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/raid1/www/Hosts/bankrupt/CAR_Public/010925.mbx C L A S S A C T I O N R E P O R T E R Tuesday, September 25, 2001, Vol. 3, No. 187 Headlines ALLIANCE CAPITAL: Denies Allegations in Securities Suit in S.D. IL ASIA PULP: Bernstein Liebhard Commences Securities Suit in S.D. NY AUCTION HOUSES: Combined Settlements Total Over $300M Cash and Stocks BAYER CORPORATION: Pomerantz Haudek Files Anti-Cholesterol Drug Suit BOEING COMPANY: Offers $92.5 Million To Settle 1997 Securities Suit CALIFORNIA: California Judge Inclined To Certify Class in School Suit CLARENT CORPORATION: Bernstein Liebhard Files Suit in N.D. CA DEL WEBB: Anthem Homeowners Seek $50M To Repair Housing Defects DIAMOND OFFSHORE: Enters Stipulation of Settlement in Texas Suit DIGITAL ISLAND: Bernstein Liebhard Files Securities Suit in S.D. NY DOW CORNING: Says Adverse Verdict Remote in S.D. NY Securities Suit DUPONT PHARMACEUTICALS: Proposes $44.5M DE Antitrust Suit Settlement F5 NETWORKS: Bernstein Liebhard Commences Securities Suit in S.D. NY GEORGIA PACIFIC: Faces Two Consumer Suits Due To Ohio Plant Operations ITXC CORPORATION: Bernstein Liebhard Files Securities Suit in S.D. NY JOHNSON VISION: Consumer Suits Over Eye Care Products Drags On KEITHLEY INSTRUMENTS: Securities Violations Suits Consolidated KEYNOTE SYSTEMS: Bernstein Liebhard Files Securities Suit in S.D. NY LENDING COMPANIES: Offers Customers $2.3 Million Settlement MCAFEE.COM: Bernstein Liebhard Commences Securities Suit in S.D. NY METROMEDIA FIBER: Bernstein Liebhard Files Securities Suit in S.D. NY MOTORCAR PARTS: $7.5 Million Settlement Awaits Court's Final Approval NETWORK ASSOCIATES: Class Member To Appeal District Court Ruling PACIFIC HEALTHCARE: CA, FL RICO and ERISA Violations Suits Dismissed PACIFIC HEALTHCARE: Files Motion To Dismiss CA Securities Suits UNDERWRITERS LITIGATION: Lovell Stewart Commences Securities Suits V ONE: Maryland Court Dismisses Suit For Failure To State Claim ********* ALLIANCE CAPITAL: Denies Allegations in Securities Suit in S.D. IL ------------------------------------------------------------------ Alliance Capital Management LP belied allegations in an amended class action complaint filed June 2001 in the Federal District Court in the Southern District of Illinois. The suit names as defendants the Company, its subsidiary Alliance Fund Distributors, Inc., among other defendants, and alleges violations of the ICA, and breaches of common law fiduciary duty. The allegations in the suit concern three mutual funds with which Alliance Capital has investment advisory agreements, including Alliance Premier Growth Fund, Alliance Growth Fund and Alliance Quasar Fund. The principal allegations of the amended complaint are that: (1) certain advisory agreements concerning these funds were negotiated, approved, and executed in violation of the Investment Company Act or ICA, in particular because certain directors of these funds should be deemed interested under the ICA; (2) the distribution plans for these funds were negotiated, approved, and executed in violation of the ICA; and (3) the advisory and distribution fees paid to Alliance Capital and Alliance Fund, respectively, are excessive and, therefore, constitute a breach of fiduciary duty. The Company intends to vigorously defend against these allegations, although they are unable to estimate the impact that the outcome of this action may have on Alliance Capital's financial condition. ASIA PULP: Bernstein Liebhard Commences Securities Suit in S.D. NY ------------------------------------------------------------------ Bernstein Liebhard and Lifshitz, LLP initiated a securities class action lawsuit on behalf all persons who acquired Asia Pulp & Paper Fiber, Ltd. (NYSE: PAP) securities between September 8, 1998 and April 4, 2001. The case is pending in the United States District Court for the Southern District of New York. Named as defendants in the complaint are Asia Pulp & Paper, Teguh Ganda Wijaya and Hendrik Tee, who are officers and /or directors of Asia Pulp & Paper. The complaint charges defendants with violations of sections 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that during the Class Period, defendants issued to the investing public false and misleading information that materially misstated the Company's condition and prospects. Moreover, the Company failed to disclose material information necessary to make its prior statements not misleading. Specifically, throughout the Class Period, defendants failed to disclose that the Company had entered into two swap contracts involving Indonesian rupiah/US dollar and Japanese yen/US dollar swaps. On April 4, 2001, Asia Pulp & Paper finally disclosed that it was in default of $220 million of swap contracts that had not been disclosed on its financial statements for fiscal years 1997 to 2000. The stunning announcement followed a steady stream of news reports that Asia Pulp & Paper was facing a strong decline in its business and, as a result, was unable to service its debt. During the Class Period, Asia Pulp & Paper was able to raise hundreds of millions of dollars in much needed capital through the issuance of bonds and a secondary offering of its American Depositary Shares. For further information, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779- 1414 by E-mail: PAP@bernlieb.com or visit the firm's Website: www.bernlieb.com AUCTION HOUSES: Combined Settlements Total Over $300M Cash and Stocks --------------------------------------------------------------------- Settlements have been reached in suits against Sotheby's and Christie's Auction houses. Earlier, the Antitrust Division of the United States Department of Justice commenced its investigation of the two houses. Sotheby's pled guilty and was imposed with a $45 million fine. Sotheby's admission set off a chain of class action suits, private civil complaints alleging federal and state antitrust violations, shareholder and shareholder derivative actions alleging failure to disclose the alleged agreements and their impact on the Company's financial condition and results of operations. Sotheby's has entered a settlement in a consolidated antitrust suit arising from fifty suits filed in or later transferred to the United States District Court for the Southern District of New York commencing January 30, 2000. Named as defendants in these actions were the Company, its subsidiary Sotheby's Inc., rival house Christie's International, PLC and its subsidiary Christie's Inc. On February 23, 2000, the Court entered an order consolidating the suits and pursuant to the order, plaintiffs filed a consolidated complaint on March 15, 2000. The consolidated complaint was brought on behalf of individuals that purchased and/or sold items auctioned by defendants during the period of January 1, 1993 through February 7, 2000. On September 24, 2000, the Company agreed to settle the litigations which the Court approved on April 20, 2001. Under the Amended Settlement Agreement, the Company has deposited into an escrow account for the benefit of members of the class: (1) $206 million in cash and (2) a global vendor's commission discount certificate with a face value of $62.5 million. The court determined that the $62.5 million face value of the global vendor's commission discount certificate had a fair market value of not less than $50 million. A. Alfred Taubman, the Company's former Chairman and a co-defendant in the suits and holder of approximately 13.2 million shares of the Company's Class B stock, funded $156 million in cash Common Stock. The vendor's commission discount certificates may be used to pay vendor's commissions and certain other sale charges at Sotheby's or Christie's during the five years after their distribution to members of the class and are redeemable for cash at the end of four years. The Company entered into the Amended Settlement Agreement without any admission of liability. A small number of class members have filed notices of appeal of the court's order approving the settlement, which awaits hearing by the United States Court of Appeals for the Second Circuit. Additionally, three similar lawsuits were filed in the same court against the same defendants beginning in August 2000 on behalf of purchasers and sellers in auctions conducted outside the United States. The complaints in these actions contained allegations identical to the complaints in the first litigation but were considered separately from them. On October 30, 2000, plaintiffs filed a consolidated amended complaint but the Court dismissed the action on the grounds of lack of jurisdiction over auctions held by the Company and its subsidiaries outside of the United States. On February 13, 2001, the plaintiffs filed a motion seeking reconsideration of the court's decision, which the court denied. Plaintiffs have appealed the court's decision to the United States Court of Appeals for the Second Circuit. In addition to the federal actions, a consolidated shareholder class action suit was filed last May 11, 2000 in the United States District Court for the Southern District of New York. The consolidated amended complaint in this action alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The suit named as defendants the Company, its Sotheby's, Inc. subsidiary, A. Alfred Taubman, Diana D. Brooks and certain other officers of the Company. On September 24, 2001, the Company agreed to settle the class action which was approved February 16, 2001. The Company entered into the settlement agreement for the aforementioned litigation without any admission of liability. Under the terms of the settlement agreement, the Company has deposited into an escrow account, for the benefit of members of a class of all purchasers of the Company's Class A Common Stock during the period of February 11, 1997 through February 18, 2000: (i) $30 million in cash and (ii) 2,204,708 shares of Sotheby's Class A Common Stock, which had a value of $40 million at the time they were deposited. A. Alfred Taubman again funded the $30 million cash payment due under the terms of the settlement. Plaintiffs' counsel has filed a notice of appeal addressed solely to the Court's award of attorneys' fees and expenses. The Company is not participating in this appeal and no other appeals have been filed and the time to appeal has expired. BAYER CORPORATION: Pomerantz Haudek Files Anti-Cholesterol Drug Suit -------------------------------------------------------------------- Pomerantz Haudek Block Grossman and Gross, LLP filed a class action lawsuit in Circuit Court of Cook County Illinois. The suit was filed on behalf of a class of persons who purchased and/or ingested the drug Baycol and who have, or in the future may have, serious side effects associated with the use of the drug. Defendants are Bayer AG (OTC: BAYZY), Bayer Corporation and Bayer Pharmaceutical Division, which tested, marketed, distributed, promoted and sold Baycol. Bayer announced on August 8, 2001 that it was withdrawing Baycol from all markets, other than Japan, in light of 31 reported deaths in the United States due to severe rhabdomyolysis in association with the use of Baycol. The Food and Drug Administration recently disclosed that users of Baycol are affected more often and more seriously by rhabdomyolysis than are patients taking other cholesterol-lowering drugs. Rhabdomyolysis is a condition that results in muscle cell breakdown and release of the contents of muscle cells into the bloodstream. Symptoms of rhabdomyolysis include muscle pain, weakness, tenderness, malaise, fever, dark urine, nausea, and vomiting. In severe cases, rhabdomyolysis may result in kidney damage and other organ damage, which may be fatal. Baycol has been implicated in 52 deaths worldwide, including the 31 in the United States. It has also been linked to about 1,100 incidents of side effects, mainly involving rhabdomyolysis. Bayer has since pulled Baycol from the Japanese market. Plaintiffs seek, among other things: (1) the establishment of a medical monitoring fund so that users of Baycol may be tested and treated for the adverse effects of the drug; (2) refunds of all amounts paid for the purchase of Baycol, as well as all other ascertainable economic losses suffered, including medical expenses as a result of consulting with physicians regarding the drug's adverse effects; and (3) compensation to all victims for personal injuries and death. For more information, contact Andrew G. Tolan, by Phone: 888-476-6529 (or (888) 4-POMLAW) (toll-free) by E-mail: agtolan@pomlaw.com or visit their Website: www.pomerantzlaw.com BOEING COMPANY: Offers $92.5 Million To Settle 1997 Securities Suit ------------------------------------------------------------------- Boeing Co. has offered to settle a 1997 securities class-action suit for $92.5 million saying that it is in the best interests of the Company. The Company continues to maintain its innocence, saying, "Although we continue to believe that plaintiffs' claims are without merit, management has decided that it is in the best interests of Boeing and its shareholders to settle the litigation." Doug Bain, Boeing senior vice president and general counsel said resolving the suit would enable the Company ".to focus all of its energies on the challenges posed by the current business environment." The suit, filed in 1997 accused the Company of doctoring financial records to conceal the extent of production problems until after its merger with McDonnell Douglas was completed. The suit was filed following Boeing's announcements that it was implementing production recovery plans that involved temporarily shutting down 747 and 737 Next Generation assembly lines, resulting in a $1.6 billion charge. The October 1997 statements sent Boeing's stock down sharply. Shareholders said Boeing withheld knowledge of the plans beforehand. Steve Berman, representing the shareholders, said he was pleased with the settlement and expected it to be approved by the court. His firm said the settlement affects tens of thousands of shareholders who bought or otherwise acquired Boeing stock from July 21 to Oct. 22, 1997. CALIFORNIA: California Judge Inclined To Certify Class in School Suit --------------------------------------------------------------------- San Francisco County Superior Court Judge Peter Busch says that he is likely to certify the class in a class action suit against the state filed by the American Civil Liberties Union. The suit names 18 school districts, but Judge Busch said he is inclined to approve the expansion of the suit to cover perhaps all of California's 1,100 school districts and their 5.8 million students. The suit accused the state of failing to properly oversee an education system said to be rife with problems including inadequate teachers, not enough textbooks and shabby school conditions. The suit further alleges that some classrooms get too hot in the summer and too cold in the winter, that students have inadequate restroom facilities, and that textbooks are scarce or outdated. Last year, the judge refused to dismiss the case, saying, "This case is exclusively about the state's system of oversight and that system's alleged inadequacies and failures." Gov. Gray Davis claims the school districts and their locally elected boards, not Sacramento, ultimately are responsible for ensuring equal educational opportunities for all children. That is why the state sued the 18 school districts named in the ACLU's original suit in a bid to force the districts to fix allegedly shoddy classrooms, issue textbooks and hire credentialed teachers as required under state law. The state's suit seeks a court order demanding the districts fix the various defects if the ACLU proves that the conditions exist. CLARENT CORPORATION: Bernstein Liebhard Files Suit in N.D. CA ------------------------------------------------------------- Bernstein Liebhard and Lifshitz, LLP commenced a securities class action lawsuit on behalf all persons who acquired Clarent Corporation (NASDAQ:CLRN) securities between April 20, 2001 and August 31, 2001. The case is pending in the United States District Court for the Northern District of California. Named as defendants in the complaint are Clarent, Jerry Shaw-Yau Chang and Simon Wong, both executive officers of the Company. The complaint charges defendants with violations of sections 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that during the Class Period, defendants issued to the investing public false and misleading financial statements that materially misstated the Company's condition and prospects. Moreover, the Company failed to disclose material information necessary to make its prior statements not misleading. On Sept. 4, 2001, Clarent announced in a press release that it had discovered information suggesting that its previously reported revenues for the first and second quarters of fiscal 2001 may have been materially overstated. They also announced that the Company's Board of Directors was forming a special committee to investigate a number of transactions that placed in question the Company's historical financial results. The Company also stated that its first quarter 2001 revenues, as released on April 19, 2001, and its second quarter 2001 revenues, as released on July 19, 2001, will be reduced and the related net losses will increase upon conclusion of the review. In addition, the Company anticipates that its revenues for the second half of fiscal 2001 and for fiscal 2002 will be substantially below previously anticipated levels, and that the related losses will be significantly larger than expected. The Company also announced that several of its officers had been placed on administrative leave. In reaction to this news, trading halted at $5.37. For more information, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779- 1414 by E-mail: CLRN@bernlieb.com or visit the firm's Website: www.bernlieb.com DEL WEBB: Anthem Homeowners Seek $50M To Repair Housing Defects --------------------------------------------------------------- A group of six Anthem homeowners, concerned over shifting foundations, cracking walls and leaky roofs, has filed a lawsuit in Maricopa County Superior Court, suing Del Webb Corporation for an estimated $50 million. The complaint's claim for $50 million makes it the most expensive construction defect lawsuit ever filed in Arizona, according to a recent report appearing in The Arizona Republic. The lead plaintiffs in the suit are Lisa Ruyack, Cassandra Fudge, Joel Hoffman, Deborah Theuerl, Steve Ruttenberg and Robert Aldrich. The plaintiffs, who seek class-action status for their lawsuit, are represented by attorney Thomas Miller of the California-based Miller Law Firm, who has won more than $400 million for homeowners in construction suits during the past decade. The suit asks for damages to repair the alleged defects in and any or all of the 2,000 houses in the award-winning community of Anthem Way near New River. Jacque Petroulakis, spokeswoman for Del Webb, which was bought by the Phoenix division of Pulte Homes in July, said the builder is addressing any problems in Anthem. "We are pretty disappointed that a few homeowners have decided on legal action instead of continuing to work with us to solve any concerns." The plaintiffs say, however, that the defects are serious enough to warrant a lawsuit. But not all Anthem homeowners with complaints are behind suing Del Webb. Christina Yochelson, a two-year resident, is still trying to get Webb to fix problems on her year-old punch list. She is ready to rally other homeowners to stop the lawsuit because it's "not good for the community and housing values." Miller said his law firm has inspected at least 50 houses in Anthem that have construction defects so far. "This many problems is really unusual for such a new project." The first house was sold in Anthem in 1999. The Anthem lawsuit is one of several defect suits to hit Del Webb in recent years. Other builders also have been sued, but Del Webb is the largest in the Phoenix area. DIAMOND OFFSHORE: Enters Stipulation of Settlement in Texas Suit ---------------------------------------------------------------- Diamond Offshore Drilling, Inc. has inked a stipulation of settlement in the class action suit filed in the United States District Court for the Southern District of Texas, Houston Division The suit was first filed in the Texas Federal Court, Galveston Division, and named as defendants all major offshore drilling companies, including Diamond Offshore. The suit was filed on behalf of offshore oil workers against all of the major offshore drilling companies and includes persons hired in the United States by the companies to work in the Gulf of Mexico and around the world. The allegation is that the companies, through trade groups, shared wage information in order to fix and suppress the wages of the workers in violation of the Sherman Antitrust Act and various state laws. Plaintiff Thomas Bryant has replaced the named plaintiff as the proposed class representative, however, no class has been certified as of the date of this report. During the first quarter of 2001, the Company recorded a $10.0 million reserve for this pending litigation in the Company's Consolidated Statements of Income. In early July 2001, the Company filed a stipulation of settlement with the District Court in which it agreed to settle the plaintiffs' outstanding claims within the limits of the reserve. The stipulation, however, is subject to approval by the District Court. On July 30, 2001 the court ordered that the case be transferred to the U.S. District Court for the Southern District of Texas, Houston Division. All settings and deadlines then in effect were cancelled, subject to further orders from the Honorable Sim Lake, U.S. District Court Judge, Houston Division. DIGITAL ISLAND: Bernstein Liebhard Files Securities Suit in S.D. NY ------------------------------------------------------------------- Bernstein Liebhard and Lifshitz, LLP filed a securities class action lawsuit on behalf all persons who acquired Digital Island, Inc. (NASDAQ: ISLD) securities between June 29, 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 Digital Island's initial public offering: Bear Stearns & Co., Inc., Lehman Brothers, Inc., and BancBoston Robertson Stephens Inc. 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 Digital Island's initial public offering of seven million shares of common stock at $15.00 per share that was completed on or about May 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 Digital Island 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 Digital Island shares in the aftermarket at pre-determined prices. For more details, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E- mail: ISLD@bernlieb.com or visit the firm's Website: www.bernlieb.com. DOW CORNING: Says Adverse Verdict Remote in S.D. NY Securities Suit ------------------------------------------------------------------- Dow Corning, Inc. is confident it will prevail in a securities class action suit, calling the possibility of a materially adverse verdict "remote", based on information "developed to date." Purchasers of Corning stock filed the suit in 1992 against Corning and certain individual defendants, alleging misrepresentations and omissions of material facts relating to the silicone gel breast implant business conducted by Dow Corning. The suit, filed in the United States District Court for the Southern District of New York, consists of those purchasers of Corning stock during the period from June 14, 1989 to January 13, 1992. The class allegedly purchased Corning stock at inflated prices due to the non-disclosure or concealment of material information. The class claims that they were damaged when Corning's stock price declined in January 1992 after the Food and Drug Administration (FDA) requested a moratorium on Dow Corning's sale of silicone gel implants. In 1997, the Court dismissed the individual defendants from the case and in December 1998, Corning filed a motion for summary judgment requesting that all claims against it be dismissed. Plaintiffs requested the opportunity to take depositions before responding to the motion for summary judgment. The Court permitted limited additional discovery of certain Dow Corning, Corning and Dow Chemical officers and directors. These depositions were completed in the second quarter of 1999. On September 23, 1999, the Court granted in part the plaintiffs' request for certain additional documentary discovery. In April 2000, the District Court ordered two additional depositions, one of which would be that of Dow Corning's former General Counsel. Dow Corning filed a petition with the United States Court of Appeals for the Second Circuit seeking relief from this Order. The Second Circuit ruling is expected in the third quarter of 2001. The discovery process is continuing and the Court has set no schedule to address the still pending summary judgment motion. Corning intends to continue to defend this action vigorously. Based on the information developed to date and recognizing that the outcome of litigation is uncertain, management believes that the possibility of a materially adverse verdict is remote. DUPONT PHARMACEUTICALS: Proposes $44.5M DE Antitrust Suit Settlement -------------------------------------------------------------------- Dupont Pharmaceuticals, Inc. has offered to settle a class action antitrust suit for $44.5 million plus interest, the law firms of Goodkind Labaton Rudoff & Sucharow LLP and Miller Faucher and Cafferty LLP announced. A fairness hearing for the settlement is set for January 2002. The suit was filed in the United States District Court for the District of Delaware on behalf of all consumers and third party payors who purchased and/or paid all or part of the purchase price of Coumadin during March 1,1997 through August 1,2001. The suit involves claims that the Company disseminated false and misleading information to consumers, third party payors and others regarding the bioequivalence of Coumadin and other warfarin sodium products. Furthermore, the defendants allegedly provided consideration to entities involved in the distribution of pharmaceuticals to induce them to favor Coumadin over other warfarin sodium products. No question was raised about the safety or effectiveness in the suit. Dupont denies that it has committed any violation of law or any wrongdoing or that it has any liability with respect to plaintiffs or on behalf of the Class, but has concluded that it is desirable that this action be settled. For more information, contact the Warfarin Sodium Antitrust Litigation by Mail: c/o Complete Claim Solutions, Inc., P.O. Box 24702, West Palm Beach, Florida 33416 by Phone: (888) 888-7474 or visit the following Websites: The Law Firm of Goodkind Labaton Rudoff & Sucharow LLP ( http://www.glrs.com) and The Law Firm of Miller Faucher and Cafferty LLP ( http://www.millerfaucher.com) F5 NETWORKS: Bernstein Liebhard Commences Securities Suit in S.D. NY -------------------------------------------------------------------- Bernstein Liebhard and Lifshitz, LLP filed a securities class action lawsuit on behalf all persons who acquired F5 Networks Corporation (NASDAQ: FFIV) securities between June 4, 1999 and December 6, 2000. The case is pending in the United States District Court for the Southern District of New York. Underwriters of F5 Networks's initial public offering: FleetBoston Robertson Stephens Inc., and Salomon Smith Barney, Inc., are named as defendants in the suit. The complaint charges the 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 F5 Networks's initial public offering of three million shares of common stock at $10.00 per share that was commenced on or about June 4, 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 F5 Networks 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 F5 Networks shares in the aftermarket at pre-determined prices. For more information, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779- 1414 by E-mail: FFIV@bernlieb.com or visit the firm's Website: www.bernlieb.com GEORGIA PACIFIC: Faces Two Consumer Suits Due To Ohio Plant Operations ---------------------------------------------------------------------- Wood products producer Georgia Pacific Corporation faces two class action suits in Columbus, Ohio State Court filed for personal injuries and property damage. The first suit was filed on May 6, 1998 against the Corporation and Georgia-Pacific Resins, Inc. (GPR), a wholly owned subsidiary of the Corporation. The lawsuit was filed by eight plaintiffs on behalf of individuals who at any time from 1985 to the present lived, worked, resided, owned, frequented or otherwise occupied property located within a three-mile radius of GPR's resins manufacturing operations in Columbus, Ohio. The lawsuit alleges that the class suffered personal injuries and/or property damage because of: (1) alleged "continuing and long-term releases and threats of releases of noxious fumes, odors and harmful chemicals, including hazardous substances" from GPR's operations and/or (2) a September 10, 1997 explosion at the Columbus facility and alleged release of hazardous material resulting from that explosion. On January 12, 2000, five plaintiffs filed another lawsuit against the defendants pursuant to the citizen suit provisions of the federal Clean Air Act and the Community Right-to-Know law. This suit alleges violations of these federal laws and certain state laws regarding the form and substance of the defendants' reporting of emissions and alleged violations of permitting requirements under certain regulations issued under the Clean Air Act. The Corporation has denied the material allegations of both lawsuits and believes it has meritorious defenses. Prior to the filing of the lawsuit, the Corporation had received a number of explosion-related claims from nearby residents and businesses. These claims were for property damage, personal injury and business interruption and are being reviewed and resolved on a case-by-case basis. ITXC CORPORATION: Bernstein Liebhard Files Securities Suit in S.D. NY --------------------------------------------------------------------- Bernstein Liebhard and Lifshitz, LLP commenced a securities class action lawsuit on behalf all persons who acquired ITXC Corporation (NASDAQ: ITXC) securities between September 27, 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 ITXC and the following: (1) Tom I. Evslin, (2) Edward B. Jordan, (3) William S. McKiernan, (4) Charles E. Noreen, Jr., (5) Lehman Brothers Inc., (6) Merrill Lynch, Pierce, Fenner & Smith Incorporated, and (7) FleetBoston Robertson Stephens, Inc. The complaint charges defendants with violations of the Securities Act of 1933 and 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 ITXC's initial public offering of 6.25 million shares of common stock at $12.00 per share that was commenced on or about September 27, 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 ITXC 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 ITXC shares in the after- market at pre-determined prices. For more information, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779- 1414 by E-mail: ITXC@bernlieb.com or visit the firm's Website: www.bernlieb.com JOHNSON VISION: Consumer Suits Over Eye Care Products Drags On -------------------------------------------------------------- Johnson & Johnson Vision Care, Inc. stated its intent to vigorously defend against two consumer class action suits filed in Florida and New Jersey. The Company faces a consolidated class action suit in the United States District Court for the Middle District of Florida brought on behalf of consumers alleging violations of federal and state antitrust laws. The suit, which also names a trade association and various Individuals as defendants, asserts that enforcement of Vision Care's long-standing policy of selling contact lenses only to licensed eye care professionals is a result of an unlawful conspiracy to eliminate alternative distribution channels from the disposable contact lens market. Trial in the suit is ongoing. The Company is also a defendant in a nationwide consumer class action brought on behalf of purchasers of its ACUVUE brand contact lenses. The plaintiffs in that action, which was filed in 1996 in New Jersey State Court, allege that the Company sold its 1-DAY ACUVUE lens at a substantially cheaper price than ACUVUE. The suits further allege that the Company misled consumers into believing these were different lenses when, in fact, they were allegedly "the same lenses." The Company has denied claims in both suits. KEITHLEY INSTRUMENTS: Securities Violations Suits Consolidated -------------------------------------------------------------- Keithley Instruments, Inc. faces a securities class action suit filed in the United States District Court for the Northern District of Ohio alleging violations of federal securities acts. The suit names as defendants, Keithley Instruments, Inc. and Joseph P. Keithley, the Company's chairman, president and chief executive officer. The suit primarily alleges violations of Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as amended. The purported class action was filed on behalf of all those who purchased Keithley stock between January 18, 2001 and March 9, 2001. The Company, with the knowledge and assistance of the individual defendant, allegedly made certain false and misleading statements concerning the Company's business condition and prospects for the second quarter of fiscal 2001. The Company and Mr. Keithley have been served with six additional complaints that are identical to the Complaint described above. These complaints were filed in the United States District Court for the Northern District of Ohio in a period commencing March to May 2001. On July 23, 2001 the actions were consolidated. The Company has said that it will respond to the allegations at the appropriate time. KEYNOTE SYSTEMS: Bernstein Liebhard Files Securities Suit in S.D. NY -------------------------------------------------------------------- Bernstein Liebhard and Lifshitz, LLP initiated a securities class action lawsuit on behalf all persons who acquired Keynote Systems, Inc. (NASDAQ: KEYN) securities between September 24, 1999 and August 15, 2001. The case is pending in the United States District Court for the Southern District of New York. Named as defendants in the complaint are Keynote and the Keynote executive officers Umang Gupta and John Flavio. The complaint also names FleetBoston Robertson Stephens, Inc. as a defendant, one of the lead underwriters of Keynote's initial public offering and secondary offering of common stock. The complaint charges defendants with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 for issuing a Registration Statements and Prospectuses that contained materially false and misleading information and failed to disclose material information. The Prospectuses were issued in connection with Keynote's initial public offering of 4,000,000 shares of common stock at $14.00 per share that was commenced on or about September 24, 1999 and a secondary offering of 5,750,000 shares of common stock at $105 per share that was commenced on or about February 7, 2000. The complaint alleges that the Prospectuses were false and misleading because they failed to disclose: (1) Robertson Stephens' agreement with certain investors to provide them with significant amounts of restricted Keynote shares in the Offerings in exchange for exorbitant and undisclosed commissions; and (2) the agreement between Robertson Stephens and certain of its customers whereby Robertson Stephens would allocate shares in the Offerings to those customers in exchange for the customers' agreement to purchase Keynote shares in the after- market at pre- determined prices. For more details, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E- mail: KEYN@bernlieb.com or visit the firm's Website: www.bernlieb.com LENDING COMPANIES: Offers Customers $2.3 Million Settlement ----------------------------------------------------------- Three fast-cash loan agencies offered more than 16,000 former customers a $2.3 million settlement in the class action lawsuit filed against them in a United States federal court. The suit alleged that Cashback Catalog Sales (later Cash 'N Advance) offered virtually worthless gift certificates for high interest loans. The suit further contended the defendants used short-term, high interest loans, also known as "pay-day loans," and enticed customers by selling gifts to cover the high rates. Customers, many of them with military ties, were offered instant short- term loans by allowing them to write personal checks that were held until pay day, a suit filed in federal court at Savannah alleged. Customers were charged $25 to $30 for each $100 borrowed, even if the loan was for one day, the lawsuit said. Braun, in documents filed in the case, describes payday lenders as businesses that typically lend $100 to $500 but charge interest rates that "would have made the Gambino family blush." Georgia law limits interest rates to loans of $3,000 or less to 16 percent, according to the lawsuit. The two companies skirted the law, according to the lawsuit, by offering gift certificates for the value of the interest fees. Customers could purchase items with the certificates only through a catalog offered by the companies after the loans were repaid, according to the lawsuit. Customers were also charged excessive shipping and handling fees, which had to be paid in cash, according to the lawsuit. Fewer than 5 percent of the gift certificates were redeemed by customers. Court documents identified owners of the two companies as John W. Griffin of Jacksonville, Fla., H. Alan Dasher of Jacksonville, Fla., Barbara Susan Griffin of Jacksonville, Fla., and Stephen W. Griffin of Buena Vista. None of the defendants have published telephone listings. U.S. District Senior Judge John N. Nangle will hold a fairness, or final approval, hearing Oct. 1 in Savannah in the class-action case against Cashback Catalog Sales, later Cash 'N Advance. At that hearing, Nangle will also decide whether to certify the case as a class action. In the proposed settlement, the defendants have offered to pay $2.3 million into a fund to compensate class members. They also agreed to cease the gift contrivance and stop collecting on checks returned for insufficient funds. At least one Kings Bay Naval Submarine Base sailor has applied to receive compensation, Braun said. Only those who borrowed money from either company between April 13, 1996, and June 26, 2001 are eligible, according to the settlement agreement. Defense lawyers have denied the allegations in the suit. Tommy James, a Macon attorney representing the loan companies, could not be reached for comment. MCAFEE.COM: Bernstein Liebhard Commences Securities Suit in S.D. NY ------------------------------------------------------------------- Bernstein Liebhard and Lifshitz commenced a securities class action lawsuit on behalf all persons who acquired McAfee.com, Inc. (NASDAQ: MCAF) securities between December 1, 1999, 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 underwriters of McAfee's initial public offering: Morgan Stanley & Co. Incorporated and FleetBoston Robertson Stephens, Inc. 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 McAfee's initial public offering of 6.25 million shares of common stock at $12.00 per share that was commenced on or about December 1, 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 McAfee 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 McAfee shares in the aftermarket at pre-determined prices. For more information, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779- 1414 by E-mail: MCAF@bernlieb.com or visit the firm's Website: www.bernlieb.com. METROMEDIA FIBER: Bernstein Liebhard Files Securities Suit in S.D. NY --------------------------------------------------------------------- Bernstein Liebhard and Lifshitz filed a securities class action lawsuit on behalf all persons who acquired Metromedia Fiber Network, Inc. (NASDAQ: MFNX) securities between January 8, 2001 and July 2, 2001. The case is pending in the United States District Court for the Southern District of New York. Named as defendants in the complaint are Metromedia, Stephen A. Garofalo and Nicholas M. Tanzi, who are officers and /or directors of Metromedia. The complaint charges defendants with violations of sections 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that during the Class Period, defendants issued to the investing public false and misleading information that materially misstated the Company's condition and prospects. Moreover, the Company failed to disclose material information necessary to make its prior statements not misleading. Specifically, defendants issued multiple press releases announcing and touting Metromedia's receipt of a $350 million credit facility from Citicorp USA, Inc. Defendants claimed that this credit facility would enable Metromedia to complete the construction of an extensive fiber optic network. These statements, however, were allegedly materially false and misleading because defendants failed to disclose that: (1) the Citicorp credit facility was contingent on the receipt of additional commitments from other lenders and that Metromedia was experiencing difficulty obtaining such commitments given the distressed market for telecom companies; (2) the further development of the Company's fiber optic network would be significantly delayed without obtaining the credit facility which was dependent on obtaining the additional loan commitments; and (3) based on the foregoing, defendants' statements about the Company and its prospects were lacking in a reasonable basis at all times. On July 2, 2001, Metromedia issued a press release announcing that it received an extension of the commitment letter for its $350 million credit facility from Citicorp. Defendants also revealed for the first time that the commitment letter from Citicorp was subject to the receipt of commitments from other lenders in the amount of $287.5 million. In response to this announcement, shares of Metromedia's stock closed at $1.95 per share on July 2, 2001, a far cry from the class period high of $19.06 reached on January 19, 2001. For more details, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E- mail: MFNX@bernlieb.com or visit the firm's Website: www.bernlieb.com MOTORCAR PARTS: $7.5 Million Settlement Awaits Court's Final Approval --------------------------------------------------------------------- Motorcar Parts and Accessories entered a settlement agreement with plaintiffs in the securities suit pending in the United States District Court for the Central District of California, Western Division. The terms of the settlement include payment of $7,500,000 to the plaintiffs in the class action. Of this amount, the Company's directors and officer's insurance carrier will pay $6,000,000, the balance to be paid by the Company. The court has given its preliminary approval to the settlement and the Company expects final approval will be given by this month. The suit alleges that, over a three-year period, the Company and certain of its officers misstated earnings in violation of securities laws. The complaint seeks damages on behalf of all investors who purchased common stock of the Company from August 1, 1996 to July 30, 1999. To finance the Company's portion of the settlement plan, the Company and Mel Marks, the Company's founder and a board member, have entered into a stock purchase agreement. Under the terms of this agreement, Marks has agreed to purchase shares of the Company's common stock, and the total purchase price for this stock would be $1,500,000, with share price at $1.00. Marks has deposited the funds to purchase the common stock with the Company. NETWORK ASSOCIATES: Class Member To Appeal District Court Ruling ---------------------------------------------------------------- Despite a court-approved settlement agreement, a member of the securities class action has filed a notice of Appeal in the Northern District of California Court, notifying parties to the case that he will appeal to the Ninth Circuit Court of Appeals to overturn the court's Final Judgment. Network Associates, Inc. entered into a $30 million settlement agreement with plaintiffs in a consolidated securities class action in the United States District Court for the Northern District of California. The Court has entered its final approval on the settlement agreement and has dismissed all claims against the Company with prejudice. The first suit was filed in April 7, 1999, against the Company and several of its officers in the United States District Court for the Northern District of California. The suit was filed purportedly on behalf of purchasers of common stock between January 20,1998 and April 19,1999. The complaint alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Other plaintiffs filed twenty-five similar actions asserting virtually identical allegations. The Court consolidated these cases and an amended complaint was filed. Defendants filed a motion to dismiss on June 6, 2000, which the Court granted only in part. The Court allowed only plaintiffs' claims related to In-Process Research and Development to go forward and shortened the class period to April 6, 1999. Plaintiffs filed a First Amended Consolidated Complaint, and defendants filed an answer. In February 2001, the Company settled the class action. PACIFIC HEALTHCARE: CA, FL RICO and ERISA Violations Suits Dismissed ------------------------------------------------------------------- Health insurer Pacific Healthcare Systems, Inc. was charged with two class action suits in California and Miami relating to their health care plans. The first suit is pending in the San Francisco Superior Court, while the second suit was dismissed by the United States District Court for the Southern District of Miami. The first suit was filed November 999 by Jose Cruz on behalf of all enrollees in their health care plans operating in California other than Medicare and Medicaid enrollees and relates to the period from November 2, 1995 to the present. The suit named the Company, its California subsidiary, and another subsidiary FHP International, as defendants. The suit alleges that the Company: (1) engaged in unfair business acts in violation of California law, (2) engaged in false, deceptive and misleading advertising in violation of California law, and (3) violated the California Consumer Legal Remedies Act. (4) received unjust payments as a result of their conduct. The Company moved to compel arbitration and the Superior Court denied the motion. Debbie Hitsman originally filed suit last November 22, 1999 in the United States District Court for the Southern District of Mississippi, Hattiesburg Division. The complaint relates to the period from November 22, 1995 to the present and purports to be on behalf of all enrollees in health care plans other than Medicare and Medicaid enrollees. The complaint alleges causes of action for violations of the Racketeer Influenced and Corrupt Organizations Act, or RICO, and the Employee Retirement Income Security Act of 1974, or ERISA. On June 23, 2000, Hitsman filed and served an additional complaint as a purported part of a multi-district litigation proceeding coordinated for pretrial proceedings in the United States District Court for the Southern District of Miami. Subsequently, Dr. Dennis Breen, Dr. Leonard Klay, Dr. Jeffrey Book and several health care providers, along with several medical associations, including the California Medical Association, joined the proceeding. These health care providers have sued a number of managed care companies, alleging that: (1) the companies' claims processing systems automatically and impermissibly alter codes included on providers' reimbursement/claims forms to reduce the amount of reimbursement, and (2) that the companies impose unfair contracting terms on providers, impermissibly delay making capitated payments under their capitated contracts, and negotiate capitation payments that are inadequate to cover the costs of health care services provided. In December 2000, the District Court granted the Company's motion to compel arbitration of all of Hitsman's claims against the Company. The Court also granted the motion to compel arbitration of all of Dr. Breen's claims against the company, except for his claims for violations of the RICO Act, and for his conspiracy and aiding and abetting claims. In April 2001, the Court granted the Company's motion to compel arbitration of all of Dr.Book's claims except for his RICO claims and his conspiracy and aiding and abetting claims. However, it denied the plaintiffs' motion to compel arbitration by several other doctors because the District Court concluded that they were only pursuing conspiracy and aiding and abetting claims against the Company. In March 2001, the District Court dismissed the Breen lawsuit, but gave the plaintiff permission to file an amended complaint. Such a complaint was filed at the end of March 2001, and the Company has filed a motion to dismiss this new complaint. In mid June 2001, the District Court dismissed the Hitsman lawsuit, but gave Hitsman permission to file an amended complaint. Instead of filing an amended complaint, Hitsman agreed to a dismissal of her case with prejudice. On July 24, 2001, the District Court dismissed the case. PACIFIC HEALTHCARE: Files Motion To Dismiss CA Securities Suits --------------------------------------------------------------- Pacific Healthcare Systems, Inc. vehemently denied allegations in two securities class action suits filed against them in the United States District Court for the Central District of California. The first case was filed December 1997 by William Madruga on behalf of purchasers of the Company's common stock from February 14, 1997 through their November 24, 1997 announcement that earnings for the fourth quarter of 1997 would be lower than expected. The complaint primarily alleges that the Company previously omitted or misrepresented material facts with respect to their acquisition of FHP Internatonal and their financial position. In November 1999, May 2000 and again in January 2001, the court dismissed the Madruga case in part without permission to amend and in part with permission to amend the complaint. The plaintiffs filed a fourth amended complaint in March 2001. The second case was filed November 21, 2000 by Michael Russ, and was later consolidated with other subsequent complaints into a single action. The complaints relate to the period between October 27, 1999 and October 10, 2000 and primarily allege that the Company made false projections about their financial performance in 2000. On June 22, 2001, the Company filed a motion to dismiss the consolidated complaint. The Company has instructed their legal counsel to defend the actions vigorously. UNDERWRITERS LITIGATION: Lovell Stewart Commences Securities Suits ------------------------------------------------------------------ The law firm of Lovell & Stewart, LLP and other firms filed a class action lawsuit on August 1, 2001 on behalf of all persons and entities who purchased between August 1, 1998 and August 1, 2001: (1) Internet Infrastructure HOLDRs, (2) Exodus Communications, Inc (Nasdaq:EXDS), (3) Inktomi Corp. (Nasdaq:INKT), (4) Vitria Technology, Inc. (Nasdaq:VITR), (5) Software.com, and (6) E.piphany, Inc. (Nasdaq:EPNY) after consultation of research reports issued by defendants: (i) Credit Suisse First Boston Corp., (ii) The Goldman Sachs Group, Inc., (iii) Merrill Lynch, Pierce, Fenner & Smith, Inc., (iv) Morgan Stanley Dean Witter & Co., (v) BancBoston Robertson Stephens, Inc. or (vi) Salomon Smith Barney, Inc. The action, Theresa T. Fadem Trust v. Credit Suisse First Boston Corp., et al., is pending in the U.S. District Court for the Southern District of New York, Docket No. 01-CV-7161 (KMW) and has been assigned to the Hon. Kimba M. Wood, U.S. District Judge. The lawsuit asserts claims under Sections 11 and 12(2) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and the common law of the State of New York and seeks to recover damages. The complaint alleges that defendants violated the federal securities laws by artificially inflating the prices of securities, to defendants' benefit, by systematically issuing research reports which contained the same uniform omissions of material facts, including: (a) the alleged material fact that the internal operations of defendants effectively mandated that defendants' analysts issue a favorable recommendation as an adjunct to defendants' obtaining (and their analysts' directly or indirectly sharing in) investment banking fees and other fees and business from the issuer of a Class Security; and (b) the alleged material fact that defendants and their employees, including analysts, frequently acquired shares of class securities at a fraction of the price that public investors later paid therefor and would profit from research reports that enabled the analyst, his or her employer, and his or her co-workers to sell their holdings at generally higher prices. The complaint also alleges that defendant Merrill Lynch 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 Internet Infrastructure HOLDRs offering failed to disclose that the prices of the HOLDRs constituent securities had been artificially inflated by defendants' misleading research reports and recommendations as set forth above. For more information, contact Christopher Lovell, Victor E. Stewart or Christopher J. Gray by Phone: 212-608-1900 by Email: sklovell@aol.com or visit the firm's Website: www.lovellstewart.com V ONE: Maryland Court Dismisses Suit For Failure To State Claim --------------------------------------------------------------- The United States District Court for the District of Maryland dismissed in its entirety a consolidated securities suit against V One Corporation for failure to state a claim. The suit was filed in January 2000 arising out of the Company's sale of a 6.8% minority interest in its common stock to NFR Security, Inc. The suit charged the Company and officers David D. Dawson, Steve Mogul and Margaret Grayson with violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by the Defendants, and violation of Section 20(a) of the Exchange Act by the Individual Defendants. On February 16, 2000, plaintiff Raj Patel filed a nearly identical suit in the Maryland District Court. On February 18, 2000, the Court extended the time for Defendants to file a responsive pleading in the first suit or the filing of a consolidated amended complaint in the matter. The Court entered an identical order in the Patel suit on March 3, 2000. The suits were consolidated on July 14, 2000. ********* 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, Aurora Fatima Antonio 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. 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