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/raid1/www/Hosts/bankrupt/CAR_Public/011204.mbx C L A S S A C T I O N R E P O R T E R Tuesday, December 4, 2001, Vol. 3, No. 236 Headlines AUTO INSURANCE: GA Ruling on Vehicles Insurance Affects All Insurers BE FREE: Lovell Stewart Commences Securities Suit in S.D. New York CARESCIENCE INC.: Berger Montague Commences Securities Suit in E.D. PA CALIFORNIA: Federal Court Dismisses Discrimination Suit V Contra Costa CANADA: School For The Deaf Sued By Former Students For Rampant Abuse CGU LIFE: Settles Texas Teachers' Insurance Fraud Suit For $8.1 Million ENRON CORPORATION: Shapiro Haber Initiates Securities Suit in S.D. TX FORD MOTOR: Files Motions To Settle Discrimination Suits in E.D. MI INDIAN FUNDS: Dec. 10 Hearing For Contempt V Interior Secretary Set INRANGE TECHNOLOGIES: Wolf Haldenstein Files Securities Suit in S.D. NY INTELLI-CHECK INC.: Speciali Greenwald File Amended Complaint in NJ JDN REALTY: Atlanta Court Approves Settlement Pact In Securities Suit LACLEDE GAS: Court Allows State Commission To Defend Self Against Suit NEXTCARD INC.: Lovell Stewart Commences Securities Suit in S.D. NY NYLABONE PRODUCTS: Dog Owners Sue After Chew Toy Causes Dog's Death ORATEC INTERVENTIONS: Wolf Haldenstein Files Securities Suit in S.D. NY PCORDER INC.: Lovell Stewart Commences Securities Suit in S.D. NY PORTAL SOFTWARE: Sued For Federal Securities Violations in S.D. NY SABA SOFTWARE: Schiffrin Barroway Commences Securities Suit in S.D. NY CALIFORNIA: LA Judge Challenges Federal Ruling In Slave Labor Case SULZER MEDICA: Appellate Court Allows Arbitration in Hip Implant Suits TICKETMASTER ONLINE: Lovell Stewart Lodges Securities Suit in S.D. NY UNITED PAN: Schiffrin Barroway Commences Securities Suit in S.D. NY ********* AUTO INSURANCE: GA Ruling on Vehicles Insurance Affects All Insurers -------------------------------------------------------------------- In response to a recent landmark ruling by Georgia's Supreme Court, Insurance Commissioner John Oxendine announced that he will direct all automobile insurers, not just the lawsuit's defendant, State Farm, to reimburse policy holders for the diminished value of cars damaged in collisions, The Atlanta Journal-Constitution reported recently. "We view the Supreme Court decision to be the law of the state of Georgia, and it applies to all insurance companies."said Oxendine. Oxendine added he intends to issue the diminished value directive next week. Insurance companies that fail to comply could face everything from fines to expulsion from the state. The Supreme Court agreed with the contention of two State Farm policy holders, who had filed a class-action lawsuit, that wrecked cars are worth less on the open market no matter how well they are repaired, and that insurance companies are liable to pay the difference. David J. Colmans of the Georgia Insurance Information Service, which represents State Farm and many other insurance providers that operate in the state, said the cost of diminished value claims could end up being passed on to consumers. "If insurance companies are paying considerable more money, it stands to reason they would have to look at their rate structures," he said. Cathy Steinberg, the state Consumers' Insurance Advocate who reviews all rate increase requests under authority of the governor, said that Oxendine would have to approve any rate increases. Insurance companies, she said, would have to prove they were spending more on diminished value claims before they could pass on the costs. Left to be determined is exactly how insurance companies will calculate the diminished values. Lawyers for State Farm and the policyholders who brought the lawsuit will argue this issue next week in Muscogee County Superior Court, where the case originated nearly two years ago. The first to be paid will be the State Farm policyholders whose claims date back to December 1 of last year, when a lower court judge first ordered State Farm to pay diminished value claims, said C. Neal Pope, the Columbus lawyer who filed the case against State Farm. State Farm put $10 million into an account to cover the claims in the event it lost its appeal. Given the Supreme Court's ruling, the Muscogee judge will have to order the money released from the account. Pope said he will make that request at the hearing to be held next week. Once the money is released, the first wave of policyholders affected by the class-action lawsuit could receive information by early next year telling them how to collect. Payouts could range from a few dollars to thousands, Pope estimated. Those who filed claims before December 1 of last year, will have to wait longer, because a separate case granting that group relief is still on appeal with the Supreme Court, which is not expected to rule until April, Pope explained. Eligible policy policyholders would have had to file a claim after December 23, 1993. State Farm has set aside $50 million for those back claims. The two lawsuits affect as many as 500,000 claims, Pope has said. State Farm insures more than 20 percent of the state's drivers. Similar lawsuits seeking back claims are pending in Muscogee County against eight other insurance companies, including Allstate and Progressive. They declined to comment. Together, the lawsuits affect about 70 percent of Georgia's drivers. BE FREE: Lovell Stewart Commences Securities Suit in S.D. New York ------------------------------------------------------------------ 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 Be Free, Inc. (NasdaqNM:BFRE) between November 3, 1999 and December 6, 2000, inclusive, in the US District Court for the 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. The suit was filed against the Company, certain of its officers and directors at the time of the IPO and: (1) Donaldson, Lufkin & Jenrette Securities Corp., (2) Chase H&Q (formerly known as Hambrecht & Quist LLC), (3) FleetBoston Robertson Stephens, Inc., (4) Royal Bank of Canada (Dain Rauscher Wessels), (5) DLJdirect, Inc., (6) Credit Suisse First Boston Corp., and (7) Merrill Lynch, Pierce, Fenner & Smith, Inc., The complaint 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 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, underwriters of the Company's IPO, allocated shares of stock to certain investors at the IPO price of $6.00 per share. To receive the allocations at $6.00, 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 the Company's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying stock at the $6.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $18.13 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 $27.50 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, contact Christopher Lovell, Victor E. Stewart or Christopher J. Gray by Phone: 212.608.1900 by E-mail: sklovell@aol.com or visit the firm's Website: http://www.lovellstewart.com CARESCIENCE INC.: Berger Montague Commences Securities Suit in E.D. PA ---------------------------------------------------------------------- Berger & Montague PC initiated a class action suit on behalf of an investor against CareScience, Inc. (Nasdaq:CARE) and its principal officers and directors in the United States District Court for the Eastern District of Pennsylvania on behalf of all persons or entities who purchased the Company's securities during the period from June 28, 2000 through and including November 1, 2000, inclusive. The suit alleges that the defendants violated Sections 11,12(a)(2) and 15 of the Securities Act of 1933 and misled investors by misrepresenting and failing to disclose material facts that the prospectus: (1) represented that the Company intended to use $20 million of the proceeds of its June, 2000 public offering for product development, and an additional $13 million to expand the Company's sales and marketing efforts; (2) stated that the Company's operating expenses were expected to continue to increase "as we expand our product development and sales and marketing efforts.and that as we execute our strategy we expect significant increases in our operating expenses to fund development of current and new product lines;" and (3) touted the Company's Careleader.com and CareScience.com products, stating that the sales of those products were expected to commence in 2001 In fact: (i) as disclosed at the end of the class period, the Company was planning only extremely minimal increases in selling, general and administrative expenses, a rate of increase which would not equal the represented $13 million to be used for the purpose for more than a decade. Indeed the increase in such expenditures was completed with the addition of a mere eight sales and marketing employees; (ii) the Company planned only modest increases in research and development, at a rate which similarly would not equal the represented amount to be used for that purpose for more than a decade; and (iii) the Company had yet to determine the marketability of its CareScience and CareLeader products, and, as a result, had no reasonable basis for the representation that sales of those products would begin in 2001. For more information, contact Sherrie R. Savett, Carole A. Broderick, Karen Orman or Kimberly A. Walker by Mail: 1622 Locust Street, Philadelphia, PA 19103 by Phone: 888.891.2289 or 215.875.3000 by Fax: 215.875.5715 by E-mail: InvestorProtect@bm.net or visit the firm's Website: http://www.bergermontague.com CALIFORNIA: Federal Court Dismisses Discrimination Suit V Contra Costa ---------------------------------------------------------------------- A California district court dismissed a discrimination class action filed against Contra Costa County by the National Association for the Advancement of Colored People (NAACP) and several business, alleging the county discriminated against women and minorities in awarding contracts for county business. The suit was the first of its kind in California to challenge a county's contracting practices after state voters in 1996 barred racial and gender preferences. The NAACP alleged that the county's lackluster efforts to attract minority and women- owned businesses to apply for contracts amounted to discrimination. US District Judge William Orrick opined that the county did not intentionally discriminate against minorities and women, even if he thought the county could have tried harder to encourage them to go after county jobs, and did a poor job of tracking how many contracts they landed. He wrote, "The court has considered the county's failure to vigorously enforce its affirmative action plans, and finds no evidence that those failures were caused by intent to discriminate against women and minority contractors." He added that the county consistently "attempted to find ways to assist women and minority contractors, small businesses and local businesses." The county's lawyer Silvano Marchesi, expressed satisfaction at the ruling, saying "Despite the fact that plaintiffs identified some 37 or more attorneys and paralegals who searched through over 4 million pages of documents we provided, they were not able to show one single instance of intentional discrimination." Oren Sellstrom, attorney for the plaintiffs, told the Contra Costa Times he was disappointed by the ruling and will talk to his clients about whether to appeal. "We think we proved our case. The judge disagreed." He concluded "There is an institutional inertia at the county that results in a subtle bias in favor of contractors with whom the county is already doing business." Contra Costa County Supervisor John Gioia of Richmond said he believes the county can do a better job of encouraging women- and minority-owned businesses to compete for county contracts. "I believe the county has never intentionally discriminated, but I still think we can be more aggressive in our outreach," Gioia said. CANADA: School For The Deaf Sued By Former Students For Rampant Abuse --------------------------------------------------------------------- 300 former students of the Jericho Hill School For the Deaf in Vancouver, B.C. filed a class action suit against the province alleging that the abuse they suffered while at the school has gravely affected their lives as adults, ruining marriages, damaging careers and fueling drug abuse. A 1991 Province newspaper report about the rampant abuse at the school raised a public outcry, prompting the Ministry of Education to close it in 1992. The school reopened a short time later as part of a suburban Vancouver school district. In 1997 former B.C. Supreme Court Justice Thomas Berger led an investigation that uncovered "the culture of abuse" at the school, existent for decades. His recommendations included financial compensation, free therapy and funding for deaf- community resources. The government quietly started reforms in 1988, but students who were known abusers were not removed from campus and no charges were filed. The government has instituted a compensation program that promised students up to $60,000 in compensation. According to Program Administrator Rene de Vos, former students were reluctant to come forward, saying the deaf community regarded it as a black mark, "something to be ashamed of." However, when the program ended earlier this year, 404 former students had received compensation. Plaintiff Leanne Rumley called the settlement "insulting" and said, "I want to seek justice that we deserve." Rumley and others are seeking between $100,000 and $300,000 in damages. Rumley was 7 years old when she was raped by older boys previously abused by a female dorm counselor. "Sexual abuse became the norm at the school," said Anne Sheane, a Victoria lawyer handling the suit. "Families were absolutely decimated by this." She added parents often didn't understand when their children tried to report the abuse. "You had kids angry at their parents who they thought knew about the abuse when they (the parents) had no idea it was going on." CGU LIFE: Settles Texas Teachers' Insurance Fraud Suit For $8.1 Million ----------------------------------------------------------------------- CGU Life Insurance Company of America settled a class action suit filed in the US District Court in Nueces County, Texas, by a group of Corpus Christi teachers for approximately $8.1 million. The teachers alleged Company representatives engaged in unscrupulous and illegal sales tactics. The suit was commenced in April 2000, claiming that the Company and its representatives sold them a controversial annuity that is barred from sale in their state. The parties entered settlement negotiations, which were underway for nearly a year. The settlement is subject to court approval by January 23, 2002, according to a Boston Business Journal report. ENRON CORPORATION: Shapiro Haber Initiates Securities Suit in S.D. TX --------------------------------------------------------------------- Shapiro Haber & Urmy LLP commenced a class action suit against Enron Corporation (NYSE: ENE) and the members of its Board of Directors on behalf of its employees, in the United States District Court for the Southern District of Texas (Houston Division). The suit was filed on behalf of all Company employees or former Company employees who were participants in the Enron Savings Plan at any time during the period from March 31, 1998 to the present. The time period covered by the suit may be expanded as additional information is discovered. The suit was filed in order to recover damages for the benefit of thousands of Company employees whose retirement savings have been devastated by the financial irregularities at the Company that have resulted in the collapse of its stock price to less than $1 per share. The complaint alleges violations of the federal Employee Retirement Income Security Act (ERISA), which was enacted to protect employees with respect to their financial interests in corporate retirement plans. For more information, contact Thomas G. Shapiro or Elizabeth Hutton by Phone: 800.287.8119 or visit the firm's Website: http://www.shulaw.com FORD MOTOR: Files Motions To Settle Discrimination Suits in E.D. MI ------------------------------------------------------------------- This week Ford Motor Company intends to file motions with proposed settlement terms to several class actions filed by its current and former employees charging the Company with age and gender discrimination in its performance evaluation system, according to Company spokesperson Anne Gattari. The suits were commenced early this year in the United States District Court for the Eastern District of Michigan, alleging the Company committed "reverse race, reverse gender and age discrimination." Specifically, the suit alleges that the Company's Performance Management Process favored younger, so-called "diversity" candidates and that the system was intended to support the diversity initiatives by driving out the older white males. Under the system, employees were graded A, B, or C. Those receiving a C could lose bonuses and raises, and two consecutive C grades could mean dismissal. Initially, at least 10 percent of employees were to be graded C, but that later was lowered to 5 percent. Former Company President and Chief Executive Officer Jacques Nasser instituted the system. Nasser resigned under pressure last October and was succeeded by present CEO William Clay Ford, Jr. Ford has said he would make it a priority to attempt to settle the age discrimination suits in hopes of rebuilding the relationship between the company and its employees. The Company also said in July that it would discontinue the system and replace the letter system with three designations: top achiever, achiever, and improvement required. Both sides commenced settlement talks this month but would not disclose the proposed terms. Attorney for the plaintiffs James Fett said negotiations to settle the individual suits have been less fruitful. He added "We are diligently attempting to resolve the individual suits, but no agreements have been reached at this time." Gattari also expressed confidence that failure to reach terms on the individual suits would not delay the filing of motions in the class action suits. She added a fairness hearing would be conducted after the filing of the motions. The Company plans to reduce its workforce by 4,000 to 5,000 employees, and offered employees voluntary separation and early retirement packages. Ford has told employees who are plaintiffs in the class action suits and who also have been offered voluntary separation packages that a waiver would be lifted allowing them to receive any payout from a settlement in the cases. In a letter sent last week, the Company said "We want to advise you that by accepting the package and signing the general release and waiver, you will not give up your right to receive a financial recovery under this proposed class action settlement, despite language to the contrary in the waiver." Gattari said this was an "exception" and not a change in any Ford policy "because we want to be fair to everybody." INDIAN FUNDS: Dec. 10 Hearing For Contempt V Interior Secretary Set ------------------------------------------------------------------- US Federal Judge Royce Lamberth has reset for December 10 the hearing to determine whether Interior Secretary Gale Norton misled the court about a computerized accounting system instituted by the Interior Department to keep track of royalties from Indian reservation lands, according to an Excite.com report. The Interior Department and Norton face a class action suit filed on behalf of 300,000 Indians, alleging that the government misspent more than $10 billion of royalties from reservation lands. Judge Lamberth has ordered the Interior Department to piece together how much the Indians are owed and is keeping close watch over Interior's reform efforts. The hearing was initially set this week, but government attorneys sought to delay the contempt hearing for a month. Judge Lamberth scolded them for stalling and asked them how they could argue the court wasn't misled, citing two directly contradictory reports about an accounting system being created to track the money. One report from Norton's office said the computerized accounting system was progressing on schedule. The other, from a consultant hired by the department, suggested the $40 million accounting system should be scrapped entirely. An exasperated Judge Lamberth asked, "What are we going to try?. Did she lie to me the first time or did she lie the second time?" The second report remains under seal due to security issues it raised. Lamberth suggested it may be released next week. INRANGE TECHNOLOGIES: Wolf Haldenstein Files Securities Suit in S.D. NY ----------------------------------------------------------------------- Wolf Haldenstein Adler Freeman and Herz LLP initiated a securities class action on behalf of purchasers of the securities of Inrange Technologies Corp. (NASDAQ: INRG), between September 21, 2000 and December 6, 2000, inclusive, in the United States District Court for the Southern District of New York. The suit was filed against the Company, certain of its officers and its underwriters. 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 September 2000, the Company commenced an initial public offering of 7.7 million of its shares of common stock at an offering price of $16 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: (1) the underwriters had solicited and received excessive and undisclosed commissions from certain investors in exchange for which those underwriters allocated to those investors material portions of the restricted number of IPO 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 more information, contact Fred Taylor Isquith, Thomas Burt, Gustavo Bruckner, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 800.575.0735 by E- mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com.All e-mail correspondence should make reference to Inrange. INTELLI-CHECK INC.: Speciali Greenwald File Amended Complaint in NJ ------------------------------------------------------------------- Speziali, Greenwald & Hawkins PC filed an amended complaint on behalf of two short-sellers of the securities of Intelli-Check, Inc., (AMEX:IDN) in the United States District Court for New Jersey, Camden. In order to expedite the claim and remove procedural delays the amended complaint will be on behalf of the individually named plaintiffs only and class action certification is no longer being sought. As previously announced, plaintiffs include investor Daniel Borislow and the previously named lead plaintiff, Keith Jones. The amendments include additional allegations arising out of the Company's most recent SEC 10-Q, specifically with respect to the Company's improper restrictions to block the sale of over 940,000 shares of common stock by its' former director, Kevin Messina (the subject of a lawsuit pending in Nassau County, New York). Allegations have also been added with respect to failure to disclose multiple items materially impacting the company's financial position and improper interference with plaintiff's broker, Paine Webber, by Intelli-Check's legal counsel. In light of the amendments, short-sale investors are advised they are no longer part of the present action and should take whatever actions, if any, they deem necessary to protect their interests. Except for the removal of class allegations, all other allegations as referenced in previous press releases are being pursued. For more information, contact David A. Speziali by Mail: 37 Oak Ridge Drive PO Box 1787 Voorhees, New Jersey 08043 by Phone: 856.772.1006 or by E-mail: dspeziali@home.com JDN REALTY: Atlanta Court Approves Settlement Pact In Securities Suit --------------------------------------------------------------------- The United States District Court in Atlanta approved the settlement agreement proposed by JDN Realty Corporation (NYSE:JDN) to settle a securities class action and a related derivative lawsuit at a final fairness hearing held November 15, 2001, concluding the settlement was fair, reasonable and adequate and in the best interests of Company shareholders. Additionally, the Court approved the terms of the related derivative lawsuit and entered final orders and judgments dismissing all the claims in the securities class action and related derivative lawsuit involving the Company. In addition to certain cash consideration already paid, the Company will issue shares of common stock pursuant to the terms of the class action and related derivative lawsuit settlements. Craig Macnab, President and Chief Executive Officer of JDN Realty Corporation, stated in a press statement "This approval finalizes the settlements previously announced by the Company in July and enables JDN to put to rest the most significant issues from the past. Importantly, it allows the Company to remove the cloud of uncertainty that has been associated with this litigation. We can focus squarely on the many business opportunities that lie ahead for our Company." For more information, visit the Company's Website: http://www.jdnrealty.com LACLEDE GAS: Court Allows State Commission To Defend Self Against Suit ---------------------------------------------------------------------- St. Louis Circuit Court Judge Robert Dierker, Jr. allowed Missouri state utility regulators to intervene in a class action against Laclede Gas Company, relating to one death and six house explosions due to its aging copper gas lines, according to a Jefferson City News Tribune report. According to lawyer Lera Shemwell, The Public Service Commission wants to defend its oversight of the Company. The commission had earlier approved the Company's plan to gradually replace about 78,000 underground copper lines that remain in the St. Louis region. The $80 million effort aims to replace about 8,000 pipes per year with safer, more modern plastic lines. Judge Dierker, however, denied the Company's motion to dismiss the case, saying it was the commission that had the proper jurisdiction to do so. Lawyer Jeffrey Lowe filed the suit on behalf of the heirs of former longtime Valley Park Police Chief Louis Brown, who died in February 1999 of injuries from an explosion. Investigators said the explosion was caused by leaking copper gas lines. Lowe also asked the Court to order the Company to speed up the pipe replacement and to award damages on behalf of the company's customers. Lowe also requested that the judge take control of the Company's safety plans, but Judge Dierker is reluctant to do so, citing the separation of powers between judicial and executive branches of government. Laclede attorney Dan Ball told the Jefferson City News Tribune that the plaintiffs in the class action, the customers, were not entitled to compensation because they would be unable "to prove a physically detectable injury, a recognizable injury." Lowe said their fear and danger to their property were damage enough. "They know that other houses are going to blow up, and if there are people in them, they are going to blow up, too." NEXTCARD 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 NextCard, Inc. (NasdaqNM:NXCD) between May 14, 1999 and December 6, 2000, inclusive in the US District Court for the 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 underwriters: (1) Donaldson, Lufkin & Jenrette Securities Corp., (2) Thomas Weisel Partners, LLC, (3) US Bancorp Piper Jaffray, (4) DLJdirect, Inc., (5) The Goldman Sachs Group, Inc., (6) Prudential Securities, Inc., (7) FleetBoston Robertson Stephens, Inc., (8) Bear, Stearns & Co., Inc., (9) Credit Suisse First Boston Corp., (10) Chase H&Q (formerly known as Hambrecht & Quist, LLC), (11) Lehman Brothers, Inc., and (12) Salomon Smith Barney, 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 its 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, underwriters of the IPO, allocated shares of stock to certain investors at the IPO price of $20.00 per share. To receive the allocations at $20.00, 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, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying stock at the $20.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $40.75 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 $36.9375 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, contact Christopher Lovell, Victor E. Stewart or Christopher J. Gray by Phone: 212.608.1900 by E-mail: sklovell@aol.com or visit the firm's Website: http://www.lovellstewart.com NYLABONE PRODUCTS: Dog Owners Sue After Chew Toy Causes Dog's Death ------------------------------------------------------------------- Nylabone Products faces a class action suit filed by dog owners after its popular chew toy "Plaque Attacker" caused the death of at least 100 dogs. The toy is a semi-flexible polyurethane bone covered with bumps called knuckles or knobs. Plaintiff Shirley Hannah said her dog, Rambo chewed the "Plaque Attacker" into pieces and swallowed them. Two of those pieces stayed in his stomach and intestine from February of 1999 until surgically removed in November of 1999. Several days later, Rambo died. In his official report regarding Rambo's death, veterinarian Ivan Muennick said "The knobby projections on the toy irritate the gut when swallowed and serve to catch other foreign bodies swalled by the dog.I feel that Nylabone should reevaluate the design, makeup, and sale of the flexibone product. Also any owners using this product should remove it from their pet's access." The Hannah family has strived to get the "Plaque Attacker" removed from store shelves. A statement from the Company to a Seattle TV station said, in part, "We are discontinuing and removing all four sizes of our bones in the plaque attacker line from stores and will introduce a new improved product shortly." The station later discovered that the chew toy had indeed been removed from the Pet Smart store where Shirley Hannah bought the toy. However, other Lubbock stores still carry the product. A Nylabone marketing representative said by phone Friday afternoon that "Plaque Attacker" had not been recalled. It turns out Pet Smart voluntarily removed the product based on customer concerns. The Hannah family alleges the Company has blamed dog owners for the deadly problem, citing part of the Company's statement which says "When improperly monitored during use, the bones can become frayed and worn with the possibility of large pieces being bitten off and becoming lodged in a dog's intestinal tract." Plaintiff Deborah Corcoran said the Company destroyed evidence in many cases and made a conscious choice to manufacture "Plaque Attacker" so that veterinarians would not be able to find it in X-ray examinations of dogs, a charge Nylabone has denied in the past, according to a ABC28 report. ORATEC INTERVENTIONS: Wolf Haldenstein Files Securities Suit in S.D. NY ----------------------------------------------------------------------- Wolf Haldenstein Adler Freeman and Herz LLP initiated a securities class action on behalf of purchasers of the securities of ORATEC, Inc. (NASDAQ:OTEC), between April 4, 2000 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 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 April 2000, the Company commenced an initial public offering of 4 million 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 those underwriters allocated to those investors material portions of the restricted number of IPO 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 more information, contact Fred Taylor Isquity, Thomas H. Burt, Michael Miske, Gustavo Bruckner, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 800.575.0735 by E-mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com.All e-mail correspondence should make reference to ORATEC. PCORDER 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 pcOrder, Inc. (formerly Nasdaq:PCOR) between February 25, 1999 and December 6, 2000, inclusive in the US District Court for the Southern District of New York against the Company, certain of its officers and underwriters: (1) The Goldman Sachs Group, Inc., (2) Credit Suisse First Boston Corp., (3) SG Cowen Securities Corp., (4) FleetBoston Robertson Stephens, Inc., and (5) Donaldson, Lufkin & Jenrette Securities Corp. 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. The suit alleges that the Company and certain of its officers at the time of its IPO violated the federal securities laws by issuing and selling Company 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, underwriters of the Company's IPO, allocated shares of stock to certain investors at the IPO price of $21.00 per share. To receive the allocations at $21.00, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of stock rocketed upward was intended to drive pcOrder's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying pcOrder stock at the $21.00 IPO price and then selling it later for a profit at inflated aftermarket prices. The stock rose as high as $59.50 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters of pcOrder'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 complaint also alleges that the Company and the defendant underwriters of the secondary offering of stock, were able to price the secondary offering at an artificially high $53.3125 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 details, visit the firm's Website: http://www.lovellstewart.com PORTAL SOFTWARE: Sued For Federal Securities Violations in S.D. NY ------------------------------------------------------------------ Portal Software, Inc. faces five securities class actions pending in the US District Court for Southern District of New York on behalf of all persons who purchased Company shares from May 5,1999 through December 6,2000, alleging federal securities violations. The suits allege the Company, certain of its officers and its underwriters engaged in improprieties in connection with the Company's 1999 initial public offering. Specifically, the complaints allege the underwriters charged certain of their customers fees in excess of those disclosed in the prospectus and engaged in certain allegedly improper activities in connection with the distribution of the IPO shares. The Company vehemently denies all the claims against it and states its intent to vigorously oppose these claims. It also expresses confidence that resolution of the suit will not have a material adverse effect on the financial position of Portal. SABA SOFTWARE: Schiffrin Barroway Commences Securities Suit in S.D. NY ---------------------------------------------------------------------- Schiffrin and Barroway LLP initiated a securities class action on behalf of purchasers of the common stock of Saba Software, Inc. (NASDAQ:SABA) between April 6, 2000 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 April 2000, the Company commenced an initial public offering of 4,000,000 of its shares of common stock at an offering price of $15 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 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 CALIFORNIA: LA Judge Challenges Federal Ruling In Slave Labor Case ------------------------------------------------------------------ Superior Court Judge Peter D. Lichtman recently challeged a federal court's ruling when he rendered a decision which kept intact a Korean- American man's claims against a Japanese cement company for which he was forced to work during World War II, the Associated Press recently reported. Judge Lichtman's ruling counters a decision made by U.S. District Judge Vaughan Walker in San Francisco, in September, when he ruled, in a class-action lawsuit, that thousands of Filipino, Chinese and Korean prisoners who claimed they were enslaved by Japanese companies had no legal redress for damages in U.S. Courts. Judge Walker's ruling also nullified a 1999 California law that allows victims of World War II slave labor to sue multinational corporations operating in the state. Both aspects of Judge Walker's decision were grounded in the peace treaty between the United States and Japan ending World War II, which bars compensation to victims of wartime atrocities. Such lenient terms were offered Japan because the United States wanted Japan to serve as a bulwark against communism in East Asia, according to a report in the Harrisburg Patriot. Judge Lichtman conceded that his ruling would require review in a court of appeal and gave defendant Onoda Cement Company, which has a Los Angeles-based subsidiary, 21 days to seek a review in the state's 2nd District Court of Appeal. "This latest decision .is fundamentally flawed, and we do indeed intend to seek immediate appellate review," said Douglas Mirell, co-lead counsel for Onoda Cement. Judge Lichtman said in his ruling that the federal court erroneously concluded that California's slave labor law intruded on the federal government's authority over foreign affairs. He noted that the law does not target any particular country, only businesses, and does not implicate any foreign policy between the United States and Japan. The ruling also said that state courts are bound to follow U.S. Supreme Court decisions on federal questions, but decisions in lower federal courts are not binding. Judge Lichtman also found fault with a statement of interest filed by federal lawyers in which they argued that California's slave labor law was unconstitutional. Judge Lichtman also wrote that it was notable that the federal government did not challenge claims made by Holocaust victims and other Europeans against Germany after World War II. He said the government was acting in an "uneven manner" by acting to prevent Asian victims from seeking reparations from Japanese companies. "Facially, this policy, if it is a policy, appears to be legally unsupportable," Judge Lichtman wrote. "This court is greatly troubled by this approach." Attorneys for Jae Wong Jeong, the plaintiff in the California case, praised Judge Lichtman's ruling, during a recent press conference, saying it could lead to reparations for those who were forced to labor for Japanese companies during the war. "It's a dramatic, historic and really quite courageous ruling," said Barry Fisher, Jeong's attorney, who is seeking class-action status for his lawsuit. The Justice Department declined to comment on the ruling. Jeong, a 12-year resident of Los Angeles, claims that as a Korean student at Tokyo's Hosei University, he was taken away in 1943 and forced to break limestone for Onoda for more than a year without pay. He was not provided adequate food, water and safety, and about 30 prisoners in his group died, the lawsuit alleges. SULZER MEDICA: Appellate Court Allows Arbitration in Hip Implant Suits ---------------------------------------------------------------------- Sulzer Medica and former parent Sulzer AG earned a partial victory after the United States Sixth Court of Appeals allowed the Company and plaintiffs to let an independent mediator review the Company's proposed $783 million settlement in hundreds of class action suits brought about by faulty knee and hip implants. More than 1,600 lawsuits were filed last December against the Company after it recalled thousands of hip and knee implants after patients who were fitted with them suffered severe pain and slipping. The Company later determined that oil residue on the hip and knee implants caused the implants not to bond properly to the patients' bones. Federal Judge Kathleen O'Malley gave preliminary approval to the settlement, under which the Company would pay patients who needed surgery after receiving the faulty hip or knee implants between $57,500 and $97,500 in cash and stock. She also issued an injunction suspending more than 1,000 individual lawsuits against the Company. Later, the US Sixth Circuit Court of Appeals reversed the approval, paving the way for individual claims against the Company, and raising fears that the Company may have to file for bankruptcy protection. The new appellate court ruling also halted for 60 days all individual lawsuits over defective implants that needed replacing and means the Company does not - for now - have to pay damages awarded by lower courts. Martin Schmidt, analyst with Bank Leu says "The worst case would have been to allow individual lawsuits to go ahead. This court ruling allows both parties to save face and increases the probability that Medica will eventually settle with a class action." Company Chief Executive Stephan Rietiker hailed the agreement, saying it was "a major step forward" and reiterated his stance that the proposed blanket settlement was the best solution to ensure patients were compensated quickly, fairly and equally. A court decision to let costly individual lawsuits proceed could eventually have more of a financial impact on the Company than the proposed class settlement. Experts remain cautious over the Company's prospects, despite general euphoria over the recent ruling. Zuercher Kantonalbank said in a briefing note "The risks for Sulzer Medica are not removed, and a definitive decision about allowing the individual lawsuits will only happen on February 1. Until then the risk is impossible to gauge." The Company is considering the unwanted option of filing for Chapter 11 bankruptcy protection if no settlement is reached and the suits are allowed to proceed as individual claims. Should individual lawsuits be allowed, parent company Medica is expected to file for Chapter 11 protection for the Company and do so quickly. The groundwork for that move is already being laid by U.S. investment bank Lehman Brothers. TICKETMASTER ONLINE: Lovell Stewart Lodges Securities Suit in S.D. NY --------------------------------------------------------------------- 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 Ticketmaster Online-CitySearch, Inc. (NasdaqNM:TMCS) between December 2, 1998 and December 6, 2000, inclusive in the US District Court for the Southern District of New York. 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. The suit names the Company, certain of its officers at the time of the IPO and underwriters: (1) Banc of America Securities LLC, (2) Allen & Company, Inc., (3) FleetBoston Robertson Stephens, Inc., (4) Bear, Stearns & Co., Inc., (5) Donaldson, Lufkin & Jenrette Securities Corp., (6) The Goldman Sachs Group, Inc., (7) Chase H&Q (formerly known as Hambrecht & Quist, LLC), (8) Morgan Stanley Dean Witter & Co., and (9) Salomon Smith Barney, Inc. The suit alleges that the defendants violated the federal securities laws by issuing and selling the Company's 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, defendants allocated the Company shares to customers at the IPO price of $14.00 per share. To receive the allocations at $14.00, 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 (and did) drive the Company's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying stock at the $14.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $56.38 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters 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 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 more information, contact Christopher Lovell, Victor E. Stewart, or Christopher J. Gray by Phone: 212.608.1900 by E-mail: sklovell@aol.com or visit the firm's Website: www.lovellstewart.com UNITED PAN: Schiffrin Barroway Commences Securities Suit in S.D. NY ------------------------------------------------------------------- Schiffrin and Barroway LLP initiated a securities class action on behalf of purchasers of the common stock of (NASDAQ:UPCOY) United Pan European Communications, N.V. between February 11, 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 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 February 1999, the Company commenced an initial public offering of 40,000,000 of its shares of common stock at an offering price of $32.78 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: (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 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 ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2001. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. 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