/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/020114.mbx C L A S S A C T I O N R E P O R T E R Monday, January 14, 2002, Vol. 4, No. 8 Headlines BLOCKBUSTER INC.: CA Court Denies Antitrust Suit Certification BRIOR CORPORATION: Recalls 3T "Curious George" Toys For Choking Hazard BRISTOL-MYERS SQUIBB: FTC Opposes Claim To Protection From Generics CUB CADET: Recalls 6,000 Garden Tractors For Risk Of Injuring Customers ENRON CORPORATION: Arthur Andersen Accused Of Document Destruction FEN-PHEN LITIGATION: Hackard Holt Announces Opt-Out Deadline In Suit INDIAN FUNDS: Judge Questions Delay Over Fund Payments Disbursement LAW SCHOOL: PA Court Dismisses Access Suit Against Admission Council LAWN-BOY INC.: Recalls 90,000 Power Mowers For Fire and Burn Hazard LITTLE TIKES: Recalls 260 Lobster Toys For Possible Choking Hazard MONSANTO CORPORATION: Farmers Suing Over Genetically Modified Canola RACIAL PROFILING: NJ Court Allows Racial Profiling Suit To Proceed TOBACCO LITIGATION: Challenge To Landmark $206B Settlement Rejected UNITED STATES: Justice Dept. Settles "Special Rate" Employees' Suit *Mold Could Be "Gold" For Lawyers, as Suits Spring Up Across Country Securities Fraud ACLN LTD.: "Adversely Affected" By Pending Securities Suits in S.D. NY ACLN LTD.: LeBlanc Waddell Commences Securities Suit in S.D. New York ACLN LTD.: Weiss Yourman Asks Directors To Produce Securities Documents ACLN LTD.: Wechsler Harwood Commences Securities Suit in S.D. New York HOMESTORE.COM: Pomerantz Haudek Commences Securities Suit in C.D. CA HOMESTORE.COM: Wolf Haldenstein Commences Securities Suit in C.D. CA IMCLONE SYSTEMS: Kaplan Fox Commences Securities Suit in S.D. New York LOGON AMERICA: Wechsler Harwood Lodges Securities Suit in Rhode Island RHYTHMS NETCONNECTIONS: Milberg Weiss Files Securities Suit in Colorado TALX CORPORATION: Ademi O'Reilly Commences Securities suit in E.D. MI VAN WAGONER: Cauley Geller Commences Securities Fraud Suit in Delaware ********* BLOCKBUSTER INC.: CA Court Denies Antitrust Suit Certification -------------------------------------------------------------- The Los Angeles County Superior Court refused to certify an antitrust class action filed against movie-rental chain Blockbuster, Inc. filed by independent video retailers, alleging the Company made illegal arrangements with major movie studios, according to a Reuters report. The suit contests agreements made in 1997 and 1998 between the Company and major studios including Walt Disney Co., AOL Time Warner Inc. and Sony Corporation's Columbia TriStar. These agreements allowed the parties to share video rental income and enabled the Company to purchase larger quantities of movies at discounted prices and advertise their large quantities of new releases to consumers, a practice the plaintiffs claim violates violate antitrust and price-fixing laws. The Company hailed Judge Victoria Chaney's ruling, "We're pleased that this ruling comes to the same conclusion that a federal court in Texas reached in March of last year - that class certification is not appropriate in the cases brought by the independent video retailers." He added, "Every victory we enjoy is also a victory for consumers because we provide them with ongoing access to the movies they want, when they want them. These are the benefits of competition." According to Jim Moriarty, a lawyer for the independent retailers, they will be pursuing the case on an individual basis. "The fact that Blockbuster and the studios committed antitrust activities is a given." BRIOR CORPORATION: Recalls 3T "Curious George" Toys For Choking Hazard ---------------------------------------------------------------------- Brior Corporation is cooperating with the US Consumer Product Safety Commission (CPSC) by voluntarily recalling about 3,100 Curious George toys. The toys include fabric-filled mobile phones that can pose a choking hazard to young children. The Company has not received any reports of injuries or incidents. This recall is being conducted to prevent the possibility of injuries. These Curious George monkey plush toys are dressed in a yellow plastic space suit with matching gloves. They have a detachable backpack with a red fabric-filled mobile phone attached. The small mobile phone is 1.25-inches by 1.5-inches, and is connected to a gray, mesh backpack by a 4.75-inch string sewn into one of the backpack's seams. A label in the collar of the space suit reads, "Curious George by BRIO." This is an "Activity George," which is written on the packaging, and is labeled for children ages 18 months and older. The back of the box reads "Removable backpack with mobile phone!" The recalled toy has model number 32900 written on the front of the box. Specialty toy stores, Internet retailers, and mail order catalogs sold the recalled Curious George toys nationwide from July 2001 through November 2001 for about $25. For more information, contact the Company by Mail: BRIO Corporation, SAFETY RECALL NI20 W18485 Freistadt Road, Germantown WI 53022 by Phone: 888-274-6869 between 8:30 am and 5 pm CT Monday through Friday or visit the firm's Website: http://www.briotoy.com. BRISTOL-MYERS SQUIBB: FTC Opposes Claim To Protection From Generics ----------------------------------------------------------------- The Federal Trade Commission (FTC) recently inserted itself into a court case involving Bristol-Myers Squibb Company, saying the New York- based drug maker should not be immune to antitrust claims in its struggles with generic drug makers, The Wall Street Journal recently reported. The FTC's legal brief was filed in US District Court in New York, where Mylan Laboratories Inc. and Watson Pharmaceuticals Inc. had sued Bristol-Myers after Bristol submitted to the Food and Drug Administration (FDA) a last-minute patent on its anxiety drug BuSpar that prevented generic versions of the drug from being launched for months. The FDA filing became a cause celebre for consumer groups, which complained to Congress and filed numerous suits seeking class action status against the Company. Attorneys general from 29 states and Puerto Rico also have sued Bristol. These lawsuits claim: (1) that the last-minute patent had little to do with the drug, BuSpar; (2) that the Company misrepresented the scope of its patent to the government in order to earn months more of exclusive sales of its anxiety drug. The suits assert such actions are anticompetitive and makes the Company liable for triple the resultant actual damages. The Company, in its court papers, asserts that even if it had made misrepresentations to the government, the US Constitution protects such misrepresentations as "petitions," much as lobbyists are protected from misrepresentations while seeking legislation. The FTC brief seeks to knock down this argument, saying, "In essence, Bristol claims that a pharmaceutical company is at liberty, as a matter of antitrust law, to monopolize a market by means of falsely asserting to the FDA that a new patent claims its approved branded drug, despite knowing that the patent does not, in fact, claim the drug." Since the FTC is not a party to the case in which the pharmaceutical companies Mylan and Watson are plaintiffs, its brief may have little direct effect. The brief contends that "a ruling in Bristol's favor would potentially give a branded drug manufacturer an almost unlimited ability to stifle generic competition, a result that could cost American consumers billions of dollars annually and would be plainly at odds with Congress's intent." The FTC brief says further that should the Company prevail in its arguments, such a potential outcome would be a matter for grave concern. The very fact of the filing of this brief suggests, regardless of its impact on the case, that the agency is becoming interested in battles and deals between branded and generic drug makers that potentially delay the arrival of cheaper generic drugs. The agency is already in the midst of investigating anti-competitive practices in the entire pharmaceutical industry. It has announced that it is investigating the Company as regards its actions protecting BuSpar, as well as its blockbuster cancer drug Taxol. FTC is also investigating GlaxoSmithKline PLC and its defense of its antidepressant Paxil. Steven Lieberman, an attorney for Mylan, said he was pleased with the FTC's brief. "What the FTC is saying is that Bristol's actions may very well subject them to a significant liability," Mr. Lieberman added. Robert Laverty, a spokesman for Bristol, responded that "the case involves important principles of antitrust law about which we and the FTC disagree.We believe our interpretation is correct that there is no basis for antitrust liability in this case." CUB CADET: Recalls 6,000 Garden Tractors For Risk Of Injuring Customers ----------------------------------------------------------------------- Cub Cadet Corporation is cooperating with the US Consumer Product Safety Commission (CPSC) by voluntarily recalling about 6,000 garden tractors. The tractor's rear wheel can loosen and spin free on its axle, resulting in a loss of power to the wheel and brake, which poses the risk of injury to consumers. The Company has received 44 reports of wheels loosening and spinning free on the axle, though no injuries or property damage has been reported. The recalled garden tractors have a 44-inch cutting deck, an 18 or 20- horsepower engine, a yellow base, and a black seat and steering wheel. The model name is printed in blue on the engine hood near the steering wheel, and the model number (#3184) is printed in large numbers on the hood of the tractor. The name "Cub Cadet Corporation" and the model number are also printed on the model plate label affixed to the lower frame near the right front wheel. Authorized Cub Cadet dealers nationwide sold the garden tractors from October 1999 through November 2001 for about $6,000. For more information, contact the Company by Phone: 888-848-6038 between 8 am and 5 pm ET Monday through Friday or visit the firm's Website: http://www.cubcadet.com ENRON CORPORATION: Arthur Andersen Accused Of Document Destruction ------------------------------------------------------------------ Fallen energy giant Enron Corporation's auditing firm "cannot say" whether employees destroyed a "significant but undetermined number" of documents relating to the Company and its finances, as the Company struggled for survival in late 2001. Accounting firm Arthur Andersen and Company said yesterday that it had instructed employees to preserve documents relating to Enron after the Securities and Exchange Commission subpoenaed the firm in its investigation. David W. Tabolt, Andersen spokesman, said, however, that "we cannot say whether that instruction was violated." According to government investigators, the document destruction began in September and continued into November. The investigators said the documents, including correspondence and both electronic and paper records, were destroyed by employees involved with the Enron assignment. The developments have led to Securities and Exchange Commission to expand its investigation of Enron's collapse to include Andersen's newly disclosed conduct. Steven Cutler, SEC Director of Enforcement, asserts "Destruction of documents is obviously an extremely serious matter.The destruction of documents by Arthur Andersen will not deter us from pursuit of our investigation and will be included within the scope of our investigation." The accounting firm could face criminal charges if the destruction of documents was done to obstruct inquiries into the matter, according to Lousiana's Republican Representative, Billy Tauzin, Chairman of the House Energy and Commerce Committee. He said, "Anyone who destroyed records simply out of stupidity should be fired.Anyone who destroyed records intentionally to subvert our investigation should be prosecuted." An unnamed government official told washingtonpost.com that the electronic records that were destroyed appear to number in the thousands. While some of those records have been recovered, there has been no accounting yet of what was destroyed. Justice officials have not commented on this development. Mr. Tabolt said that the firm was still gathering information about the episode before deciding what, if any, discipline to administer to the employees involved. FEN-PHEN LITIGATION: Hackard Holt Announces Opt-Out Deadline In Suit -------------------------------------------------------------------- People who have opted out of the class-action lawsuit against American Home Products and may have suffered heart damage as a result of taking the diet pill fen-phen/Redux have one year to initiate their claims, according to Michael A. Hackard, a national pharmaceutical liability attorney. The deadline was announced under the terms of the $3.75 billion class- action settlement finalized Thursday. Mr. Hackard noted that this final approval of the class action is extremely important for anyone who ever took the diet fen-phen drugs. He said in a statement "The heart valve and pulmonary injuries caused by fen-phen can take years to manifest themselves.However, now that the class action has received final approval, potential claimants only have one year from Jan. 3 to get tested and have any injuries diagnosed. Those missing the Jan. 3, 2003 deadline will be permanently barred from ever seeking compensation or damages from American Home Products." Those who took either of the drugs and have been diagnosed with heart valve damage or primary pulmonary hypertension can contact an attorney specializing in pharmaceutical liability. Those who have been diagnosed with a mild injury due to the drugs can file a claim known as a "green form" that will make them eligible for compensation or damages if their condition deteriorates within the next 15 years. For more information, contact Michael A. Hackard, Hackard and Holt by Phone: 1-888-452-5805, 1-916-853-3000 or 1-916-524-8231 by E-mail: hackard@hackardlaw.com or visit the litigation Website: http://www.pphlaw.com INDIAN FUNDS: Judge Questions Delay Over Fund Payments Disbursement ------------------------------------------------------------------- An exasperated Judge Royce Lamberth accused the government of game- playing last week, after receiving dozens of angry phone calls and letters from tribal leaders and Indian account holders who failed to receive their trust fund payments last month from the US Interior Department. The Interior Department has been unable to release its monthly disbursements to thousands of American Indians throughout the country presumably after Judge Lamberth ordered the department's computers shut down last month after discovering that hackers could easily access the Indian Trust Fund from the Internet. Since then, the systems that process payments to the beneficiaries have been shutdown because government officials admit they cannot operate without public Interior access, even though they have their own private network. Judge Lamberth issued the order in the ongoing class action filed by thousands of American Indian tribal members against the government claim mismanagement of their plaintiffs' trust fund accounts, up to at least $10 billion. The trust fund system was created in 1887 to administer royalties on mining, grazing and logging on American Indian lands. Judge Lamberth implied the department was not working hard enough to remedy the security breach, and said the government could be delaying the funds as a means of "pressuring" attorneys representing 300,000 American Indians whose lawsuit has embarrassed the Bush and Clinton administrations. The Department has denied this. A spokesperson for the Department told The Lincoln Journal Star that its "technology team has been working overtime with the contractor to bring about resolution." Bill Roselius, a special assistant to Assistant Secretary Neal McCaleb, told Indianz.com that about 40 officials, information technology staff members and attorneys have been working with special master Alan Balaran to try and fix the security holes. In describing why checks haven't been written, Mr. Roselius said, "The special master has the authority to keep anything from happening." Mr. Balaran has responded by blaming the government for the affair, which the Bush administration waited months to start to correct, "I would respectfully suggest that any harm which has inadvertently befallen trust beneficiaries and others is the direct consequence of years of malaise on the part of those Interior officials charged with ensuring the security of trust data." The Interior has already missed December 2001 payments and probably won't able to disburse January 2002 in time either, said officials. Based on December 2000 figures, about $15 million was sent to 43,000 Indian beneficiaries, but officials did not have historical amounts for January of last year, according to an Indianz.com report. LAW SCHOOL: PA Court Dismisses Access Suit Against Admission Council -------------------------------------------------------------------- A Philadelphia federal court has dismissed without prejudice a high profile class action against the Law School Admission Council (LSAC), filed nearly two years ago on behalf of individuals who had requested accommodations for their disabilities when taking the Law School Admission Test (LSAT), but whose requests LSAC had denied in whole or in part. The suit gained national media attention when it was filed, in part because one of the plaintiffs had persuaded Steve Wozniak (a founder of Apple Computers) to provide some financial backing for it. The plaintiffs were never able to certify their alleged class of plaintiffs, and each one withdrew from the case at some point in the proceeding. Finally, the attorney representing the plaintiffs was left clientless, and the case was dismissed with prejudice. In a statement, LSAC President Philip D. Shelton said "We were confident from the beginning that this attorney would be unable to prove the allegations leveled against us." Each year, LSAC grants testing accommodations to hundreds of aspiring attorneys with disabilities. Mr. Shelton adds, "we do not grant such requests automatically.Rather, we follow the requirements of the Americans with Disabilities Act and engage in a careful, individualized assessment of each person's request and supporting documentation in an effort to level the playing field for all test takers." In the majority of cases, that review results in the provision of accommodations, but sometimes it does not. "The dismissal of this case is a vindication of our processes for reviewing requests for accommodations," he added. For more information, contact Edward G. Haggerty by Phone: 1-215-968- 1326 or access the Website: http://www.lsac.org LAWN-BOY INC.: Recalls 90,000 Power Mowers For Fire and Burn Hazard ------------------------------------------------------------------- Lawn-Boy, Inc. is cooperating with the US Consumer Product Safety Commission (CPSC) by recalling about 90,000 Lawn-Boy power mowers. Stress cracks can develop in the mower's fuel tank, allowing gasoline to leak and posing a risk of fire and burn injuries. The Company received nearly 400 reports of fuel tanks on these mowers leaking, and one report of a fire. No injuries or property damage were reported. The recalled Lawn-Boy SilverPro and GoldPro Series are walk-behind, 21- inch mowers powered by 2-cycle Duraforce engines. "Duraforce" is written on the top of the recoil starter. A decal on the right rear of the mower's housing has one of the following model numbers: 10247, 10252, 10323, 10324, 10424, 10550 or 10552. The decal also has a serial number starting with "21." Lawn-Boy dealers, and department and home center stores sold these mowers from December 2000 through November 2001 for between $300 and $600. For more information, contact the Company by Phone: 800-444-8676 or visit the firm's Website: http://www.lawnboy.com. LITTLE TIKES: Recalls 260 Lobster Toys For Possible Choking Hazard ------------------------------------------------------------------ Little Tikes Co. is cooperating with the US Consumer Product Safety Commission (CPSC) by voluntarily recalling about 260 lobster toys attached to the activity tray of the Ocean Friends Stationary Entertainer. The antennae on the lobster toy can break, posing a choking hazard to young children. No injuries or incidents have been reported. This recall is being conducted to prevent the possibility of injury. The recall involves Ocean Friends Stationary Entertainer model 4629 GIG. The model number is located underneath the entertainer's tray. The green tray on the stationary entertainer is supported by three adjustable legs and has the words "Little Tikes" printed across the front. The seat, patterned with colorful pictures of sea animals, sits in the center of the unit and swivels so the child can play with the nine toys attached to the tray. The recalled lobster toy is red with black antennae. Only lobsters with black antennae are involved in this recall. Toys R Us stores sold the stationary entertainer with the lobster toy nationwide between October 2001 through November 2001 for about $60. For more information, contact the Company by Phone: 888-883-7662 or visit the firm's Website: http://www.littletikes.com MONSANTO CORPORATION: Farmers Suing Over Genetically Modified Canola -------------------------------------------------------------------- A group of Canadian organic farmers are likely to file a class action in Saskatoon Provincial Court against chemical giants Monsanto Corporation and Aventis SA, for damages caused by genetically modified canola that allegedly threatens the environment and the genetic purity of the organic agriculture industry. The Saskatchewan Organic Directorate (SOD), a group representing around 1,000 organic farmers, plans to file the suit. SOD President Arnold Taylor said, "We are asking for damages for the loss of canola in our rotations, past, present and future and we're hoping to get an injunction to prevent introduction of genetically modified wheat." Canola is used mainly to produce processed food ingredients, cooking oils and livestock feed. According to an iWon report, about 60% of the canola grown in Saskatchewan is genetically modified to resist weeds. Organic certifiers do not allow for genetically modified organisms in their seed supply. Organic farmers are prohibited from applying most crop chemicals, and must rely on crop rotation, which includes the staggered planting of canola and wheat, to control weeds. According to these farmers, the genetically modified canola produced by the two companies blows onto their fields, contaminating their crops and the seed supply and driving away their premium-paying customers, most of whom are in Europe. Mr. Taylor says "There's no market for organic canola that has GMOs, that isn't organic anymore. It doesn't conform to the standards." Company spokesperson, Trish Jordan, says officials are still waiting to hear more about the suit before making any comments, "We have no idea what their claims are. We have no idea whether we'll be named. We have no idea if other people will be named, so it's just 100 percent speculation at this point." RACIAL PROFILING: NJ Court Allows Racial Profiling Suit To Proceed ------------------------------------------------------------------ US District Judge Joel A. Pisano allowed four black men who claim they were victims of racial profiling by the New Jersey State Police to proceed with their class action. Thomas M. White, John McKenzie, Frederick Hamiel and Tyrone Hamilton filed the suit in June 1999 against the state police and: (1) Col. Carl A. Williams, state police superintendent from 1994- 1999, (2) Peter Verniero, state attorney general from 1996-1999, (3) John J. Farmer, present state Attorney General (4) Col. Clinton Pagano, state police superintendent in the 1970s and 1980s, (5) Col. Michael Fedorko, who was acting state police superintendent from February to September 1999 and (6) the New Jersey Turnpike Authority, which oversees operations on the highway The suit claims that between 1997 and 1999, the plaintiffs were pulled over and in some cases searched simply because of their race. The suit was put on hold while a similar case proceeded through the state courts. It was reopened last year after that class certification was denied. The state then filed a motion to dismiss the case. Judge Joel Pisano ruled partly in favor of the state, throwing out claims similar to the federal suit. He also did not rule on whether the men were in fact victims of racial profiling and had their civil rights violated. Lawyers for the plaintiffs welcomed the verdict. Alan L. Yatvin, the lead lawyer in the case, said "Individually they couldn't bring a lawsuit. What you have, in many cases, are race-based stops or searches based on nothing more than that the person is African-American." Unlike dozens of other lawsuits in New Jersey dealing with racial profiling, this one has the potential to win damages for many minority motorists. The attorney general's office has not commented on the suit yet. Sean Walsh, a spokesman for Gov.-elect James E. McGreevey, said the incoming administration had also not reviewed the ruling. TOBACCO LITIGATION: Challenge To Landmark $206B Settlement Rejected ------------------------------------------------------------------- The Supreme Court rejected a challenge filed by A.D. Bedell Wholesale Company and Triangle Candy & Tobacco Company, to the $206 billion settlement signed four years ago by the tobacco industry and 46 states in the class action the two companies filed, alleging that provisions of the 1998 settlement were anti-competitive. The suit named three of the nation's biggest tobacco companies, Philip Morris, RJ Reynolds and British American Tobacco PLC's Brown & Williamson Tobacco Corp. The two Companies said the accord allowed the three companies to gain higher profits from higher cigarette prices, Dow Jones reported. They noted cigarette manufacturers immediately raised prices by 45 cents a pack, even though analysts said that a 19-cent price hike could have funded the settlement. Additional price increases followed, the report said. They added that the settlement created a cartel that has allowed tobacco companies to overcharge "by billions of dollars annually." A Philadelphia appellate court dismissed the challenge last June, ruling that the cigarette makers were shielded from antitrust claims. The three defendants said the lower court ruling was correct and didn't merit Supreme Court review. UNITED STATES: Justice Dept. Settles "Special Rate" Employees' Suit ------------------------------------------------------------------- The United States Justice Department has agreed to settle for more than $173.5 million a class action filed by the National Treasury Employees Union (NTEU) on behalf of more than 212,000 current and former "special salary rate" federal employees in Washington federal court, after 19 years of litigation. According to washingtonpost.com, the suit was commenced after the Reagan administration issued a regulation that said the annual, statutory pay raise provided to General Schedule employees, the bulk of the government's white-collar workforce, would have no effect on special pay rates. As a result of the policy, many special-rate employees received either no salary increases between Oct. 1, 1982, and Sept. 30, 1988, or very modest increases, the NTEU said. In 1988, the OPM reverted to its policy of increasing special rates by the same percentage as the General Schedule pay increases. Colleen M. Kelley, NTEU president hailed the settlement, saying it was "a tremendous victory for federal employees." All civil service employees who were paid special salary rates during fiscal years 1982 to 1988 are eligible for the settlement. The special rates are paid for jobs that the government has difficulty keeping filled. The jobs included clerical workers, medical personnel, engineers and law enforcement officers, the union said. The settlement has to be approved by the US Court of Federal Claims to become final. The approval is also required before it can be determined how much back pay is owed to each person. The union's general counsel, Gregory J. O'Duden, said he was "extremely confident" the settlement would receive judicial approval. Mr. O'Duden estimated that many of the special-rate employees will receive $1,000 to $3,000 in back pay and that engineers who went without pay raises during the 1982-88 period could be entitled to about $30,000 each. For more information, contact the NTEU by Phone: 800-750-3406 or visit the Website: http://www.specialratessettlement.com. *Mold Could Be "Gold" For Lawyers, as Suits Spring Up Across Country -------------------------------------------------------------------- Mold could be the next asbestos for tort lawyers, as some 10,000 suits against contractors and insurers are building up in courts. These suits commonly claim that mold growths in their homes are making the residents sick, causing everything from headaches and dizziness to neurological damage, according to a National Center for Policy Analysis report. Mold is the visible growth of any 100,000 species of fungus. Certain types of mold contain a mycotoxin that can be fatal, but these cases are extremely rare. This fact has not stopped the rise of mold litigation across the country. The Centers for Disease Control and Prevention also released a report implicating a type of mold in the bleeding lungs of eight Cleveland infants and saying that mold can cause allergic reactions. The CDC later recanted the report, admitting that the study used unorthodox collection techniques and was flawed. The CDC also stated that there is no proven link between mold and illnesses. However, the legal damage has already been done. Mold litigation has spread across the country. In May, a class action was filed against the University of California alleging that more than 800 student residents of university housing have potentially been exposed to mold and/or fungi that could lead to health problems such as cough, congestion, runny nose, eye irritation, fevers, and breathing problems. Another suit arose in November against the South Shore Lakes Apartment complex in Texas, saying toxic mold contaminated tenants' furniture, clothing and personal belongings and caused severe health problems for the plaintiffs. A specialist investigating the place found several species of mold: stachybotrys, aspergillius, penicillium, cladisporium and cahetomium. Last December, San Francisco apartment leaser Henry Phipps Plaza Associates settled a class action for $1.2 million, in which hundreds of tenants claimed that toxic mold in their two Kips Bay-area apartment buildings had damaged their skin, lungs and brains. School districts in Illinois and Ohio have been hit by suits from students claiming health problems. A Texas jury awarded $32.1 million to a Dallas executive although the insurance company involved is appealing. Insurers estimate they paid out $670 million for mold- related property damage in Texas alone in 2001, more than double the total in 1999. Securities Fraud ACLN LTD.: "Adversely Affected" By Pending Securities Suits in S.D. NY ---------------------------------------------------------------------- ACLN Ltd. vehemently denied the allegations in the securities class actions pending against the Company and its directors in the US District Court for the Southern District of New York, for federal securities violations. The suits, filed on behalf of various stockholders, generally allege that the Company has misstated its profitability and future prospects in public disclosures. The Company revealed in a statement that the US Securities Exchange Commission is conducting an investigation of its operations and requested it to provide certain information. The SEC staff has advised the Company that it had serious questions regarding disclosures it made in its filings with the Commission. Company President, Aldo Labiad has promised to cooperate fully with the investigation. He stated, "The Company believes that its SEC filings are accurate in all material respects, welcomes the Commission's inquiry and is committed to addressing the issues raised by the Commission promptly and fully." Mr. Labiad also commented on the adverse impact on the Company's business caused by statements concerning the Company, which have appeared in recent press reports and were repeated by newspapers in Europe. He asserts "Our business has suffered significantly from a loss of trust by suppliers, customers and port agents in the countries where we do business. As a result, the level of car shipments has declined in the fourth quarter. In addition, dealers who traditionally make prepayments to us to use our logistics services to ship cars to Africa are now refusing to prepay. Erosion of prepayments, coupled with demands for prepayment from the company that sells us cars for resale, have adversely affected the Company." He further stated, "We believe that our cash could better be used to develop the Company's business and enhance its value to the shareholders. Management therefore plans to direct its energies to restore the trust the Company has enjoyed and to maximize growth and earnings for the benefit of its shareholders, customers and employees." ACLN LTD.: LeBlanc Waddell Commences Securities Suit in S.D. New York --------------------------------------------------------------------- LeBlanc and Waddell LLC initiated a securities class action against ACLN Ltd. (NYSE:ASW) in the US District Court for the Southern District of New York, claiming the company artificially inflated its share price by misleading the investing public, on behalf of all investors who bought ACLN stock between June 29, 2000 and December 20, 2001. The complaint accuses the Company, a wholesale automobile dealer and shipper based in Belgium, of violating sections 10(b) and 20(a) of the Securities Exchange Act of 1934. It claims that the company, Chairman Joseph Bisschops and two other top officers issued a series of false and misleading statements about its business and financial results during the class period. Specifically, some complaint allegations concern the company's purported ownership of a $6 million cargo ship named the Sea Atef. Though the company said it owned the vessel - and wrote off $1.8 million a year in connection with the asset - the complaint maintains that the ship actually was property of the Sea Atef Shipping Co. Ltd., a company on whose board Mr. Bisschops sits. Other allegations focus on discrepancies in the company's filings with the Securities and Exchange Commission and other public statements, including: (1) Mr. Bisschops' failure to properly report the apparent disposition of 27% of the company's stock; (2) Conflicting reports about the company's expenses in 2000, including payments to a company controlled by Mr. Bisschops for "administrative services;" and (3) Inconsistent reports on the company's new car sales for the first quarter of 2001 When TheStreet.com published an investigative report on December 20, 2001 detailing these discrepancies, Company stock plunged more than 64%, from $26.11 to $9.40 per share. The following day, JP Morgan downgraded Company shares due to lack of confidence in the company and its management, including the company's inability to confirm that it had $117 million in cash as it claimed. Trading of Company stock was subsequently halted and the last shares sold before trading was suspended were priced at $6.56. For more information, contact Roger LeBlanc or Chad A. Dudley by Mail: 5353 Essen Lane, Suite 420 Baton Rouge LA 70809 by Phone: 800-988-3514 or by E-mail: rogerleblanc@lw-law.net ACLN LTD.: Weiss Yourman Asks Directors To Produce Securities Documents ----------------------------------------------------------------------- Weiss & Yourman has made a demand upon the Board of Directors of ACLN, Ltd. (NYSE:ASW) to produce the information and documents which it is furnishing to the Securities and Exchange Commission in connection with allegations made in a securities class action filed by the firm against them in the US District Court for the Southern District of New York. The suit, filed on behalf of purchasers of the Company's securities between September 30, 2000 and December 20, 2001, 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. Beginning in June 2000, and continuing throughout the class period, defendants issued multiple press releases and filed quarterly and annual reports with the SEC which highlighted the Company's growth and strong financial performance. For more information, contact Weiss and Yourman by Phone: 800-437-7918 or 310-208-2800 by E-mail: info@wyca.com or visit the firm's Website: http://www.wyca.com ACLN LTD.: Wechsler Harwood Commences Securities Suit in S.D. New York ---------------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP initiated a securities class action on behalf of purchasers of the securities of ACLN, Ltd. (NYSE: ASW) between June 29, 2000 and December 20, 2001, inclusive, in the United States District Court, Southern District of New York against the Company and: (1) Joseph Bisschops, (2) Aldo Labiad and (3) Alex De Ridder 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. Beginning in June 2000, and continuing throughout the class period, defendants issued multiple press releases and filed quarterly and annual reports with the SEC which highlighted the Company's growth and strong financial performance. As alleged in the suit, these statements were materially false and misleading because they failed to describe the true state of financial affairs at the Company. Specifically, defendants: (i) failed to disclose certain self-dealing transactions between defendant Bisschops and certain private entities which he controlled; (ii) overstated the Company's assets by listing a shipping vessel, the Sea Atef, as an asset of the Company when, in fact, the Company did not own the Sea Atef; (iii) understated the Company's selling, general and administrative expenses, causing the Company's net income to be overstated; and (iv) violated generally accepted accounting principles (GAAP) and the Company's own stated policy with regard to recognition of revenue by reporting revenue for the cars that it sold as soon as the ship carrying the cars left the port and not when the shipment was completed. The truth about these statements finally came to light on December 20, 2001, in an article published by Herb Greenberg on The Street.com. In response to the questions raised in Greenberg's article, the Company's shares plunged 64%, falling $16.71 to close at $9.40 per share. For more information, contact Patricia Guiteau by Phone: 877-935-7400 (toll-free) by E-mail: pguiteau@whhf.com or visit the firm's Website: http://www.whhf.com HOMESTORE.COM: Pomerantz Haudek Commences Securities Suit in C.D. CA -------------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP initiated a securities class action against Homestore.com (Nasdaq: HOMS), on behalf of all those persons or entities who purchased the Company's common stock during the period between May 4, 2000 through December 21, 2001, in the United States District Court for the Central District of California (Western Division). The suit names as defendants the Company and: (1) Stuart H. Wolff, Chairman and Chief Executive Officer, (2) John M. Giesecke, Jr., President of the Retail and Consumer Services Group, (3) Joseph J. Shew, former Vice President and Chief Financial Officer The suit alleges that the Company, an online marketplace for home and real estate-related information and associated products and services, and three of the Company's senior officials, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing materially false and misleading statements to the market which mislead investors and concealed the Company's true financial condition. In particular, it is alleged that during the class period, defendants issued a series of false and misleading statements concerning its publicly reported revenues and earnings. As a result of these false and misleading statements, the market price of the Company's common stock was artificially inflated during the class period. In December 2001, after the close of the market, the Company disclosed that it was conducting an inquiry into its accounting practices. The Company also announced that it would restate certain of its financial statements. In response to this announcement, the Nasdaq Stock Market halted trading of the Company's stock. Thereafter, on January 2, 2002, the Company announced that it had overstated its advertising revenues for the first three quarters of 2001 by between $54 million and $95 million in connection with certain advertising transactions that should have been accounted for as barter transactions. The Company also announced that transactions under review included transactions that occurred in 2001, as well as in 2000, and that there may be additional material restatements of its financial results. For further details, contact Andrew G. Tolan by Mail: Pomerantz Haudek Block Grossman & Gross LLP by Phone: 888-476-6529 by Email: agtolan@pomlaw.com or visit the firm's Website: http://www.pomlaw.com HOMESTORE.COM: Wolf Haldenstein Commences Securities Suit in C.D. CA -------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP has initiated a securities class action in the United States District Court for the Central District of California, Western Division on behalf of purchasers of Homestore.com, Inc. (NASDAQ:HOMS) common stock between July 20, 2000 and December 21, 2001, inclusive, against the Company and: (1) Stuart H. Wolff, at all times relevant here to, Chairman and CEO, (2) Peter B. Tafeen, at all times relevant here to, Executive Vice President of Business Development and Sales, and (5) Joseph J. Shew, at all times relevant here to, Chief Financial Officer The suit charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. In May 2000, the Company issued a release of its positive 1st Quarter 2000 results. The suit alleges that as part of their effort to boost the price of Company stock, defendants misrepresented the Company's true prospects in an effort to conceal its improper acts until they were able to sell at least $16 million of their own stock. In order to overstate revenues and assets in 1st, 2nd and 3rd Quarter 2000 and the 1st, 2nd and 3rd Quarter 2001, the Company violated generally accepted accounting principles and SEC rules by engaging in improper "roundtrip" transactions. These transactions had the effect of dramatically overstating revenues and assets. This came to an end (though unbeknownst to the public) in the Company's 3rd Quarter 2001 as its main roundtrip partner stopped doing these transactions with the Company. The suit further alleges that following the release of the Company's 3rd Quarter 2001 results, the Company also slashed its revenue projections for 2002 from $563 million to $375-$425 million as a result of a material decline in its business with its main "roundtrip" partner. On this news the Company's shares plummeted by more than 50% the following trading day from $4.98 to close at $2.28. Then, on December 21, 2001 (after the close of the market), the Company partially admitted that its past accounting for its prior results was inaccurate. On this news the Company's shares were halted and have not traded since. Then, on January 2, 2002, defendants admitted that the Company's revenue for 2001 had been overstated by as much as $95 million. The defendants also admitted that additional material restatements "may follow," including a restatement of financial results for fiscal year 2000. For further details, contact Fred Taylor Isquith, Gregory M. Nespole, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 800-575-0735 or by E-mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com.E-mail should refer to Homestore. IMCLONE SYSTEMS: Kaplan Fox Commences Securities Suit in S.D. New York ---------------------------------------------------------------------- Kaplan Fox initiated a securities class action against ImClone Systems, Inc. and certain of the Company's officers and directors in the United States District Court for the Southern District of New York, on behalf of all persons or entities who purchased the common stock of ImClone Systems, Inc. (NASDAQ: IMCL) between May 12, 2001 and January 9, 2002, inclusive. The complaint charges the defendants with violations of the Securities Exchange Act of 1934. The suit alleges that during the class period, defendants made materially false and misleading statements about: (1) the progress of the Company's Fast-Track application with the United States Food and Drug Administration (FDA) for approval to market Erbitux, the Company's new "blockbuster" drug for the treatment of colorectal cancer; (2) how closely the Company was working with the FDA to assure that the Company's Fast-Track application would be approved during the first quarter of 2002; and (3) the positive impact that Erbitux's approval would have on the Company's revenues for fiscal 2002 and 2003. The suit further alleges that, it was false and materially misleading for defendants to represent that the Company had presented the evidence necessary to allow the FDA to accept its Erbitux application because at the start of the class period defendants had filed an application with the FDA, which defendants knew did not comply with the stated expectations of the FDA. On December 28, 2001, the Company shocked the market when it announced that the FDA had declined to accept its Fast-Track biological-license application to market Erbitux. As a result of the defendants' false and misleading statements during the class period, the price of Company common stock traded at artificially inflated prices. For more information, contact Frederic S. Fox, Jonathan K. Levine or Christine Fox by Mail: 805 Third Avenue, 22nd Floor, New York, NY 10022 or 601 Montgomery Street, San Francisco, CA 94111 by Phone: 800-290- 1952, 800-290-1952, 800-290-1952 or 415-772-4700 or visit the firm's Website: http://www.kaplanfox.com LOGON AMERICA: Wechsler Harwood Lodges Securities Suit in Rhode Island ---------------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP initiated a securities class action in the United States District Court for the District of Rhode Island, on behalf of purchasers of Log On America, Inc. (Nasdaq:LOAX) securities between April 22, 1999 and November 20, 2000, inclusive, against the Company and: (1) David R. Paolo, Chairman, Chief Executive Officer and founder, and (2) Kenneth M. Cornell, Chief Financial Officer 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 repeatedly issued statements indicating that, among other things, the Company was on track to achieve the goals of its business plan and that it was successfully growing its service offerings and customer base through its numerous acquisitions. The suit alleges that these statements were materially false and misleading because, among other things, they failed to disclose or misrepresented: (i) that the revenues the Company was generating from its customer base, which was predominantly consumer-focused, were not sufficient to offset the extensive capital costs that the Company was incurring in order to build out its network and provision its products; (ii) that the Company's "growth-by-acquisition" strategy was not meeting with success as the Company had acquired a collection of disparate businesses which it was unable to effectively integrate into its existing business; (iii) that the Company was experiencing weakening demand for its products and services and was attempting to transition into different markets in order to reinvigorate its sales growth; and (iv) that as a result of the foregoing adverse factors, the Company would not be profitable in the near-term, if at all, and would have to completely restructure its operations and slash costs. For further details, contact Patricia Guiteau by Mail: 488 Madison Avenue 8th Floor New York, New York 10022 by Phone: 877-935-7400 (Toll Free) by E-mail: pguiteau@whhf.com or visit the firm's Website: http://www.whhf.com RHYTHMS NETCONNECTIONS: Milberg Weiss Files Securities Suit in Colorado ----------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the securities of Rhythms NetConnections, Inc. (NASDAQ: RTHMQ) between January 6, 2000 and April 2, 2001, inclusive, in the United States District Court, District of Colorado against defendants: (1) Catherine Hapka, (2) Steve Stringer, (3) Scott C. Chandler and (4) John W. Braukman 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. Throughout the class period, the Company portrayed itself as a fast-growing and expanding provider of DSL services and repeatedly represented that it could continue to expand its broadband network throughout the United States and reassured investors that it was financially able to continue this expansion. As alleged in the suit, defendants' statements issued throughout the class period were materially false and misleading when made as they failed to disclose the following adverse facts which were then known to defendants or recklessly disregarded by them: (i) that the Company lacked the financial resources necessary to execute its business plan of a full national network expansion; (ii) that the Company's efforts to scale back its expansion plans were not meeting with success as the Company was unable to generate the necessary financing; (iii) that the Company was not well-funded or well-positioned to continue its growth, as the Company's expenses, including its ongoing debt payment obligations, were far outpacing its revenues and rapidly depleting the Company's cash reserves; (iv) that the Company did not have adequate cash reserves and was not sufficiently "stable" and "financially strong" that it would be able to fund its operational needs into the first quarter of 2002, as defendants repeatedly promised investors - defendants were not even able to keep the Company running though 2001, as it had earlier guaranteed; and (v) that without the influx of additional capital, the Company would be forced to seek bankruptcy protection, which would render the Company's common stock worthless. While in posession of the true facts about the Company and its business, the individual defendants and other insiders collectively sold 600,000 shares of the Company's common stock for gross proceeds in excess of $16 million - of which over $12.6 million alone was received by defendant Hapka - and the Company raised hundreds of millions of dollars in preferred stock sales and debt issuances. For more information, contact Steven G. Schulman or Samuel H. Rudman by Phone: 800-320-5081 by E-mail: Rhythmscase@milbergNY.com or visit the firm's Website: http://www.milberg.com TALX CORPORATION: Ademi O'Reilly Commences Securities suit in E.D. MI --------------------------------------------------------------------- Ademi & O'Reilly LLP initiated a securities class action in the United States District Court for the Eastern District of Missouri on behalf of purchasers of TALX Corporation (Nasdaq:TALX) common stock during the period between July 18, 2001 and October 1, 2001. The suit charges the Company, certain of its officers and directors and its underwriters with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. In August 2001, the Company completed a secondary offering of 3.245 million shares of its stock (including over-allotments, and also including the sale of 253,000 shares by the Company's CEO), raising gross proceeds of approximately $100 million for the Company, pursuant to a registration statement and prospectus dated August 2, 2001 The suit alleges that the registration statement/prospectus was false and materially misleading for the following reasons: (1) defendants had failed to disclose that the Company had improperly capitalized significant amounts of software related to the Company's customer premised systems line of business, which assets were already substantially impaired and which would have to be written off in the near term; (2) defendants failed to properly account for the true value of the Company's inventory, such that the overstated value of the Company's impaired inventory would have to be written down in the near term; (3) defendants misrepresented that the Company's business was expanding, when it was not, and at which time defendants were already planning on reducing staff and closing offices; (4) defendants were already planning to take at least $2.8 million in write-offs; and (5) the outsourced benefits enrollment business was not operating according to the expectations that had been promoted by defendants, and this line of business was not a significant growth-driver as represented by the Company. The suit further alleges that, throughout the class period, TALX hid the same factors not properly disclosed in the Company's secondary offering registration statement/prospectus from the Company's public shareholders. Defendants misled investors and analysts by issuing a series of false and materially misleading public statements designed to, and which did, artificially inflate the value of the Company's shares. This inflation allowed the Company and its CEO to reap almost $100 million from the sale of stock. Then, on October 1, 2001, weeks after the defendants had sold almost $100 million worth of Company stock and used over $11 million in Company stock to acquire Ti3, that defendants issued a press release which revealed that the Company's fiscal 2002 earnings would be only $0.58-$0.62, excluding charges, on revenues of less than $50 million and that second quarter fiscal 2002 revenues would be less than $12 million. The Company also announced it would recognize charges of $2.8 million to write off capitalized software costs, inventory and to close offices. As a result of the defendants' shocking disclosures, Company stock declined to less than $17 per share, compared to the class period high of $34.28 per share, representing a loss to investors of over 50% of the value of their Company investment by the end of the class period. For more information, contact Robert O'Reilly by Phone: 866-264-3995 by E-mail: talx@ademilaw.com or visit the firm's Website: http://www.ademilaw.com VAN WAGONER: Cauley Geller Commences Securities Fraud Suit in Delaware ---------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP initiated a securities class action in the United States District Court for the District of Delaware on behalf of all persons who purchased or otherwise acquired shares of Van Wagoner Emerging Growth Fund (Nasdaq: VWEGX) during the period between April 28, 2000 and June 30, 2001, inclusive. The suit alleges violations of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940 and the Investment Company Act of 1940. Specifically, the suit alleges that the Fund and its investment advisor and investment managers disseminated a series of prospectuses/registration statements to the class during the class period which reflected a materially inflated net asset value (NAV) (the price at which Fund shares are purchased and sold). The NAV was materially inflated because the Fund had overvalued a material portion of holdings in certain privately held companies. In addition, the Fund's performance was materially overstated since those figures were based on the materially overstated NAV of the Fund. The lawsuit also alleges that the risk disclosures contained in the prospectuses/registration statements disseminated during the class period were not meaningful, and were themselves misleading, because they failed to disclose that the Fund was materially overstating its NAV. 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 by E-mail: info@classlawyer.com or visit the firm's Website: http://www.classlawyer.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 2002. 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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