/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/011203.mbx C L A S S A C T I O N R E P O R T E R Monday, December 3, 2001, Vol. 3, No. 235 Headlines ASBESTOS LITIGATION: Railroad Companies Sue WV Justices For 1999 Ruling AT&T CORPORATION: Sued For Race, Gender Bias and Sexual Harassment BRIGHTPOINT INC.: Cauley Geller Initiates Securities Suit in S.D. IN COLIN SERVICE: Appeals Court Reinstates RICO Suit Filed By Rival Firm CREDIT SUISSE: US Attorney Drops Investigation Into IPO Violations DJ ORTHOPEDICS: Wechsler Harwood Commences Securities Suit in S.D. NY ENRON CORPORATION: Two Law Firms File Suit For ERISA Violations in TX ENRON CORPORATION: Schwartz Junell Initiates ERISA Suit In Texas Court GLOBESPAN INC.: Lovell Stewart Commences Securities Suit in S.D. NY GLAXOSMITHKLINE PLC: Fund Sues For Inflating AWP of Anti-Nausea Drugs INDIAN FUNDS: Interior Secretary Reorganizes Handling of Indian Affairs INDIAN FUNDS: Interior Secretary Faces Contempt of Court Charges INVESTMENT FUNDS: Former Peregrine CEO Sued For Securities Violations JNI CORPORATION: Lovell Stewart Initiates Securities Suit in S.D. NY LEXMARK INTERNATIONAL: Milberg Weiss Lodges Securities Suit in E.D. KY METROPOLITAN ATLANTA: Suit Commenced For Discrimination, ADA Violations NOVEN PHARMACEUTICALS: Cauley Geller Files Securities Suit in S.D. FL NOVEN PHARMACEUTICALS: Schiffrin Barroway Files Securities Suit in FL OKLAHOMA: Picher Residents, Lawyers Contemplate Mining Hazards Suit QUEST SOFTWARE: Schiffrin Barroway Files Securities Suit in S.D. NY SAGENT TECHNOLOGY: Milberg Weiss Lodges Securities Suit in N.D. CA SPANISH BROADCASTING: Schiffrin Barroway Files Securities Suit in NY SRI SURGICAL: Cauley Geller Commences Securities Suit in M.D. Florida STARMEDIA NETWORKS: Marc Henzel Commences Securities Suit in S.D. NY STATE FARM: Must Pay For Wrecked Cars' Dimished Value, Says GA Court SUPPORT.COM: Milberg Weiss Initiates Securities Suit in S.D. New York XOMA LTD: Wechsler Harwood Initiates Securities Suit in N.D. California XOMA LTD.: Levy Levy Commences Securities Suit in N.D. California ********* ASBESTOS LITIGATION: Railroad Companies Sue WV Justices For 1999 Ruling ----------------------------------------------------------------------- Five West Virginia Supreme Court Justices and two circuit Judges were named in a class action suit filed by four railroad companies. The lawsuit challenges a 1999 Supreme Court ruling that set up a Mass Litigation Panel to hear consolidated asbestos cases and directed the panel to resolve all cases by July 2002. Over 25,000 plaintiffs have filed cases against various Companies, relating to health hazards due to asbestos exposure. More than 5,000 of these cases were brought against railroad companies. West Virginia courts joined these cases pursuant to 1999 SC ruling. The companies that initiated the suit in the US District Court in Charleston, West Virginia are: (1) CSX Transportation, Inc. of Jacksonville, Florida, (2) Norfolk Southern Railway Company of Norfolk, Virginia, (3) Consolidated Rail Corporation of Philadelphia, (4) American Premier Underwriters Inc. of Cincinnati The suit alleges that the ruling deprived the Companies of their rights to due process of law and seeks a declaration that the plan is unconstitutional. The suit names as defendants: (i) Supreme Court Chief Justice Warren McGraw, (ii) Supreme Court Justice Joseph Albright, (iii) Supreme Court Justice Robin Davis, (iv) Supreme Court Justice Elliott "Spike" Maynard, (v) Supreme Court Justice Larry Starcher, (vi) Circuit Judge Martin J. Gaughan, who is supervising judge over asbestos cases involving railroad employees and whose district covers Brooke, Hancock and Ohio counties; (vii) retired Kanawha County Circuit Judge A. Andrew MacQueen who developed a master plan for proceeding with the cases and serves on the Mass Litigation Panel along with five other judges Carter G. Phillips, attorney for the Companies, told the Naples Daily News, "The problem that creates is you don't get any kind of individualized justice.What you get is an enormous pressure to settle because there are very few defendants who are going to be willing to risk.litigating. You never get your day in court - that's the bottom line." He added it was virtually impossible for railroad companies to interview plaintiffs or have them examined by physicians because of limited timing, the large number of cases and because many plaintiffs are from outside West Virginia. CSX's Director for Corporate Communications David Hall said, "West Virginians are being exploited.You have clients coming in here, and when they do either get a settlement or a jury award, that money is leaving West Virginia, so West Virginians are left with the burden of paying for these trials." Michelle Mensore, a spokeswoman for the State Supreme Court, said Thursday she could not comment on prospective or pending litigation, according to a Naples Daily News Report. For more information, contact the United States District Court for the Southern District of West Virginia by Mail: 300 Virginia St. Charleston WV 25301 by E-mail: automation@wvsd.uscourts.gov or visit the Website: http://www.wwvsd.uscourts.gov AT&T CORPORATION: Sued For Race, Gender Bias and Sexual Harassment ------------------------------------------------------------------ Telecommunications giant AT&T Corporation faces a class action suit filed on behalf of over 150 employees, charging the Company of a wide variety of discrimination charges, including gender and race discrimination and sexual harassment. Law firm Leeds, Morelli & Brown PC filed the suit along with the U.S. Equal Employment Opportunity Commission (EEOC). The suit alleges that the employees were subjected to lewd advances, and solicitations of sexual favors in exchange for advancement. The suit also claims failure to promote, disparity in pay, and failure to provide reasonable accommodations. The job of a female African-American employee with multiple sclerosis and sleep apnea who worked 4.5 miles from her home was eliminated. She claims she was forced to take a position 30 miles away. This employee requested an accommodation for relocation but was denied, stating that her disability did not warrant a reasonable accommodation but rather, she had transportation issues. Included in the case is an Arab woman who was pushed into a locker by a co-worker, told that she is "not a real woman" and that she should take off her veil because "it looks ugly." According to attorney Lenard Leeds, "AT&T has denied promotions and transfers, and created a hostile environment for any employee who complains about sexual harassment, disparate treatment and/or preferential treatment.We believe that this class action will have historic significance both legally and economically throughout the nation." About 150 plaintiffs are involved in the case from states throughout the country, including Arizona, Georgia, Colorado, California, Tennessee, Ohio, Pennsylvania, New Jersey and New York. Twenty-five percent of the plaintiffs have been fired. Employees involved hold positions as sales people, customer care representatives, and engineers. Mr. Leeds added, "This class action will make it clear to every industry regardless of their size or power, that sexual harassment and discrimination will not be excused or tolerated on any level." For more information, contact Lenard Leeds by Phone: 1.800.585.4658 by E-mail: LMB@leedsmorellibrown.com or visit the firm's Website: www.lmblaw.com BRIGHTPOINT INC.: Cauley Geller Initiates Securities Suit in S.D. IN -------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP initiated a securities class action in the United States District Court for the Southern District of Indiana, Indianapolis Division on behalf of purchasers of Brightpoint, Inc. (NASDAQ:CELL) publicly traded securities during the period between January 28, 1999 and November 14, 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 the Company's common stock. On November 8, 2001, the Company announced that it would restate its 1998, 1999, 2000 and first and second quarter 2001 results because the Company expensed its insurance premium costs over an extended time period rather than accrued the date it entered into the insurance policy. The complaint alleges that as a result, the Company's failure to prepare its financial statements pursuant to generally accepted accounting principles caused its 1998-2Q 2001 income and assets to be materially overstated. The effect of the restatement was significant. Rather than the $239.5 million of shareholders' equity the Company reported in 1998, it restated this number to $228 million. The restatement revealed that the Company had inflated shareholders' equity by $8.71 million in 1999, $6.5 million in 2000, $6 million in the first quarter of 2001 and $5.5 million as of June 30, 2001. 1998 net income per share fell from $0.38 in 1998 to $0.17 after the restatement. The restatement revealed that EPS was inflated by $0.02 in 1999. 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: www.classlawyer.com COLIN SERVICE: Appeals Court Reinstates RICO Suit Filed By Rival Firm --------------------------------------------------------------------- The 2nd US Circuit Court of Appeals reversed a federal court's decision to dismiss a class action against labor contractor Colin Service Systems, Inc. accusing it of illegally hiring undocumented workers to reduce its costs, and enable the Company to bid lower than other competing firms. Rival contractor Commercial Cleaning Services filed the suit asserting claims under the Racketeering Influenced and Corrupt Organizations (RICO) Act. According to a Law.com report, the federal court decided that Commercial had no standing to sue because it did not demonstrate proximate harm, a requirement established by the U.S. Supreme Court in Holmes v. Securities Investor Protection Corp. (1992). Lawyer for the plaintiffs Howard Foster expressed satisfaction at the decision, telling Law.com "This makes it a lot easier for any suits alleging unfair competition under RICO to go forward." He added that the ruling will enable him to bring similar suits against other industries including meat packing and agriculture. The Appellate Court, however, found that the suit was deficient in one aspect and needed to be resubmitted. Commercial failed to allege that Colin had actual knowledge the illegal aliens it hired were brought into the country in violation of the statute, according to the ruling. Colin's lawyers said the finding was a victory. Aaron Marcu said "We're pleased that the court agreed that the complaint was legally insufficient and should have been dismissed.There is no basis to this case, and we are confident we will prevail when we return to the district court." According to G. Robert Blakeley, a Notre Dame Law professor and writer of the 1970 RICO act, the ruling signifies a shift from the Federal Court's generally hostile attitude toward competitive-injury allegations under RICO. The Court has "now told people who are competitively injured by the abuse of the immigration system that they have a remedy under RICO. Before, they didn't have a remedy at all, which is why Congress put it in there." For more information, visit the 2nd Circuit Court of Appeals Website: http://csmail.law.pace.edu/lawlib/legal/us-legal/judiciary/second- circuit.html or E-mail: dwilliams@law.pace.edu CREDIT SUISSE: US Attorney Drops Investigation Into IPO Violations ------------------------------------------------------------------ The US Attorney's Manhattan Office has dropped its investigation of investment bank Credit Suisse First Boston for alleged initial public offering (IPO) violations. The US Attorney, together with the Securities and Exchange Commission (SEC) and the regulatory unit of the National Association of Securities Dealers, have been looking at potential abuses in how IPO shares were allotted to investors during the tech sector boom of the late 1990s and early 2000, according to a USA Today report. The Company was investigated for its participation in two IPOs involving software company VA Linux and internet provider Covad Communications. VA Linux shares sped upward on their December 1999 IPO, while Covad Communications has filed for bankruptcy protection in August. In a disclosure to the SEC, the Company said the Covad class action alleges the Company and another unnamed investment bank issued favorable analyst reports on Covad Communications in order to get its banking business. The end of the investigation could mean that the civil cases against the Company could be settled earlier and more quickly. The Company is also talking to other regulatory agencies to settle possible civil cases arising from the IPO investigation. For more information, contact the United States District Court for the Southern District of New York by Mail: 500 Pearl Street, New York NY 10007-1312 by Phone: 212.805.0136 or visit the Website: http://www.nysd.uscourts.gov DJ ORTHOPEDICS: Wechsler Harwood Commences Securities Suit in S.D. NY --------------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP filed a securities class action in the United States District Court for the Southern District of New York on behalf of all shareholders that acquired the common stock of DJ Orthopedics, Inc. pursuant or traceable to an initial public offering by Orthopedics in November 15, 2001, against the Company, certain of its officers and directors and its underwriters. The complaint alleges that defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, by issuing a registration statement and prospectus in connection with an initial public offering of common stock which contained materially false and misleading statements and omissions. Specifically, the complaint alleges that shortly after the commencement of trading on November 15, 2001, the IPO share price dropped precipitously from $17 per share upon news that analysts adjusted downward the Company's fourth quarter earnings forecast. Fourth quarter earnings estimates were touted by defendants in "road shows" to investors prior to the IPO. Defendants did not halt the IPO or trading in the stock, even though the registration statement and prospectus failed to disclose that the fourth quarter estimates were adjusted downward. The news drove the price of the Company's shares down by at least 10%, to close at $15.25 per share, on heavy trading volume of 7.3 million shares. By its third full day of trading, the Company's shares were down to $13.16 per share, or over 22% off the IPO price. For more information, contact David Leifer by Mail: 488 Madison Avenue 8th Floor New York, New York 10022 by Phone: 877.935.7400 (Toll Free) by E-mail: dleifer@whhf.com or visit the firm's Website: http://www.whhf.com ENRON CORPORATION: Two Law Firms File Suit For ERISA Violations in TX --------------------------------------------------------------------- The Baskin Law Firm and Williams, Squires and Wren LLP commenced a class action suit in federal court in Texas on behalf of current and former employees of Enron Corporation (NYSE:ENE) and its affiliates, alleging that Company officials breached their fiduciary duties in the administration of their 401(k) plans. As a result, the employee's retirement savings have been decimated. The suit alleges that the Company, its directors and administrators of the Company's 401(k) plan, violated the Employee Retirement Income Security Act (ERISA) by loading employees' retirement accounts with Company stock while ignoring its chaotic financial situation. The results of defendants' mismanagement have been disastrous, forcing the Company to restate over three years of financial results to correct errors that had inflated its income by at least $591 million. Meanwhile, Company stock, which made up over 54% of all the assets in the Company's 401(k) plan, has plunged a staggering 99% in less than one year. The suit further alleges that defendants violated their duty to provide employees with complete and accurate information about Company stock. Instead of warning employees of the risks associated with investing their retirement savings in Company stock, defendants kept the employees in the dark and encouraged them to invest their nest eggs in Company stock, while at the same time Company insiders disposed of over $1.2 billion of their own stock at prices as high as $82 per share. According to the suit, defendants took actions that made it impossible for its workers to protect their retirement savings, forcing them to watch helplessly as Company stock plummeted. Although the Company made all of its matching contributions in stock, it prohibited its employees from touching that stock until they reached age 50. The retirement savings of employees and their families have been devastated by defendants' misconduct. For more information, contact the two law firms by Phone: 1.888.741.6200 or visit the Website: http://www.trialfirm.com. ENRON CORPORATION: Schwartz Junell Initiates ERISA Suit In Texas Court ---------------------------------------------------------------------- Schwartz Junell Campbell and Oathout LLP commenced a class action in federal court in Texas on behalf of current and former employees of Enron Corporation (NYSE:ENE) and its affiliates alleging that Company officials breached their fiduciary duties in the administration of their 401(k) plans and as a result, employees' retirement savings have been decimated. The suit alleges that the Company and its officials violated the Employee Retirement Income Security Act (ERISA) by using Company stock as an investment option while overlooking its vast financial problems. By failing to act prudently in managing the Company's retirement plan, defendants are responsible for the damage suffered by many of Company employees, some who have lost their entire nest egg. The suit further alleges that defendants, in violation of ERISA, did not disclose the risks connected with investing their retirement savings in Company stock. The suit also alleges, while providing Company stock to employees, defendants were busy bungling Company books and inflating its income by hundreds of millions of dollars. Before this mismanagement was discovered, company insiders disposed of over $1.2 billion of their own Enron stock at prices as high as $82 per share. When the extent of the misconduct was finally discovered, forcing the Company to restate its financial results for the last three years, stock fell by more than 99% in less than one year. Defendants' financial misconduct meant that Company employees, whose retirement funds contained huge quantities of stock, would be forced to watch their retirement dreams fade away. Further packing the retirement funds with stock, the Company matched its employees' contributions in the stock. The suit charges the Company with restricting the removal of that stock until the employee reached age 50. Thus, employees were powerless to prevent their retirement funds from disappearing. For further details, contact Mitzi Flowers by Phone: 713.752.0017 or by E-mail: mflowers@schwartz-junell.com. GLOBESPAN INC.: Lovell Stewart Commences Securities Suit in S.D. NY ------------------------------------------------------------------- Lovell & Stewart, LLP initiated a securities class action on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of GlobeSpan, Inc. (NasdaqNM:GSPN) between June 23, 1999 and December 6, 2000, inclusive in the United States District Court for the Southern District of New York. The suit asserts claims under Section 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. The suit names the Company, certain of its officers and directors at the time of the IPO and these underwriters of the Company's initial public offering: (1) FleetBoston Robertson Stephens, Inc., (2) Donaldson, Lufkin & Jenrette Securities Corp., (3) SG Cowen Securities Corporation, (4) Thomas Weisel Partners LLC, (5) Morgan Stanley Dean Witter & Co., (6) E*Trade Group, Inc., (7) DLJdirect, Inc., (8) Lehman Brothers, Inc., (9) Merrill Lynch, Pierce, Fenner & Smith, Inc., (10) Prudential Securities Incorporated, (11) UBS Warburg LLC and (12) Jefferies & Company The suit alleges that the defendants violated the federal securities laws by issuing and selling Company common stock pursuant to its initial public offering and a secondary offering of Company stock 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, underwriters of the IPO, allocated shares of Company stock to certain investors at the IPO price of $5.00 per share. To receive the allocations at $5.00, the IPO 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 stock rocketed upward was intended to drive share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the IPO underwriters and their customers to reap enormous profits by buying Company stock at the $5.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $14.38 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters of the Company's IPO 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 suit also alleges that the Company and underwriters of the secondary stock offering were able to price the secondary offering at an artificially high $100.00 per share due to the continued effects of the foregoing violations. The suit further alleges that defendants violated the Securities Act of 1933 because the prospectuses distributed to investors and the registration statements filed with the SEC in order to gain regulatory approval for the Company offerings contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above. For more details, contact Christopher Lovell, Victor E. Stewart or Christopher J. Gray by Mail: 500 Fifth Avenue, New York, New York 10110 by Phone: 212.608.1900 by E-mail: sklovell@aol.com or visit the firm's Website: http://www.lovellstewart.com GLAXOSMITHKLINE PLC: Fund Sues For Inflating AWP of Anti-Nausea Drugs --------------------------------------------------------------------- Spector Roseman and Kodroff LLP filed a class action lawsuit on behalf of the Teamsters Health and Welfare Fund of Philadelphia and Vicinity against pharmaceutical giant GlaxoSmithKline PLC and its two predecessors Glaxo Wellcome and SmithKline Beecham to halt fraud by drug companies. The Teamsters fund commenced the suit on behalf of all persons and entities who used the nationally published "Average Wholesale Price" (AWP) in paying for ant-nausea drugs Zofran and Kytril. An investigation performed for the benefit fund uncovered evidence that the defendants have, for many years, deliberately overstated the price of two popular drugs used to prevent nausea during chemotherapy. The suit alleges that the Company and its predecessors targeted the class by fraudulently inflating the AWP as reported in industry publications, knowing that patients, insurers and employee benefit funds would use it as a basis for determining how much to pay for the drugs. According to the complaints, the AWP quoted by the defendants for its drugs bears no relationship to the actual wholesale price it charges to doctors and other purchasers. The disparity between what the doctor actually pays to obtain the drug from the defendants, and the AWP that the Teamsters Fund and other payors use to determine its reimbursement, is known informally as "the spread." The defendants marketed their products to doctors by emphasizing the amount of the spread that can be obtained by the physician. According to plaintiffs' attorney Jeffrey Kodroff, Glaxo Wellcome marketed Zofran while SmithKline Beecham marketed the competing drug Kytril, before their merger. As alleged in the complaints, the two companies did not compete by lowering prices, but by raising their prices and emphasizing to doctors the amount of the spread available from their drugs. At the same time, each company accused the other of fraudulent marketing conduct. Kodroff noted that ironically, "They were both right." The Fund has also recently commenced two other class actions against Bristol-Myers Squibb earlier this month and Schering-Plough back in May. The suits allege unlawful pricing of drugs purchased by the Fund. For more information, contact Jeffrey L. Kodroff by Phone: 215.496.0300 or by E-mail: jkodroff@srk-law.com. INDIAN FUNDS: Interior Secretary Reorganizes Handling of Indian Affairs ----------------------------------------------------------------------- Interior Secretary Gale Norton will meet next month with American Indian leaders to begin discussion on a plan to reorganize agencies that manage millions of dollars in royalties and rents from Indian lands, the Associated Press recently reported. J. Steven Griles, an Interior Department Deputy Director, recently told the National Congress of American Indians that Secretary Norton will begin the legally mandated consultations in Albuquerque, New Mexico, on December 13. The Interior Secretary, who is the top administration official for Indian affairs and trustee for the Indians' royalty revenues, announced earlier this month the formation of the new Bureau of Indian Trusts Assets Management to oversee the accounting of $500 million a year in historically mismanaged royalties from Indian land. The new bureau was created under the threat of contempt of court citations against Norton and nearly 40 other past and present officials for their failure to reform the trust fund, which manages mining, grazing, logging and other royalties from Indian land. Some 300,000 Indians have filed a class-action lawsuit against the Interior Department, claiming that more than $10 billion has been squandered through over a century of mismanagement of the trust fund. US District Judge Royce Lamberth has ordered the Interior Department to find out how much it owes the Indians and to fix its accounting system. Judge Lamberth recently ordered Norton to appear before him to show cause why she should not be held in contempt of court. Tribal leaders attending their national conference in Washington State criticized the Interior Department for failing to consult them before deciding to reorganize the Bureau of Indian Affairs (BIA). They accused Norton of unilaterally making the decision to change the most powerful government body in Indian Country, the BIA, by placing trust fund management of Indian revenues and royalties in a new, separate bureau. "We have found that we cannot trust our trustee," Keith Harper, an attorney representing the Indians in their class-action lawsuit, told the conference audience. Harper's clients have proposed court-ordered receivership. "It seems like Secretary Norton is the Grinch that stole consultation," said Tex Hall, a North Dakota tribal chairman. "The United States has not lived up to its obligations." Tribal chairmen from across the nation stood in line at microphones to criticize Norton and Interior officials for neglecting to ask their opinions of the reorganization plan. "One hundred fifty years of mismanaged trusts and we have less than a month to prepare for this," Gregg Bourland, chairman of the Cheyenne River Sioux Tribe said. Norton's decision to reorganize the BIA came shortly after an independent report was completed detailing the problems with the current system of managing Indian accounts, Bourland said. J. Steven Griles, an Interior deputy director, said that all but five pages of the report, which were ordered sealed by the District Court, have been made public on the department's web site. For more information, contact the United States District Court for the District of Columbia by Mail: 333 Constitution Avenue, NW Washington D.C. 20001 by Phone: 202.354.3000 by E-mail: webadmin@dcd.uscourts.gov or visit the Website: http://www.dcd.uscourts.gov INDIAN FUNDS: Interior Secretary Faces Contempt of Court Charges ---------------------------------------------------------------- Federal District Judge Royce C. Lamberth ordered Interior Secretary Gale Norton to stand trial next week on charges that she acted in contempt of court for allegedly filing false information regarding efforts to overhaul a $500 million Indian Trust Fund, The Wall Street Journal recently reported. The Interior Department manages the fund as a banking system for individual Indians, with income derived from the use of their land. Judge Lamberth said the contempt allegations also apply to Assistant Interior Secretary for Indian Affairs Neal McCaleb, who will also stand trial. The Judge's action follows reports by court-appointed monitors asserting that, under Norton, the department has made little progress in replacing a faulty accounting system that Indian plaintiffs, in a class-action to locate their monies, say has cost billions in lost assets. If she is found in contempt, Norton will be the third cabinet official to face the wrath of Judge Lamberth in the Indian Trust Fund case. In October 1999, he found two Clinton administration officials, Interior Secretary Bruce Babbitt and Treasury Secretary Robert Rubin, to be in contempt in the class-action lawsuit, which was initiated in 1996. The lawsuit stems from mismanagement of royalties from mining, grazing, timber harvesting and other activities on 54 million acres of Indian land held in trust by the Interior Department since 1887. Payments were supposed to be made to the Indian beneficiaries, but much of the money was lost, misappropriated, stolen or never collected. A class- action lawsuit was brought on behalf of 300,000 Indians, alleging the government has squandered at least $10 billion in Indian royalties and possibly many times that amount. No one seems to know where the money is. Last month Norton attempted to mollify the Judge by establishing a new office to oversee the trust-fund accounts, previously managed by the Bureau of Indian Affairs. The money is actually held by the Treasury Department. The accounts are part of a banking system established by Congress in the 19th century for Indian reservations that had no banks. The accounts are supposed to hold and disburse income for about 300,000 Indians annually. In his order, Judge Lamberth suggested that Norton may be on difficult legal ground because her lawyers missed the deadline to contest three reports made by a court-appointed monitor who charged, among other things, that the department's descriptions of its efforts to set up a computerized accounting system were exaggerated and misleading. Specifically, Norton will have to show that her office has complied with the Judge's 1999 order that the Interior Department pieced together how much is owed to the 300,000 Indians who have sued the agency . Norton must also prove that she did not file false or misleading reports about the status of the accounting and the department's current system of tracking the Indians' royalties. Despite the 1999 order, the Department failed to account for how much is owed the Indians, although it spent $614 million on the effort, according to the court-appointed monitors. Dennis Gingold, lead attorney for the Indians, said the judge's action "demonstrates that the secretary of Interior is unfit to remain as trustee for the individual Indian trust accounts." If she is held in contempt, he said, Judge Lamberth should put the trust funds under a court-appointed receiver until the class action is settled. At an October 30th hearing, Judge Lamberth scolded the Interior Department's lawyer and advised the lawyer "to throw yourself on the mercy of the court" rather than defend conduct he called "so clearly contemptuous." Interior spokesman Eric Ruff said strides have been taken to improve the management of the trust fund and comply with court orders since Secretary Norton took office, including the creation of a new office specifically dedicated to trust fund management. "Such progress is evidence of the department's commitment and determination to resolve the Indian trust issue," Ruff said in a statement. For more information, contact the United States District Court for the District of Columbia by Mail: 333 Constitution Avenue, NW Washington D.C. 20001 by Phone: 202.354.3000 by E-mail: webadmin@dcd.uscourts.gov or visit the Website: http://www.dcd.uscourts.gov INVESTMENT FUNDS: Former Peregrine CEO Sued For Securities Violations --------------------------------------------------------------------- Bartko Zankel Tarrant and Miller commenced a class action suit in the United States District Court for the Southern District of California, on behalf of all persons and entities: (1) who purchased limited partnership interests in Allied Capital Partners, a California limited partnership; (2) who purchased limited partnership interests in Grafton Partners , a California limited partnership; (3) who purchased membership interests in Six Sigma, Llc, Also Known as 6 Sigma, Llc , a California limited liability company. This lawsuit has been brought by plaintiffs Tom Frame, Bruce Miller and Ronald G. VandenBerghe against James Hillman, alleging the defendant, along with Michael Fanghella, fraudulently offered and sold to them over $328 million in unregistered securities. It asserts that Fanghella and Hillman created and operated a fraudulent scheme, through which they solicited funds from investors and represented and agreed that funds received from the investors would be used solely for the purpose of providing funding for pre-sold sub-prime mortgage loans from PinnFund USA, Inc., formerly a California corporation whose activities were controlled and dominated by Michael Fanghella, its Chairman. PinnFund is now under the receivership of Charles G. La Bella, who is also the responsible party in bankruptcy for the Company. The defendant owned and controlled a former California corporation called Peregrine Funding, Inc. Peregrine was the general partner of Allied and of Grafton, and the managing member of Sigma. The suit alleges that the investors' money was not used as agreed and represented by Mr. Hillman and Mr. Fanghella - for the sole and exclusive purpose of originating mortgage loans already committed and pre-sold - but instead was diverted by the two to other purposes, including their personal expenditures and of their family members and associates, as well as for ostensible "returns" on investments to earlier investors. The operation of this fraudulent scheme is alleged to have induced additional new investors to invest, to convince existing investors to have maintained their capital investments in the funds, and to have persuaded existing investors to make additional capital contributions. The scheme is alleged to have begun to collapse in late 2000, as PinnFund became unable to make monthly dividend payments to investors in the funds, and finally ended shortly after the United States Securities and Exchange Commission filed a lawsuit against Mr. Hillman, Mr. Fanghella, PinnFund, Peregrine, and others on March 22, 2001 in the United States District Court for the Southern District of California. The Court has made various rulings in the SEC lawsuit, and on April 25, 2001: (i) entered a preliminary injunction against defendant and others; (ii) froze the assets of the defendant, Fanghella and others; and (iii) preliminarily determined that defendant and Fanghella committed violations of various federal securities laws. For more information, contact Bartko, Zankel, Tarrant & Miller by Mail: 900 Front Street, Suite 300, San Francisco, CA 94111 by Phone: 415. 956.1900 or visit the Website: http://www.01cv0496h.org JNI CORPORATION: Lovell Stewart Initiates Securities Suit in S.D. NY -------------------------------------------------------------------- Lovell & Stewart LLP commenced a securities class action lawsuit on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of JNI Corporation (NasdaqNM:JNIC) between October 26, 1999 and December 6, 2000, inclusive, in the US District Court for Southern District of New York. The lawsuit 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 against the Company, certain of its officers and directors and the underwriters: (1) Donaldson, Lufkin & Jenrette Securities Corp., (2) Salomon Smith Barney, Inc., (3) Bear, Stearns & Co., Inc., (4) Chase H&Q (formerly known as Hambrecht & Quist, LLC), (5) DLJdirect, Inc., (6) FleetBoston Robertson Stephens, Inc. and (7) Lehman Brothers, Inc. The suit alleges that the defendants violated the federal securities laws by issuing and selling common stock pursuant to the Company's initial public offering and a secondary offering of stock 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 underwriters allocated shares of Company stock to certain investors at the IPO price of $19.00 per share. To receive the allocations at $19.00, the underwriters' 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 share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying Company stock at the $19.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $47.50 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 also alleges that the Company was able to price its secondary offering at an artificially high $74.00 per share due to the continued effects of the foregoing violations. The complaint further alleges that defendants violated the Securities Act of 1933 because the prospectuses distributed to investors and the registration statements filed with the SEC in order to gain regulatory approval for the offerings contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above. For more information, visit the firm's Website: http://www.lovellstewart.com LEXMARK INTERNATIONAL: Milberg Weiss Lodges Securities Suit in E.D. KY ---------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP commenced a securities class action on behalf of purchasers of the securities of Lexmark International, Incorporated (NYSE:LXK) between March 20, 2001 and October 22, 2001, inclusive in the United States District Court, Eastern District of Kentucky, Lexington Division against the Company and: (1) Gary E. Morin, (2) Marvin L. Mann and (3) Paul J. Curlander The suit alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading statements to the market. Specifically, throughout the class period, defendants made highly positive statements regarding the Company's financial results, including strong sales and growth of its printers. Despite unprecedented competition in the industry, Lexmark seemed to be immune to market conditions, reporting quarter after quarter of strong financial growth. Unbeknownst to the investing public, the Company was plagued with an increasing backlog of unmarketable inventory which defendants failed to properly account for in its publicly reported financial results, causing the Company's financial results to be overstated by at least $25 million during the class period. By failing to timely take a charge to earnings for the unmarketable inventory, defendants and other Company insiders were able to divest themselves of thousands of Lexmark shares at prices well above $60 per share, generating proceeds of over $8,000,000. On October 22, 2001, defendants finally revealed the truth, indicating that the Company would record a $25 to $35 million inventory write-down in the fourth quarter of fiscal year 2001, and that it would have to undergo a major restructuring in order to maintain its competitiveness. In addition, instead of generating between 70-80 cents in earnings per share for the fourth quarter of 2001, a figure defendants repeatedly emphasized the Company would reach, defendants were forced to drastically revise its fourth quarter earnings' guidance. As revealed on October 22, 2001, defendants expected only 40-50 cents in earnings per share for the fourth quarter of 2001, a far cry from what analysts and the investing public were led to expect. In response to the unexpected news, Lexmark stock declined by over 11% to close at $44.77 per share, on extraordinarily high trading volume. For more information, contact Steven G. Schulman or Samuel H. Rudman by Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by Phone: 800.320.5081 by E-mail: Lexmarkcase@milbergNY.com or visit the firm's Website: http://www.milberg.com METROPOLITAN ATLANTA: Suit Commenced For Discrimination, ADA Violations ----------------------------------------------------------------------- The Metropolitan Atlanta Rapid Transit Authority (MARTA) faces a class action lawsuit alleging consistent discrimination against MARTA riders with disabilities. The suit is the first formal action taken against MARTA for ADA violations. Specifically, the suit alleges noncompliance with the Americans with Disabilities Act (ADA) and the Rehabilitation Act of 1973, which provide a specific set of guidelines for public transportation systems serving people with disabilities. The complaint filed today in federal court details the experiences of the six individuals named in the action, and asks that the court find MARTA in violation of the ADA for these abuses: (1) Failing to make information available to people with disabilities through accessible formats and technology; (2) Failing to ensure that personnel - particularly bus drivers and customer service representatives - are adequately trained to serve riders with disabilities, and to serve them in a respectful and courteous way; (3) Failing to maintain wheelchair lifts and other features of the vehicles that make them accessible to people with disabilities, and also failing to have a good system in place for alternative means of transportation when lifts and other equipment don't operate correctly; (4) Failing to announce stops at transfer points, major intersections and destinations, particularly when a specific request is made by a visually impaired rider; (5) Failing to provide paratransit services (curb-to-curb service in vans outfitted specifically for people with disabilities and the elderly) comparable to the level of service provided to non-disabled riders; Specifically, the paratransit service is found to be unreliable and inconsistent, frequently requiring riders to wait for hours for vans that never show, or be refused service because of inconsistent customer service policies. A MARTA bus driver recently refused to help Fulton County Magistrate Judge Stephanie Davis, who is a quadriplegic, in depositing her fare in the slot. She said "Like many Atlantans, I use MARTA as my primary means of transportation.It is not unusual for me to encounter buses with wheelchair lifts that don't work, or drivers who don't know how to operate the equipment, and to experience unacceptable delays in service. But when a paratransit van driver recently refused to help me deposit my fare because he wasn't supposed to handle money, I was shocked." Joshua H. Norris, spokesperson for the Disability Law and Policy Center (DLPC), asserts "Visually impaired riders constantly encounter drivers who do not announce stops, and people who use wheelchairs are frequently denied service because buses have broken equipment. Riders who rely on MARTA's paratransit service have received the worst treatment, which is made all the more unfortunate by the fact that the paratransit van is for many the only option for transportation." The DLPC is a nonprofit organization founded last year to help people with disabilities live as independently as possible in the community and is one of the only groups that was created specifically with the mission of bringing suit against those who it identifies as violating the rights of people with disabilities. For more information, contact the United States District Court for the Northern District of Georgia, Atlanta Division by Mail: Richard B. Russell Federal Building and Courthouse, 75 Spring Street SW Atlanta GA 30303-3361 by Phone: 404.215.1660 or visit the Website: http://www.gand.uscourts.gov NOVEN PHARMACEUTICALS: Cauley Geller Files Securities Suit in S.D. FL --------------------------------------------------------------------- Cauley Geller Bowman & Coates LLP initiated a securities class action in the United States District Court for the Southern District of Florida on behalf of purchasers of Noven Pharmaceuticals, Inc. (NASDAQ:NOVN) publicly traded securities during the period between March 27, 2001 and November 1, 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 Company securities. Throughout the class period, Noven publicly touted two of its women's hormone replacement products and represented that sales of these agents would be substantial. These statements, as alleged in the complaint, were materially false and misleading because by November 13, 2000, defendants knew that Novartis Pharma AG, its exclusive marketing agent in Europe, was not aggressively marketing the Company's two hormone drugs, and that Novartis was instead marketing its own competing drug, Estraderm. On August 2, 2001, the Company issued a press release that only partially revealed the truth, stating that sales to Novartis were weaker than analysts and investors had been led to believe. In response, Company stock price plunged by 43%, to close at $18.98 on August 3, 2001. Subsequently, on November 1, 2001, Noven issued a press release that revealed, for the first time, that: (1) Novartis had its own hormone-replacement system and would not be converting to the Company's product; (2) Novartis had excess-inventories of the Company's products; and (3) As a result, its European sales would decline substantially in the fourth quarter of 2001 and 2002. In response to this announcement, the Company's stock price fell by 33% to $14.89. 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 NOVEN PHARMACEUTICALS: Schiffrin Barroway Files Securities Suit in FL --------------------------------------------------------------------- Schiffrin and Barroway LLP initiated a securities class action in the United States District Court for the Southern District of Florida on behalf of all purchasers of the common stock of Noven Pharmaceuticals (NASDAQ:NOVN) from March 27, 2001 through November 1, 2001, inclusive. The complaint charges the Company and certain of its officers and directors with issuing false and misleading statements concerning the Company's business and financial condition. Specifically, the complaint alleges that throughout the class period, Noven publicly touted two of its women's hormone replacement products and represented that sales of these agents would be substantial. These statements, as alleged in the complaint, were materially false and misleading because by November 13, 2000, defendants knew that Novartis Pharma AG, the Company's exclusive marketing agent in Europe, was not aggressively marketing its two hormone drugs, and that Novartis was instead marketing its own competing drug, Estraderm. On August 2, 2001, the Company issued a press release the only partially revealed the truth, stating that sales to Novartis were weaker than analysts and investors had been led to believe. In response, Company stock price plunged by 43%, to close at $18.98 on August 3, 2001. Subsequently, on November 1, 2001, the Company issued a press release that revealed, for the first time, that: (1) Novartis had its own hormone-replacement system and would not be converting to the Company's product; (2) Novartis had excess-inventories of the Company's products; and (3) as a result, the Company's European sales would decline substantially in the fourth quarter of 2001 and 2002. In response to this announcement, Company stock price fell by 33% to $14.89. 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 OKLAHOMA: Picher Residents, Lawyers Contemplate Mining Hazards Suit ------------------------------------------------------------------- Residents of Picher, Oklahoma have met with several attorneys to discuss the possibility of filing a class action against the government for allegedly concealing environmental hazards due to area's past mining activities. The meeting, however, ended with no definite decisions. The site, which encompasses the 40-mile area of Picher, Cardin, Quapaw, Commerce and North Miami, was mined for zinc and lead and consisted of 300 miles of tunnels from the late 1880s to 1960. A study by the Harvard School of Public Health on Tar Creek residents shows high lead levels, arsenic and other metals that were collected from hair samples of 49 residents, ranging from children to middle-aged adults. This led the federal Environmental Protection Agency to designate the area as a "Superfund cleanup site", classifying it as a top hazardous site. The current phase of the EPA cleanup has been focusing on the replacement of topsoil in residential yards. Contaminated soil in yards, health officials say, poses a risk for young children at play. John Sparkman, director of the Picher Housing Authority, told the Joplin Globe that no major decisions have been made. He said "They talked a lot.but there didn't seem to be any major decisions being made about lawsuits. A lot of people had questions about different parts of the situation, and the attorneys were mainly trying to answer those." Sparkman has been trying to drum up community support in a government buyout of the time after a governor's task force last year recommended that the Picher area be flooded and made into a wetlands as a means to throttle the potential for lead poisoning. However, his idea was met with mixed reactions- some embracing the idea, others rejecting it. No government agency, federal or state, has to date put forth any such proposal. The attorneys also refused to disclose what was discussed, saying it was not open to the public. Brad Barron, with the law firm of Richard Gibbons & Associates, said Wednesday that the session had been planned "as an attorney-client discussion." Richard Gibbons and Associates and another Tulsa firm McKinney and Stringer commenced a civil suit earlier this month in Ottawa County District Court for Trenton and Michelle Herd of Picher. The suit seeks in excess of $6 million from six companies that formerly mined lead and zinc in the area. The Herds allege their son has an elevated blood-lead level. For more information, visit the Website: http://www.mckinneystringer.comor the Environmental Protection Agency's Website: http://www.epa.gov/earth1r6/6sf/pdffiles/tarcreek.pdf QUEST SOFTWARE: Schiffrin Barroway Files Securities Suit in S.D. NY ------------------------------------------------------------------- Schiffrin and Barroway LLP initiates a securities class action on behalf of purchasers of the common stock of Quest Software, Inc. (NASDAQ:QSFT) between August 13, 1999 and December 6, 2000, inclusive in the United States District Court, Southern District of New York, 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 August 1999, Quest commenced an initial public offering of 4,400,000 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, among other things, that: (1) 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 (2) the underwriters had entered into agreements with customers whereby the underwriters agreed to allocate Company shares to those customers in the Company IPO in exchange for which the customers agreed to purchase additional Quest 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 by E-mail: info@sbclasslaw.com SAGENT TECHNOLOGY: Milberg Weiss Lodges Securities Suit in N.D. CA ------------------------------------------------------------------ Milberg Weiss Bershad Hynes and Lerach, LLP commenced a securities class action in the United States District Court for the Northern District of California on behalf of purchasers of Sagent Technology, Inc. (NASDAQ:SGNT) (NASDAQ:SGNTE) publicly traded securities during the period between May 11, 2001 and November 28, 2001. 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 during the class period, defendants caused Company shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. As a result of this inflation, the Company was able to complete a private placement offering of 9.1 million shares, raising net proceeds of $16.8 million on August 1, 2001. On November 15, 2001, just months after this offering was completed, Sagent revealed that its 3rd Quarter results, and possibly other quarters, were false when issued. The stock dropped below $.70 per share on this news. Then, on November 28, 2001, after the market closed, defendants revealed that the Company's results from the 1st tot the 3rd quarter had been materially misstated and would have to be restated. For more information, contact William Lerach or Darren Robbins by Phone: 800/449-4900 by E-mail: wsl@milberg.com or visit the firm's Website: http://www.milberg.com/sagenttech/. SPANISH BROADCASTING: Schiffrin Barroway Files Securities Suit in NY -------------------------------------------------------------------- Schiffrin and Barroway LLP initiated a securities class action on behalf of purchasers of the common stock of Spanish Broadcasting System, Inc. (NASDAQ:SBSA) between October 27, 1999 and December 6, 2000, inclusive in the United States District Court, Southern District of New York 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 October 1999, SBS commenced an initial public offering of 21,787,400 of its shares of common stock, at an offering price of $20 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, among other things, that: (1) 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 Company shares issued in connection with the IPO; and (2) 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 further details, 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 SRI SURGICAL: Cauley Geller Commences Securities Suit in M.D. Florida --------------------------------------------------------------------- Cauley Geller Bowman & Coates LLP initiated a securities class action in the United States District Court for the Middle District of Florida, Tampa Division on behalf of purchasers of SRI Surgical Express Incorporated (NASDAQ:STRC) common stock during the period between July 23, 2001 and November 27, 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 defendants issued a series of press releases touting the Company's new customer contracts such as the HealthTrust Purchasing Group contract announced on May 1, 2001, as well as "record" financial results for the third quarter of fiscal year 2001. In response, Company stock soared to over $41 per share in September 2001, and the Company was named to the Forbes magazine list of the best small companies in the country. The complaint also states that, unbeknownst to the investing public who purchased SRI stock during the class period at artificially inflated prices, the Company's business and financial conditions were rapidly deteriorating. Indeed, on November 27, 2001, defendants revealed that the Company's previously issued financial statements for the third quarter of 2001 were false and that the Company's revenues and earnings were actually $1,034,000 and $262,000 less, respectively, than previously reported, and $.04 less per diluted share. As alleged in the complaint, these "newly" issued results did not meet analysts' estimates. In addition, the Company revealed that the outlook for the fourth quarter was far worse than investors had been led to believe. Defendants reported for the first time that the "pricing impact of new group purchasing organization arrangements on existing hospital customers," among other previously undisclosed problems detailed in the complaint, contributed to the third quarter shortfall and expected fourth quarter 2001 shortfall. According to the complaint, in response to the news that SRI would not meet third or fourth quarter analyst estimates, and had improperly recognized revenue in the third quarter of 2001, Company stock plunged over 40%, closing at $14.63 on November 28, 2001, on unusually high volume of 2.7 million shares. The impact of defendants' improper accounting practices was devastating to SRI investors. 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 STARMEDIA NETWORKS: Marc Henzel Commences Securities Suit in S.D. NY -------------------------------------------------------------------- The Law Office of Marc S. Henzel initiated 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; (2) Jack C. Chen, co-founder of the Company, former President; and (3) Steven J. Heller, former Chief Financial Officer The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, by issuing materially false and misleading statements during the class period that had the effect of artificially inflating the market price of the Company's securities. The complaint also 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 and press releases concerning the Company's publicly reported revenues, earnings and net income. Moreover, the Company failed to disclose material information necessary to make its prior statements not misleading. On November 19, 2001, StarMedia shocked the investing community by announcing that it was restating its previously reported financial results for fiscal year 2000 and the first two quarters of fiscal 2001, due to accounting errors and improper accounting practices at two of the Company's Mexican subsidiaries, AdNet S.A. de C.V. and StarMedia Mexico, S.A. de C.V. As a result of these improper accounting practices, StarMedia's reported revenues and earnings were overstated by at least $10 million. Additionally, the Company announced that its Chief Financial Officer had resigned. These disclosures contradicted much of the information provided by defendants to the market during the class period concerning its financial results. In response, Nasdaq halted trading in the Company's shares. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave, Suite 202 Bala Cynwyd, PA 19004-2808 by Phone: 888.643.6735 or 610.660.8000 by Fax: 610.660.8080 by E-mail: Mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182. STATE FARM: Must Pay For Wrecked Cars' Dimished Value, Says GA Court -------------------------------------------------------------------- The Georgia Supreme Court recently ruled unanimously that State Farm Mutual Automobile Insurance Company must pay for the diminished value of cars damaged in collisions, as well as their repairs, the Associated Press reported recently. The Supreme Court upheld, as well, Superior Court Judge Doug Pullen's order that the insurer must begin compiling the information needed to begin reimbursing clients for the diminished value of their repaired cars. The Supreme Court also upheld the decision by a Columbus trial judge who certified a class-action lawsuit against State Farm. Supreme Court Justice Robert Benham, writing for the court, noted that State Farm's promise to its clients is to "pay for loss to your car," minus any deductible. Benham cited State Farm's own documents in which the company acknowledged there is a common perception that a wrecked vehicle is worth less simply because it has been wrecked. "Recognition of diminution of value as an element of loss to be recovered on the same basis as other elements of loss, merely reflects economic reality," Benham wrote. "This means folks are going to start getting paid what they should have been paid over the years," said Columbus lawyer C. Neal Pope, who filed the lawsuit against State Farm. "In the past, the insurance companies have said, `We've fixed your car and that's it.' Not anymore," said Pope, who has filed similar lawsuits on behalf of clients against numerous insurance companies, including GEICO, Progressive, Cotton States, MetLife and Allstate. State Farm, whose headquarters are based in Bloomington, Illinois, is still reviewing the decision to determine what affect it will have on the current lawsuit and on future claims in Georgia, spokesman Dave Hurst said. ".our general feeling about claims for diminished value is: If insurance companies are required to pay them on a widespread basis, premiums would have to go up eventually," Hurst said. Dennis Howard, Executive Director of Arizona-based Insurance Consumer Advocate Network, called the ruling "groundbreaking." He added that, in the future, insurance companies may give policyholders the opportunity to pay a separate premium for diminished value coverage, as well as providing collision and comprehensive coverage. In the State Farm case, two policy holders contended that no matter how well a wrecked car was repaired, the insurer was liable for the amount of any diminished value. State Farm, on the other hand, argued that there was no objectively discernible diminution in the value of a repaired car; but if there was such a loss, it would not be realized until the car was resold. For more information, contact the Georgia Supreme Court by Mail: 244 Washington Street, Atlanta GA or visit the Website: http://www.state.ga.us/Courts/Supreme SUPPORT.COM: Milberg Weiss Initiates Securities Suit in S.D. New York --------------------------------------------------------------------- Milberg Weiss Bershad Hynes and Lerach commenced a securities class action on behalf of purchasers of the securities of Support.com Inc. (NASDAQ: SPRT) between July 18, 2000 and December 6, 2000, inclusive in the United States District Court, Southern District of New York against the Company and: (1) Radha Ramaswami Basu, CEO, President and Director; (2) Brian M. Beattie, CFO, (3) Credit Suisse First Boston Corp., (4) Bear, Stearns & Co. Inc. and (5) FleetBoston Robertson Stephens Inc. The suit 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, Support.com commenced an initial public offering of 4,250,000 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, among other things, 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 connec tion 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.com IPO in exchange for which the customers agreed to purchase additional shares in the aftermarket at pre-determined prices. For more information, contact Steven G. Schulman or Samuel H. Rudman by Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by Phone: 800.320.5081 or visit the firm's Website: http://www.milberg.com XOMA LTD: Wechsler Harwood Initiates Securities Suit in N.D. California ----------------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP commenced a securities class action in the US District Court for the Northern District of California on behalf of purchasers of Xoma Ltd. (NASDAQ:XOMA- news) during the period between May 24, 2001 and October 4, 2001, including those persons who purchased shares in or traceable to XOMA's June 26, 2001 offering of 3 million shares against the Company, Genentech Inc. and certain officers and directors of the two Companies. The complaint will allege that defendants violated Sections 10(b) and 20 of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a registration statement and prospectus, as well as press releases and filings with the Securities and Exchange Commission that contained materially false and misleading statements. As a result of these false and misleading statements, the market price of the Company's securities were artificially inflated. Specifically, the complaint alleges that defendants caused the two Companies, as co- developers of the psoriasis drug Xanelim, to repeatedly tell investors that the Company intended to file its Biologics Licensing Application (BLA) with the Food and Drug Administration (FDA) by the end of 2001 or first quarter of 2002. The timing of the BLA filing was material to investors because the prompt filing would allow Xanelim to reach the market faster than its competitors and thereby gain greater market share. Defendants failed to disclose that during pivotal Phase III testing of Xanelim, the Companies had relocated manufacturing facilities from XOMA to Genentech. The Companies also changed the manufacturing process for the drug in preparation for commercial production. While representing that the Company intended to file its BLA by year- end 2001 or first quarter 2002, defendants further failed to disclose that the FDA would require pharmacokinetic testing to be done because XOMA and Genentech were unable to demonstrate equivalency between the Xanelim used for clinical trials and the compound manufactured for commercial production. On June 26, 2001, the Company sold 3 million shares of stock at an offering price of $15 per share, raising $45 million. On October 4, 2001, the Companies issued a press release disclosing for the first time, that the FDA was requiring them to do a further pharmacokinetic study to show such equivalency and that, as a result, the Company would not file its BLA until the summer of 2002 at the earliest. On October 5, 2001, the price of Company stock fell as low as $6.40 from its closing price of $9.76 per share a day earlier. For more information, contact Ramon Pinon by Phone: 877.935.7400 by E- mail: pguiteau@whhf.com or visit the firm's Website: www.whhf.com XOMA LTD.: Levy Levy Commences Securities Suit in N.D. California ----------------------------------------------------------------- Levy and Levy PC filed a securities class action in the US District Court for the Northern District of California on behalf of all investors who bought XOMA Ltd. (NASDAQ:XOMA) stock between May 24, 2001 and October 4, 2001, including those persons who purchased shares in or traceable to its June 26 offering of 3 million shares. The complaint says the Berkeley-based biopharmaceuticals manufacturer issued false and misleading statements about its plans to file a Food and Drug Administration (FDA) application for Xanelim, an experimental psoriasis drug the Company was co-developing with Genentech Inc. For investors in the Company, successful development of Xanelim was pivotal. In 20 years, the company never turned a profit or brought a drug to market. Filing the application, known as a Biologics Licensing Application (BLA), was an important step in gaining FDA approval for the drug. The Company repeatedly said it planned to file the BLA with the agency by the end of 2001 or the first quarter of 2002. That timetable would have put the Company and Genentech in a neck-and-neck race with Biogen, Inc. to be the first manufacturer to market an effective treatment for psoriasis. The winner would gain a significant advantage in a lucrative market that is expected to reach $2 billion by the year 2005. In fact, the Company and Genentech were nearly a year behind Biogen. At the time the Company told investors it planned to file its BLA by the end of 2001, it knew but failed to disclose that a change in its manufacturing process would necessarily delay filing until after that date. On October 4, 2001, the Company admitted that it would not file the BLA until the summer of 2002 at the earliest. The next day the price of Company stock fell as low as $6.40 from a closing price of $9.76 per share a day earlier. 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), 203.564.1920 by E-mail: LLNYCT@aol.com or visit the firm's Website: www.levylawfirm.com ********* 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. 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