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/raid1/www/Hosts/bankrupt/CAR_Public/010607.mbx C L A S S A C T I O N R E P O R T E R Thursday, June 7 2001, Vol. 3, No. 111 Headlines BLOCKBUSTER INC.: Offers to Settle Cases On Extended Viewing Fees COMMTOUCH SOFTWARE: Faces California Suits Over Revenue Restatements CORAM HEALTHCARE: Second Amended Plaint Removes Officers From NJ Suit DIGITAL IMPACT: Milberg Weiss Commences Securities Suit In S.D. NY DTM CORPORATION: Discovery Cancelled As Parties Agree To Settle Suit EMEX CORPORATION: Berman DeValerio Commences Shareholders Suit In NY EMULEX CORPORATION: Expects CA Securities Suits To Be Consolidated FIRST VIRTUAL: Hearing Date Has Yet To Be Set On Plaintiffs' Appeal FOCUS ENHANCEMENTS: Court Axes One Suit, Allows Discovery On Another GENERAL DYNAMICS: Won't Ask For Reimbursement Of Cost On Argo Lawsuit GENTIVA HEALTH: Fairness Hearing On $25M Settlement Set For August GENTIVA HEALTH:Court Sacks RICO Claims, Allows Discovery Of Antitrust GSV INC.: Files Motion To Dismiss Consolidated Securities Suit In NJ INSURANCE LITIGATION: Auto Insurance Firms To Face Multi-million Suit INTERVOICE-BRITE: Milberg Weiss Commences N.D. Texas Securities Suit IWI HOLDING: To Cancel Settlement If Class Members Opt Out Of Deal JEFFERSON PILOT: Subsidiary Faces Two Suits Over Policy Illustrations KRAFT FOODS: No Class Certified Yet In Two Price-fixing Suits MADISON RIVER: Motion To Dismiss Amended Complaint Remains Pending NANTUCKET ISLAND: Outcome Of Four Shareholders Suits In ME Uncertain ON POINT:Settles Securities Suit For $50,000 Cash, $950,000 In Stocks PARTY CITY: Securities Lawsuit In New Jersey Dismissed With Prejudice P COM: Faces A Number Of Securities Suits Over Drop In Stock Value PHILIP SERVICES: Sued Over Work On Sodium Filter In Customer's Plant PNV INC.: Rosen Law Firm Commences Securities Lawsuit In S.D. NY SELECTICA INC.: Milberg Weiss Commences Securities Suit In S.D. NY STREAMEDIA COMMUNICATIONS: Rosen Commences Securities Suit In S.D. NY SOUTHWALL TECHNOLOGIES: $3.75M Settlement Deal Receives Approval TENFOLD CORPORATION: Intends To File Motion To Dismiss On June 19 TOBACCO LITIGATION: R.J. Reynolds Prevails on RICO and Fraud Charges UNILAB CORPORATION: Plaintiffs Turn Down Settlement Agreement US TIMBERLANDS: Shareholders Suits Won't Affect Finances,Operations VISKASE COMPANIES: Consolidated Sausage Casing Suit Moved To Illinois VISUAL NETWORKS: Barrack and Cohen Law Firms Commence Suit In MD WEBLINK WIRELESS: Faces Five Securities Lawsuits Pending In Texas WEBLINK WIRELESS: Settles Suit Over Rebates For Unspecified Amount ********* BLOCKBUSTER INC.: Offers to Settle Cases On Extended Viewing Fees ----------------------------------------------------------------- Blockbuster Inc. (NYSE: BBI) has offered to settle class action lawsuits regarding its extended viewing fees, though extended viewing fees will remain a part of Blockbuster's business and the company policy will not change. "The settlement was made possible because the parties arrived at a win- win solution which benefited both Blockbuster and its customers," said Ed Stead, executive vice president and general counsel for Blockbuster. "Although Blockbuster has won previous cases regarding our extended viewing fee policy, the practicality is that defending lawsuits like these requires both time and money, so in the best interest of our company, we've decided to settle the cases. We're pleased we can end this litigation and that our rental policy will continue unchanged," he said. Blockbuster will provide certificates to eligible class members that they can use toward movie rentals or purchases at stores owned by Blockbuster and participating franchisees. The certificates will be issued and are redeemable between Jan. 15, 2002 and May 15, 2002. Under Blockbuster's policy, customers who do not turn in their movies or games within the initial viewing period automatically have their rental extended for an equivalent time and price. Overall, about 90 percent of rentals are turned back within the initial viewing period, and Blockbuster has worked proactively to make the rental process more convenient for its members, including: (i) In February of 2000, in order to give customers more time to watch their movies, Blockbuster extended its rental return period 12 hours, from midnight until noon the following day. (ii) As a reminder, Blockbuster prints the return date on all customer receipts. (iii) Store employees are instructed to provide members with a verbal reminder of their return date at the checkout counter. (iv) In early 1998, the company extended the viewing period for about 95 percent of its inventory to five-day rentals, giving its members more time to view and return their videos. (v) Blockbuster includes a clear explanation of its rental policy on membership applications. (vi) Blockbuster has taken steps to remind customers when they retain a movie or game rental past its initial viewing period by providing both reminder phone calls to customers who have not returned their tapes and notification postcards mailed to the customer's home. "Our members clearly understand that extended viewing fees are a necessary part of the rental business," said Stead. "We realize that while some customers elect to keep our products for an extended period, others do not consciously make this election and they don't like it when they overlook the return and incur an extended viewing fee. Nevertheless it is inventory being kept out of our store, and we have to assess this fee, similar to other industries, such as rental car agencies and hotels," he added. Blockbuster Inc. is a publicly traded subsidiary of Viacom Inc. (NYSE: VIA, VIA.B) and is the world's leading renter of videos, DVDs, and video games with more than 7,700 stores throughout the Americas, Europe, Asia and Australia. COMMTOUCH SOFTWARE: Faces California Suits Over Revenue Restatements -------------------------------------------------------------------- Following the restatement by Commtouch Software Ltd. of its revenues for the first three quarters of 2000, several class action lawsuits were filed in the United States District Court for the Northern District of California, against the Company and certain of its officers and directors, alleging violations of the antifraud provisions of the Securities Exchange Act of 1934, arising from the Company's consolidated financial statements. "While we are unable to predict the ultimate outcome of these claims we believe they are without merit and intend to vigorously defend ourselves," the Company said in a regulatory document filed with the Securities and Exchange Commission recently. CORAM HEALTHCARE: Second Amended Plaint Removes Officers From NJ Suit --------------------------------------------------------------------- A complaint was filed in the United States District Court for the Third District of New Jersey on November 8, 2000 and an Amended Class Action Complaint was filed on November 15, 2000, alleging that certain current and former officers and directors of Coram HealthCare Corporation and the company's principal lenders, Cerberus Partners, L.P., Foothill Capital Corporation and Goldman Sachs & Co., implemented a scheme to perpetrate a fraud upon the stock market regarding the common stock of the Company. A second Amended Class Action Complaint was filed on March 21, 2001, which removed all of the officers and directors of the company as defendants, except the company's Chief Executive Officer and another current member of the Board of Directors and continued to name Cerberus Partners, L.P., Foothill Capital Corporation and Goldman Sachs & Co. as defendants. Plaintiffs allege that the defendants artificially depressed the trading price of the company's publicly traded shares and created the false impression that stockholders' equity was decreasing in value and was ultimately worthless. Plaintiffs further allege that members of the class sustained total investment losses of $50 million or more. DIGITAL IMPACT: Milberg Weiss Commences Securities Suit In S.D. NY ------------------------------------------------------------------ The law firm of Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit last Tuesday on behalf of purchasers of the securities of Digital Impact, Inc. (NASDAQ:DIGI) between November 22, 1999 and December 6, 2000, inclusive. The action, captioned Warren Stein v. Digital Impact, Inc. et al., 01 Civ 4942 (DAB) is pending in the United States District Court, Southern District of New York against defendants Digital Impact, Credit Suisse First Boston Corp., William Park and David Oppenheimer. The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. For further details, contact: Steven G. Schulman or Samuel H. Rudman One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by Phone: (800) 320-5081 by Email: digitalimpactcase@milbergNY.com or thru the firm's Website: http://www.milberg.com DTM CORPORATION: Discovery Cancelled As Parties Agree To Settle Suit -------------------------------------------------------------------- Expedited discovery on the Spinner v. Goldstein case has been cancelled as parties in the case agreed in principle to settle the action. DTM Corporation said in a report to the Securities and Exchange Commission that representatives of the purported class and the Company are now preparing the stipulations in the proposed settlement agreement. On April 6, 2001, the purported class action lawsuit was filed in the 200th Judicial District Court of Travis County, Austin, Texas, naming as defendants DTM, certain of DTM's directors and 3D Systems Corporation. The complaint was amended on May 2, 2001. The complaint as amended asserts that the $5.80 cash consideration to be paid in the merger of the Company with 3D Systems Corporation is inadequate and does not represent the value of the assets and the future prospects of DTM. The complaint seeks, among other things, preliminary and permanent injunctive relief prohibiting DTM from consummating the merger, and if the merger is consummated, an order rescinding the merger and awarding damages to the purported class. EMEX CORPORATION: Berman DeValerio Commences Shareholders Suit In NY -------------------------------------------------------------------- Shareholders filed Tuesday a federal class action charging Emex Corporation (Nasdaq: EMEX) with securities fraud, the law firm of Berman DeValerio & Pease said. The lawsuit was filed in the United States District Court for the Southern District of New York and is captioned Masters v. Emex Corporation et al., Civil Action No. 01-CV-4886. It seeks damages for violations of federal securities laws on behalf of all investors who bought Emex Corporation common stock between April 9, 2001 and May 23, 2001. Emex Corporation is charged with having issued a false and misleading press release concerning its successful attempt to secure much-needed financing. In particular, on April 9, 2001, the Company announced that it had obtained $100 million in project financing to build the first of a series of its highly touted commercial plants. The Company credited the success of the deal to "the efforts of Credit Suisse First Boston," a prestigious Wall Street investment firm. In reaction to the news, the price of Emex common stock soared 13% on April 10, 2001. On May 23, 2001, Dow Jones Newswires broke the news that, in fact, Credit Suisse First Boston was not involved in securing Emex's financing. According to the May 23rd article, a spokesperson for CSFB stated that CSFB turned down Emex's financing proposal. On May 30, 2001, Emex issued another press release in which it revealed that Fieldstone, Inc., not CSFB, was the financial institution behind the $100 million financing. For more information, contact: Patrick T. Egan, Esq., Jeffrey C. Block, Esq. by mail: Berman DeValerio & Pease LLP, One Liberty Square, Boston, MA 02109 by email: bdplaw@bermanesq.com or by Phone: (800) 516-9926 EMULEX CORPORATION: Expects CA Securities Suits To Be Consolidated ------------------------------------------------------------------ Beginning on or about February 20, 2001, Emulex Corporation and certain of its officers and directors were named as defendants in securities class action lawsuits filed in the United States District Court, Central District of California. As of March 16, 2001, approximately seven of these lawsuits have been filed. The Company expects that the cases will be consolidated, and that a consolidated complaint will be filed after the Court appoints a lead plaintiff. The plaintiffs in the actions purport to represent purchasers of our common stock during various periods ranging from January 18, 2001 through February 9, 2001. The complaints allege that the Company and certain of its officers and directors made misrepresentations and omissions in violation of sections 10(b) and 20(a) of the Securities Exchange Act of 1934. As a result of these lawsuits, a number of derivative cases have been filed in California and Delaware alleging that certain officers and directors breached their fiduciary duties to the Company in connection with the events alleged in the class action lawsuits. FIRST VIRTUAL: Hearing Date Has Yet To Be Set On Plaintiffs' Appeal ------------------------------------------------------------------- There is still no schedule for the hearing on the Notice of Appeal brought by stockholders of First Virtual Communications Inc. to the U.S. Circuit Court of Appeals on March last year. The Company furnished this information recently to the Securities and Exchange Commission in a regulatory filing. On or about April 9, 1999, several purported class action suits were filed in the United States District Court for the Northern District of California alleging violations of the federal securities laws against the Company and certain of its officers and directors in connection with its reporting of financial results for the period ended December 31, 1998. The court dismissed these actions without leave to amend on February 14, 2000. The plaintiffs filed a notice of appeal with the Ninth U.S. Circuit Court of Appeals on March 29, 2000. The appeal has been fully briefed by all parties. FOCUS ENHANCEMENTS: Court Axes One Suit, Allows Discovery On Another -------------------------------------------------------------------- Focus Enhancements Inc. has been named as a defendant in two consolidated class actions alleging violations of federal securities laws. The lawsuits allege that Focus and its Chairman and certain other present and former officers violated federal securities laws in connection with a number of allegedly false or misleading statements and seek certification of two classes, one on behalf of persons who purchased stock from July 17, 1997 to February 19, 1999 and the other on behalf of persons who purchased stock between November 15, 1999 to March 1, 2000, respectively. Defendants moved to dismiss both actions. On May 10, 2001, the Federal District Court dismissed the later alleged class action in its entirety. As to the earlier alleged class action, the Federal District Court granted certain portions of the Company's motion to dismiss and denied other portions, allowing the case to go forward into pretrial discovery as to certain matters. GENERAL DYNAMICS: Won't Ask For Reimbursement Of Cost On Argo Lawsuit --------------------------------------------------------------------- General Dynamics Corporation has agreed not to collect reimbursement for the cost it entailed in the trial and appeal of the Argo Case in California. This after the plaintiffs also waived their right to appeal the decision reversing a jury verdict in 1997. On May 1, 2001, the Appellate Court for the Fifth District of California reversed a 1997 jury verdict awarding plaintiffs $101 million in actual and punitive damages. On April 19, 1995, 101 then-current and former employees of General Dynamics' Convair Division in San Diego, California filed a six-count complaint in the Superior Court of California, County of San Diego. The plaintiffs alleged that the company interfered with their right to join an earlier class action lawsuit for overtime wages brought pursuant to the Federal Fair Labor Standards Act by, among other things, concealing its plans to close the Convair Division. GENTIVA HEALTH: Fairness Hearing On $25M Settlement Set For August ------------------------------------------------------------------ Gentiva Health Services, Inc. disclosed in a recent regulatory filing with SEC that it has reached an agreement to settle the Securities and Derivative actions in New York and Delaware, respectively. In late 2000, after engaging in a mediation conducted by a third-party mediator, the parties to the class action (In re Olsten Corporation Securities Litigation, No. 97-CV-5056 (DRH), U.S. District Court for the Eastern District of New York) and Derivative Lawsuit (Rubin v. May, No. 17135-NC, Delaware Chancery Court) agreed in principle to settle both lawsuits for the aggregate sum of $25 million. The proposed settlement is subject to final approval of the respective courts before which the class action and the derivative lawsuit are pending. By order dated April 30, 2001, the District Court preliminarily approved the settlement and scheduled a settlement fairness hearing date for August 31, 2001. GENTIVA HEALTH:Court Sacks RICO Claims, Allows Discovery Of Antitrust --------------------------------------------------------------------- On June 23, 2000, Gentiva Health Services, Inc. was served with a Complaint in a purported class action lawsuit filed by Ultimate Home Health Care Inc. in the U.S. District Court for the Middle District of Tennessee, captioned Ultimate Home Health Care, Inc. v. Columbia/HCA Healthcare Corp., No. 3-00-0560. The Company was served with an Amended Complaint in the Tennessee Lawsuit on July 21, 2000, which names as defendants Columbia/HCA, Columbia Homecare Group, Olsten Health Management a/k/a Hospital Contract Management Services (one of the Company's subsidiaries) and Olsten Corporation. The Amended Complaint alleges, among other things, that the defendants' business practices in connection with home health care patient referrals between 1994 and 1996 violated provisions of Federal antitrust laws, the Racketeer Influenced and Corrupt Organizations Act (RICO), the Tennessee Consumer Protection Act (TCPA), and state common law. In September 2000, the defendants filed a motion to dismiss the Amended Complaint, and by an order dated January 21, 2001, the Court dismissed plaintiffs' RICO and state common law tort claims. The Court also held that the plaintiffs had properly pleaded the antitrust, TCPA and civil conspiracy claims and allowed those claims to proceed to discovery. GSV INC.: Files Motion To Dismiss Consolidated Securities Suit In NJ -------------------------------------------------------------------- In March and April 2000, the following twelve purported class actions were filed against GSV, Inc. and certain of its current and former officers and directors in the U.S. District Court for the District of New Jersey: (i) Ames v. Cybershop, (ii) Ezeir v. Cybershop, (iii) Fuechtman v. Cybershop, (iv) Kaufman v. Cybershop, (v) Goldenberg v. Cybershop, (vi) Marino v. Cybershop, (vii) Waldarman v. Cybershop, (viii) Page v. Cybershop, (ix) Young v. Cybershop, (x) Johnson v. Cybershop, (xi) Hitzing v. Cybershop, and (xii) Gerber v. Cybershop On April 25, 2001, lead counsel for the plaintiffs was designed and an amended complaint was filed. On May 18, 2001 a motion to dismiss was filed on behalf of the Company and all other defendants. The amended complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making or causing GSV to make materially false and misleading statements about GSV. GSV is vigorously defending these actions. INSURANCE LITIGATION: Auto Insurance Firms To Face Multi-million Suit --------------------------------------------------------------------- A multi-million-dollar class-action lawsuit has been authorized by the Board of Directors of the National Auto Agents Alliance (NAAA) against several insurers. The Auto Agents Alliance questions the legality of insurers reducing agent's compensation expenses without reducing charges to consumers. The NAAA action comes in the wake of continuing slashes in agent compensation of 25 to 100 percent in some states, eliminating the agent's ability to provide quality service contracted to policyholders. Subsequent to receiving approval of rates based on anticipated expense factors, some insurance companies have been reducing agent compensation expenses sharply without obtaining prior regulatory approval or passing on these reductions to the consumer. The National Auto Agents Alliance, representing thousands of agents and millions of policyholders across the U.S., believes that consumers suffer when their agents are financially unable to provide quality service for which the consumer paid. NAAA President, James W. Holthaus, stated: "It is unfortunate that we have been forced to take this action but feel this is the right direction to take for both our member independent agents and the consumers they represent." The National Auto Agents, formed in 1995, is a trade group representing independent auto insurance agents in 18 states. For more information, contact Art Mastera, Executive Director, at 877/367-6223 or by email at ajmastera@bigfoot.com. INTERVOICE-BRITE: Milberg Weiss Commences N.D. Texas Securities Suit -------------------------------------------------------------------- Milberg Weiss Bershad Hynes, Lerach, LLP filed a class action in the United States District Court for the Northern District of Texas on behalf of purchasers of InterVoice-Brite, Inc. (NASDAQ:INTV) common stock during the period between October 12, 1999 and June 6, 2000. The complaint charges InterVoice and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company was created through the acquisition of Brite Voice Systems, Inc. for $164.4 million in cash and stock in the 2ndQ F00. The complaint alleges that during the Class Period, defendants made materially false statements about InterVoice's business, its financial results, the success of its integration with Brite and its prospects. For additional details, contact: Milberg Weiss Bershad Hynes & Lerach LLP, William Lerach by Phone: 800/449-4900 or by email: wsl@milberg.com IWI HOLDING: To Cancel Settlement If Class Members Opt Out Of Deal ------------------------------------------------------------------ IWI Holding Ltd. said in a recent regulatory filing with the Securities and Exchange Commission that it may decline to pursue the settlement agreement it forged with the plaintiffs of a 1996 shareholder suit, if a significant number of the class members will "opt out" of the pact. The agreement has been pending for court approval since December 1999. The Company was named codefendant in the class action brought by a stockholder in 1996 who alleges the Company misrepresented its financial position in interim financial statements. The stockholder is seeking damages of $11 million. The parties reached an agreement in principle to settle the claim for a significantly lesser amount. JEFFERSON PILOT: Subsidiary Faces Two Suits Over Policy Illustrations --------------------------------------------------------------------- Jefferson-Pilot Life, a primary insurance subsidiary of Jefferson Pilot Corporation, is a defendant in two separate proposed class action suits. The plaintiffs' fundamental claim in the first suit is that the Company's policy illustrations were misleading to consumers. Management believes, however, that its policy illustrations made appropriate disclosures and were not misleading. The second suit alleges that a predecessor company, Pilot Life, decades ago unfairly discriminated in the sale of certain small face amount life insurance policies, and unreasonably priced these policies. In both cases, the plaintiffs seek unspecified compensatory and punitive damages, costs and equitable relief. "While management is unable to estimate the probability or range of any possible loss in either or both cases, management believes that our practices have complied with state insurance laws and intends to vigorously defend the claims asserted," the Company said in its report to the Securities Exchange Commission recently. KRAFT FOODS: No Class Certified Yet In Two Price-fixing Suits ------------------------------------------------------------- Since 1996, seven putative class actions have been filed by various dairy farmers alleging that Kraft Foods, Inc. and others engaged in a conspiracy to fix and depress the prices of bulk cheese and milk through its trading activity on the National Cheese Exchange. Two of the actions were voluntarily dismissed by plaintiffs after class certification was denied. Three cases were consolidated in state court in the Circuit Court of Wisconsin, Dane County, and in November 1999, the court granted the Company's motion for summary judgment. The plaintiffs' appeal is now pending before the Wisconsin Court of Appeals, Fourth Circuit. The Company's motions to dismiss were granted in cases pending in the Circuit Court of Cook County, Illinois and in the U.S. District Court for the Central District of California. Appellate courts have reversed and remanded both cases for further proceedings. No classes have been certified in any of the cases. MADISON RIVER: Motion To Dismiss Amended Complaint Remains Pending ------------------------------------------------------------------ On October 5, 1999, nine former employees of Madison River Capital, LLC, who had elected to retire and receive cash distributions for their interests in the Employee Stock Ownership Plan in 1996 and 1997 filed a class action lawsuit in Alabama state court alleging breach of fiduciary duty, suppression, and misrepresentation against the Company and its subsidiaries. The complaint alleged that the Company failed to disclose to plaintiffs' ongoing negotiations for the sale of the Company and that the true value of their ESOP interests were higher than the amounts offered to them in connection with their early retirement. Plaintiffs have filed an amended complaint on November 18, 1999 and sought class certification, the establishment of a constructive trust to distribute proceeds from the sale of the Company to the plaintiffs, and a preliminary injunction seeking to stop the Company from making further distributions from the ESOP. On December 6, 1999, the Company, moved to dismiss plaintiffs' amended complaint on the ground that it failed to state any claim upon which relief could be granted. Defendants' motion is currently pending with the Court. NANTUCKET ISLAND: Outcome Of Four Shareholders Suits In ME Uncertain -------------------------------------------------------------------- There are four lawsuits, each purporting to represent a class of investor limited partners, against the Nantucket Island Associates Limited Partnership, its general partners and certain related and unrelated parties. The lawsuits claim unjust enrichment, violation of the Massachusetts securities laws, breach of fiduciary duty, fraud, deceit, misrepresentation, conspiracy, breach of contract, negligence, and violation of Massachusetts consumer protection laws on behalf of themselves and the purported class. The plaintiffs appear to contend in substance, that a 1996 offering of preferred limited partnership units in the Company and the subsequent sale of certain assets of the Company violated their rights as limited partners. "It is not possible to predict the likely outcome of these actions at this time," the Company said in a recent report to the Securities and Exchange Commission. ON POINT:Settles Securities Suit For $50,000 Cash, $950,000 In Stocks --------------------------------------------------------------------- On April 20, 2000, a shareholder class action was filed against On- Point Technology Systems, Inc. and certain officers and directors in the U.S. District Court, Southern District of California. The action, which seeks an unspecified amount of damages on behalf of all similarly situated shareholders, alleges that On-Point violated federal securities laws by the dissemination of materially false and misleading financial statements. The defendants have entered into amended settlement agreements with the class, and the court has preliminarily approved the amended settlement agreements. On-Point and the other defendants have denied the liability claims as part of the amended settlements, but believe that settling the case quickly is in the best interests of the Company in order for management to more effectively proceed with its strategic business plans. Under the settlement agreement, On-Point would be permitted to issue shares equal to $950,000 in value on the date the shares are required to be issued to the class, which is estimated would occur within twelve months, and $50,000 of cash. PARTY CITY: Securities Lawsuit In New Jersey Dismissed With Prejudice --------------------------------------------------------------------- Party City Corporation (OTC: PCTY), America's largest party goods chain with 455 Company-owned and franchised stores, announced that on May 29, 2001, the United States District Court for the District of New Jersey dismissed with prejudice the complaint that had been filed against the Company and certain of its former officers alleging violations of the Federal securities laws. This decision is subject to appeal. The class action, In re Party City Corporation Securities Litigation, was a consolidation of a number of separate complaints, each of which was filed in the United States District Court for the District of New Jersey, and each of which was filed as a class action on behalf of persons who purchased or acquired shares of the Company's common stock during various time periods between February 1998 and March 19, 1999. P COM: Faces A Number Of Securities Suits Over Drop In Stock Value ------------------------------------------------------------------ P Com, Inc. is a defendant in a consolidated state-court class action lawsuit in which the plaintiffs are alleging various securities laws violations by the Company and certain of its officers and directors. The plaintiffs are seeking unspecified damages based upon the decrease in market value of shares of the Company's Common Stock. "While management believes the action is without merit and is defending this action vigorously, these proceedings are at an early stage and the Company is unable to speculate on the ultimate outcomes," the Company said in a report to the Securities and Exchange Commission. PHILIP SERVICES: Sued Over Work On Sodium Filter In Customer's Plant -------------------------------------------------------------------- On September 13, 1999, a lawsuit was filed in state court in Ohio Ashtabula County), alleging injury to certain named plaintiffs resulting from evacuation due to a fire and shelter-in-place orders with respect to a sodium filter at an RMI Titanium Company plant in Ashtabula, Ohio. The plaintiffs allege negligence on the part of RMI and Philips Services Corporation in the removal of sodium from the filter on RMI's premises. Plaintiffs are seeking actual and punitive damages and their attorneys are applying for class action status to represent 500 people affected by the evacuation order and the approximately 4,500 people affected by the shelter-in-place orders. RMI has demanded indemnification from Philip Services Corporation under the terms of the contract pursuant to which the work was performed. PNV INC.: Rosen Law Firm Commences Securities Lawsuit In S.D. NY ---------------------------------------------------------------- The Rosen Law Firm announced it has commenced a class action in the United States District Court for the Southern District of New York on behalf of all purchasers of PNV Inc. (Nasdaq -PNV or OTCBB-PNVNE.OB) publicly traded common stock during the period beginning the date of the initial public offering on November 24, 1999 through May 15, 2000. The complaint names certain officers and directors of PNV, as well as each of the underwriters of PNV's initial public offering as defendants. The complaint seeks damages for violations of federal securities laws. The complaint alleges that certain of the executive officers and directors of PNV, together with the underwriters of the company's initial public offering misrepresented the capital and financing requirements of PNV in the prospectus distributed to investors. For further information, contact: Laurence Rosen, Esq. toll-free at 866-767-3653 or email lrosen@rosenlegal.com or visit the website at http://www.rosenlegal.comfor more information. SELECTICA INC.: Milberg Weiss Commences Securities Suit In S.D. NY ------------------------------------------------------------------ The law firm of Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit last Tuesday on behalf of purchasers of the securities of Selectica, Inc. (NASDAQ:SLTC) between March 10, 2000 and December 6, 2000, inclusive. The action, captioned Phillip Stone v. Selectica, Inc. et al., 01 Civ. 4941 (GBD) is pending in the United States District Court, Southern District of New York against defendants Selectica, Credit Suisse First Boston Corp., FleetBoston Roberston Stephens, Inc., Rajen Jaswa, Sanjay Mittal and Stephen Bennion. The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. For more information, contact: Steven G. Schulman or Samuel H. Rudman One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by Phone: (800) 320-5081 by Email: selecticacase@milbergNY.com or thru the firm's Website: http://www.milberg.com STREAMEDIA COMMUNICATIONS: Rosen Commences Securities Suit In S.D. NY --------------------------------------------------------------------- The Rosen Law Firm filed a class action last Tuesday in the United States District Court for the Southern District of New York on behalf of all purchasers of Streamedia Communications Inc. (Nasdaq -SMIL or OTCBB-SMILE.) publicly traded common stock during the period beginning the date of the initial public offering on December 22, 1999 through June 1, 2001. The complaint names Streamedia, certain of its officers and directors, as well as each of the underwriters of Streamedia's initial public offering as defendants. The complaint seeks damages for violations of federal securities laws. The complaint alleges that the prospectus authored by defendants misrepresented the true state of Streamedia's business at the time of the IPO. For further information, contact: Laurence Rosen, Esq. toll-free at 866-767-3653 or email lrosen@rosenlegal.com or visit the website at http://www.rosenlegal.comfor more information. SOUTHWALL TECHNOLOGIES: $3.75M Settlement Deal Receives Approval ---------------------------------------------------------------- Southwall Technologies, Inc. was named a defendant in a class action lawsuit filed on March 9, 1998 by Richard McKernan in the Superior Court of California, County of Santa Clara. The Company has reached a settlement with plaintiffs in the amount of $3.75 million. That settlement received final approval and statutory approval as a good faith settlement from the Court on February 22, 2001. TENFOLD CORPORATION: Intends To File Motion To Dismiss On June 19 ----------------------------------------------------------------- On or after August 12, 2000, six complaints were filed in the United States District Court of Utah alleging that Tenfold Corporation and certain of its officers violated certain federal securities laws. All six complaints were virtually identical and allege that: (i) the Company improperly recognized revenues on some of its projects; (ii) the Company failed to maintain sufficient accounting reserves to cover the risk of contract disputes or cancellations; (iii) the Company issued falsely optimistic statements that did not disclose these accounting issues; and (iv) Company insiders sold stock in early calendar year 2000 while knowing about these issues. On October 30, 2000, the Company's motion to consolidate the six complaints into one class action complaint was granted. On March 7, 2001, the court appointed lead plaintiffs and lead class counsel. On May 1, 2001, the plaintiffs filed an amended consolidated complaint that repeats their earlier allegations while adding additional details regarding the projects on which revenue was allegedly improperly recognized. The Company is reviewing this complaint and intends to file a motion to dismiss on or before June 19, 2001. TOBACCO LITIGATION: R.J. Reynolds Prevails on RICO and Fraud Charges -------------------------------------------------------------------- A Brooklyn, N.Y., jury refused to find that R.J. Reynolds Tobacco Company had committed common law fraud or that it had violated the federal RICO (Racketeer Influenced and Corrupt Organizations) Act in an action brought against the tobacco industry by Empire Blue Cross Blue Shield of New York. The jury did, however, find that Reynolds Tobacco and other tobacco manufacturers had violated the N.Y. Deceptive Business Practices Act. Empire had asserted claims under that act both on behalf of itself and on behalf of certain of its subscribers. Reynolds Tobacco will appeal the verdict and expects to prevail in its challenge to the findings of liability under the state consumer protection statute. "We are pleased that the jury found in our favor with respect to the common law fraud and RICO claims and consider this case a victory," said Thomas F. McKim, assistant general counsel for Reynolds Tobacco. "The jury also apparently found the plaintiff's factual case concerning the deceptive practices claims less than compelling, since they awarded only a tiny fraction of the damages sought by the plaintiff. "We believe the verdicts returned under the consumer protection act will be reversed, once the relevant legal issues are considered by the court of appeals," said McKim. "Neither Empire nor its subscribers were misled by Reynolds or the other defendants about the health hazards of smoking," said McKim. "The evidence presented during the trial showed that nothing the tobacco companies said or did had any impact on the decisions made by Empire's subscribers to take up or continue smoking, or on the choices Empire made as a provider of health-care insurance." "The U.S. Court of Appeals for the Second Circuit, which will hear the appeal, has already ruled in a similar case (Laborers Local 17) that third-party payers are too remote from any alleged injury to have standing to sue," said McKim. "We believe the Second Circuit will abide by its own precedent and dismiss this case." Of the current verdict, McKim said, "The Blue Cross Blue Shield case should never have gone to trial in the first place. The overwhelming majority of federal courts have rejected health-care cost-recovery claims by third-party payers because the plaintiffs, who are not injured themselves, cannot as a matter of law receive payment for alleged injuries to others." To date, eight U.S. courts of appeal (the 2nd, 3rd, 5th, 7th, 8th, 9th, 11th and D.C. circuits) have unanimously rejected third-party payer suits. The most recent of those decisions came in late May, when the U.S. Court of Appeals for the District of Columbia Circuit dismissed four separate lawsuits brought by a union health-and-welfare fund and three foreign governments, noting that these types of claims against the tobacco industry are "too remote, contingent, derivative and indirect to survive." Other defendants in the case included Philip Morris Inc. (NYSE: MO), Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, American Tobacco Company, Liggett Group, Inc. and Liggett and Myers Tobacco Company, B.A.T. Industries p.l.c., B.A.T.CO., U.S. Smokeless Tobacco Company, New York based public relations firm Hill and Knowlton, Council for Tobacco Research and the Tobacco Institute. R.J. Reynolds Tobacco Company (RJRT) is a wholly owned subsidiary of R.J. Reynolds Tobacco Holdings, Inc. (NYSE: RJR). R.J. Reynolds Tobacco Company is the second-largest tobacco company in the United States, manufacturing about one of every four cigarettes sold in the United States. UNILAB CORPORATION: Plaintiffs Turn Down Settlement Agreement ------------------------------------------------------------- Unilab Corporation informed the Securities and Exchange Commission recently that the plaintiffs in the shareholders suit filed in 1999 would no longer push through with the settlement it had agreed with the Company last year. The Company provided no further details in its regulatory filing with the Commission except to note that the agreement was just waiting final approval from the court. On November 4, 1999, the purported class action was filed in the United States District Court for the Southern District of New York against the Company and the board of directors by certain former stockholders, seeking compensatory damages, prejudgment interest, and expenses on behalf of the class of shareholders. The complaint alleges, among other things, that the proxy statement relating to the November 1999 re-capitalization contained material misrepresentations and omissions in violation of the federal proxy rules. US TIMBERLANDS: Shareholders Suits Won't Affect Finances,Operations ------------------------------------------------------------------- In November 2000, six purported class action lawsuits were filed against U.S. Timberlands Services Company, LLC (General Partner) and its Board of Directors alleging breach of fiduciary duty and self- dealing in connection with an announcement on November 2, 2000 that a group led by senior management has begun the process to explore taking U.S. Timberlands Company L.P. private. All six lawsuits were filed in the Court of Chancery of the State of Delaware for the County of New Castle. Each lawsuit was filed by a Unitholder of the Company, on behalf of all other Unitholders of the Company who are similarly situated, and seeks to have the class certified and the Unitholder bringing the lawsuit named as representative of the class. In addition, the lawsuits seek to enjoin the Going-Private Transaction, to rescind the Going-Private Transaction if it is consummated, and to recover damages and attorneys' fees. In addition to naming the General Partner and the Board as defendants, all six lawsuits name the Company as a defendant. In the opinion of management, after consultation with outside counsel, the pending lawsuits are not expected to have a material adverse effect on the Company's financial position or results of operations. VISKASE COMPANIES: Consolidated Sausage Casing Suit Moved To Illinois --------------------------------------------------------------------- During 1999 and 2000, Viskase Companies, Inc. and certain of its subsidiaries and one other sausage manufacturer were named in ten virtually identical civil complaints filed in the United States District Court for the District of New Jersey by the following plaintiffs: (i) Smith Provision Co., Inc.; (ii) Parks LLC (d/b/a Parks Sausage Company); (iii) Real Kosher Sausage Company, Inc.; (iv) Sahlen Packing Co., Inc.; (v) Marathon Enterprises, Inc.; (vi) Ventures East, Inc.; (vii) Keniston's, Inc.; Smithfield Foods, Inc.; (viii) Clougherty Packing Co.; and (ix) Klement Sausage Co. The District Circuit ordered all of these cases consolidated in Civil Action No. 99-5195-MLC (D.N.J.). Each complaint brought on behalf of a purported class of sausage casings customers alleges that the defendants unlawfully conspired to fix prices and allocate business in the sausage casings industry. The Company and its subsidiaries have filed answers to each of these complaints denying liability. In 2001, all of the consolidated cases were transferred to the United States District Court for the Northern District of Illinois, Eastern Division. VISUAL NETWORKS: Barrack and Cohen Law Firms Commence Suit In MD ---------------------------------------------------------------- The following class action complaints have been commenced in the United States District Court for the District of Maryland, Southern Division, on behalf of purchasers of the common stock of Visual Networks, Inc. (Nasdaq: VNWK) who bought their stock during the period from February 7, 2000 through August 22, 2000 inclusive: (i) Martin B. Ruza and William Patrick Cooper v. Visual Networks, Inc. and Scott E. Stouffer, Civil Action No. DKC 00-CV-2073; (ii) Krista D. Scott v. Visual Networks, Inc. and Scott E. Stouffer, Civil Action No. DKC 00-CV-2107; (iii) John Diers v. Visual Networks, Inc. and Scott E. Stouffer, Civil Action No. DKC 00-CV-2164; (iv) Virginia Pepe v. Visual Networks, Inc. and Scott E. Stouffer, Civil Action No. DKC 00-CV-2572; (v) Madeline Gesser v. Visual Networks, Inc. and Scott E. Stouffer, Civil Action No. DKC 00-CV-2407; (vi) Eugene Kruger v. Visual Networks, Inc. and Scott E. Stouffer, Civil Action No. DKC 00-CV-2219; (vii) Gerald Cohen, Oba McMillian and Todd Simon v. Visual Networks, Inc. and Scott E. Stouffer, Civil Action No. DKC 00-CV-2156; (viii) Jerry Krim v. Visual Networks, Inc., Scott E. Stouffer and Michael Watters, Civil Action No. DKC 00-CV-2686. The complaints in these actions allege that, during the Class Period, defendants issued to the investing public false and misleading statements concerning Visual Networks' acquisition of Avesta Technologies, Inc. Plaintiffs seek to recover damages for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the Securities Exchange Commission on behalf of all purchasers of Visual Networks' common stock during the Class Period. For further details, contact plaintiffs' counsel: Mark R. Rosen, Esquire, Barrack, Rodos & Bacine, 3300 Two Commerce Square, 2001 Market Street, Philadelphia, PA 19103 at (800) 417-7305 or Lisa M. Mezzetti, Esquire, Cohen, Milstein, Hausfeld & Toll, P.L.L.C., 1100 New York Avenue, N.W., West Tower, Suite 500, Washington, DC 20005 at (888) 240- 0775. WEBLINK WIRELESS: Faces Five Securities Lawsuits Pending In Texas ----------------------------------------------------------------- In March and April of 2001, Weblink Wireless, Inc. was served with five lawsuits against it and John D. Beletic seeking to recover an unspecified amount of monetary damages allegedly caused by the Company's alleged fraudulent scheme to artificially inflate the price of the Company's common stock through a series of alleged false and misleading statements to the market and alleged material omissions in violation of federal and state securities laws. Four of the lawsuits are filed in the U.S. District Court for the Northern District of Texas and seek class action status on behalf of persons who purchased the Company's common stock on the open market during the period from December 29, 2000, through February 20, 2001. The fifth lawsuit is filed in the Dallas County Court at Law on behalf of a single stockholder that purchased the Company's common stock on the open market during the same time period. No discovery has yet occurred, and the Company believes the lawsuits have no merit and intends to vigorously defend it. WEBLINK WIRELESS: Settles Suit Over Rebates For Unspecified Amount ------------------------------------------------------------------ On March 20, 2001, Weblink Wireless, Inc. was served with a lawsuit against RadioShack Corporation and the Company in the Missouri Circuit Court, 22nd Judicial Circuit in St. Louis, Missouri. The lawsuit seeks class action status on behalf of all persons in the United States who: (i) purchased a Motorola LS-550, LS-750 Wordline pager or an E- Pager One-Line receiver at RadioShack from November 18, 1999, through December 31, 1999; (ii) signed up for a particular type of paging services; (iii) applied for the $30.00 rebate offered, and (iv) who have suffered economic loss or damage as a result of the Company's denial of the rebate requested or Company's alleged failure to timely pay rebates on the purchases. On May 21, 2001, the Company settled this action on terms that were immaterial to the Company. ********* 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. 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 * * *