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/raid1/www/Hosts/bankrupt/CAR_Public/020118.mbx C L A S S A C T I O N R E P O R T E R Friday, January 18, 2002, Vol. 4, No. 13 Headlines AIR CANADA: Woman Sues For Discrimination Due To Oxygen Tank Policy ARTHUR ANDERSON: Energy Firm Commences Suit Related To Enron Collapse BOEING COMPANY: Female Employees File Three Gender Discrimination Suits BOIES SCHILLER: Two Women Employees Sue Alleging Gender Discrimination CREDIT CARDS: Visa, MasterCard Sued For Antitrust Violations in E.D. PA HMO LITIGATION: Force Doctors To Arbitrate Not Litigate, HMOs Say INSURANCE COMPANIES: Appeals Court Reinstates Fraud Suits in Miami INTERLAND INC.: Sued For Sale of Defective Computer Products in MN INTERLAND INC.: Employees Sue For Labor Standards Act Violations in ID KM.NET: Settles Michigan Internet Mall Pyramid Suit For $6 Million MICHIGAN: Truckers Sue Local Governments Over Road Rules Enforcement NEW HAMPSHIRE: Disability Rights Group Sues For Health Services Delay NEW YORK: Businessman Sues City After Arrest Due To Outdated Ticket OHIO: Warden Defends Prison Security In Trial of Civil Rights Suit SOUTH CAROLINA: Greenville Flood Suit Still Awaiting Certification VIVENDI UNIVERSAL: Judge Approves $4.75M Settlement in Royalties Suit Securities Fraud ALLSTATE INSURANCE: Settles For $59M Damaged Vehicles Insurance Suit HA-LO INDUSTRIES: Wolf Haldenstein Initiates Securities Suit in N.D. IL ICG HOLDINGS: Faces Multiple Suits For Securities Act Violations in CO IMCLONE SYSTEMS: Schatz Nobel Commences Securities Suit in S.D. NY INFONET SERVICES: Schatz Hobel Commences Securities Suit in C.D. CA INTRAWARE INC.: Will Vigorously Oppose Securities Suit in S.D. NY PALM INC.: Sued For Breach of Fiduciary Duty Due To Stock Option Plan RICA FOODS: Cauley Geller Commences Securities Suit in S.D. New York RICKEL HOME: $3M Settlement Reached in Securities Suit in S.D. NY SIMON TRANSPORTATION: Appeal on Suit Dismissal To Be Heard January 15 TAKE-TWO INTERACTIVE: Schatz Nobel Lodges Securities Suit in S.D. NY USA NETWORKS: Faces Consolidated Suit For Securities Violations in NY WILLAMETTE INDUSTRIES: Request To Stop Georgia Pacific Merger Withdrawn ********* AIR CANADA: Woman Sues For Discrimination Due To Oxygen Tank Policy ------------------------------------------------------------------- Air Canada faces a class action suit filed by a Regina, Canada resident after they prevented her from bringing her portable oxygen tank on board a flight, according to CBC news. Plaintiff Edith Toth damaged her lungs during radiation treatment and needs the tank to breathe. She tried to bring it with her on a recent flight, but the airline refused, saying it was a "dangerous good." However, Ms. Toth considered it outright discrimination. She states "All I want to do is take my tank on. It should be no problem at all. Just get it strapped in and away we go." The Airline offers its own tanks but charges $100 per trip. The Company said it enforced this to ensure the tanks were properly secured and working. Jim Toth, Mrs. Toth's husband, says the tanks operated by Air Canada are exactly the same as the one his wife uses, which costs about four or five dollars each way. He accuses Air Canada of bilking passengers, saying "I think Air Canada's just gotten so big and arrogant that they say: 'We'll do what we damn well please and to heck with the rest of you." Twenty people have filed complaints against the Airline, but the Company is standing by its policy. Before it merged with Air Canada, Canadian Airlines allowed passengers to bring their own tanks on board. WestJet currently permits personal tanks as well. ARTHUR ANDERSON: Energy Firm Commences Suit Related To Enron Collapse --------------------------------------------------------------------- Tulsa, Oklahoma based energy firm Samson Investment Company filed a suit against Enron Corporation's auditor, Arthur Andersen LLP, claiming the Company "recklessly disregarded evidence of questionable financial transactions between Enron and its insiders." An executive of the beleaguered accounting firm earlier admitted that documents pertaining to Enron were destroyed last fall after the Securities and Exchange Commission commenced an investigation into Enron's finances. Andersen has since fired the senior auditor. The firm also said that four partners in its Houston office would be stripped of management responsibilities and that three auditors had been put on administrative leave. The suit, likely to be the start of a rash of lawsuits accusing Andersen of complicity in Enron's spectacular collapse, experts predicted. They also said that, with so much money at stake and potential victims including shareholders, employees and clients of Enron, the anticipated avalanche of lawsuits will be lumped together into a few cases and granted class action status, according to an Associated Press report. Mark Cheffers, Chief Executive of AccountingMalpractice.com, said the case "is unique and extraordinary and you haven't even seen the beginning of it." The suit, filed on behalf of more than 100 unnamed companies, contends that Samson and other companies "justifiably relied on the financial audits of Enron" for their natural gas purchase contracts with Enron. It called the audits "grossly misleading." According to Associated Press, Andersen officials didn't immediately respond to a telephone message seeking comment on the firm's exposure to litigation related to Enron, or what defenses it may employ to contest the lawsuits. BOEING COMPANY: Female Employees File Three Gender Discrimination Suits ----------------------------------------------------------------------- Employees of aerospace giant, Boeing Company (NYSE:BA) commenced three separate sex-discrimination lawsuits in US District Courts in California, Kansas, and Missouri, claiming the aerospace giant has denied women promotions, equal pay and other employment opportunities based solely on gender, law firm Hagens Berman reported. The suit, which could potentially represent thousands of employees in each state, and tens of thousands across the country, follows a similar class action filed in October 2001 by a group of female employees in Washington's Puget Sound region. The Court limited the class action to female Boeing employees working in the Puget Sound region, but left the door open for other suits in other regions. In certifying the Puget Sound suit, the Court found that "the data yields statistically significant results of adverse impacts on female employees in every facility and at every level." Attorney for the plaintiffs, Steve Berman said "We plan to use Boeing's own surveys to show that Boeing is aware of a deep-seated gender bias within its organization.What's worse, the company has done very little to challenge that bias although the evidence of its existence is well- documented." Several plaintiffs from each state have come forward with their own experiences of sexual discrimination at Boeing. Cheryl Lee Persinger works as a technical specialist at Boeing's Wichita, Kan. plant where she claims she has hit "the cement ceiling at Boeing." In the last year alone, Ms. Persinger applied for 17 different jobs at Boeing, but was not even interviewed for 75 percent of them, despite having more than adequate qualifications, according to the complaint. Plaintiff Teodosia Grosz, a worker at the Boeing Long Beach facility since 1996, was fired in July from her position as an electrical engineer. According to the complaint, Ms. Grosz made considerably less money than male engineers with less experience and education, some of whom did not even hold engineering degrees. A Boeing employee in St. Louis for nearly 13 years, Terri Wertz received substantial pay raises to match her performance until she took pregnancy leave, according to the complaint. When Ms. Wertz returned, her raises became quite minimal. In January 2000, she finally received a five percent raise originally scheduled for August 1997, the complaint contends. The lawsuit claims this raise is still below the lowest published pay scale for her job. In one external survey, more than 85 percent of women at Boeing facilities were paid less than comparably situated men. In addition to pay inequity, the suit contends that women were denied favorable job assignments and promotional opportunities, as well as undergoing verbal assaults from the predominately male workforce. "A company can explain away slight statistical anomalies, but Boeing has a great deal more to answer for," Berman said. "The numbers don't lie - they point to a systemic, ongoing problem in virtually every major Boeing facility." According to the suit, the Company has strongly worded anti- discrimination policies, but managers and supervisors leniently enforce these policies. The suit contends that, rather than punishing the perpetrator, the Company's anti-discrimination policies often punished women by assigning them to unskilled jobs with little chance for advancement. For more information, contact Steve Berman by Phone: 206-623-7292 by E- mail: steve@hagens-berman.com or Mark Firmani by Phone: 206-443-9357 or by E-mail: mark@firmani.com BOIES SCHILLER: Two Women Employees Sue Alleging Gender Discrimination ---------------------------------------------------------------------- Two women who worked for the law firm headed by David Boies recently filed a lawsuit charging that the firm had illegally discriminated against them and other female lawyers by paying them less than their male counterparts and by putting them on a dead-end career track, according to the New York Times News Service. The lawsuit, filed in Federal District Court in Manhattan, claims that the firm, Boies, Schiller & Flexner LLP, maintained separate tracks for male and female associates, segregating all but one woman onto the non-partnership track. In a written statement, Jonathan D. Schiller, a managing partner in the firm, said, "There is absolutely no merit in the claims we understand are being asserted." He said that the two women filed the lawsuit after demanding a payment of more than $1 million to avoid the adverse publicity a lawsuit would bring. David Boies, a managing partner in the firm, was the lead counsel in the federal government's anti-trust case against Microsoft. He represented the plaintiffs in the class action lawsuit against Sotheby's auction house, and led Al Gore's legal efforts in Florida after the presidential election. The women filing the lawsuit, Rachel M. Baird and Bonnie Porter, each worked at the firm's headquarters in Armonk, New York, for about a year before quitting. During that time, they said in their lawsuit, that the non-partnership track at the firm had seven lawyers, all women, and the partnership track had 11 lawyers, of whom only one was a woman. Despite being paid less and getting smaller bonuses, the women on the non-partnership track did substantially the same work as the men on the partnership track, according to the lawsuit. Ms. Baird, a 1992 graduate of Yale Law School, worked for the Connecticut Attorney General's office for seven years, then accepted a position at Boies Schiller in 2000. The firm told her before her interview that she would not be put on the partnership track, the lawsuit said. Ms. Porter, a 1998 graduate of Boston College School of Law, worked as a law clerk for a magistrate judge in U.S. District Court in Rhode Island and as an associate in the litigation department of Rosenman & Colin LLP, a New York law firm. She also joined the Boies firm in 2000. She, too, was told before her interview that she would not be put on the partnership track. Ms. Baird's beginning salary was $102,000, and never exceeded $112,000, and Ms. Porter's was $114,000, according to the lawsuit. During the same period, two men who had graduated from law school in 1998 were paid base salaries of $145,000, the lawsuit said. The law firm has 119 lawyers in New York, Washington, Florida, California and New Hampshire. Of 66 associates, 26 are women, and nine of 42 partners are women, the firm's administrative partner, Philip Korologos said. CREDIT CARDS: Visa, MasterCard Sued For Antitrust Violations in E.D. PA ----------------------------------------------------------------------- Credit card giants, Visa and Mastercard faces a class action filed by antique seller AAG International in the US District Court for the Eastern District of Pennsylvania, alleging that they conspired to monopolize the market for credit card services. The suit claims that Visa, MasterCard and the banks that issue those cards illegally agreed that the banks would not issue any other credit cards like American Express or Discover. AAG International Stephen Flood said in a statement that he was bringing the lawsuit because he believes that competition in the marketplace is essential in bringing consumers lower prices. The suit was filed on behalf of all businesses that were forced to pay higher fees to accept Visa and MasterCard. In October, a New York federal judge found the challenged practice violates the federal antitrust laws. Diane Nast, attorney for the plaintiffs, says "The fact that a federal judge has held the conduct of Visa and MasterCard illegal provides a strong foundation for the claims in this suit." Ms. Nast expects that more suits will be filed alleging similar violations against the two Companies. For more information, contact Dianne M. Nast or Michael G. Nast by Phone: 1-717-892-3000 HMO LITIGATION: Force Doctors To Arbitrate Not Litigate, HMOs Say ----------------------------------------------------------------- In a massive lawsuit with national implications, attorneys for health maintenance organizations argued recently before a panel of the 11th Circuit Court of Appeals in Atlanta, that health maintenance organizations (HMO) doctors should be forced to go to arbitration rather than pursue a lawsuit in court, the Miami Herald recently reported. The Atlanta hearing was to consider oral arguments of an appeal by the HMOs on a ruling by US District Judge Federico Moreno in Miami that allowed the doctors' case to move toward trial. The doctors have launched a twin-pronged attack against the managed care organizations. The case that Judge Moreno is allowing to move toward trial claims that the HMOs frequently cheated doctors out of payments. The second case, on which the Judge has yet to rule, has been brought on behalf of 35 million patients claiming that they were routinely denied needed care by the HMOs. Dennis Pantazis, an Alabama attorney representing about 20 clients in the doctors' suit, including the California and the Florida medical associations, said several hundred doctors' HMO cases are being consolidated into the Miami case. Late last year, Judge Moreno had ruled that those doctors who had HMO contracts requiring arbitration should go to arbitration, but that such a move did not cover all the doctors or all the claims being made, and that therefore the court case should proceed. At the Atlanta hearing, HMO lawyer Walter Dellinger, an attorney general during the Clinton administration, told the three-judge appeal panel that the doctors were trying to avoid arbitration agreements. A decision for the doctors, said Mr. Dellinger, "would simply obliterate the strong congressional preference to arbitrate." The doctors' attorney, Jim Tilghman said Judge Moreno's original ruling was correct, because the arbitration clauses did not cover all the HMO doctors treating patients. The HMOs involved include United Healthcare, Prudential and Wellpoint. The cases are expected to go on for several years, according to an Associated Press report. INSURANCE COMPANIES: Appeals Court Reinstates Fraud Suits in Miami ------------------------------------------------------------------ A three-judge panel on the Third District Court of Appeals reinstated two lawsuits against Union Central Life Insurance Company and PFL Life Insurance Company (now known as Transamerica Life Insurance Company), alleging the Companies fraudulently sold life insurance policies as pension plans, according to an Associated Press report. The Appeals Court remanded the case to Miami Circuit Court, after debunking the Company's argument that the opportunity for lawsuits had passed. The Appellate Court ruled the lawsuits were filed in time, based on the time frame during which policyholders thought the companies victimized them. Plaintiff Willian Xanttopoulos, who represents Union Central policyholders, asserted "It's justice. It gives people who are entitled to a remedy an opportunity to get what they deserve." Both Companies declined to comment on the pending suit. INTERLAND INC.: Sued For Sale of Defective Computer Products in MN ------------------------------------------------------------------ Interland Inc. faces a consumer class action pending in the United States District Court in Minnesota, alleging the Company sold defective computers to consumers. The suit alleges that the Company sold computer products with a defect that may cause errors when information is written to a floppy disk. The case is currently in the early stages of discovery and no class has yet been certified. In a disclosure to the Securities and Exchange Commission, the Company said that other substantially similar lawsuits have been filed against other major computer manufacturers. Interland further said it is unable to estimate total expenses, possible loss or range of loss that may ultimately be connected with the matter. This potential liability remains with the Company even though it has sold the PC Systems business. INTERLAND INC.: Employees Sue For Labor Standards Act Violations in ID ---------------------------------------------------------------------- Employees of Interland, Inc. commenced a class action in the United States District Court for Idaho, alleging violations of the Fair Labor Standards Act, particularly failure to pay non-exempt employees overtime for hours worked in excess of 40 in a week as well as other alleged violations of the FLSA and state wage and hour laws. The case is currently in the early stages of discovery and no class has yet been certified. The Company revealed in a SEC filing that it is unable to estimate total expenses, possible loss or range of loss that may ultimately be connected with the matter. This potential liability remains with the Company even though it sold the PC Systems business. KM.NET: Settles Michigan Internet Mall Pyramid Suit For $6 Million ------------------------------------------------------------------ Michigan Attorney General Jennifer M. Granholm has reached settlement agreements with KM.NET and its President Stewart Giardina. Ms. Granholm accused the Company and its affiliates PowerCard International and ECB4U.COM of violating Michigan law by selling Internet "malls" through an on-line pyramid scheme. In March 2000, the Consumer Protection Division of Ms. Granholm's office received numerous complaints from Michigan consumers who had made an initial investment of $399.95 in an Internet mall but had not received any return on their investment as promised by the company. According to PowerCard records, more than 17,000 Internet shopping malls were purchased between March 3 and March 22, 2000. Michigan residents account for a majority of these purchases. Ms. Granholm filed a notice of intended action against KM.NET in March 2000 alleging violations of both the Michigan Pyramid Promotion and Michigan Consumer Protection Acts. When the company would not commit to issue refunds to consumers, Ms. Granholm filed suit under the Michigan Consumer Protection Act. In addition to the Michigan suit, in August 2001, Attorney General Granholm intervened on behalf of Michigan consumers in a private class action lawsuit that had been brought against the company in Alabama. The court gave preliminary approval to the Alabama class action settlement agreement on October 1, 2001. The class action agreement extends to all consumers who bought an Internet mall between March 3 and March 22, 2000, and whose bank accounts were electronically debited on or after March 22, 2000. Though further proceedings will take place before the settlement is final, postcard and e-mail notices have been distributed to all affected consumers. Company officials have indicated that as many as 23,000 Internet malls were sold to Michigan residents. Granholm expects the settlement agreements to lead to refunds for thousands of those residents. The eventual number of consumers affected by the settlement will be determined, in part, by when those consumers joined the program, when their bank account was debited, and whether they received any commission while in the program. Consumers affected by the class action settlement have until January 25, 2002 to opt-out of the settlement, to object to the proposed settlement, or to file a verified proof of claim form. A fairness hearing has been scheduled in Alabama for February 19, 2002. The settlement of the Michigan and Alabama suits should pave the way for the release of approximately $6 million related to the sale of on- line mall purchases currently being held by a federal court in Maryland. The money will be used to refund all consumers, including those in Michigan represented by Granholm, affected by the class action lawsuit. Once consumers who purchased Internet malls between March 3 and March 22, 2000 are repaid, remaining funds will be used to offer refunds to Michigan residents who purchased malls at other times. For more information, contact the office of the Attorney General by Phone: 1-517-373-8060 or visit the Website: http://www.ag.state.mi.us MICHIGAN: Truckers Sue Local Governments Over Road Rules Enforcement -------------------------------------------------------------------- Truckers have filed a class action against local governments in southeastern Michigan, claiming that the counties, cities and townships have no authority to fine them for violations, the Associated Press recently reported. The lawsuit argues that a 1995 federal law does not allow local governments to enforce ordinances on trucks and that safety enforcement is the job of the state. The suit was filed by four trucking companies against Wayne, Oakland, Macomb, Monroe and Washtenaw counties. Also named are the City of Detroit and 28 other cities and townships within the five counties. No hearing date has been set. The trucking companies' suit asks that the enforcement stop and local governments repay fines which, the lawsuit alleges, were illegally imposed. If the truckers win the lawsuit, local governments would not be able to collect fines for violations of truck laws or even ban trucks from certain local roads. City and township officials say they enforce truck weight and safety laws to protect their roads and the safety of their citizens. "It would be a nightmare for the general public," Canton Township Supervisor Tom Yack told The Detroit News recently. Local governments in southeastern Michigan collected millions in truck fines. Canton Township collected $352,000 in 1999, the most recent year for which figures were available. Under a law passed in 2000, local governments keep 70 percent of the fine money, while 30 percent goes to support libraries. "They've done it primarily, in our opinion, because they viewed it as a huge revenue-generator for them," said Walter Heinritzi, Executive Director of the Michigan Trucking Association. However, local officials say that a lack of state enforcement of trucking regulations is driving their efforts. "Our view of this is that the state does not have sufficient enforcement presence and that our enforcement efforts are self-defense as much as anything else," said Scott Schraeger, Senior Legislative Associate for the Michigan Municipal League. "They're related to safety; they're related to destruction of the roads." Elwood Simon, the trucking companies' Birmingham attorney, would not comment on the lawsuit. NEW HAMPSHIRE: Disability Rights Group Sues For Health Services Delay --------------------------------------------------------------------- A New Hampshire disability rights group is filing a class action against the State Department of Health and Human Services and Governor Jeanne Shaheen, for denying services to people for developmental disabilities. Disabilities Rights Center, Inc. is initiating the suit on behalf of five named plaintiffs and a class of others. The suit contends that under state and federal law the state is supposed to provide services, such as residential housing, for people with developmental disabilities. However, the state allegedly denied services to many such people and instead placed them on waiting lists. According to a Union Leader report, twelve area agencies around the state are responsible for aiding adults with developmental disabilities. Those groups receive their money from the state government. Susan Fox, Director of the state health agency's Division of Developmental Services, asserts "Currently, we receive a certain amount of funds from the Legislature each biennium, and it has not been enough over the past many years to serve everyone in need of services." According to Ms. Fox, 217 people, all with mental retardation, cerebral palsy or other serious disabilities, are on the waiting list for residential services, day programs or other programs. The average wait time, Fox said, is 210 days. Parents who have adult children with disabilities welcome the suit. "It's the only way to get their attention and get these problems resolved," said Rudy Mayo, a parent of a son with Down's Syndrome, who spent 11 years on a waiting list for residential housing before recently receiving a spot. NEW YORK: Businessman Sues City After Arrest Due To Outdated Ticket ------------------------------------------------------------------- A Manhattan businessman filed a class action suit against the City of New York after he was wrongly locked up for 15 hours because of a traffic-ticket mistake, according to the New York Post Manhattan police arrested Dominic Russo, 44, telling him his license had been suspended for not paying a ticket. Mr. Russo was cited in December 2000 for allegedly not wearing a seat belt. After 15 hours behind bars, officials realized the original ticket was outdated and listed the wrong fine, resulting in the suspended-license snafu. Russo, whose story of jailhouse woe first appeared in The Post, filed the suit seeking unspecified damages on behalf of any other motorists who were wrongly incarcerated for a ticket mix-up. OHIO: Warden Defends Prison Security In Trial of Civil Rights Suit ------------------------------------------------------------------ The Warden of the Ohio State Penitentiary testified recently at a hearing before US District Judge James S. Gwin during the course of a class action lawsuit, filed by the American Civil Liberties Union (ACLU) on behalf of prisoners who allege the conditions at the super- maximum-security prison in Youngstown, Ohio, are inhumane, the Akron Beacon Journal reported recently. Warden Todd Ishee told the Judge that the cells' metal doors, which are tightly sealed with metal strips, are safer than cells with bars. He also told Judge Gwin that since the strips have been added, there have been no assaults and no escapes and that inmates have stopped throwing bodily fluids at guards. Warden Ishee also said he knows of no other Ohio prison with the strips. ACLU attorneys argue that isolation is too extreme in the prison cells, with doors they liken to a gas chamber's, because they are metal and have no bars. They say prisoners are not able to talk to each other or share magazines and newspapers with adjoining cells. They have no outside recreation. The jail cells are equipped with a chin-up bar and a four-inch, open window slit. One of the prisoners, Jason Robb, listed in the class-action suit, has been seated in the courtroom during the trial. He testified that this was the first time he had been outside or left the building in four years. ACLU attorney Raymond Vasvari said the ACLU is asking Judge Gwin to establish some guidelines on transferring prisoners into the penitentiary and on how they can appeal their detention in Ohio's only super-maximum-security prison. Testimony centered on how prisoners get assigned to the prison and how they get out. ACLU attorneys said there are no written guidelines for either process, and the cases don't seem to be consistent. ACLU attorney, Stoughton Lynd questioned why so much power was given to high officials in a central office instead of prison officials. He targeted Bernard Ryznar, who oversees inmate assignments and transfers for the Ohio Department of Rehabilitation and Correction. Ryznar has the final vote in determining who will stay in or transfer out of the penitentiary. ACLU attorneys contend that the prisoners in the high-security prison are so isolated that prisoners have little chance to prove themselves worthy of a transfer. There is nothing on which to base evaluations of prisoners' behavior because they are confined most of the time and have no interaction with other people, ACLU attorneys say. State attorney, Joseph Mancini asked the Judge to dismiss the case. He argued that the prison is in line with 35 other state prisons with maximum security. Mr. Mancini cited two Supreme Court rulings that stated the transfer of prisoners should be decided by prison administrators, and the courts should be left out of the decision. Judge Gwin denied the motion for dismissal. The State has already agreed to make other changes sought in the lawsuit concerning medical care, mental health and outdoor recreation. The parties have agreed to allow outside medical staff to make treatment decisions for inmates and to monitor the treatment of mentally ill inmates who are required to be transferred to other prisons. The Corrections Department also agreed to build an outdoor exercise facility beginning in December 2002, to be completed by August 2003. The estimated cost is $4 million. The State contends the new policies, which will go into effect in March, have more specific guidelines. They say the changes were in progress before the lawsuit was filed. One example of the new policy is to look back only five years when considering inmate transfers. Officials also will weigh what type of programs the inmates have completed, such as stress management or general equivalency diploma studies. Warden Ishee testified that 70 percent of the inmates take advantage of programs, which is higher than most prisons, whether they are minimum or maximum security. The State is planning to call two expert witnesses who favor maximum- security prisons, James Austin, a faculty member at George Washington University, in Washington, D.C. and Chase Riveland, former head of the National Institute of Corrections. SOUTH CAROLINA: Greenville Flood Suit Still Awaiting Certification ------------------------------------------------------------------ It could take some time before the suit filed against Greenville County, South Carolina over flooding problems along Gilder Creek in Simpsonville becomes a class action, according to South Carolina Circuit Judge Larry Patterson. Greenville County resident, Greg Branyon initiated the suit in August last year saying the County by approving several new subdivisions over the recent years, had caused flooding at his home and others living along the Gilder Creek watershed during heavy rains. This week, Mr. Branyon appeared in State Court with about 25 other complainants to try to get class certification and to add more than 40 developers and construction companies as defendants. Circuit Judge Larry Patterson allowed the addition of the developers as defendants, but did not rule on the class action status until more evidence is brought forward. He said he will rule on the issue at a later time. He states "It appears there is potential.It could be in the best interest of justice to resolve this as one lawsuit." For a suit to be become a class action, it must be proven that: (1) there are too many plaintiffs involved to have separate trials; (2) the plaintiffs have similar complaints; (3) the defendants' response is similar for all the plaintiffs; and (4) damages exceed $100 for each plaintiff. Rodney Brown, Mr. Branyon's attorney, said this is a perfect example of a class suit. "There are a tremendous amount of people affected by this," he said, according to a Greenville Online report. "The facts will remain throughout." John Devlin, the attorney representing the County, countered that, to date, there is no evidence of other people being involved in the suit as well as no proof of common interest among the group. VIVENDI UNIVERSAL: Judge Approves $4.75M Settlement in Royalties Suit --------------------------------------------------------------------- Superior Court Judge Victoria Gerrard Chaney granted preliminary approval to a class action settlement proposed by Vivendi Universal Inc.'s music branch, awarding a total of $4.75 million to approximately 300 musicians and their families. The suit, the first of its kind, alleges that the Company's music branch cheated the plaintiffs of royalties dating back to the 1940s. Most of the artists in the suits are elderly or have died. Other plaintiffs include the heirs of the late Billie Holiday, Patsy Cline, Ella Fitzgerald and Louie Armstrong. Lead plaintiff and singer, Peggy Lee claimed that the Universal Music Group failed to pay her and other musicians millions of dollars by underreporting sales figures and overcharging for services, according to an Associated Press report. Ms. Lee was signed to the Decca label in the mid-1950s. The company acquired Lee's contract through a series of mergers. The case hinged on a clause in her pre-video-era contract barring the sale of "transcriptions" of the movie without her approval. Under the settlement, the Company will establish a trust fund to pay musicians or their heirs who agree to accept the settlement, according to court documents. The Company also admitted no wrongdoing in the settlement. Judge Chaney called the agreement "reasonable and fair." A final settlement could be reached by early May after a hearing is held to determine whether anyone objects. Securities Fraud ALLSTATE INSURANCE: Settles For $59M Damaged Vehicles Insurance Suit -------------------------------------------------------------------- The Georgia State Court preliminarily approved a settlement between Allstate Insurance Company and plaintiffs in the suit filed by a class of persons that: (1) are insured under a Georgia personal lines automobile insurance policy issued by the Company or its subsidiary Allstate Indemnity Company who reported valid property damage claims for vehicle damage under that policy's collision or comprehensive coverages, which loss occurred between January 18, 1995 and December 5, 2001; and (2) are insured under a Georgia personal lines automobile insurance policy issued by the Company or its subsidiary Allstate Indemnity Company who reported valid property damage claims for vehicle damage under that policy's uninsured motorist coverage, which loss occurred between January 18, 1997 and December 5, 2001, but excluding claims resulting in total losses, claims related to non-owned or temporary substitute vehicles, claims limited to glass repair or replacement, tire replacement, sound systems repair or replacement, or any combination of the three, claims confined to emergency roadside assistance or towing, claims in which the policyholder was paid for diminished value in addition to the cost of repair, and claims identified as closed without payment by both Companies, provided, however, persons otherwise satisfying the class definition and who have insured leased vehicles are included in the settlement class. In light of a recent Georgia Supreme Court ruling, and the trial court's order certifying this as a class action, the parties agree that settlement is in the best interest of all the Company's policyholders due to the uncertainty, risks, and costs associated with continuing this litigation. The Court's orders and this settlement are limited to claims made by Georgia policyholders under Georgia law. Upon final approval of the settlement, the Company will create a settlement fund of $59,076,410 to pay class members diminished value settlement amounts. The settlement provides that each settling Georgia policyholder, who has not already received a payment for diminished value, will each receive approximately $150-$215 per claim. By February 6, 2002, the Company will mail notice to class members, who will have until March 8, 2002, to opt out of the class. If they choose not to opt out, they will be entitled to diminished value settlement payments from the Company and will be bound by the settlement. Those who have objections to the settlement must file those objections by March 1, 2002. The Court has scheduled a fairness hearing for March 15, 2002 at the Muscogee County Courthouse. For more information, contact Michael Trevino by Phone: 1-847-402-5600 or C. Neal Pope by Phone: 1-706-324-0050 or visit the firm's Website: http://www.allstate.com HA-LO INDUSTRIES: Wolf Haldenstein Initiates Securities Suit in N.D. IL ----------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP commenced a securities class action in the United States District Court for the Northern District of Illinois, Eastern Division on behalf of all purchasers of the securities of HA-LO Industries Inc. (formerly NYSE: HMK, now OTC: HMLOQ), between February 18, 1999 and November 23, 2001 inclusive. The suit names as defendants: (1) Lou Weisbach, President and CEO until November 1999, Chairman of the Board, (2) John R. Kelley Jr., President and CEO from November 1999 until February 15, 2001, (3) Marc S. Simon, CEO since February 15, 2001, and (4) Gregory J. Kilrea, CFO) The Company has filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code and is not a defendant in this lawsuit. The suit charges that defendants and the Company violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission by making a series of materially false and misleading statements to the market between February 18, 1999 and November 23, 2001, concerning the Company's financial performance for the Company's fiscal year 1998, 1999, and 2000 and for the first quarter of 2001. Moreover, throughout the class period, defendants issued press releases reporting the Company's quarterly and year-end financial performance, and filed reports confirming such performance with the United States Securities and Exchange Commission. These reports positively portrayed the Company's performance during the class period. These statements, as alleged in the complaint, were materially false and misleading because the Company had, throughout the class period, improperly recognized revenues, thereby inflating its reported sales and earnings. In November 2001, the Company issued a press release announcing the restatement of its previously filed financial statements for the period 1998 to 2000, and that the Company "may also restate its first quarter 2001 Form 10-Q." The restatement would also effectively decrease its reported class period pretax income by a total of $15 million, including $1.2 million if that restatement includes the first quarter of 2001. For more information, contact Fred Taylor Isquith, Adam J. Levitt, Gustavo Bruckner, Michael Miske, George Peters or Derek Behnke: By Mail: 656 West Randolph Street, Suite 500W, Chicago, Illinois 60661 or 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 HA-LO. ICG HOLDINGS: Faces Multiple Suits For Securities Act Violations in CO ---------------------------------------------------------------------- ICG Holdings Canada, Inc. faces fourteen class action suits filed in the United States District Court for the District of Colorado by various shareholders, against the Company and: (1) J. Shelby Bryan, former chief executive officer, (2) John Kane, former president, and (3) William S. Beans, Jr., former president The suits uniformly allege violations of Rules 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaints seek class action certification for similarly situated shareholders. The Company expects that the suits will be consolidated and that the Court will choose a lead plaintiff's counsel. The Company has retained legal counsel and intends to vigorously defend against these lawsuits. Additionally, the Company has also tendered these claims to its insurers. At this time, the claims against the Company have been stayed pursuant to its filing for bankruptcy. IMCLONE SYSTEMS: Schatz Nobel Commences Securities Suit in S.D. NY ------------------------------------------------------------------ Schatz and Nobel PC initiated a securities class action in the United States District Court for the Southern District of New York on behalf of all persons who purchased stock of ImClone Systems, Inc. (Nasdaq: IMCL) between June 28, 2001 and December 28, 2001, inclusive. The suit alleges that ImClone, a biotechnology company, and its top management misled the investing public during the class period by misrepresenting the progress made in obtaining FDA approval of Erbitux, a drug developed to treat colorectal cancer. Specifically, it is alleged that throughout the class period, the defendants stated that results of clinical tests for Erbitux exceeded minimum government standards for new drug approval, that the Company's application for "fast track" approval from the FDA was in compliance with all applicable regulations, and that the Company was working closely with the FDA to ensure speedy approval. Moreover, the defendants assured investors that the Company would achieve revenues of $150 million directly from sales of Erbitux in fiscal year 2002 alone. However, while making these statements to the investing public, a number of the Company's senior officers were purchasing large amounts of stock at rock-bottom prices, with low- interest loans from the Company, most of which were then sold on the same day for a gross profit approaching $150 million. Ultimately, following several days of rumors, the Company confessed after the close of the market on December 28, 2001, that the FDA had rejected the application for Erbitux for, among other deficiencies, the failure to include sufficient data showing that Erbitux even worked. On the next trading day, the share price of the Company's stock, which speculation had already been driven down 21% from its class period high of $73.83 per share, closed at $46.46 per share. For more information, contact Andrew M. Schatz, Patrick A. Klingman or Wayne T. Boulton by Phone: 800-797-5499 by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net. INFONET SERVICES: Schatz Hobel Commences Securities Suit in C.D. CA ------------------------------------------------------------------- Schatz and Nobel PC initiated a securities class action in the United States District Court for the Central District of California on behalf of all persons who purchased securities (including common stock and options) of Infonet Services Corp. (NYSE: IN) between December 16, 1999, and July 31, 2001, inclusive. The suit alleges that the Company, a provider of international data communications services to multinational corporations, and its President and Chief Executive Officer misled the investing public during the class period by making false or misleading statements concerning the company's financial condition. Specifically, the Company was portrayed as a booming company which was experiencing and would continue to experience rapidly rising sales and profits on its core products and in its AUCS sales channel. (AUCS was the company's name for business arising out of its participation in an AT&T-Unisource Communications Services agreement.) As a result of these statements, the Company's stock price traded at an artificial class period high of $32.9375 per share. However, on July 31, 2001, the Company began to reveal the truth about its operations announcing results would be below market expectations due to disappointing results from the Company's European operations and its AUCS sales channel. The next day, the Company's stock fell 44.70% to $3.55 per share. For more information, contact Andrew M. Schatz, Patrick A. Klingman or Wayne T. Boulton by Phone: 800-797-5499 by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net INTRAWARE INC.: Will Vigorously Oppose Securities Suit in S.D. NY ----------------------------------------------------------------- Intraware, Inc. denies the allegations in a securities class action pending in the United States District Court for the Southern District of New York, against the Company, certain of its directors and officers, and its underwriters, alleging violations of federal securities laws. The suit, filed on behalf of purchasers of the Company's stock between February 25, 1999 and December 6, 2000, inclusive, alleges violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 involving undisclosed compensation to the underwriters and improper practices by the underwriters. The Company believes that it is part of the rash of similar complaints filed against numerous public companies that conducted initial public offerings of their common stock since the mid-1990s. The suit was consolidated with the above-mentioned suits for pretrial purposes before Judge Shira Scheindlin of the US District Court for the Southern District of New York. Judge Scheindlin has ordered that the time for all defendants to respond to any complaint be postponed until further order of the Court. Intraware has not been required to answer the complaint, and no request for discovery has been served. The Company, however, believes the suit is without merit and intends to defend against it vigorously. PALM INC.: Sued For Breach of Fiduciary Duty Due To Stock Option Plan --------------------------------------------------------------------- Handheld products maker Palm, Inc. faces a shareholder derivative and class action lawsuit commenced in January 2001 in California Superior Court, accusing the Company's Directors of breaching their fiduciary duties to its stockholders. The Directors allegedly breached fiduciary duties by not having the Company's public shareholders approve its 1999 director stock option plan. 3Com Corporation, the Company's sole shareholder at the time, was the one who approved the 1999 director plan prior to its March 2000 initial public offering. The suit further alleges that the Company was required to seek approval for the plan by shareholders after the initial public offering. The plaintiffs filed an amended complaint in November 2001 adding new defendants and new allegations, including that defendants breached fiduciary duties by approving the Company's 2001 director stock option plan and by making misrepresentations in its September 2001 proxy statement. The suit is currently in discovery. No trial date has been set. RICA FOODS: Cauley Geller Commences Securities Suit in S.D. New York -------------------------------------------------------------------- Cauley Geller Bowman & Coates LLP initiated a securities class action in the United States District Court for the Southern District of Florida, Miami Division on behalf of purchasers of Rica Foods, Inc. (Amex: RCF) common stock during the period between January 16, 2001 and December 28, 2001, inclusive. The suit charges the Company and certain of its officers and directors with violations of the federal securities laws. The suit alleges, among other things, that throughout the class period, defendants filed documents with the US Securities and Exchange Commission which failed to disclose that the Company was not in compliance with the credit agreement entered into with Pacific Life Insurance Company on January 16, 2001. The suit charges that defendants knew that the Company's SEC filings were false and misleading, and further alleges that defendants' misrepresentations caused the price of the Company's common stock to be artificially inflated throughout the class period. 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 RICKEL HOME: $3M Settlement Reached in Securities Suit in S.D. NY ------------------------------------------------------------------ Rabin and Peckel LLP announces a settlement has been reached in the class action filed against Rickel Home Centers, Inc. in the United States District Court for the Southern District of New York on behalf of purchasers of the Company's units in the offering that closed on November 4,1994 and in the secondary market on January 10, 1996. A fairness hearing will be held on April 10, 2002 in the United Stated District Court for the Southern District of New York, before the Honorable Deborah A. Batts. The hearing will determine whether a proposed settlement, pursuant to which defendants and/or their insurers will deposit the sum of $3,000,000 in cash into an escrow account on or before February 1, 2002, should be approved by the Court as fair, reasonable and adequate to the class in the litigation, and to consider a request by plaintiffs' counsel for attorneys' fees in an amount up to 37% of the settlement fund and reimbursement of expenses in an amount not to exceed $300,000. For more information, contact Cecile Paulino by Mail: FRG Information Systems, Inc.Rickel Securities Litigation Settlement Fund P.O. Box 4059 Grand Central Station New York, NY 10163 by Phone: 212-490-3550 or by Fax: 212-490-5709. SIMON TRANSPORTATION: Appeal on Suit Dismissal To Be Heard January 15 --------------------------------------------------------------------- The 10th Circuit Court of Appeals, on January 15,2002, will hear oral arguments on the appeal of the plaintiffs in the securities class action against Simon Transportation Services, Inc. The suit was commenced against the Company and one of its officers and directors, and certain of its former officers and directors, alleging that the defendants made material misrepresentations and omissions during the period February 13, 1997 through April 2, 1998 in violation of Sections 11, 12(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In September 2000, the District Court dismissed the case with prejudice. The Company stated, in a disclosure to the Securities and Exchange Commission, that it intends to vigorously defend this action. TAKE-TWO INTERACTIVE: Schatz Nobel Lodges Securities Suit in S.D. NY -------------------------------------------------------------------- Schatz and Nobel PC initiated a securities class action in the United States District Court for the Southern District of New York on behalf of all persons who purchased stock of Take-Two Interactive Software, Inc. (Nasdaq: TTWO) between February 24, 2000 and December 17, 2001, inclusive. The suit alleges that the Company, which develops and distributes video games, and several of its senior officers misled the investing public during the class period by violating generally accepted accounting principles and improperly recognizing revenues on sales of products that were subsequently returned and/or purchased by the Company. The suit also alleges that, although unknown to investors during the class period, the Company had received requests for information from the SEC in May and August, 2001, regarding the Company's accounting for impaired assets, one-time charges, and its accounts receivables. On December 17, 2001, Take-Two announced that it would restate its previously-filed financial statements for its fiscal year ended October 31, 2000 and the first three quarters of 2001 because of improper revenue recognition. The reported amount of the restatement for fiscal year 2000 would decrease reported net sales by $12.0 million to $15.0 million, and by $9.5 million for the first three quarters of fiscal year 2001. On this news, trading in Company stock, which had dropped the previous trading day from $15.05 to $10.33 per share on rumors of the restatement, was halted. The last reported trade of $10.33 was well below the class period high of $23.95 per share. For more information, contact Andrew M. Schatz, Patrick A. Klingman or Wayne T. Boulton by Phone: 800-797-5499 by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net. USA NETWORKS: Faces Consolidated Suit For Securities Violations in NY --------------------------------------------------------------------- USA Networks, Inc. faces a consolidated class action pending in the United States District Court for the Southern District of New York against the Company, certain of its officers and directors and its underwriters, for alleged federal securities violations. The consolidated suit sprang from four similar class actions commenced in June 2001 on behalf of purchasers of the Company's stock between November 9,1999 and December 6,2000. The suit alleges violations of Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. Specifically, the suit alleges that the Company's prospectus was false or misleading in that it failed to disclose: (1) that the underwriters allegedly were paid excessive commissions by certain customers in return for receiving shares in the IPO; and (2) that certain of the underwriters' customers allegedly agreed to purchase additional shares of the Company in the aftermarket in return for an allocation of shares in the IPO. The plaintiffs further contend that as a result of those omissions from the prospectus, the price of the Company's stock was artificially inflated, and that the defendants are liable for unspecified damages to those persons who purchased stock during that period. In August 2001, these actions were consolidated before a single judge along with cases brought against numerous other issuers and their underwriters that make similar allegations involving the IPO's of those issuers. The consolidation was for purposes of pretrial motions and discovery only. In a disclosure to the Securities and Exchange Commission, the Company states its intention to defend this matter vigorously. WILLAMETTE INDUSTRIES: Request To Stop Georgia Pacific Merger Withdrawn ----------------------------------------------------------------------- Stockholders of Willamette Industries Inc. withdrew a request for a temporary restraining order on the impending merger of the Company with Georgia Pacific Corporation, Associated Press reports. The Company was contemplating the merger to battle a $6 billion hostile takeover bid by Weyerhauser Corporation that began in 2000. According to former Company Chairman (now Weyerhauser Chairman) Steven Rogel, any deal with Georgia-Pacific would end the takeover bid. The request for a TRO was filed by Milberg Weiss Bershad Hynes and Lerach, who said in a statement that it filed the injunction request to temporarily prevent the Willamette board of directors "and anyone acting in concert with them from entering into a business combination with Georgia-Pacific." The firm filed documents in support of the request, including a solicitation and recommendation statement the Company filed Nov. 27 with the Securities and Exchange Commission. The statement, signed by CEO Duane McDougall, indicated that the Company had outperformed Weyerhaeuser in a number of areas, including a better return on invested capital, average equity and average assets, according to an Associated Press report. The statement also detailed the hostile takeover attempt and accused Weyerhaeuser of dragging its feet and refusing to negotiate a higher price based on the comparative financial data. US District Judge Anna Brown scheduled a Thursday hearing on the injunction request. The Company has not made any statement on the withdrawal of the request. ********* 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. 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