/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010801.mbx C L A S S A C T I O N R E P O R T E R Wednesday, August 1 2001, Vol. 3, No. 149 Headlines 21ST CENTURY: Faces 'Overtime Pay' Suit Filed By CA Claims Adjuster ASHFORD.COM: Wolf Haldenstein Files Securities Suit In S.D. New York AUTOBYTEL.COM: Bernstein Liebhard Begins Securities Suit In S.D. NY BLUE MARTINI: Wolf Haldenstein Commences Securities Suit In S.D. NY BREAKAWAY SOLUTIONS: Wolf Haldenstein Begins Securities Suit In S.D. NY CYBERSOURCE CORPORATION: Milberg Weiss Files S.D. NY Securities Suit DAKOTA PORK: Judge Gives Part Of Settlement Money To Salvation Army EQUINIX INC.: Stull Stull Begins Securities Suit In S.D. New York FLEETWOOD ENTERPRISES: Notices Sent To 31,000 Potential Class Members GLOBAL CROSSING: Schiffrin & Barroway Files S.D. NY Securities Suit JDN REALTY: Inks Multi-million Cash and Stocks Settlement Pact JOHNSON & JOHNSON: To Award Cash, Credit To Settle "Contact Lens" Suit MONSANTO COMPANY: Sustains Novel "Property Monitoring" Lawsuit MP3.COM: Securities And Shareholders Settlement Receives Nod In July MP3.COM: Expects Oral Arguments On Plaintiffs' Appeal This October NET2PHONE INC.: Schiffrin & Barroway Files Securities Suit In S.D. NY NEW CENTURY: Subsidiary Scheduled To Answer MA Complaint This Month NEW CENTURY: Parties In Ohio Lawsuit Deep In Settlement Negotiations QWEST COMMUNICATIONS: Dyer & Shuman Files Securities Suit In Colorado SANTA FE: Consultant Tells City To Up Water Rates Or Go To Court SOLUTIA INC.: Amended Lawsuit In Alabama Adds 915 More Plaintiffs SPACELABS MEDICAL: Lawyer Seeks Certification on Discrimination Suit TERRA NETWORKS: Wolf Haldenstein Brings Securities Suit In S.D. NY TICKETS.COM: Wolf Haldenstein Commences Securities Suit In S.D. NY WEBVAN GROUP: Stull Stull Initiates Securities Suit In S.D. New York ********* 21ST CENTURY: Faces 'Overtime Pay' Suit Filed By CA Claims Adjuster ------------------------------------------------------------------- 21st Century Insurance Group promised to mount a vigorous defense against a class action suit served on the Company just last month. In its regulatory filing with the Securities and Exchange Commission, the Company revealed that a number of its claim adjusters filed the suit July 19. They accused the Company of improperly classifying them as salaried workers not eligible for overtime pay. Similar suits have been filed against other California insurance companies, the SEC report noted. "The Company believes it was in compliance with applicable law and will vigorously defend itself in the litigation," said the Company in the SEC report. Hoovers.com describes 21st Century Insurance Group as "prepared for the present." Subsidiaries of the company sell automobile, homeowners, and personal liability insurance, primarily in California. Under the aegis of American International Group, which owns more than 60 percent of the company and has become more active in management, 21st Century has also expanded into Arizona, Nevada, Oregon, and Washington. ASHFORD.COM: Wolf Haldenstein Files Securities Suit In S.D. New York -------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of Ashford.com, Inc. (Nasdaq: ASFD) securities between September 22, 1999 and December 6, 2000, inclusive. The defendants in the suit are Ashford, certain of its officers and directors, and its underwriters. The complaint alleges that defendants violated the federal securities laws by issuing and selling Ashford common stock pursuant to the September 22, 1999 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. Specifically, the complaint alleges that in exchange for the excessive commissions, defendants allocated Ashford shares to customers at the IPO price. To receive the allocations (i.e., the ability to purchase shares) at the IPO price, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Ashford stock rocketed upward (a practice known on Wall Street as ``laddering'') was intended to (and did) drive Ashford's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices. For more details, contact: Wolf Haldenstein Adler Freeman & Herz LLP by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: (800) 575- 0735 (Fred Taylor Isquith, Esq., Gregory Nespole, Esq., Thomas Burt, Esq., Gustavo Bruckner, Esq., Michael Miske, or George Peters) by E- mail: classmember@whafh.com or visit the firm's Website: www.whafh.com AUTOBYTEL.COM: Bernstein Liebhard Begins Securities Suit In S.D. NY ------------------------------------------------------------------- Bernstein Liebhard & Lifshitz, LLP filed a securities class action lawsuit on behalf of all persons who acquired Autobytel.com, Inc. (NASDAQ: ABTL) securities between March 25, 1999 and December 6, 2000. The case is pending in the United States District Court for the Southern District of New York. Named as defendants in the complaint are the following underwriters of Autobytel's initial public offering: (i) Lehman Brothers, Inc., (ii) Bear, Stearns & Co., Inc., (iii) Goldman Sachs & Co., and (iv) Morgan Stanley & Co. Incorporated The complaint charges defendants with violations of the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus that contained materially false and misleading information and failed to disclose material information. The Prospectus was issued in connection with Autobytel's initial public offering of 4.5 million shares of common stock at $23.00 per share that was completed on or about March 25, 1999. The complaint alleges that the Prospectus was false and misleading because it failed to disclose: (i) the Underwriter Defendants' agreement with certain investors to provide them with significant amounts of restricted Autobytel shares in the IPO in exchange for exorbitant and undisclosed commissions; and (ii) the agreement between the Underwriter Defendants and certain of its customers whereby the Underwriter Defendants would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase Autobytel shares in the after-market at pre-determined prices. The Securities and Exchange Commission and the U.S. Attorneys' Office are investigating underwriting practices in connection with several initial public offerings completed in 1999 and 2000. For more information, contact: Linda Flood, Director of Shareholder Relations by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E-mail: ABTL@bernlieb.com or visit the firm's Website: www.bernlieb.com BLUE MARTINI: Wolf Haldenstein Commences Securities Suit In S.D. NY ------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of Blue Martini Software, Inc. (Nasdaq: BLUE) securities between July 24, 2000 and December 6, 2000, inclusive. The defendants in the suit are Blue Martini, certain of its officers and directors, and its underwriters. The complaint alleges that defendants violated the federal securities laws by issuing and selling Blue Martini common stock pursuant to the July 24, 2000 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. Specifically, the complaint alleges that in exchange for the excessive commissions, defendants allocated Blue Martini shares to customers at the IPO price. To receive the allocations (i.e., the ability to purchase shares) at the IPO price, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Blue Martini stock rocketed upward (a practice known on Wall Street as ``laddering'') was intended to (and did) drive Blue Martini's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices. For additional information, contact: Wolf Haldenstein Adler Freeman & Herz LLP by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 800-575-0735 (Fred Taylor Isquith, Esq., Gregory Nespole, Esq., Thomas Burt, Esq., Gustavo Bruckner, Esq., Michael Miske, or George Peters) by E-mail: classmember@whafh.com or visit the firm's Website: www.whafh.com BREAKAWAY SOLUTIONS: Wolf Haldenstein Begins Securities Suit In S.D. NY ----------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of Breakaway Solutions, Inc. (Nasdaq: BWAY) securities between October 5, 1999 and December 6, 2000, inclusive. The defendants in the suit are Breakaway, certain of its officers and directors, and its underwriters. The complaint alleges that defendants violated the federal securities laws by issuing and selling Breakaway common stock pursuant to the October 5, 1999 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. Specifically, the complaint alleges that in exchange for the excessive commissions, defendants allocated Breakaway shares to customers at the IPO price. To receive the allocations (i.e., the ability to purchase shares) at the IPO price, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Breakaway stock rocketed upward (a practice known on Wall Street as ``laddering'') was intended to (and did) drive Breakaway's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices. For more information, contact: Wolf Haldenstein Adler Freeman & Herz LLP by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 800-575-0735 (Fred Taylor Isquith, Esq., Gregory Nespole, Esq., Thomas Burt, Esq., Gustavo Bruckner, Esq., Michael Miske, or George Peters) by E-mail: classmember@whafh.com or visit the firm's Website: www.whafh.com CYBERSOURCE CORPORATION: Milberg Weiss Files S.D. NY Securities Suit -------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP filed Monday a class action lawsuit on behalf of purchasers of the securities of Cybersource Corporation (NASDAQ:CYBS) between June 23, 1999 and December 6, 2000, inclusive. The action is pending in the United States District Court, Southern District of New York against the following defendants: (i) Cybersource, (ii) Merrill Lynch, Pierce, Fenner & Smith, (iii) Goldman Sachs & Co., (iv) BancBoston Robertson Stephens, (v) William S. McKiernan and (vi) Charles E. Noreen 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. On or about June 23, 1999 Cybersource commenced an initial public offering of 4,000,000 of its shares of common stock at an offering price of $11 per share. In connection therewith, Cybersource filed a registration statement, which incorporated a prospectus, with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) Merrill Lynch, Robertson Stephens and Goldman Sachs had solicited and received excessive and undisclosed commissions from certain investors in exchange for which Merrill Lynch, Robertson Stephens and Goldman Sachs allocated to those investors material portions of the restricted number of Cybersource shares issued in connection with the Cybersource IPO; and (ii) Merrill Lynch, Robertson Stephens and Goldman Sachs had entered into agreements with customers whereby Merrill Lynch, Robertson Stephens and Goldman Sachs agreed to allocate Cybersource shares to those customers in the Cybersource IPO in exchange for which the customers agreed to purchase additional Cybersource shares in the aftermarket at pre- determined prices. For more details, contact: Steven G. Schulman or Samuel H. Rudman by Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by Phone: (800) 320-5081 by Email: cybersource@milbergNY.com or visit the firm's Website: www.milberg.com DAKOTA PORK: Judge Gives Part Of Settlement Money To Salvation Army ------------------------------------------------------------------- U.S. District Judge Lawrence Piersol ruled recently that the $5,400 of the settlement money awarded to the former workers of Dakota Pork Industries be given to the Salvation Army in Huron, South Dakota, the Associated Press reported. This ruling comes nearly four years after Dakota Pork closed its doors in Huron, putting about 800 employees out of work. It also brings the class action lawsuit to a close. The lawsuit was filed soon after Dakota Pork closed on August 1, 1997, leaving 450 families without income until federal and state help arrived. Since Dakota Pork closed without notice, said Ron Volesky, an attorney who helped the former workers in the suit, it may have violated a federal law requiring that a company of more than 50 employees give 60 days notice prior to closing. The Salvation Army came to the rescue of the former workers and their families, providing food for approximately six weeks until unemployment compensation and other services became available. The Salvation Army is receiving the remains of the $2 million which was not distributed to the former workers for lost wages and benefits, and which could not be returned for various reasons, according to the same Associated Press report. EQUINIX INC.: Stull Stull Begins Securities Suit In S.D. New York ----------------------------------------------------------------- Stull, Stull & Brody filed Monday a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of Equinix, Inc. (NASDAQ:EQIX) common stock between August 10, 2000 and December 6, 2000, inclusive. The complaint alleges that defendants violated the federal securities laws by issuing and selling Equinix common stock pursuant to the August 10, 2000 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. The complaint alleges that, in exchange for the excessive commissions, members of the underwriting group allocated Equinix shares to customers at the IPO price of $12 per share. To receive the allocations (i.e., the ability to purchase shares) at $12, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Equinix stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive Equinix's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying stock at the $12 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $14 its first day of trading and which subsequently rose to a Class Period high of $16.50 on August 31, 2000. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration Statement filed with the SEC in order to gain regulatory approval for the Equinix offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO transaction and failed to disclose the additional commissions and "laddering" scheme discussed above. For more details, contact: Tzivia Brody, Esq. by Phone: 1-800-337-4983 (toll free) by E-mail: SSBNY@aol.com by Fax: 212/490-2022 or by Mail: 6 East 45th Street, New York, NY 10017 FLEETWOOD ENTERPRISES: Notices Sent To 31,000 Potential Class Members --------------------------------------------------------------------- Employees of Fleetwood's housing and recreational vehicle plants may be eligible for compensation for work they performed "off-the-clock," according to a lawsuit filed in federal court in Idaho. Notices recently went out to over 31,000 current and former Fleetwood employees informing them of their rights and giving them the chance to join the lawsuit. The lawsuit claims that Fleetwood employees performed production work before the regular starting time, during lunch breaks, and after the regular shift, but were not paid for working during those times. Additionally, the lawsuit claims that Fleetwood changed time records, did not keep other necessary records and improperly rounded down employee time. The lawsuit also claims that certain supervisors in Fleetwood's housing plants were improperly classified and should have received time and a half for any hours worked in excess of forty in a week. Fleetwood denies the allegations against it. The federal court has conditionally certified the lawsuit as a class action, but has not yet made any decision on the merits of the case. Headquartered in Riverside, California, Fleetwood is the leading manufacturer of recreational vehicles and one of the largest manufacturers of manufactured housing with plants in 18 states within the United States. Those currently eligible to join in the lawsuit are those employees who worked at a Fleetwood housing plant between February 11, 1997, and February 20, 2001. Also eligible are those Fleetwood employees who worked at a travel trailer or motor home plant as of February 20, 2001. To join in the lawsuit, employees must sign and mail a "Consent to Join" form so that it is received by September 7, 2001. Employees are not required to know exactly how many hours they worked "off-the-clock" in order to join the lawsuit and make a claim. Fleetwood is prohibited by law from firing, disciplining or retaliating against any employee who chooses to join the lawsuit. Those joining the lawsuit will be bound by any judgment, whether favorable or unfavorable. Only those who join the lawsuit will be eligible to participate in any recovery. To obtain detailed information about this lawsuit or to request a "Consent to Join" form, employees may call 1-800-483-7455. Spanish language versions of all documents may also be requested. GLOBAL CROSSING: Schiffrin & Barroway Files S.D. NY Securities Suit ------------------------------------------------------------------- Schiffrin & Barroway, LLP filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of all purchasers of the common stock of Global Crossing, Ltd. (NYSE: GX) from August 13, 1998 through December 6, 2000, inclusive. The defendants in the suit are Global Crossing and the following underwriters: (i) Salomon Smith Barney, Inc., (ii) Merrill Lynch, Pierce, Fenner & Smith, (iii) Goldman Sachs & Co., (iv) Morgan Stanley & Co. Incorporated, (v) Bear, Stearns & Co., (vi) Credit Suisse First Boston Corporation, and (vii) Lehman Brothers Inc. On or about August 13, 1998, Global Crossing commenced an initial public offering of 21,000,000 of its shares of common stock at an offering price of $19 per share. In connection therewith, Global Crossing filed a registration statement, which incorporated a prospectus, with the SEC. The complaint alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) the Underwriter Defendants had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the Underwriter Defendants allocated to those investors material portions of the restricted number of Global Crossing shares issued in connection with the Global Crossing IPO; and (ii) the Underwriter Defendants had entered into agreements with customers whereby the Underwriter Defendants agreed to allocate Global Crossing shares to those customers in the Global Crossing IPO in exchange for which the customers agreed to purchase additional Global Crossing shares in the aftermarket at pre-determined prices. For more information, contact: Schiffrin & Barroway, LLP through Marc A. Topaz, Esq. or Stuart L. Berman, Esq. by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706 or by E-mail: info@sbclasslaw.com JDN REALTY: Inks Multi-million Cash and Stocks Settlement Pact -------------------------------------------------------------- JDN Realty Corporation announced recently that it has reached a multi- million deal effectively settling a pending securities class action litigation. The Atlanta Business Chronicle reported that the deal involved cash payments and issuance of a substantial number of common stocks. If approved, class members will be paid an aggregate of $16.8 million in cash and 1.68 million shares of common stock, the newspaper said. In addition, the Company is also required to provide a $4 million guarantee assuring that the class members will receive a minimum of $7.5 million from recoveries or settlements of suits filed by the Company against its insurance carrier and other parties. The company and the class members will share in any recovery from these outside parties above $8 million, the Chronicle said. As a result of this settlement deal, the company is anticipating relatively reduced future earnings per share due to an increased expense associated with debt used to pay the cash portion of the settlement. The Company is also reviewing its dividend policy as a result of the deal, the report added. JDN Realty is a real estate investment trust that develops, acquires, leases, and manages shopping centers in about 20 states, primarily in the Southeast. Wal-Mart and Lowe's are two of the Company's largest customers. JOHNSON & JOHNSON: To Award Cash, Credit To Settle "Contact Lens" Suit ---------------------------------------------------------------------- Johnson & Johnson said recently it will award consumers cash and credits to settle a class action lawsuit that alleged misleading marketing of Acuvue contact lenses, according to a report in the Atlanta Journal Constitution. The suit, filed in 1996, claimed that the company's eye-products unit, Vistakon, misleadingly said a less expensive one-day Acuvue lens should not be worn as long as a standard Acuvue lens when, in fact, both lenses can be used for the same length of time. MONSANTO COMPANY: Sustains Novel "Property Monitoring" Lawsuit -------------------------------------------------------------- A judge handling a suit against Monsanto Company has refused to dismiss the class action, even if one of the issues involved may bring the matter further to the West Virginia Supreme Court. Judge O.C. Spaulding sustained the suit last week against the biotechnology company despite a novel prayer of the plaintiff seeking a court-supervised inspection and monitoring of properties allegedly contaminated with dioxin. "Medical monitoring has been recognized. I know of no property monitoring," the Charleston Daily Mail quoted Spaulding. The magistrate suggested seeking an opinion on the issue from the state Supreme Court. Robert Carter filed the suit against Monsanto and several other companies that include the novel issue of "property monitoring." Aside from that, he is also asking payments for medical monitoring costs and punitive damages for decreased property value and loss of enjoyment of land he and others own along Heizer and Manila Creek. Monsanto and the other defendants maintain dioxin dumpsites in those areas, the newspaper reported. According to the news account, dioxin is a byproduct of the chemicals manufactured by Monsanto that include the controversial 'Agent Orange' used in the Vietnam War. Dioxin does not break down and has been linked to cancer. The other defendants in the suit are Solutia, Inc., which took over the chemical operations of Monsanto; Amherst Coal Co., Arch of West Virginia Inc., Arch of Illinois Inc. and Apogee Coal Co. They allegedly own or control the Manila Creek landfill. MP3.COM: Securities And Shareholders Settlement Receives Nod In July -------------------------------------------------------------------- The settlement agreement reached in March by all parties in the California securities and shareholders derivative suits has received final approval recently. This was the announcement made by MP3.com, Inc. in its latest SEC regulatory filing. According to the Company, the California Superior Court approved the settlement of the derivative suit June 29. The securities suit settlement was given the nod by the federal court July 11. The following are the terms of the settlement: (i) the defendants do not accept liability, (ii) payment of $35 million into an escrow account, and (iii) issuance of 2.5 million shares of MP3.com common stock which MP3.com valued at $5,391,000, in exchange for complete dismissal and release of all claims with prejudice. The escrow amount and the 2.5 million shares of common stock will be governed by the Stipulations. The distribution of the escrow amount and the 2.5 million shares will not occur prior to March 31, 2002, except under certain circumstances. These circumstances include the sale or other acquisition of MP3.com prior to the distribution of the 2.5 million shares of common stock, in which case the stock will be treated equally with all other outstanding shares of MP3.com common stock. The securities suit traces its roots to several lawsuits filed between September and November last year against the Company and certain of its employees, officers, and directors. Meanwhile, the shareholders derivative suits were filed between September and October last year by stockholders on common law claims, fraud, and various other charges. MP3.COM: Expects Oral Arguments On Plaintiffs' Appeal This October ------------------------------------------------------------------ MP3.com, Inc. informed the SEC recently it will possibly appear in court once more this October to face an appeal by plaintiffs whose suits alleging copyright violations were dismissed late last year. According to the Company, briefing on the appeal filed last January was completed recently; hence the likelihood of a hearing later in October. Several artists filed the class action lawsuit in the United States District Court for the Southern District of New York against the Company and several major recording companies that claimed to own copyrights in sound recordings featuring the artists. In particular, the complaint alleged that the recording company defendants did not possess any copyright protections with respect to plaintiffs' pre-1972 published and pre-1978 unpublished recordings, did not possess the right to digitally transmit plaintiffs' pre-1996 recordings over the Internet, and did not possess the right to control the conversion of plaintiffs' recordings into mp3 files. The complaint further alleged that MP3.com has used the names and likenesses of plaintiffs without their consent or authorization and in a deceptive manner, in violation of the federal Lanham Act, the New York Civil Rights Law, and unspecified unfair competition and misappropriation laws. In their prayer for relief, plaintiffs asked to have their class action certified, to be awarded unspecified damages and attorneys' fees, to have the defendants enjoined from using plaintiffs' names and likenesses to promote downloading music over the Internet, and to receive declaratory relief regarding plaintiffs' rights in their pre- and post-1972 recordings. On August 28, 2000, the Court issued an oral ruling dismissing all claims against MP3.com. On December 7, 2000, judgment was entered dismissing, with prejudice, the federal claims against the defendants. MP3.com offers 1 million songs from some 150,000 artists (mostly lesser-known acts looking for exposure) that can be downloaded free of charge. It also offers some premium subscription services and sells albums and compilation CDs. NET2PHONE INC.: Schiffrin & Barroway Files Securities Suit In S.D. NY --------------------------------------------------------------------- Schiffrin & Barroway, LLP commenced a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of all purchasers of the common stock of Net2Phone, Inc. (Nasdaq: NTOP) from July 29, 1999 through December 6, 2000, inclusive. The defendants in the suit are Net2Phone, Bear Stearns & Co., Inc., BancBoston Robertson Stephens, Goldman Sachs & Co., Morgan Stanley & Co. Incorporated, Howard S. Balter and Ilan S. Slasky. On or about July 29, 1999, Net2Phone commenced an initial public offering of 5,400,000 of its shares of common stock at an offering price of $15 per share. In connection therewith, Net2Phone filed a registration statement, which incorporated a prospectus, with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) the Bear Stearns, Robertson Stephens, Goldman Sachs, and Morgan Stanley had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the Bear Stearns, Robertson Stephens, Goldman Sachs, and Morgan Stanley allocated to those investors material portions of the restricted number of Net2Phone shares issued in connection with the Net2Phone IPO; and (ii) the Bear Stearns, Robertson Stephens, Goldman Sachs, and Morgan Stanley had entered into agreements with customers whereby the Bear Stearns, Robertson Stephens, Goldman Sachs, and Morgan Stanley agreed to allocate Net2Phone shares to those customers in the Net2Phone IPO in exchange for which the customers agreed to purchase additional Net2Phone shares in the aftermarket at pre-determined prices. For more information, contact: Schiffrin & Barroway, LLP through Marc A. Topaz, Esq. or Stuart L. Berman, Esq. by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706 or by E-mail: info@sbclasslaw.com NEW CENTURY: Subsidiary Scheduled To Answer MA Complaint This Month ------------------------------------------------------------------- New Century Financial Corporation admitted in a recent SEC regulatory document that its subsidiary New Century Mortgage Corporation is facing a class action complaint in Massachusetts. According to the document, the subsidiary is scheduled this August to file its answer to the complaint currently pending in the Massachusetts federal court. Charles Perry Jr., purporting to represent a class, initiated the suit, which alleges that certain payments made by the subsidiary to mortgage brokers, sometimes referred to as yield spread premiums, violate the federal Real Estate Settlement Procedures Act. The complaint filed last month also alleges that the subsidiary induced mortgage brokers to breach their fiduciary duties to borrowers. "We have retained legal representation and are evaluating the complaint," the Company said in its SEC report. New Century Financial Corporation provides sub-prime mortgage loans primarily for single-family residences. NEW CENTURY: Parties In Ohio Lawsuit Deep In Settlement Negotiations -------------------------------------------------------------------- Plaintiffs in an Ohio class action suit against several financial institutions have agreed to settle the case, this according to a SEC regulatory document filed by New Century Mortgage Corporation recently. According to the Company, this new development has extended the deadline for the Company and other defendants to answer the second amended complaint filed in May. The Company added that the parties in the suit are currently deep in negotiations to come up with a mutually acceptable settlement agreement. The suit was originally filed in October last year against the Company, Central Mortgage, Equibanc Mortgage Corporation, Century 21 Home Improvements, and Incredible Exteriors. The class purportedly consists of consumers located in the State of Ohio whose credit transaction was brokered by Equibanc and Central Mortgage. The suit is now pending in the U.S. District Court for the Southern District of Ohio. The complaint alleges breaches of the Federal Fair Housing Act, Equal Credit Opportunity Act, Truth in Lending Act, gender discrimination, fraud, unconscionability, civil conspiracy, RICO, as well as other claims against the other defendants. New Century Mortgage Corporation is a wholly owned subsidiary of New Century Financial Corporation. QWEST COMMUNICATIONS: Dyer & Shuman Files Securities Suit In Colorado --------------------------------------------------------------------- Dyer & Shuman, LLP filed a class action in the United States District Court for the District of Colorado on behalf of purchasers of Qwest Communications International Inc. (NYSE:Q) publicly traded securities during the period between March 22, 2001 and July 23, 2001. The complaint charges Qwest and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that on March 22, 2001, defendants Joseph Nacchio and Robin Szeliga appeared at a UBS Warburg hosted senior management meeting where they falsely claimed that they would legitimately achieve 1Q01 and FY01 EPS of $0.11 and $0.59, respectively. On April 24, 2001, Qwest reported its financial results for 1Q01, including revenue growth of 12% and EBITA growth of 16%. Subsequent to these statements, Qwest's stock price increased, trading as high as $41.83 on 4/30/01. In fact, Qwest's 1Q01 results and its statements regarding those results as well as the statements regarding the success of the integration with U.S. West Inc. and the company's strong expense controls were materially false and misleading due to the company's improper valuation of KPNQwest in violation of Generally Accepted Accounting Principles (as the value of its investment in KPNQwest had already declined months earlier), and due to the following undisclosed facts: (a) Qwest's 1Q01 earnings were better than expectations primarily due to its change in the discount rate to calculate its pension obligations, increasing Qwest's 1Q01 results by at least $0.03; (b) Qwest's 1Q01 earnings were better than expectations due to defendants' failure to properly "write-down" the value of Qwest's holdings in KPNQwest, which was materially overstated as a result; (c) Qwest's 1Q01 earnings were increased by $0.01-$0.02 due to its aggressive use of capitalization to classify tens of millions of dollars of interest and software development costs as assets rather than expenses, which would contribute to decreased earnings in future quarters; (d) there was no way Qwest's future earnings would be nearly as strong as represented due in part to the accounting manipulations defendants engaged in which would adversely affect future results, as expenses were being deferred to future quarters and years; and (e) Qwest's selling, general and administrative expenses were only 22% of sales, not due to tight expense controls as represented, but to improper classification of SG&A expenses as cost of sales. Subsequently, on July 20, 2001, Qwest admitted that its classification of costs had been incorrect such that cost of sales had been overstated and SG&A expenses had been understated. As a result of defendants' issuance of alleged material and misleading statements (including a false 1Q01 financial statement), Qwest's stock traded as high as $41.83 per share. The individual defendants took advantage of this inflation, selling 1,255,000 shares of their Qwest stock for proceeds of $49.5 million. Ultimately, on July 24, 2001, Qwest conceded that it recorded a write- down of over $3.1 billion, primarily related to its ownership in KPNQwest. Upon this admission/revelation, Qwest's shares dropped once again, trading below $27. For more information, contact: John M. Martin by Phone: 800-711-6483 or by E-mail: jmartin@dyershuman.com SANTA FE: Consultant Tells City To Up Water Rates Or Go To Court ---------------------------------------------------------------- Increase water rates or face a costly class action suit. So said a rate consultancy firm recently, warning city officials of Santa Fe, New Mexico of the possibility of a huge suit from its bondholders if current water rates are maintained. Santa Fe News Mexican reported last week that Integrated Utilities Group had told the city that there are no other options left but to increase rates by 79 percent. Unless, of course, the city is willing to face a class action from the holders of its $72 million bonds issued in 1995 to purchase the water utility. Already, the city has received a letter from its bond insurer informing of its technical default due to its inability to generate enough revenues to pay debt service on the bonds. So far, the city has used gross-receipts tax money to subsidize the operation of the water utility rather than make rates reflect the cost of running the water company, the report said. According to the report, a rate increase would up the monthly water bill of city residents between $6 and $23 a month, based on the size of the water pipe serving their home. A residence served by a 1-inch pipe would see the monthly fee rise from $8.61 to $15.41, according to the proposal prepared by the consultancy firm. SOLUTIA INC.: Amended Lawsuit In Alabama Adds 915 More Plaintiffs ----------------------------------------------------------------- Solutia, Inc. informed SEC recently that an amended complaint filed last June has increased the plaintiffs in a class action suit currently pending in an Alabama federal court. According to a Company report to the SEC, the amended complaint added 915 more plaintiffs consisting of "minor children or persons under the age of twenty-one years" who allegedly reside in "poor areas" near the Company's Anniston plant. This is the same plant that the plaintiffs, in its complaint filed last May, blamed for their exposure to "polychlorinated biphenyls" that has resulted in unspecified physical injuries and emotional distress. According to AskJeeves.com, the production of "polychlorinated biphenyls" (PCBs) is related to the formation of dioxins, which have been shown to cause cancer. Due to this, the production or use of PCBs has since been banned. Plaintiffs allege that PCBs and other substances were released from the Anniston plant into local waterways and/or onto plaintiffs' properties, causing injury and damage to those properties. The plaintiffs seek compensatory and punitive damages in unspecified amounts and request medical testing, monitoring and treatment and unspecified injunctive relief. Solutia, Inc. operates through three segments: integrated nylon (more than 50% of sales), performance films, and specialty products. Its chemical-based products can be found in pet-stain-resistant carpets, safety glass, and packaging. The company's integrated nylon segment makes fibers for carpets, space shuttle tires, upholstery, and dental floss. Its performance films unit makes plastic interlayer for automotive glass, anti-glare films for electronic displays, adhesives, and other products. The specialty products unit makes resins and additives used in paints, soft drinks, detergents, and water-treatment chemicals. SPACELABS MEDICAL: Lawyer Seeks Certification on Discrimination Suit -------------------------------------------------------------------- The law firm of Ricardo A. Guarnero, Seattle attorney, filed Monday a motion to certify a class of: "All current and former Hispanic employees who have been employed at Spacelabs Medical Incorporated manufacturing facilities in the states of Washington and California as salaried employees below the first level manager at any time from June 26, 1992 through the present." The suit charges Spacelabs of systematically discriminating against Hispanic/Latino workers through the following: (i) paying them less than other workers, (ii) failing to promote them, (iii) denying training opportunities (iv) paying them less than similarly situated or less qualified Caucasians, (v) retaliating against anyone for challenging unauthorized practices, (vi) judging Hispanics by a different set of standards then applied to similarly situated or less qualified Caucasians, (vii) demoting or assigning to less favorable shifts, work areas, or facilities. Additionally, Spacelabs Medical instituted an "English-only" policy that plaintiffs claim was discriminatorily applied to Hispanics. The English-only policy had the effect of denigrating Hispanics and denying them an opportunity for advancement. Although denominated as a "language policy" by the defendant, the actual pattern and practice is a prohibition on Spanish. Declarations submitted with the motion state that the "English-only" policy was instituted after white employees complained that they did not like to hear Hispanics speaking Spanish. Plaintiffs allege that the English-only policy had various deleterious and discriminatory effects. First, the policy compromised the safety and well being of Hispanics who could not be warned of hazards or other impediments due to the fact that they did not understand or poorly understood English. Second, the English-only policy precluded training of skilled and eager workers because the training would not be conducted in the language that they understood. Spacelabs hired the Hispanic workers knowing that they spoke little or no English. Third, the policy was used subjectively to preclude advancement to those who were subjectively deemed to have poor English proficiency. Fourth, the English-only policy allowed whites to denigrate and harass Hispanic workers. Fifth, and most critically, Spanish is an integral element of Hispanic identity. Thus, the policy forbidding the speaking of Spanish had the effect of making Hispanics feel inferior in the same manner as separate "colored" fountains denigrated blacks in the Jim Crow South. For more information, contact: Law Offices of Ricardo A. Guarnero by Phone: 206/381-1292 or by E-mail: rguarnero@aol.com TERRA NETWORKS: Wolf Haldenstein Brings Securities Suit In S.D. NY ------------------------------------------------------------------ Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of Terra Networks, S.A. (Nasdaq: TRLY) securities between November 15, 1999 and December 6, 2000, inclusive. The defendants in the suit are Terra, certain of its officers and directors, and its underwriters. The complaint alleges that defendants violated the federal securities laws by issuing and selling Terra common stock pursuant to the November 15, 1999 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. Specifically, the complaint alleges that in exchange for the excessive commissions, defendants allocated Terra shares to customers at the IPO price. To receive the allocations (i.e., the ability to purchase shares) at the IPO price, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Terra stock rocketed upward (a practice known on Wall Street as ``laddering'') was intended to (and did) drive Terra's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices. For more details, contact: Wolf Haldenstein Adler Freeman & Herz LLP by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: (800) 575- 0735 (Fred Taylor Isquith, Esq., Gregory Nespole, Esq., Thomas Burt, Esq., Gustavo Bruckner, Esq., Michael Miske, or George Peters) by E- mail: classmember@whafh.com or visit the firm's Website: www.whafh.com TICKETS.COM: Wolf Haldenstein Commences Securities Suit In S.D. NY ------------------------------------------------------------------ Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of Tickets.com, Inc. [Nasdaq: TIXX] securities between November 3, 1999 and December 6, 2000. The defendants in the suit are TIXX, certain of its officers and directors, and its underwriters. The complaint alleges that defendants violated the federal securities laws by issuing and selling TIXX common stock pursuant to the November 3, 1999 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. Specifically, the complaint alleges that in exchange for the excessive commissions, defendants allocated TIXX shares to customers at the IPO price. To receive the allocations (i.e., the ability to purchase shares) at the IPO price, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of TIXX stock rocketed upward (a practice known on Wall Street as ``laddering'') was intended to (and did) drive TIXX's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices. For more information, contact: Wolf Haldenstein Adler Freeman & Herz LLP by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: (800) 575-0735 (Fred Taylor Isquith, Esq., Gregory Nespole, Esq., Thomas Burt, Esq., Gustavo Bruckner, Esq., Michael Miske, or George Peters) by E-mail: classmember@whafh.com or visit the firm's Website: www.whafh.com WEBVAN GROUP: Stull Stull Initiates Securities Suit In S.D. New York -------------------------------------------------------------------- Stull, Stull & Brody filed Monday a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of Webvan Group, Inc. (NASDAQ:WBVN) common stock between November 4, 1999 and December 6, 2000, inclusive. The complaint alleges that defendants violated the federal securities laws by issuing and selling Webvan common stock pursuant to the November 4, 1999 IPO without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. The complaint alleges that, in exchange for the excessive commissions, members of the underwriting group allocated Webvan shares to customers at the IPO price of $15 per share. To receive the allocations (i.e., the ability to purchase shares) at $15, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Webvan stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive Webvan's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying stock at the $15 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose about 73% in its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration Statement filed with the SEC in order to gain regulatory approval for the Webvan offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO transaction and failed to disclose the additional commissions and "laddering" scheme discussed above. For additional information, contact: Tzivia Brody, Esq. by Phone: 1- 800-337-4983 (toll free) by E-mail: SSBNY@aol.com by Fax: 212/490-2022 or by Mail: 6 East 45th Street, New York, NY 10017 ********* 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. Enid Sterling, Larri-Nil 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 * * *