too Early to Assess Impact of Suit Filed by Crew ----------------------------------------------------------------- Royal Caribbean Cruises, Ltd. disclosed in a recent regulatory filing with the Securities and Exchange Commission that it is party to a lawsuit filed in April 1999 in the United States District Court for the Southern District of New York. The class suit was filed on behalf of current and former crewmembers alleging that the Company failed to pay the plaintiffs their full wages. The suit seeks payment of the following: (i) the wages alleged to be owed, (ii) penalty wages under U.S. law, and (iii) punitive damages. In November 1999, a purported class action suit was filed in the same court alleging a similar cause of action. The Company is not able at this time to estimate the impact of these proceedings. SKYMALL INC.: Continues Defense Against Securities Suit in Arizona ------------------------------------------------------------------ On January 29, 1999, a securities class action complaint was filed against SkyMall Inc. and Robert Worsley, the Company's Chief Executive Officer, Chairman and largest shareholder, in connection with certain disclosures made by the Company in December 1998 relating to its Internet sales. The complaint was filed in the United States District Court, District of Arizona, Case No. CIV-99-0166-PHX-ROS. The complaint alleges unlawful manipulation of the price of the Company's stock and insider selling during the period from December 28, 1998 through December 30, 1998. The complaint seeks unspecified damages for alleged violations of federal securities laws. SkyMall and Worsley filed a motion to dismiss the complaint on the basis that the complaint fails to state a claim upon which relief can be granted. In September 2000, the motion was granted in part and denied in part. SkyMall continues to believe that the allegations against it and Worsley are substantially without merit and intends to vigorously defend the lawsuit. THQ INC.: CA Court Modifies Dismissal, Allows Third Amended Complaint --------------------------------------------------------------------- On April 23, 2001, the United States District Court for the Central District of California modified its December 20, 2000 order that dismissed with prejudice two essentially identical class action lawsuits filed against THQ INC. on February 18, 2000 and on March 2, 2000, respectively. In its April 23, 2001 order, the court granted plaintiffs leave to file a third amended complaint and the plaintiffs have so filed. The lawsuits allege that the Company, and certain of its directors and senior officers, violated Section 10(b) of the Securities and Exchange Act of 1934 and SEC Rule 10b-5. TRANS-WORLD AIRLINES: Settles Sexual Harassment Suit For $2.6 Million --------------------------------------------------------------------- A sexual harassment class-action suit against Trans-World Airlines brought by the U.S. Equal Employment Opportunity Commission and three women represented by Lipman & Plesur, LLP settled for $2.6 million, the largest settlement obtained by the New York District Office of the EEOC. "The 'stick your head in the sand' approach to dealing with sexual harassment in the workplace proved very costly in this case," said Robert D. Lipman, a member of Lipman & Plesur, LLP and President of Interactive Employment Training, Inc. Sick and disgusting acts have been rampant at TWA for years and the company has not taken action to stop it, according to the Complaints filed by Lipman & Plesur, LLP and the EEOC. Lipman said that it is unbelievable that a company would choose to let sexual harassment fester in the workplace, inviting huge morale and other work-related problems as well as a class-action lawsuit, when such conduct can be easily prevented through appropriate discriminatory harassment prevention training. "A relatively small investment in a discriminatory harassment prevention training course could have prevented this whole case," Lipman said. VERSANT CORP.: Files Another Dismissal Motion For Yet Another Plaint -------------------------------------------------------------------- Versant Corporation and certain of the Company's present and former officers and directors were named as defendants in four class action lawsuits filed in the United States District Court for the Northern District of California, on January 26, 1998, February 5, 1998, March 11, 1998 and March 18, 1998. On June 19, 1998, a Consolidated Amended Complaint was filed by the court-appointed lead Plaintiff. On May 22, 2000, the court granted the defendants' motion to dismiss the Consolidated Amended Complaint, permitting plaintiff leave to amend. Plaintiffs filed a Second Amended Complaint on July 7, 2000. The court granted the defendant's motion to dismiss the Second Amended Complaint on April 2, 2001, permitting plaintiff leave to amend. Plaintiff filed a Third Amended Complaint on May 10, 2001. Like its predecessors, the Third Amended Complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act, and Securities and Exchange Commission Rule 10b-5 promulgated under the Securities Exchange Act, in connection with public statements about the Company and the Company's financial performance. The Third Amended Complaint seeks an unspecified amount of damages. The Company vigorously denies the plaintiffs' claims and intends to file a motion to dismiss the Third Amended Complaint. WABASH NATIONAL: Settles Shareholders Suit in Indiana For $500,000 ------------------------------------------------------------------ >From January 22, 1999 through February 24, 1999, five purported class action complaints were filed against Wabash National Corporation and certain of its officers in the United States District Court for the Northern District of Indiana. The complaints purported to be brought on behalf of a class of investors who purchased the Company's common stock between April 20, 1998 and January 15, 1999. The complaints alleged that the Company violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under the Act by disseminating false and misleading financial statements and reports respecting the first three quarters of the Company's fiscal year 1998. In addition, on March 23, 1999, another purported class action lawsuit was also filed in the United States District Court for the Northern District of Indiana, naming the Company, its directors and the underwriters of the Company's April 1998 public offering. That complaint alleged that the Company and the individual defendants violated Section 11 of the Securities Act of 1933, and that the Company, the individual defendants as "controlling persons" of the Company, and the underwriters are liable under Section 12 of that Act, by making untrue statements of material fact in and omitting material facts from the prospectus used in that offering. Both the Securities Exchange Act complaints and the Securities Act complaint arise out of the restatement of the Company's financial statements for the first three quarters of 1998. At a hearing on May 10, 1999 and in an order entered on June 22, 1999, Judge Allen Sharp consolidated the six pending cases under the caption In re Wabash National Corporation Securities Litigation, No. 4:99CV0003AS and established a schedule for further proceedings. Pursuant to the order, selected lead plaintiffs filed a Consolidated Class Action Complaint on July 6, 1999. The consolidated complaint repeated the claims made in the original complaints respecting the restatement and also alleges that the loss contingency for certain excise taxes, which Wabash disclosed on January 19, 1999, should have been recorded earlier. The Company's motion to dismiss the consolidated complaint was denied by the Court in February 2000. The Court subsequently denied plaintiff's motion to certify the case as a class action and fixed April 30, 2001 as the deadline for submission of summary judgment motions and March 31, 2001 as the end of discovery proceedings. On March 29, 2001, all plaintiffs voluntarily withdrew their claims arising under Sections 10 (b) and 20 (a) of the Securities and Exchange Act of 1934, when a Stipulation of Dismissal with Prejudice was filed with the Court. On April 2, 2001, the Court entered an Order of Dismissal giving effect to the Stipulation of Dismissal. As a result of that dismissal, the only claims remaining in the case were those brought by purchasers of shares in the Company's public offering on April 23, 1998 (i.e., claims arising under Sections 11 and 12 of the Securities Act of 1933). On April 17, 2001, the Company announced that it had reached an agreement that terminates the remaining elements of the shareholder litigation brought against the Company. Under the agreement, which is subject to court approval, the Company will pay $500,000 into a fund from which purchasers of stock in the Company's 1998 public offering and who satisfy certain criteria will be entitled to recover $0.33 per share. Unclaimed monies remaining in the fund, after attorney's fees and expenses are paid, will be returned to the Company. Also on April 17, 2001, the Court entered an order dismissing the action without prejudice to the right of any party upon good cause shown within ninety days to vacate the order and reopen the action if the settlement is not consummated. ********* 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., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Larri-Nil G. Veloso and Lyndsey Resnick, Editors. Copyright 2001. 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. 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