/raid1/www/Hosts/bankrupt/CAR_Public/011130.mbx
C L A S S A C T I O N R E P O R T E R
Friday, November 30, 2001, Vol. 3, No. 234
Headlines
AETNA INC.: Cauley Geller Commences Securities Suit in S.D. New York
AETNA INC.: Schiffrin Barroway Commences Securities Suit in S.D. NY
APROPOS TECHNOLOGY: States Securities Suit in N.D. IL "Meritless"
AQUA-LEISURE INDUSTRIES: Recalls 90,000 Defective Sunsmart Baby Floats
CERAFLAME INC.: Recalls 3,000 Tea Kettles Due To Burn, Injury Risks
COAST VALLEY: EEOC Sues, Alleging Sexual Harassment Of Women Employees
CORIO INC.: Schiffrin Barroway Commences Securities Suit in S.D. NY
ENRON CORPORATION: Finkelstein Krinsk Files Securities Suit in S.D. CA
FLASHNET COMMUNICATIONS: Lovell Stewart Files Suit in S.D. New York
JUDICIAL CONFERENCE: Rule Revisions on Control of Class Action Delayed
HANDSONTOYS INC.: Recalls 100,000 Toy Rattles Due To Choking Hazard
KROGER COMPANY: Sued By African-American Employees For Racial Bias
LEGAL NOTICE: Wechsler Harwood Announces Class Periods For ENE, DQE
LEGAL NOTICE: Bull Lifshitz Announces Deadlines For Securities Suits
MANLEY TOY: Recalls 15,800 Zapper Toys For Posing Choking Hazard
METRICOM INC.: Stull Stull Commences Securities Suit in N.D. California
MICROSOFT CORPORATION: Criticisms Rage as Judge Considers Settlement
MICROSOFT CORPORATION: Now Faces Probes by European Commission, Senate
NANOPHASE TECHNOLOGIES: Final Settlement Hearing Set For January 2002
NESCO INC.: Levy Levy Initiates Securities Suit in N.D. Oklahoma
NESCO INC.: Rabin Peckel Commences Securities Suit In N.D. Oklahoma
NEXTCARD INC.: Cauley Geller Initiates Securities Suit in N.D. CA
POTOMAC ELECTRIC: Settles For $2.25M April 2000 Pipeline Accident
STARMEDIA NETWORKS: Levy Levy Initiates Securities Suit in S.D. NY
STRIDE RITE: Recalls 109,000 Girls Shoes For Posing Choking Hazard
TIRE RECALL: Judge Certifies "Economic Loss" Suits V. Ford, Firestone
*********
AETNA INC.: Cauley Geller Commences Securities Suit in S.D. New York
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Cauley Geller Bowman & Coates, LLP initiated a securities class action in
the United States District Court for the Southern District of New York on
behalf of purchasers of Aetna, Inc. (NYSE:AET) common stock during the
period between December 13, 2000 and June 7, 2001, inclusive.
The complaint charges the Company and certain of its officers and directors
with issuing a series of material misrepresentations to the market before
and during the class period, thereby artificially inflating the price of the
Company's common stock. Specifically, the complaint alleges that the Company
issued statements concerning its ability to control and monitor its costs
and obligations in light of its expected and actual sales. Defendants knew
that the Company's management systems, procedures and controls for
monitoring such costs were lacking but they made positive statements about
the Company management, controls, and abilities to control costs while
concealing the defective management systems.
Between April 10, 2001 and May 8, 2001, the Company surprised the market by
announcing:
(1) higher-than-anticipated medical costs during the fourth
quarter of 2000 and the first quarter of 2001;
(2) faulty record-keeping which caused the payment of millions of
dollars in medical claims for former clients; and
(3) the absence of necessary management control systems required
for management to know the Company's obligations and proper
medical costs.
Finally, on June 7, 2001, it was revealed that the cause of much of the
Company's financial woes was that: "Poor record-keeping has resulted
in...paying millions of dollars in medical claims for people whose benefits
have expired." During the class period, the value of Company shares had
been artificially inflated to almost $43.00 per share but, as a result of
these disclosures, stock price plunged in excess of forty percent to below
$25.00 per share.
For further details, contact Jackie Addison, Sue Null or Shelly Nicholson by
Mail: P.O. Box 25438 Little Rock, AR 72221-5438 by Phone: 1.888.551.9944
(toll-free) by E-mail: info@classlawyer.com or visit the firm's Website:
http://www.classlawyer.com
AETNA INC.: Schiffrin Barroway Commences Securities Suit in S.D. NY
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Schiffrin and Barroway LLP initiates a securities class action in the United
States District Court for the Southern District of New York on behalf of all
purchasers of the common stock of Aetna, Inc. (NYSE:AET) from December 13,
2000 through June 7, 2001, inclusive.
The suit charges the Company and certain of its officers and directors with
issuing a series of material misrepresentations to the market before and
during the class period, thereby artificially inflating the price of its
common stock. Specifically, the complaint alleges that the Company issued
statements concerning, among other things, its ability to control and
monitor its costs and obligations in light of its expected and actual sales.
Defendants knew that the Company's management systems, procedures and
controls for monitoring such costs were lacking but they made positive
statements about management, controls, and abilities to control costs while
concealing the defective management systems.
Between April 10, 2001 and May 8, 2001, the Company surprised the market by
announcing:
(1) higher-than-anticipated medical costs during the fourth
quarter of 2000 and the first quarter of 2001;
(2) faulty record-keeping which caused the payment of millions of
dollars in medical claims for former clients; and
(3) the absence of necessary management control systems required
for management to know the Company's obligations and proper
medical costs.
Finally, on June 7, 2001, it was revealed that the cause of much of the
Company's financial woes was that "Poor record-keeping has resulted
in...paying millions of dollars in medical claims for people whose benefits
have expired." During the class period, the value of Company shares had been
artificially inflated to almost $43.00 per share but, as a result of these
disclosures, Company stock price plunged in excess of forty percent to below
$25.00 per share.
For more information, contact Marc A. Topaz or Stuart L. Berman 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 by E-mail: info@sbclasslaw.com
or visit the firm's Website: http://www.sbclasslaw.com
APROPOS TECHNOLOGY: States Securities Suit in N.D. IL "Meritless"
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Business software provider Apropos Technology (NASDAQ:APRS) intends to
vigorously oppose several securities class actions pending against them in
United States District Court for the Northern District of Illinois.
The Company labeled "without merit" suits filed against the Company, certain
of its current and former directors and officers, and the underwriters of
its initial public offering on behalf of purchasers of Company stock.
The suit asserts that the Company violated the federal securities laws by
making misstatements and omissions in its registration statement and
prospectus in connection with its initial public offering in February 2000,
relating to the role that founders Brady and Bach then played in the
Company. Specifically, the prospectus misrepresented that the two were both
active members of the executive management team and the Company's most
senior technology officers.
In July 1999, Brady failed in an effort to have the Company's Board of
Directors oust defendant Kerns from the company. As a result, Brady packed
up his office and stopped reporting for work, effectively ending his tenure
as Chief Technology Officer. He had no involvement in the day-to-day affairs
of the Company, nor was he involved in the development of its business and
technology. At about the same time, Bach also fell out of favor with Kerns.
Kerns limited Bach's role in the Company to being in charge of two employees
responsible for designing and implementing customer interfaces.
At the time of the IPO, the Company's technology and development departments
were in disarray. None of these material facts were disclosed to the
investing public in the IPO documents. As a result of the
misrepresentations, the investing public was misled. On April 10, 2001 the
Company's share price declined to $2.98 from a class period high of $70 near
the beginning of the class period.
AQUA-LEISURE INDUSTRIES: Recalls 90,000 Defective Sunsmart Baby Floats
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Aqua-Leisure Industries, Inc. is cooperating with the U.S. Consumer Product
Safety Commission (CPSC) by voluntarily recalling about 90,000 "SunSmart"
baby floats. The leg holes in the seat of the float can tear, causing
children to unexpectedly fall into the water and possibly drown.
The Company has received 12 reports of the floats' seats tearing and causing
children to fall into the water. There were four incidents of children
becoming completely submerged before a caregiver was able to reach them.
However, no injuries have been reported.
The recalled floats are packaged as "SunSmart" Baby Adjustable Sunshade
Boats. The baby floats are blue and white circular tubes with a seat in the
middle, and a detachable protective sunshade. The vinyl floats, intended for
ages 6 months to 18 months, have pictures of purple crabs and various
colored fish along the top. The word, "SunSmart" is printed across the front
of the float. The floats can be identified by the lettering "C/S" molded
onto the valve.
Juvenile products, specialty and discount department stores nationwide,
including Target, K-Mart, Bed Bath and Beyond and Baby Central, sold the
baby floats from August 2000 through September 2001 for between $10 and $13.
For more information, contact the Company for a free replacement by Phone:
866.807.3998 (between 9 am and 5:00 pm ET Monday through Friday) or visit
the firm's Website: http://www.aqualeisure.com.
CERAFLAME INC.: Recalls 3,000 Tea Kettles Due To Burn, Injury Risks
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Ceraflame Inc. is cooperating with the U.S. Consumer Product Safety
Commission (CPSC) by voluntarily recalling about 3,000 ceramic tea kettles.
The tea kettles can break or burst during use, spilling hot water, which
poses the risk of burn injuries to consumers. The Company has received six
reports of tea kettles breaking, though no injuries have been reported.
The Ceraflame Ceramic Stove Top Tea Kettles are made of ceramic and are
glazed black. The tea kettles have either a brown wooden handle, or a
ceramic handle of a similar color to the kettle. The kettles have the words
"Ceraflame" and "Made in Brazil" stamped on the bottom.
Gourmet stores and specialty catalogs sold these tea kettles nationwide from
October 2000 through October 2001 for between $60 and $70. However, tea
kettles purchased at Bloomingdales stores or on QVC are not involved in this
recall.
For more information, contact the Company by Phone: 888.679.5060 (toll-free
between 9 am and 5 pm ET Monday through Friday) or by E-mail:
info@ceraflame.com.
COAST VALLEY: EEOC Sues, Alleging Sexual Harassment Of Women Employees
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The Equal Employment Opportunity Commission commenced a class action against
Central Coast wine grape grower Coastal Valley Management, Inc. claiming
"severe and pervasive sexual harassment" of farmworker women, according to
an Associated Press report.
The suit alleges that the Company's supervisors, including the human
resources director responsible for stopping harassment, demanded sexual
favors and touched the women during unwanted advances. The plaintiffs are
among the 500-plus employees who worked the fields, or in packing and
driving operations, at the Company, according to EEOC regional attorney
William R. Tamayo. The plaintiffs also alleged if they complained about the
alleged harassment, they would face retaliation including failure to promote
and even firing.
The EEOC has pursued several similar suits in recent years against
California growers, including a $1.85 million settlement against a Salinas
firm, Tamayo said. He said any trial likely would not begin for at least a
year.
CORIO INC.: Schiffrin Barroway Commences Securities Suit in S.D. NY
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Schiffrin and Barroway LLP initiated a securities class action on behalf of
purchasers of the common stock of Corio, Inc. (NASDAQ:CRIO) between July 20,
2000 and December 6, 2000, inclusive in the United States District Court,
Southern District of New York, located at 500 Pearl Street, New York, NY
against the Company, certain of its officers and its underwriters. 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.
In July 2000, the Company commenced an initial public offering of 10,000,000
of its shares of common stock at an offering price of $14 per share. In
connection therewith, the Company 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 that:
(i) the underwriters had solicited and received excessive and
undisclosed commissions from certain investors in exchange for
which the underwriters allocated to those investors material
portions of the restricted number of shares issued in
connection with the IPO; and
(ii) the underwriters had entered into agreements with customers
whereby the underwriters agreed to allocate shares to those
customers in the IPO in exchange for which the customers
agreed to purchase additional shares in the aftermarket at
pre-determined prices.
For more information, contact Marc A. Topaz or Stuart L. Berman 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
ENRON CORPORATION: Finkelstein Krinsk Files Securities Suit in S.D. CA
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Finkelstein & Krinsk commenced a securities class action against Enron
Corporation (NYSE: ENE) for violations of the federal securities laws in the
United States District Court for the Southern District of California, on
behalf of purchasers of the Company's securities from at least January 18,
2001, through November 23, 2001.
The suit alleges that the Company with management insiders participated in a
scheme to artificially inflate its stock price and misrepresent the
condition of its business...The complaint tracks numerous reports and
alleges that the Company issued a series of false and misleading statements
that victimized public investors. Specifically, the complaint alleges that
the Company issued statements that should have, but did not, disclose that:
(1) its Broadband Services Division was experiencing declining
demand for bandwidth; and
(2) the Company's creation of a trading market for bandwidth was
not succeeding and was resulting in materially overstated
operating results.
As the truth is revealed, the price of Company securities has continued to
drop. In contrast, during the class period Company insiders disposed of over
$73 million of their holdings of Company stock.
For more information, contact Jeffrey R. Krinsk by Mail: 501 West Broadway,
Suite 1250, San Diego, CA 92101 by Phone: 877.493.5366 (toll-free) by
E-mail: fk@class-action-law.com or by Fax: 619.238.5425.
FLASHNET COMMUNICATIONS: Lovell Stewart Files Suit in S.D. New York
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Lovell & Stewart, LLP filed a securities class action on behalf of all
persons and entities who purchased, converted, exchanged or otherwise
acquired the common stock of Flashnet Communications, Inc. (formerly
Nasdaq:FLAS) between March 16, 1999 and May 31, 2000, inclusive.
The suit asserts claims under Section 11, 12 and 15 of the Securities Act of
1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated by the SEC thereunder and is pending in the U.S.
District Court for the Southern District of New York against the Company,
certain of its officers and directors and underwriters:
(1) FleetBoston Robertson Stephens, Inc.,
(2) UBS PaineWebber, Inc., and
(3) First Union Securities, Inc.
The suit alleges that the Company and certain of its officers and directors
at the time of its IPO violated the federal securities laws by issuing and
selling Company common stock pursuant to the initial public offering without
disclosing to investors that several of the underwriters of the IPO had
solicited and received excessive and undisclosed commissions from certain
investors.
In exchange for the excessive commissions, the complaint alleges, the
underwriter defendants allocated Company shares to customers at the IPO
price of $17.00 per share. To receive the allocations at $17.00, the
defendant 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 Company stock rocketed upward was intended to
drive Company share price up to artificially high levels. This artificial
price inflation enabled both the defendant underwriters and their customers
to reap enormous profits by buying stock at the $17.00 IPO price and then
selling it later for a profit at inflated aftermarket prices, which rose as
high as $46.00 during its first day of trading.
Rather than allowing their customers to keep their profits from the IPO, the
complaint alleges, the defendant 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
offering contained material misstatements regarding the commissions that the
defendant underwriters would derive from the IPO and failed to disclose the
additional commissions and "laddering" scheme discussed above.
For further details, contact Lovell and Stewart by Phone: 212.608.1900 or
visit the firm's Website: http://www.lovellstewart.com
JUDICIAL CONFERENCE: Rule Revisions on Control of Class Action Delayed
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The U.S. Judicial Conference's Committee on Civil Rules has tabled proposed
class action rule revisions that would have enhanced greatly federal judges'
authority to deny certification for class action lawsuits. The idea,
however, could be revived later in the rulemaking process, according to a
report in a recent issue of Trial, a publication of the Association of Trial
Lawyers of America (ATLA).
The proposal would have given federal judges the authority to certify a
class for proceedings in one court only, and in so doing preclude other
courts, even state courts, from entertaining other class action suits
involving the same class or the same subject matter. It also would have
allowed a federal court to deny certification and exercise the same
preclusive effect on parallel proceedings. The proposed changes, would have
amended Rule 23 of the Rules of Civil Procedure.
Fred Baron, president of ATLA, wrote the Committee on Civil Rules,
contending that the change would violate the Rules Enabling Act, which
authorizes the federal courts to make revisions to their own internal
procedure. That law, in turn, includes an injunction forbidding the
courts from abridging or modifying any substantive right currently
enjoyed by litigants. Such a change as the Committee proposed also
could violate the Seventh Amendment to the U.S. Constitution, Baron
added.
"Until such time as that conclusion is reached through the courts
(conceivably as much as 10 years from now), these proposals would wreak
havoc in class action practice," Baron warned. "They would deter attorneys
from taking on meritorious cases and, even in cases that are filed, deny
acccess to justice to countless victims of similar widespread harms."
The Committee's action in tabling the measure does not mean it will not be
revived at a later date. John Rabiej, a spokesman for the U.S. Judicial
Conference, said that the Committee plans to "study the idea
further," and has scheduled a conference at the University of Chicago to
discuss other ways of regulating class action litigation.
One proposed change that survived the Conference's recent meeting would
give federal courts new authority to regulate appointment of counsel in
class action litigation, ostensibly to prevent conflicts of interest,
and to limit attorney fee awards in such cases.
Baron also found this proposal undesirable. This proposal would impinge on
the traditional role of the state courts to regulate the conduct of
attorneys, Baron told the panel. "The added threat of having to satisfy
separate federal and state standards can easily create confusion for
lawyers," he wrote. "It can also facilitate bad faith attempts to use the
threat of ethics proceedings to intimidate lawyers for either side."
HANDSONTOYS INC.: Recalls 100,000 Toy Rattles Due To Choking Hazard
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HandsOnToys, Inc. is cooperating with the U.S. Consumer Product Safety
Commission (CPSC) by voluntarily recalling about 100,000 rattles. The rattle
can break and expose the noisemaker inside the rattle handle, posing a
choking hazard to young children. CPSC and HandsOnToys have received 11
reports of the rattles breaking. A 9-month old girl was found with the
plastic noisemaker lodged in her throat. Her mother removed it by performing
the Heimlich maneuver.
The rattles were sold under the Wiggly Giggler brand name. The rattle can be
shaken stacked and rolled. The rattle is a 3-inch long tube with mushroom
caps on each end. It was sold in three color combinations, green with purple
caps, orange with pink caps and purple with orange caps. The rattle contains
a noisemaker inside that produces a sound when the rattle is shaken. "Wiggly
Giggler" is written on the tube of the rattle.
Specialty toy stores nationwide sold the rattles from May 2000 through
September 2001 for between $2 and $3. However, rattles with a small number
"3" imprinted in the painted circle on the base of the mushroom end cap, in
the center of the four sound holes are not included in this recall.
For more information, contact the Company by Phone: 888.442.6376 (between 9
am and 5 pm ET Monday through Friday) to receive a replacement toy.
KROGER COMPANY: Sued By African-American Employees For Racial Bias
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Washington-based Gordon Silberman Wiggins and Childs is filing a class
action against grocery giant Kroger Company in the U.S. District Court in
Louisville, Kentucky, alleging the Company racially discriminated against
its African-American employees in their selection and promotion procedures.
The suit was filed on behalf of black Americans who have been employed by
the Company at any time since October 1998 and who have been subject to
discrimination, according to an IWon online report.
The suit relates the experience of Cary Waymon Owsley, a black employee who
established a computer-based training program for the zone in which his
store was located. Three years later, the Company encouraged a white male
without experience in computer-based training to apply for a newly created
computer training position in the area. The white employee was then
promoted and Owsley was called to assist in performing his duties. The
Company allegedly never asked Owsley to apply for the new position. In a
press statement, attorney David Sanford said, "Kroger routinely promotes
whites, while ignoring the qualifications of its African-American
employees," a claim the Company denies.
Company spokesman Gary Rhodes told IWon that the "Company has a very strong
track record of hiring and promoting minorities throughout the company." He
added that they have not received a copy of the suit.
LEGAL NOTICE: Wechsler Harwood Announces Class Periods For ENE, DQE
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Wechsler Harwood Halebian and Feffer LLP notifies the persons who transacted
in these securities and respective class periods:
CORPORATION CLASS PERIOD DUE DATE
ENRON, INC. 11/16/98 - 11/08/01 12/21/01
(NYSE:ENE)
DQE, INC. 12/06/00 - 04/30/01 12/05/01
(NYSE:DQE)
For more information, contact Craig Lowther or Ramon Pinon IV by Mail: 488
Madison Avenue, New York, New York 10022 by Phone: 877.935.7400 (toll-free)
by E-mail: clowther@whhf.com or rpinoniv@whhf.com or visiting the firm's
Website: www.whhf.com
LEGAL NOTICE: Bull Lifshitz Announces Deadlines For Securities Suits
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Bull and Lifshitz LLP notifies purchasers or acquirors of these securities
and their class periods:
CORPORATION CLASS PERIOD PARTICIPATION
DEADLINE*
Intel Corp. 07/19/00-09/29/00 12/10/01
(Nasdaq:INTC)
GenesisIntermedia, Inc. 12/21/99-09/25/01 12/17/01
(Nasdaq:GENI)
Enron Corporation 01/18/00-10/17/01 12/21/01
(NYSE:ENE)
Loudcloud, Inc. Pursuant to 11/30/01
(Nasdaq:LDCL) 3/8/01 offering
* The date by which an application must be made to the appropriate court to
serve as lead plaintiff of the class.
For more information, contact Peter D. Bull or Joshua M. Lifshitz by Phone:
212.213.6222 or by E-mail: counsel@nyclasslaw.com
MANLEY TOY: Recalls 15,800 Zapper Toys For Posing Choking Hazard
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Manley Toy Direct is cooperating with the U.S. Consumer Product Safety
Commission (CPSC) by voluntarily recalling about 15,800 Zapper toys. The
balloon tongues and the cylinders holding the tongues on these toys can
detach, posing a choking and aspiration hazard to young children.
The Promotional Resources Group of Companies Inc. had previously recalled
about 105,000 Bug Zapper toys on June 6, 2000. That company received a
report of a 3-year-old boy who inhaled a balloon tongue that detached from a
Zapper toy into his sinus cavity. He required medical treatment to remove
the part from his nose. Additionally, eight firms recalled about 835,000
Zapper toys on March 19, 2001.
The vinyl Zapper toys are about 2 to 3 inches long, and come in the shape of
various animals including frogs, dinosaurs and snakes. When the toy is
squeezed, the balloon tongue attached to its mouth inflates or rolls out.
"CHINA" or "MADE IN CHINA" is molded into the toy.
Arcades, amusement parks and carnivals sold and distributed these toys from
January 2000 through August 2001. They were sold for about $1.
For more information, contact the Company by Phone: (800) 767-9998 (between
9 am and 5 pm CT Monday to Friday) or visit the firm's Website:
http://www.manleytoy.com.
METRICOM INC.: Stull Stull Commences Securities Suit in N.D. California
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Stull, Stull and Brody LLP initiated a securities class action in the United
States District Court for the Northern District of California on behalf of
purchasers of the common stock of Metricom, Inc. (formerly NASDAQ:MCOM)
(currently OTC:MCOMQ) from between June 21, 1999 and July 2, 2001,
inclusive.
The suit alleges that defendants violated Sections 11, 12, and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The suit
alleges the defendants issued a series of false and misleading statements
that artificially inflated the price of Company securities. Specifically,
the complaint alleges that certain defendants, beginning in June 1999,
issued statements concerning the Company's business, financial results and
operations that failed to disclose or only partially disclosed three
material agreements with MCI WorldCom, Inc.
In February 2000, the Company closed a secondary public offering of 5
million shares of its common stock at a price to the public of $87 per
share. Many of the material terms of the MCI agreements were not revealed to
investors prior to the offering. In addition, the complaint further
alleges, certain defendants disseminated materially false and misleading
statements that manipulated and artificially inflated the Company's common
stock price. These knowingly false and misleading statements drove Company
stock from $11.06 per share near the beginning of the class period to as
high as $109.50 per share on January 28, 2000, just prior to the offering.
In July 2001, the Company filed a voluntary petition for bankruptcy relief.
The Company's bankruptcy filings disclosed that contingent claims, including
those owed to MCI, approached almost $700 million with total debts exceeding
$1 billion.
For more details, contact Tzivia Brody by Mail: 6 East 45th Street, New York
NY 10017 by Phone: 1.800.337.4983 (toll-free) by Fax: 212.490.2022 or by
E-mail: SSBNY@aol.com
MICROSOFT CORPORATION: Criticisms Rage as Judge Considers Settlement
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Microsoft Corporation's $1B proposal to settle hundreds of antitrust class
actions continues to come under fire as a University of Washington economist
told U.S. Federal Judge J. Frederick Motz in a preliminary hearing he
underestimated the amount of damages the software giant would pay.
According to CNN.com, Keith Leffler, told the judge that he should have
estimated the damages to be about $5.15 billion, instead of an initial $1.2
billion that he disclosed. Judge Motz appeared "stunned" but was reassured
when the lawyers who negotiated the settlement told him that they did not
use the figures in their calculation of the settlement amount. He
reportedly told the lawyers, "It seems to me you've got to go back to square
one to get back to square five," after the mistakes were revealed.
Under the proposed settlement, the Company would provide $1B in cash,
software and computer equipment to 16,000 of the nation's poorest schools.
The Company also specified that they would put up a foundation to oversee
the donations. Judge Motz also asked the Company and the lawyers who
negotiated the settlement to answer charges from rivals Apple Computer and
Red Hat, educators and plaintiffs' lawyers that the settlement would only
entrench the Company's monopoly. He asserted that if schools were offered
free copies of Windows, the school was going to act "...in a rational
economic way" by opting for what "would get the most bang for its buck."
One of the critics of the settlement is Ken Wasch, president of the Software
and Information Industry Association (SIIA). He said the settlement was not
for education, but was a "court-supported marketing plan." Red Hat, Inc.,
who markets Linux-based operating systems, also criticized the settlement.
CEO Matthew Szulik said "We just didn't find that (the settlement) to be
very logical...for a convicted monopoly." Apple Computer has also been very
vocal against the settlement, saying it would encroach on one of the sectors
of the market where it was giving Microsoft a fair fight. The Company has
its products in about 47% of all schools. CEO Steve Jobs asserted in a
press statement "We're baffled that a settlement imposed against Microsoft
for breaking the law should allow, even encourage, them to unfairly make
inroads into education - one of the few markets left where they don't have
monopoly power."
Lawyers for plaintiffs in the District of Columbia, Minnesota, New Mexico,
New York, North Carolina and North Dakota opposed the settlement. Lawyers
representing California consumers said the settlement was "grossly
inadequate" and would deny their clients the opportunity to seek as much as
$9 billion in damages.
Three weeks earlier, the Company inked a settlement with the Justice
Department in the federal government's antitrust suit by imposing
restrictions on the Company's business practices that would be overseen by
an independent on-site, three-member panel of computer experts. Some of the
states involved in the case have refused to accept the settlement, saying
the restrictions do not go far enough to curb the Company's anticompetitive
behavior.
According to a CNN.com report, Microsoft CEO Steve Ballmer said the
settlement "...avoids long and costly litigation for the company and at the
same time, really makes a difference in the lives of millions of school
children in some of the most economically disadvantaged schools in the
country." David Tulchin, the Company's lead lawyer told CNN.com he would
make a strong case for the settlement in the next hearing. "The settlement
is a great settlement for the kids and the country. It helps 7 or 8 million
kids in the poorest schools get the benefit of technology they wouldn't
otherwise have."
The plaintiffs' lawyers who negotiated the settlement argued that it was a
better deal for consumers than trying to divide the money among individuals.
Michael Hausfeld, of the Cohen Milstein Hausfeld and Toll lawfirm, asserted
last week consumers would have gotten as little at $10 apiece if Microsoft
had agreed to reimburse them directly - an assertion which Judge Motz seemed
to accept.
"This was a very carefully thought-out plan," Hausfeld told Reuters.
"There's a lot of complaining out there, and there's no relationship between
the complaining and reality." Ballmer also denied the settlement is aimed
at boosting the company's market share in American schools, saying money
from the settlement can be used to buy software from Microsoft competitors.
Hausfeld added that they were in negotiations with Red Hat for the company
to provide free copies of its Linux-based operating system for each copy of
Windows that Microsoft gives to schools.
Judge Motz said he is likely to rule by mid-December on whether to accept or
reject the proposed settlement of the case, according to a Seattle Post
Intelligencer report. If approved, the agreement would resolve more than
150 suits alleging Microsoft abused its power by overcharging for Windows,
Office and other software and creating a monopoly.
MICROSOFT CORPORATION: Now Faces Probes by European Commission, Senate
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As debate rages over the $1B settlement for hundreds of private antitrust
class action, Microsoft Corporation faces two probes by the European
Commission and the Judiciary Committee of the United States Senate.
According to a Zdnet report, European Commission spokeswoman Amelia Torres
said that the commission was studying the Company's reply to the
allegations. "The Commission will then have to reach a conclusion, which
will probably be next year." The Commission is investigating whether the
software giant violated European Union laws by designing its Windows
operating system to work better with its own server software than that of
rivals and by tying its Media Player software to its operating system. The
Company has said that it would forego a December hearing set by the
commission, but asserted it was interested in settling the allegations. Ms.
Torres said the investigations will continue, despite the Company's absence.
She also said it was Microsoft's right if it did not wish to have a hearing.
The Judiciary Committee of the United States Senate is also setting up its
own probe, deciding on a December 12 hearing date, to decide whether the
Company's proposed federal antitrust settlement goes far enough in stifling
its illegal practices, the Wall Street Journal reported on Wednesday. The
Committee plans to request testimony from the Justice Department's antitrust
chief, Charles James, state officials who are for and against the settlement
and a top Microsoft lawyer or executive, aides said, according to the
newspaper's online edition.
CEO Steven Ballmer will probably not testify as the Company has argued
against a hearing, with the Justice Department settlement still pending. It
is also unclear whether its competitors will testify, even though they
supported holding such hearing in the past, industry lobbyists told the
Journal.
NANOPHASE TECHNOLOGIES: Final Settlement Hearing Set For January 2002
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Wolf Haldenstein Adler Freeman and Herz LLP announced in a press statement
that a hearing for final approval of the settlement of a securities class
action against Nanophase Technologies, Inc. has been set for January 10,2002
in the U.S. District Court for the Northern District of Illinois. The suit
alleges that, liable under the federal Securities Exchange Act of 1934, are:
(1) Nanophase Technologies Corporation,
(2) Robert W. Cross,
(3) Dennis J. Nowak,
(4) Leonard A. Batterson,
(5) Donaldson, Lufkin & Jenrette, Inc.,
(6) Furman Selz LLC (now known as ABN Amro Securities LLC) and
(7) CIBC Oppenheimer Corp. (now known as CIBC World Markets Corp.)
The suit was filed on behalf of:
(i) all persons and entities who owned the Company's preferred
stock prior to the initial public offering of common stock;
and
(ii) all persons and entities whose shares were converted into
Company common stock upon the IPO.
The defendants supposedly issued fraudulent material misstatements and
omissions relating to the solicitation of consents to proceed with the
offering from certain of the Company's preferred stockholders.
The hearing seeks to determine whether an order should be entered:
(a) certifying the action as a class action of the above-defined
class for settlement purposes;
(b) finally approving the proposed settlement of the claims
asserted by plaintiff in the action against the defendants on
the terms set forth in the stipulation of settlement dated
October 1, 2001;
(c) dismissing the action with prejudice; and
(d) awarding counsel fees and reimbursement of expenses to counsel
for plaintiff and the class
For more information contact Wolf Haldenstein by Mail: 270 Madison Avenue,
New York, New York 10016 by Phone: 800.575.0735 or the firm's Website:
http://www.whafh.com.All e-mail correspondence should make reference to
Nanophase.
NESCO INC.: Levy Levy Initiates Securities Suit in N.D. Oklahoma
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Levy and Levy PC commenced a securities class action in the United States
District Court for the Northern District of Oklahoma on behalf of all
persons or entities who purchased Nesco, Inc. (NASDAQ:NESC) common stock
between April 26, 2000 and August 16, 2001, inclusive against the Company
and:
(1) Eddy L. Patterson,
(2) James Howell, and
(3) Larry Johnson
The suit alleges that defendants violated Section 10(b) and 20(a) of the
Securities and Exchange Act of 1934 by issuing a series of materially false
and misleading statements about the Company's quarterly and annual financial
results for 2000 and its quarterly financial results for the first quarter
of 2001.
At the close of the class period, the Company restated its revenues for 2000
and the first quarter of 2001 to adjust for $3.65 million in overbooked
sales. The overbooked sales, which were the result of accounting
irregularities, forced the company to reduce its earnings for 2000 to
$588,000, or 6 cents a share, from the previously reported $2.85 million, or
31 cents per share. The suit also alleges that as a result of these false
and misleading statements the price of the Company's common stock was
artificially inflated throughout the class period.
For more information, contact Stephen G. Levy by Mail: One Stamford Plaza,
263 Tresser Blvd., 9th Floor, Stamford, CT 06901 by Phone: 866.338.3674
(toll free) or 203.564.1920 by E-mail: LLNYCT@aol.com or visit the firm's
Website: http://www.levylawfirm.com
NESCO INC.: Rabin Peckel Commences Securities Suit In N.D. Oklahoma
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Rabin and Peckel LLP initiates a securities class action in the United
States District Court for the Northern District of Oklahoma on behalf of all
persons or entities who purchased Nesco, Inc. common stock (NASDAQ:NESC)
between April 26, 2000 and August 16, 2001, both dates inclusive against the
Company and:
(1) Eddy L. Patterson,
(2) James Howell, and
(3) Larry Johnson
The suit alleges that defendants violated Section 10(b) and 20(a) of the
Securities and Exchange Act of 1934 by issuing a series of materially false
and misleading statements about the Company's quarterly and annual financial
results for 2000 and its quarterly financial results for the first quarter
of 2001.
At the close of the class period, the Company restated its revenues for 2000
and the first quarter of 2001 to adjust for $3.65 million in overbooked
sales. The overbooked sales, which were the result of accounting
irregularities, forced the company to reduce its earnings for 2000 to
$588,000, or 6 cents a share, from the previously reported $2.85 million, or
31 cents per share. The suit also alleges that as a result of these false
and misleading statements the price of its common stock was artificially
inflated throughout the class period.
For more information, contact Maurice Pesso or Eric Belfi by Mail: 275
Madison Avenue, New York, NY 10016 by Phone: 800.497.8076 or 212.682.1818 by
Fax: 212.682.1892 by E-mail: email@rabinlaw.com or visit the firm's Website:
http://www.rabinlaw.com
NEXTCARD INC.: Cauley Geller Initiates Securities Suit in N.D. CA
-----------------------------------------------------------------
Cauley Geller Bowman & Coates LLP commenced a securities class action in the
United States District Court for the Northern District of California on
behalf of purchasers of NextCard Inc. (Nasdaq:NXCD) publicly traded
securities during the period between March 30, 2000 and October 30, 2001,
inclusive.
The complaint charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. The complaint
alleges that defendants disseminated false and misleading statements
concerning the Company's operations and prospects for 2000 and 2001. In
fact, defendants knew the Company's reserves were materially underfunded and
that as a result, its 2000 and 2001 projections and/or results were false.
During the class period, taking advantage of the inflation in Company stock,
the defendants sold almost $9 million worth of their own stock at
artificially inflated prices of as much as $10.89 per share.
Then, on October 31, 2001, it was revealed that, among other things,
defendants had concealed that during the class period:
(1) due to the deteriorating quality of NextCard's portfolio, the
Company would need to dramatically increase its reserves for
loan losses in fiscal 2000 and the first, second and third
quarters of 2001 and as a result its reported value of its
loans for fiscal 2000 and first and second quarters 2001 was
overstated;
(2) the Company had improperly recorded "credit losses" as "fraud
losses" and as a result the Company's "securitization
activities" during the Class Period did not qualify for "low
level recourse treatment." Defendants knew that as a result,
such would dramatically increase the Company bank division's
risk weighted assets, and would decrease the Company's "risk
based capital ratio" below federal banking guidelines -
rendering the Company "significantly under capitalized";
(3) because the Company's risk-based capital ration had plummeted
below acceptable levels, it had been technically subject to a
Prompt Correction Action Order and thereby restricted from
accepting or reviewing any brokered deposits;
(4) as a result of the above, the Company's 2000 and 2001 results
and projections were materially false and misleading.
These disclosures shocked the market, causing Company stock to decline to
$0.84 per share before closing at $0.87 per share on October 31, 2001 on
volume of more than 43 million shares.
For more information, contact Jackie Addison, Sue Null or Shelly Nicholson
by Mail: P.O. Box 25438 Little Rock, AR 72221-5438 by Phone: 1.888.551.9944
(toll-free) by E-mail: info@classlawyer.com or visit the firm's Website:
http://www.classlawyer.com
POTOMAC ELECTRIC: Settles For $2.25M April 2000 Pipeline Accident
-----------------------------------------------------------------
The Potomac Electric Power Company has agreed to settle for $2.25 million a
class action filed by Prince George's and Calvert Counties, Maryland owners
after a spill in April 2000 polluted the shoreline of Swanson Creek, a
tributary of Patuxent River.
126,000 gallons of fuel spilled out from a ruptured pipeline owned by the
Company and operated by Support Terminal Services Inc. at the utility's
Chalk Point Generating System. The accident pushed large quantities of oil
over the beaches and marshes of the creek, contaminating 20 miles of
shoreline and killing hundreds of turtles, fish, muskrats and other
wildlife.
As a result, the Company was fined $674,000 for:
(1) understating the amount of oil that spilled;
(2) for a lack of procedures in place that could have detected the
leak quickly; and
(3) for technical violations of pipeline safety regulations.
Damage assessment continues in the site, costing more than $65 million,
according to a Sunspot report. A state Department of Natural Resources
spokesman said restoration work cannot begin until the clean-up is complete.
The settlement, which is due for approval next week in the U.S. District
Court in Greenbelt, would compensate waterfront property owners and
commercial watermen affected by the accident. Plaintiffs' attorney Gary
Mason of Cohen Milstein Hausfeld and Toll, said they were pleased by the
settlement. "As we are approaching the two-year anniversary, we are glad to
achieve resolution." Company spokeswoman Makini Street said the suit was
"tentatively settled". The Company is awaiting the court proceedings to be
finalized next week.
STARMEDIA NETWORKS: Levy Levy Initiates Securities Suit in S.D. NY
------------------------------------------------------------------
Levy and Levy PC commences a securities class action in the United States
District Court for the Southern District of New York on behalf of all
purchasers of StarMedia Network, Inc. (NASDAQ:STRM) securities between April
11, 2000 and November 19, 2001, inclusive against the Company and:
(1) Fernando J. Espuelas, co-founder of the Company, former Chief
Executive Officer, and former Chairman of the Board of
Directors, and
(2) Steven J. Heller, former Chief Financial Officer.
The suit charges that defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by
issuing a series of material misrepresentations to the market during the
class period concerning the Company's financial performance. The suit also
alleges that the Company reported artificially inflated financial results in
press releases and filings made with the SEC by improperly recognizing
revenue in violation of generally accepted accounting principles (GAAP).
Specifically, the complaint alleges that two of the Company's primary
subsidiaries, AdNet S.A. de C.V. and StarMedia Mexico, S.A. de C.V., had
engaged in improper accounting practices which had the effect of materially
overstating the Company's reported revenues and earnings by at least $10
million. On November 19, 2001, the Company issued a press release announcing
that based on the "preliminary" results of an internal investigation into
its accounting practices, it expects to restate its financial statements for
fiscal year 2000 and the first two quarters of 2001 and that those financial
statements should not be relied upon. The Company further reported that its
Chief Financial Officer had "resigned."
Immediately following the announcement of the restatement, the NASDAQ Stock
Market halted trading in Company stock, pending the receipt of additional
information from the Company. The Company's stock last traded at $0.38 per
share, which is 98.5% less than the class period high of $25.50, reached on
April 11, 2000.
For further details, contact Stephen G. Levy by Mail: One Stamford Plaza,
263 Tresser Blvd., 9th Floor, Stamford, CT 06901 by Phone: 866.338.3674
(toll free), 203.564.1920 by E-mail: LLNYCT@aol.com or visit the firm's
Website: http://www.levylawfirm.com
STRIDE RITE: Recalls 109,000 Girls Shoes For Posing Choking Hazard
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Stride Rite Children's Group Inc. is cooperating with the U.S. Consumer
Product Safety Commission (CPSC) by voluntarily recalling about 109,000
pairs of Munchkin T-Strap girls' shoes. The buckle on these shoes can break,
posing a choking hazard for young children. Stride Rite Children's Group has
received four reports of the buckle breaking, and one report of a child
putting a broken piece of the buckle in her mouth and starting to choke.
The Munchkin T-Strap girls' shoes were sold in children's sizes 4 through
12. They have a strap that is fastened by a metal buckle on the side of the
shoe. The word "MUNCHKIN" is molded into the bottom of the shoe. The shoes
have these style numbers written inside the shoe below the words "Made in
China:"
(1) 3182011 (Brown Suede),
(2) 3182029 (Black Leather),
(3) 3182037 (Red Leather),
(4) 3182045 (Navy Leather),
(5) 3182052 (White Leather),
(6) 3182094 (Black Patent)
Shoe Department and Stride Rite Outlet stores nationwide sold these shoes
from January 2001 through September 2001 for about $25.
Consumers should take the shoes away from their children immediately and
return the shoes to the store where purchased for a refund or replacement
shoes. For more information, contact the Company by Phone: 800.650.7708
(between 9 am and 5 pm ET Monday through Friday) or visit the firm's
Website: http://www.strideritecorp.com.
TIRE RECALL: Judge Certifies "Economic Loss" Suits V. Ford, Firestone
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U.S. District Judge Sarah Evans Barker certified as a class action most of
the "economic loss lawsuits" filed against Ford Motor Company and
Bridgestone Corporation's Firestone unit relating to last year's rollover
accidents affecting the Ford Explorer. The accidents occurred when the
tread separated in Firestone Tires used by the popular sports utility
vehicle. This caused 271 deaths and more than 800 injuries.
Judge Barker certified three classes:
(1) Anyone who owned or leased a 1991-2001 model year Ford
Explorer on or before Aug. 9, 2000;
(2) Anyone who owned, purchased or leased a 1991-2001 Explorer
equipped with certain Firestone tires; and
(3) Anyone who owned or leased vehicles equipped with Firestone
ATX, ATX II, Firehawk ATX, ATX 23 Degree, Widetrack Radial
Baja and Wilderness tires anytime from 1990 to the present.
However, Judge Barker denied plaintiff requests to certify a class
consisting of all current U.S. residents who have owned or leased tires that
failed, resulting in property damage. The suit is unique from other suits
because it won't involve cases where people were injured or killed because
of tire blowouts or vehicle rollovers, by far the most publicized elements
of the case. Instead, it consolidates claims from millions of people across
the country for a variety of reasons including loss of value and violations
of consumer protection laws and the federal warranty act.
Earlier, Bridgestone and Ford have contested class action for the suits,
saying the non-injury cases are too different to treat as a whole. Company
spokeswoman Jill Bratina told the Associated Press the proposed class would
involve nearly 300 different populations of tires, including different sizes
and types, which would present an unmanageable case for a jury to consider.
Ford spokeswoman Kathleen Vokes also told Associated Press that "This
litigation is being brought by people who have not been hurt in any way
shape or form, they have not been in an accident, they have not suffered a
tread separation."
It is not yet known whether the two Companies will appeal the judge's
decision. The ruling will not affect the hundreds of personal-injury suits
facing the Companies due to the accidents.
*********
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
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Information contained herein is obtained from sources believed to be
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The CAR subscription rate is $575 for six months delivered via e-mail.
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