/raid1/www/Hosts/bankrupt/CAR_Public/020225.mbx
C L A S S A C T I O N R E P O R T E R
Monday, February 25, 2002, Vol. 4, No. 39
Headlines
AMERICAN EXPRESS: Agrees To Settle Gender, Age Bias Suit For $31M
CALPHALON CORPORATION: Recalls 13,000 Steel Kettles For Burn Hazard
GLOBAL CROSSING: Keller Rohrback Files ERISA Suit in W.D. California
GRACO CHILDREN'S: Issues Instruction Sheet For Snack Activity Trays
HOLLYWOOD ENTERTAINMENT: Faces Overtime Wage Suit in CA State Court
NEW MEXICO: Plaintiffs Okay Redistricting Plan, Stop Suit V. Elections
PAYPAL INC.: Consumers Commence Fraud Suit in California State Court
Securities Fraud
ARTHUR ANDERSON: Attempts To Forge Deal With Enron Creditors Panel
CONSECO INC.: $120 Million Shareholder Suit Settlement Reached in IN
ENTERASYS NETWORKS: Faruqi Faruqi Commences Securities Fraud Suit in NH
GLOBAL CROSSING: Milberg Weiss Commences Securities Suit in C.D. CA
GLOBAL CROSSING: Schiffrin Barroway Lodges Securities Suit in W.D. NY
GT GROUP: Denies Allegations in Securities Fraud Suits in S.D. New York
HANOVER COMPRESSOR: Schatz Nobel Commences Securities Suit in S.D. TX
HAYES LEMMERZ: MI Securities Suits Stayed Due To Chapter 11 Filing
HOMESTORE.COM: Rabin Peckel Lodges Securities Suit in C.D. California
JP MORGAN: Rabin Peckel Commences Securities Suit in S.D. New York
KMART CORPORATION: Milberg Weiss Commences Securities Suit in E.D. MI
MTI TECHNOLOGY: Plaintiffs File Second Amended Securities Suit in CA
MUSE TECHNOLOGIES: Asks For Dismissal of Securities Fraud Suits in MA
NATIONAL GOLF: Schiffrin Barroway Commences Securities Suit in C.D. CA
NATIONAL GOLF: Slotnick Shapiro Commences Securities Suit in C.D. CA
NVIDIA CORPORATION: Kirby McInerney Commences Securities Suit in CA
OVERHILL CORPORATION: Appeals Court Has Yet To Issue Decision in Nevada
PRI AUTOMATION: Hearing On Motion To Dismiss Fraud Suit Pending
QUEST COMMUNICATIONS: Rabin Peckel Initiates Securities Suit in CO
QWEST COMMUNICATIONS: Rabin Peckel Commences Securities Suit in CO
RHYTHMS NETCONNECTIONS: Federman Sherwood File Securities Suit in CO
RICA FOODS: Securities Suits Will Not Have Adverse Effect on Operations
RICA FOODS: Wolf Haldenstein Lodges Securities Suit in S.D. Florida
ROTTLUND COMPANY: Reaches Agreement To Settle Shareholder Suit in MN
RURAL METRO: Motion To Dismiss Securities Suit Still Pending In AZ
SPX CORPORATION: Faces Suit For Failed Merger With VSI Holdings, Inc.
SUPREMA SPECIALTIES: Rabin Peckel Commences Securities Suit in NJ
TYCO INTERNATIONAL: Marc Henzel Commences Securities Suit in S.D. NY
*********
AMERICAN EXPRESS: Agrees To Settle Gender, Age Bias Suit For $31M
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The money-management unit of American Express Company has agreed to pay
$31 million to settle a sex and age discrimination lawsuit filed on
behalf of more than 4,000 women who say they were denied equal pay and
promotions, The Wall Street Journal recently reported.
The women allege in the complaint, filed simultaneously with the
proposed class action settlement, that systematic discrimination and
"blatant sexism" hampered their careers. "The discriminatory practices
are the product of a stereotype, pervasive both inside Amex and
throughout the industry, that women don't have what it takes to succeed
in the financial planning business," the complaint alleges.
The proposed settlement would require, in addition to the payment of
the $31 million, that American Express Financial Advisors Inc. appoint
a Diversity Officer, institute mandatory diversity training for
financial advisers and managers and, by 2005, increase its hiring of
women to 32 per cent of all new financial advisers. About 25 percent
of the unit's financial advisers are currently women, the Company
says.
At a recent Washington, DC hearing, Judge Henry Kennedy delayed his
settlement decision for at least two or three weeks, saying he needed
time to review the agreement and other documents in the case before
granting preliminary approval.
The sex discrimination case stems from claims filed with the Equal
Employment Opportunity Commission (EEOC) by four women formerly
employed by the Minneapolis unit. The suit also claimed that women
over the age of 40 were victims of age discrimination. The women also
complained of being yelled at, sworn at and belittled by men at the
Company. One woman said her manager refused her request for a transfer
because he "would miss having (her) beautiful body around."
Lawrence Schaefer, a lawyer for the women, said the agreement was a
"milestone in this field" and would "change the way (American Express)
does business in a profound way."
The proposed pact is the latest chapter in the saga of sex-
discrimination allegations on Wall Street. The Salomon Smith Barney
unit of Citigroup Inc. and Merrill Lynch & Company both settled
high-profile sex-discrimination cases in the late 1990s.
Last fall, the US EEOC weighed in, filing a class action on behalf of
as many as 100 women in Morgan Stanley's institutional-stock
department, alleging among other things, that the firm failed to
promote and pay former star saleswoman, Allison Schieffelin, as much as
comparable men in her department. Morgan has denied the allegations.
In the American Express case, Marie Davis, a spokeswoman for the
Company's money-management arm, denied the allegations but said
American Express decided to settle "rather than get into expensive
litigation." She added, "We are disappointed about these allegations.
There were a few women in the Company who feel they were not treated
fairly. But while we are sorry they feel that way, we believe we
treated them fairly."
CALPHALON CORPORATION: Recalls 13,000 Steel Kettles For Burn Hazard
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Calphalon Corporation is cooperating with the US Consumer Product
Safety Commission (CPSC) by recalling about 13,000 stainless steel
kettles. The kettle's cover traps steam inside of the kettle causing
an increase in pressure. This forces hot water to rise and escape
through the spout, posing a serious burn hazard to consumers.
The Company has have received reports of 13 incidents, including three
minor burn injuries. Hot water splashed on two adult's hands and an
18-month-old child's scalp.
The recalled kettles are stainless steel, have a glass cover, and have
the model number 4302, which is located on the bottom of the kettle.
The kettles, which can hold 2-quarts of water, also have the name
"Calphalon" printed on the glass cover.
Department stores and specialty catalogs nationwide sold these kettles
between October 2001 and January 2002 for about $40.
For more details, contact the Company by Phone: 800-233-0753 between 8
am and 4:30 pm ET Monday through Friday to receive a free replacement
cover, or visit the firm's Web site: http://www.calphalon.com
GLOBAL CROSSING: Keller Rohrback Files ERISA Suit in W.D. California
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Keller Rohrback LLP filed an Employee Retirement Income Security Act
(ERISA) fraud class action in the United States District Court for the
Central District of California, Western Division, on behalf of
participants and beneficiaries of the Global Crossing Ltd. Employees'
Retirement Savings Plan (NYSE:GX) from Sept. 28, 1999, to the present.
Under the law interpreting ERISA, the defendants, the Plan's directors
and administrators and the Company's officers and directors, may have
breached their fiduciary duties of loyalty and prudence by failing to
disclose and inform the plan participants and beneficiaries with
respect to the Company's operations and prospects.
Rather than providing complete and accurate information to the plan's
participants, it is alleged that the defendants may have withheld and
concealed material information, thereby encouraging participants and
beneficiaries to continue to make and maintain substantial investments
in Global Crossing stock and the plans.
For more information, contact Jennifer Tuato'o by Phone: 800-776-6044
by E-mail: investor@kellerrohrback.com or visit the Web sites:
http://www.erisafraud.comor http://www.SeattleClassAction.com
GRACO CHILDREN'S: Issues Instruction Sheet For Snack Activity Trays
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Graco Children's Products, Inc. is cooperating with the US Consumer
Product Safety Commission (CPSC) by providing a new instruction sheet
for installing the suction cups on about 8,900 Snack and Activity
Trays. The Snack and Activity Trays are sold with detached suction cups
that the consumer installs. If the suction cups are not properly
attached, they can detach, posing a choking hazard to young children.
The Company has not received any reports of injury from the suction
cups detaching. This recall is being conducted to prevent the
possibility of injuries.
The Snack and Activity Tray can attach to high chairs, strollers,
swings and other flat surfaces. There are four toys on each tray,
including a toucan with a rainbow colored beak, a clear ball with
colored beads inside, a yellow star with a mirror on one side and a
green dog. "Mix `N MoveT" is molded on the toucan, ball and dog. The
toys are removable and interchangeable with other Mix `N MoveT toys,
which are purchased separately.
Discount, department and juvenile product stores nationwide, including
Sears, sold these activity trays from August 2001 through February
2002, for about $15.
For more information, contact the Company by Phone:
800-345-4109 or visit the firm's Web site: http://www.gracobaby.com
HOLLYWOOD ENTERTAINMENT: Faces Overtime Wage Suit in CA State Court
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Hollywood Entertainment Corporation faces a consolidated class action
pending in the Superior Court of the State of California, in and for
the County of Santa Clara, on behalf of certain exempt employees of the
Company's California stores, who claim the Company owed them overtime
payments.
The case is in the early stages of discovery, and a class has not been
certified. The Company believes it has provided adequate reserves in
connection with this claim and intends to vigorously defend the action.
NEW MEXICO: Plaintiffs Okay Redistricting Plan, Stop Suit V. Elections
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A lawsuit filed by two Albuquerque residents, which threatened to
derail the March 5th City elections, has been called-off by the
plaintiffs, whose suit in Federal Court challenged the City's decision
not to redistrict after the 2000 Census, the Albuquerque Journal
recently reported. US District Judge Martha Vazquez recently decided
that with the lawsuit withdrawn, the City elections will go on as
planned.
The City moved to quell public discontent and to satisfy the plaintiffs
by redrawing City districts within two weeks. The lawsuit was
withdrawn after the City and plaintiffs, Gloria Lopez and Don Moya,
agreed that the new, revised district plan, Plan C-2, balanced
political power better than the plan drafted after the 1990 Census.
The suit contended that District 3, the southwestern section of the
city, was a third larger in population than the other three districts.
To conduct the elections without redistricting would have infringed
upon the "one person, one vote constitutional law, the plaintiffs
alleged in their lawsuit." The "one person, one vote rule" rule aims
at keeping districts balanced, particularly the minority votes within
the districts.
The recent hearing before Judge Vazquez afforded city leaders and
residents alike a chance to voice final objections to the expedited
redistricting process and for the judge to rule on the suit and,
ultimately, the fate of the March 5th election.
City Councilors Frank Montano and Miguel Chavez opposed classifying the
lawsuit a class action, a condition in settling the suit, as a class
action would include all 46,718 registered voters. Both Mr. Chavez and
Mr. Montano argued that the short period of time involved from the time
the lawsuit was filed, challenging the failure to redistrict, to the
time the new plan was offered, two weeks, was not sufficient to
permit a study of the process and implications of redistricting.
Ms. Lopez was not without her criticism, saying "It is unfortunate that
citizens like me and Don have to bring this kind of thing to light,
when it really should be up to the City's leaders to do it."
PAYPAL INC.: Consumers Commence Fraud Suit in California State Court
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Paypal, Inc. faces a class action lawsuit filed in the California
Superior Court in Santa Clara County by customers who accuse the
Company of fraud by illegally restricting access to their money.
Gail Koff, lawyer for the plaintiffs told CNET, that the Company
frequently locks customers' accounts if it suspects that fraud played a
part in a transaction, even if the amount in doubt is a fraction of the
total amount in an account. Consequently, customers are unable to
accept any more payments via PayPal, pay anyone through the service, or
withdraw any of their money until PayPal clears the transaction. That
can often take days or even weeks, customers charge. "Under the guise
of needing to protect consumers from fraud, they themselves are guilty
of fraudulent abuse of their customers," she said.
Customers have already complained about the alleged fraud, going so far
as to putting up several websites (most notably, Paypalwarning.com) for
disgruntled customers.
The suit came days after the Company commenced its initial public
offering. CNET reports that the Company warned in regulatory filings
with the SEC that while it had taken steps to reduce fraud, it still
incurred "substantial losses" due to merchant and consumer fraud. A
PayPal representative has declined to comment on the litigation, citing
a post-IPO quiet period.
Securities Fraud
ARTHUR ANDERSON: Attempts To Forge Deal With Enron Creditors Panel
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Arthur Andersen LLP has begun the task of trying to negotiate a
universal settlement with Enron Corporation's shareholders, creditors
and employees, by extending an offer of between $700 million and $800
million in a recent meeting with Enron's Creditors Committee, according
to an individual involved in the process, The Wall Street Journal
recently reported.
The very future of the Company, Enron's longtime accounting firm, is at
stake in this settlement offer process. Andersen has to reach an
accord that does not drain its remaining assets. If accepted, the
amounts allegedly being offered by Andersen would mark the biggest
litigation settlement ever, by a "Big Five" accounting firm, over an
audit failure.
The Company's attempt to negotiate a settlement began when it contacted
lawyers for some large shareholders who had sued Andersen and Enron in
Federal Court in Houston. Andersen expressed interest in a sweeping
settlement to all claims, according to one lawyer who received such a
call, The Wall Street Journal reported.
Lawyers assigned to lead the litigation against Andersen have rejected
the firm's early offers, noting that they amount to less than two
percent of the shareholders' total losses. Other plaintiffs' attorneys
say it would be foolish to accept a settlement offer so early in the
government's investigation of the Enron scandal, while so many
questions about Andersen's level of culpability for the collapse remain
unresolved.
Andersen's lawyers and financial advisers hope to negotiate a deal that
would encompass the three separate groups:
(1) Enron shareholders who watched their holdings dwindle in value
to almost nothing;
(2) Enron unsecured creditors, who are owed billions of dollars;
and
(3) current and former Enron employees who lost 401(k) plan
holdings that were heavily invested in Enron stock.
Andersen also wants the settlement to encompass any potential
civil claims by federal agencies, such as the Securities and Exchange
Commission.
Andersen's advisors met in New York to lay out a settlement proposal to
representatives of the Official Unsecured Creditors Committee in
Enron's bankruptcy. While the Committee has not filed suit against
Andersen, it is believed to be considering such an action. The
lawsuits that have been filed against Andersen accuse the firm of
misrepresenting Enron's financial condition. "The whole point is, that
they (Andersen) want global peace," said one lawyer involved in the
process. "They are going to need to feel that if they are going to
reach into their pocket, it is going to be once, and that's it."
Among the parties contacted by Andersen was class action law firm
Milberg Weiss Bershad Hynes & Lerach LLP, recently named by a
Houston Federal Judge as lead plaintiffs' counsel for the shareholder
suits against Arthur Andersen and Enron.
William Federman, an Oklahoma City attorney who is working closely with
Milberg Weiss on issues relating to Andersen, says an Andersen attorney
at Davis Polk & Wardell first floated an offer of $600 million during a
recent conference call. Some of that amount would come from Andersen
itself, Mr. Federman said, with the rest coming from its insurers.
Officials at Milberg Weiss did not comment, and Davis Polk lawyers
could not be reached.
Mr. Federman says the initial settlement offer was rejected by William
Lerach, lead attorney for Milberg Weiss. Mr. Federman said the $600
million offer was found inadequate, given the size of the Enron
shareholders' losses and lingering questions about the degree of
Andersen's culpability. He said the Andersen attorney characterized
the offer as an amount twice the size of the $335 million that Ernst &
Young LLP paid in 1999 to settle shareholder suits over its failed
audits of Cendant Corporation.
"I think Arthur Andersen is going to have to seriously consider getting
their partners to pay up money individually," Mr. Federman said. "The
partners profited by all the distributions and bonuses they were paid
because of their Enron work." Neither Milberg Weiss nor Mr. Federman
attended the recent meeting with Enron's creditors committee, where the
settlement offer of between $700 million and $800 million was floated.
Actually, Andersen may be able to pay as much as $1 billion in a
settlement, some of which would come from insurance and the firm's
self-insurance pool and the rest from the Company's earnings over the
next few years, according to people familiar with Andersen's strategy,
and related in a recent report by The Wall Street Journal. Andersen
had revenue of $4.5 billion in North America for the fiscal year that
ended August 31, 2001.
Andersen used the same strategy of initiating settlement talks in
shareholder lawsuits involving another Andersen client, Waste
Management Inc., after the trash hauler was hit by an accounting
scandal in 1999. Following lengthy behind-the-scenes talks, Andersen
agreed to pay $75 million to Waste Management shareholders to settle
the lawsuits. Andersen also paid $110 million to settle shareholder
suits filed after the collapse of Sunbeam Corporation, another one of
its clients.
Such settlements often take months to consummate. In the Waste
Management case, the settlement occurred 10 months after the accounting
fraud was revealed, but that case was far smaller and simpler than
Enron.
Recently Andersen issued a prepared statement saying, "Reaching out to
the groups affected in this case is consistent with our commitment to
address the issues raised by Enron's collapse in a straightforward and
constructive manner. We think it is in the best interests of all
parties to deal expeditiously and responsibly with what has occurred."
An Andersen spokesman declined further comment.
CONSECO INC.: $120 Million Shareholder Suit Settlement Reached in IN
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Insurance firm Conseco, Inc. has agreed to pay $120 million to settle a
securities class action filed by shareholders in the US District Court
for the Southern District of Indiana, Indianapolis Division, alleging
the Company issued false financial results.
The suit was filed on behalf of investors who bought the Company's
shares from April 1999 to April 2000. During the class period, the
Company's shares fell from $30 to $6, after investors discovered that
the Company recognized revenue on loan sales before they were earned.
The Company later restated their financial statements, according to an
iWon report.
The settlement was a major victory for the lead plaintiffs, the
Anchorage Police & Fire Retirement System and the State of Louisiana
Firefighters' Retirement System.
The Company has denied any wrongdoing, but faces another legal battle
as it tries to determine who among its insurers will pay for the
settlement. The Company is suing its liability insurance carriers in a
county court in Indiana, seeking to force them to pay up. The insurers
include:
(1) Royal Insurance Co. of America, a unit of British insurer
Royal & Sun Alliance (RSA),
(2) Westchester Fire Insurance Company, a unit of Bermuda insurer
ACE Ltd. (ACE),
(3) RLI Insurance, part of XL Capital Ltd. (XL);
(4) Greenwich Insurance Co. and
(5) HSBC Insurance Brokers Limited, a unit of bank HSBC (HSBA)
According to the Company, National Union Fire Insurance Co., a unit of
American International Group Inc. (AIG), the leading insurer on the
policy, has been left out of legal proceedings as it has already paid
its full $10 million contribution to the claim, according to an iWon
report. The other insurers are still investigating the case, the
Company said.
ENTERASYS NETWORKS: Faruqi Faruqi Commences Securities Fraud Suit in NH
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Faruqi and Faruqi LLP initiated a securities class action in the United
States District Court for the District of New Hampshire on behalf of
all purchasers of Enterasys Networks, Inc. (NYSE:ETS) securities
between September 26, 2001 and February 1, 2002, inclusive.
The suit charges defendants with violations of federal securities laws
by, among other things, issuing a series of materially false and
misleading press releases concerning the Company's financial results
and business prospects.
Specifically, the complaint alleges that these press releases were
materially false and misleading because, among other things:
(1) the Company's Asia Pacific region operations, which
represented a material portion of the Company's revenues, was
improperly recognizing revenues in violation of the Company's
accounting policies and generally accepted accounting
principles. As a result, the Company's operating results were
materially misrepresented and overstated;
(2) the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and
(3) based on the foregoing, defendants' statements concerning the
prospects of the Company were lacking in a reasonable basis at
all times.
On February 1, 2002, however, the Company shocked the market when it
announced that it would be delaying the release of its fourth quarter
and fiscal year financial results because it was reviewing the revenue
recognition practices of its Asia Pacific operations. The Company also
announced the SEC was conducting an investigation.
For more information, contact Anthony Vozzolo by Mail: 320 East 39th
Street, New York, NY 10016 by Phone: 877-247-4292 or 212-983-9330 by E-
mail: Avozz@faruqilaw.com or visit the firm's Web site:
http://www.faruqilaw.com
GLOBAL CROSSING: Milberg Weiss Commences Securities Suit in C.D. CA
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Milberg Weiss Bershad Hynes and Lerach LLP initiated a securities class
action in the United States District Court for the Central District of
California on behalf of all purchasers of Global Crossing Ltd.
(NYSE:GX) publicly traded securities during the period between February
14, 1999 and October 4, 2001, including those persons who acquired
Company stock pursuant to a merger which closed on September 28, 1999
between the Company and Frontier Corporation.
The suit charges certain of the Company's officers and directors with
violations of the Securities Exchange Act of 1934. Due to its recent
bankruptcy filing, the Company is not named as a defendant in the
action.
The suit alleges that during the class period, defendants issued false
and misleading statements and press releases concerning the Company's
financial statements, their ability to offset declining wholesale
demand for bandwidth capacity with higher-margin, customized data
services and its ability to generate sufficient cash revenue to service
its debt.
During the class period, before the disclosure of the true facts, the
individual defendants and certain Company insiders sold their
personally held common stock generating more than $1.5 billion in
proceeds and the Company raised over $7 billion in debt and equity
offerings.
However, the full extent of the Company's cash flow crisis, and its
failure to compete in the market for customized communications
services, began to emerge on October 4, 2001. On that date, the Company
issued a string of stunning announcements, such as that cash revenues
in the third quarter would be approximately $1.2 billion, $400 million
less than the $1.6 billion expected by a consensus of analysts surveyed
by Thomson Financial/First Call. The cash revenue shortfall was
purportedly the result of a "sharp falloff" in wholesale IRU sales to
carrier customers. The Company further announced that it expected
recurring adjusted EBITDA to be "significantly less than $100 million"
compared to forecasts of $400 million.
Following these announcements, the Company's share priced plunged by
49% to $1.07 per share.
For more information, contact William Lerach by Phone: 800-449-4900 by
E-mail: wsl@milberg.com or visit the firm's Web site:
http://www.milberg.com
GLOBAL CROSSING: Schiffrin Barroway Lodges Securities Suit in W.D. NY
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Schiffrin & Barroway, LLP initiated a securities class action in the US
District Court for the Western District of New York, alleging that
Global Crossing, LTD. (NYSE:GX) (OTCBB:GBLXQ) misled shareholders about
its business and financial condition.
The suit seeks damages for violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 on behalf of all investors who
bought Company securities between April 28, 1999 and October 4, 2001.
The suit alleges that the New York-based Company, during the class
period, issued false and misleading statements, press releases, and SEC
filings concerning the Company's financial condition, as well as its
ability to generate sufficient cash revenue from new revenue sources
considering the failing market for broadband access.
Prior to the disclosure of the Company's true financial condition, the
individual defendants and other Company insiders sold holdings of
common stock for proceeds of more than $149 million. In addition,
during the class period defendants caused the Company to sell notes on
favorable terms to itself, which generated $1 billion in investor
capital.
On October 4, 2001, the Company announced that cash revenues in the
third quarter would be approximately $1.2 billion, $400 million less
than the $1.6 billion expected by analysts and forecast several times
earlier in the year by defendants. In addition, the Company and the
defendants stated that they expected recurring adjusted EBITDA to be
"significantly less than $100 million" compared to forecasts of $400
million made several times earlier in the year.
Following this series of announcements, the Company's share priced
plummeted nearly 50% to $1.07 per share on extremely heavy trading
volume. Subsequently, with its stock trading at well under a dollar per
share of common stock, the Company filed for Chapter 11 Bankruptcy
protection on January 28, 2002 after becoming unable to service its
debt.
For more details, contact Marc A. Topaz or Stuart L. Berman by Phone:
888-299-7706 (toll free) or 610-822-2221 by Fax: 610-822-0002 by E-
mail: info@sbclasslaw.com or visit the firm's Web site:
http://www.sbclasslaw.com.
GT GROUP: Denies Allegations in Securities Fraud Suits in S.D. New York
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GT Group Telecoms, Inc. will mount a strong defense against a class
action pending in the US District Court for the Southern District of
New York on behalf of purchasers of the securities of GT Group Telecom,
Inc. (NASDAQ: GTTLB) between March 9, 2000 and December 6, 2000,
inclusive.
The action is pending in the United States District Court, Southern
District of New York against the Company and:
(1) Goldman, Sachs & Co.,
(2) Salomon Smith Barney Inc.,
(3) CIBC World Markets Corp.,
(4) Merrill Lynch, Pierce, Fenner & Smith Incorporated,
(5) Morgan Stanley & Co., Incorporated,
(6) RBC Dominion Securities Corporation,
(7) Daniel R. Milliard, and
(8) Stephen H. Shoemaker.
The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933 and Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder. The suit alleges the
Company's underwriters acted improperly in the way in which they
allocated stock to buyers in public offerings and colluded with these
buyers in after-market activities.
GT Group considers the suit as part of the trend of over 900 similar
suits filed against numerous investment dealers and over 210 issuers in
the New York federal court.
The Company has advised both its outside counsel and its insurers of
this matter. The Company believes it has strong defenses to this
lawsuit and intends to contest it. However, because this lawsuit is at
an early stage, it is unable to provide an evaluation of the ultimate
outcome of the litigation.
HANOVER COMPRESSOR: Schatz Nobel Commences Securities Suit in S.D. TX
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Schatz and Nobel PC initiated a securities class action in the United
States District Court for the Southern District of Texas on behalf of
all persons who purchased common stock or publicly traded options of
Hanover Compressor Company (NYSE: HC) between November 8, 2000 and
January 28, 2002, inclusive.
The suit alleges that the Company, which performs natural gas
compression services for oil and gas companies, and three of its top
executives misled the investing public during the class period
concerning its investment in a joint venture to build and operate a
natural gas processing plant in Nigeria.
Specifically, it is alleged that the Company improperly recognized
revenue associated with the joint venture when the project was years
from completion. In addition to such violations of generally accepted
accounting principles, the Company is alleged to have issued shares in
a secondary offering at grossly inflated prices.
On January 28, 2002, Hanover reported that it had booked millions in
revenue and earnings in connection with the Nigerian project and that
its Board of Directors had begun a review of "the transactions of this
joint venture and the related accounting." By that date, the Company's
shares had fallen below $15.00 per share.
For more details, contact Andrew M. Schatz, Patrick A. Klingman, Wayne
T. Boulton, Nancy A. Kusela by Phone: 800-797-5499 by E-mail:
sn06106@aol.com or visit the firm's Web site: http://www.snlaw.net.
HAYES LEMMERZ: MI Securities Suits Stayed Due To Chapter 11 Filing
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The securities class actions pending against Hayes Lemmerz
International, Inc. have been stayed, due to the Company's filing of a
petition under Chapter 11 of the Bankruptcy Code in December 2001.
The suits were commenced in November last year against the Company and
two of its officers, in the US District Court for the Eastern District
of Michigan on behalf of all purchasers of the Company's stock between
June 8, 2000 and September 5, 2001.
The suit alleges that the Company violated the federal securities laws
by issuing a series of material misrepresentations to the market
concerning its financial results for fiscal 2000 and the first quarter
of fiscal 2001.
HOMESTORE.COM: Rabin Peckel Lodges Securities Suit in C.D. California
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Rabin and Peckel LLP initiated a securities class action in the United
States District Court for the Central District of California on behalf
of all persons or entities who purchased Homestore.com, Inc. common
stock (Nasdaq:HOMS) between May 4, 2000 and December 21, 2001, both
dates inclusive.
The suit charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. On July 19,
2000 (after the close of the market), the Company issued a release of
its positive second quarter 2000 results, causing its stock price to
soar by more than $7 (or 25%) the following trading day.
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 Company stock.
In order to overstate revenues and assets in the second, third, and
fourth quarters of 2000, and the first, second, and third quarters of
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.
Though unbeknownst to the public, this came to an end in the Company's
third quarter of 2001, as its main roundtrip partner stopped doing
these transactions with the Company. Following the release of the
Company's third 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.
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.
For more information, contact Eric Belfi or Maurice Pesso by Mail: 275
Madison Avenue, New York, NY 10016 by Phone: 800-497-8076 or
212-682-1818 by Fax: 212-682-1892 or by E-mail: email@rabinlaw.com.
JP MORGAN: Rabin Peckel Commences Securities Suit in S.D. New York
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Rabin and Peckel LLP initiated a securities class action in the United
States District Court for the Southern District of New York on behalf
of all persons or entities who purchased JP Morgan Chase & Co., Inc.
common stock (NYSE:JPM) between November 28, 2001 and January 28, 2002,
both dates inclusive.
The suit charges the Company with violations of federal securities
laws, and charges that on the first day of the class period, the
Company recklessly misrepresented its risk and loss exposure related to
its transactions and dealings with the Enron Corporation as being
approximately $900 million.
The Company later admitted that, in fact, its total Enron related
exposure was actually about $2.6 billion, or almost three times the
earlier figure. Shortly thereafter, J.P. Morgan wrote down $1.13
billion in non-performing assets, specifically related to losses
generated by its dealings with Enron.
For more information, contact Eric Belfi or Maurice Pesso by Mail: 275
Madison Avenue, New York, NY 10016 by Phone: 800-497-8076 or
212-682-1818 by Fax: 212-682-1892 or by E-mail: email@rabinlaw.com.
KMART CORPORATION: Milberg Weiss Commences Securities Suit in E.D. MI
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Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class
action on behalf of purchasers of the securities of Kmart Corporation
(NYSE: KM) between May 17, 2001 and January 22, 2002, inclusive, in the
United States District Court, Eastern District of Michigan, against
defendant Charles Conaway.
The suit alleges that defendant violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between May 17, 2001 and January 22, 2002, thereby artificially
inflating the price of Company securities.
Prior to and throughout the class period, as alleged in the complaint,
the Company and Mr. Conaway represented that the Company was engaged in
a comprehensive restructuring of its operations which were revitalizing
the Company and its sales.
The suit alleges that these representations were materially false and
misleading because they failed to disclose and misrepresented these
adverse material facts:
(1) that the Company's purported revitalization was a complete
failure as it was continuing to lose market share to
competitors and its purported efforts to reverse this trend
were not meeting with success;
(2) that the Company's supply chain management was extremely
problematic as its distribution centers were outdated and
inefficient and its supply chain software was plagued by bugs
and glitches, which were causing the Company to experience
inventory problems. As a result of these supply chain
management issues, the Company was experiencing difficulties
routing inventory to stores, thereby negatively impacting its
sales; and
(3) that the Company was experiencing substantial liquidity
problems which would necessitate a major restructuring of its
operations and possibly a bankruptcy filing, which ultimately
happened.
On January 22, 2002, the Company issued a press release announcing that
it had filed a voluntary petition for reorganization under Chapter 11
of the US Bankruptcy Code According to the press release, the Company's
decision to seek "judicial reorganization" was based on a "combination
of factors, including a rapid decline in its liquidity resulting from
Kmart's below-plan sales and earnings performance in the fourth
quarter."
Following this announcement, the price of Company stock dropped from
$1.74 per share to $0.70 per share, a one day decline of 59%, on
extremely heavy trading volume.
For more information, contact Steven G. Schulman or Samuel H. Rudman by
Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by
Phone: 800-320-5081 by E-mail: Kmartcase@milbergNY.com or visit the
firm's Web site: http://www.milberg.com
MTI TECHNOLOGY: Plaintiffs File Second Amended Securities Suit in CA
--------------------------------------------------------------------
Plaintiffs in the securities suit against MTI Technology Corporation
and several of its officers have filed a second amended complaint,
pursuant to the orders of the US District Court for the Central
District of California.
The suits were commenced in July 2000, alleging that defendants were
aware of adverse information that they failed to disclose during that
period and, hence, that they violated specified provisions of the
Securities Exchange Act of 1934 and the rules promulgated thereunder.
The suits were later consolidated in December 2000, making similar
allegations against the same defendants. The Court later dismissed the
consolidated suit, but gave leave for the plaintiffs to file a first
amended complaint. The Court again dismissed the suit, but allowed
the plaintiffs to file a second amended suit.
MTI believes the lawsuit is without merit and intends to continue to
defend the suit vigorously. The Company also expressed confidence that
the ultimate resolution of these matters will not have a materially
adverse effect on its financial position, results of operations, or
liquidity.
MUSE TECHNOLOGIES: Asks For Dismissal of Securities Fraud Suits in MA
---------------------------------------------------------------------
Muse Technologies, Inc. moved to dismiss the securities class actions
pending in the United States District Court for the District of
Massachusetts on behalf of purchasers of the Company's securities
during the period January 24, 2000 through February 21, 2001.
The suits charge the Company and three of its former and current
officers with violations under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, as well as Securities and Exchange
Commission Rule 10b-5 during the class period.
The defendants allegedly issued materially false and misleading
statements and omitted material facts that should be publicly disclosed
throughout the class period and reported that none of the Company's
assets consisted of securities when, in fact, a significant portion of
Muse's current assets had secretly been invested in high-risk
securities, which ultimately lost more than 85% of their value.
NATIONAL GOLF: Schiffrin Barroway Commences Securities Suit in C.D. CA
----------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Central District of California on
behalf of all purchasers of the common stock of National Golf
Properties, Inc. (NYSE: TEE) from April 1, 1999 through November 14,
2001 (including all purchases in or pursuant to the Company's May 17,
2001 secondary offering).
The suit charges the Company and certain of its officers and directors
with issuing false and misleading statements concerning its business
and financial condition. The complaint alleges that David G. Price
misappropriated funds from a publicly traded company and funneled them
to himself via a scheme of complicated financial dealings involving
National Golf and a variety of Price-controlled entities. Price-
controlled entities conduct substantial business with the Company, to
the detriment of its shareholders. Mr. Price's plan culminated in a
May 2001 secondary offering that generated over $31 million from
plaintiff and other class members which went to a Price-controlled
entity, Oaks Christian High School.
The defendants allegedly violated the Securities Act of 1933 by issuing
a false and misleading registration statement and prospectus, which
became effective May 17, 2001, and included materially false and
misleading financial statements, and other false and misleading
statements, pursuant to which 1.175 million shares of the Company's
common stock were sold to plaintiff and other members of the class.
The defendants allegedly violated the Securities Exchange Act of 1934
by making a series of materially false and misleading statements
concerning the business and financial operations of the Company with
the intent and having the effect of substantially inflating the trading
price of the Company's common stock.
For more information, contact Marc A. Topaz or Stuart L. Berman by
Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com
NATIONAL GOLF: Slotnick Shapiro Commences Securities Suit in C.D. CA
--------------------------------------------------------------------
Slotnick, Shapiro and Crocker LLP initiated a securities class action
in the United States District Court for the Central District of
California on behalf of all purchasers of common stock of National Golf
Properties, Inc. (NYSE: TEE) from April 1, 1999 through November 14,
2001 (including all purchases in or pursuant to the Company's May 17,
2001 secondary offering.
The suit charges the Company and certain of its officers and directors
with issuing false and misleading statements concerning its business
and financial condition. The suit alleges that David G. Price
misappropriated funds from a publicly traded company and funneled them
to himself via a scheme of complicated financial dealings involving
National Golf and a variety of Price-controlled entities. Price-
controlled entities conduct substantial business with National Golf,
allegedly to the detriment of the Company's shareholders.
Mr. Price's plan culminated in a May 2001 secondary offering that
generated over $31 million from plaintiff and other class members which
went to a Price-controlled entity, Oaks Christian High School.
The defendants allegedly violated the Securities Act of 1933 by issuing
a false and misleading registration statement and prospectus, which
became effective May 17, 2001, and included materially false and
misleading financial statements, and other false and misleading
statements, pursuant to which 1.175 million National Golf shares were
sold to plaintiff and other members of the class.
The defendants allegedly violated the Securities Exchange Act of 1934
by making a series of materially false and misleading statements
concerning the business and financial operations of the Company with
the intent of having the effect of substantially inflating the trading
price of the Company's common stock.
For more information, contact Stephen D. Oestreich by Phone: 100 Park
Avenue, 35th Floor New York, NY 10017 by Phone: 212-687-5000 or
888-367-5291 by Fax: 212-687-3080 or by E-Mail: tcallahan@sscny.com
NVIDIA CORPORATION: Kirby McInerney Commences Securities Suit in CA
-------------------------------------------------------------------
Kirby McInerney & Squire, LLP initiated a securities class action in
the United States District Court for the Northern District of
California on behalf of all purchasers of NVIDIA Corp. (Nasdaq: NVDA)
common stock during the period from February 15, 2000 through February
14, 2002.
The suit charges the Company, as well as its Chief Executive Officer
and Executive Vice President for sales and business development, with
violations of Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934. The violations, as the complaint alleges, stem from the
issuance of allegedly false financial statements during the class
period, which had the effect, during the class period, of artificially
inflating the price of Company shares while two NVIDIA executives
received $66 million from insider sales.
On February 14, 2002, the Company announced that the SEC had requested
that it conduct a review of how it had accounted for "certain past
transactions" and that, as a result, the Company might be forced to
restate previously-announced financial results.
In reaction to such news, Company shares fell from $62.16 on February
14, 2002 to $53.55 per share two trading days later.
For more information, contact Ira Press or Orie Braun by Mail: 830
Third Avenue, 10th Floor New York, New York 10022 by Phone:
212-317-2300 or 888-529-4787 or visit the firm's Web site:
http://www.kmslaw.com
OVERHILL CORPORATION: Appeals Court Has Yet To Issue Decision in Nevada
-----------------------------------------------------------------------
Overhill Corporation faces a consolidated class action pending in the
US District Court for the District of Nevada against the Company and
certain of its officers and directors, alleging federal securities
violations.
The consolidated suits arose from five suits filed in 1997, alleging
the defendants issued several misrepresentations that resulted in the
market price of Overhill's stock being artificially inflated. The
defendants filed motions to dismiss in each of the lawsuits. Without
certifying the cases as class actions, the court consolidated the cases
into a single action.
In March 2000, the Court dismissed the plaintiffs' claims against one
of the Company's officers and directors and restricted the plaintiffs
from pursuing a number of their claims against the other defendants.
The court also granted the remaining defendants leave to file motions
for summary judgment. Motions for summary judgment were thereafter
filed, pointing out that there was no evidence to support the
plaintiffs' claims.
In November 2000, the Court granted the motions for summary judgment,
disposing of all of the claims asserted by the plaintiffs. The
plaintiffs then filed a motion for rehearing, which the Court denied in
March 2001.
The plaintiffs have appealed these decisions to the United States Court
of Appeals for the Ninth Circuit, which has yet to issue its decision
after oral arguments took place on February 13, 2002.
Recently, the plaintiffs requested the Appellate Court to enjoin the
Company's proposed spin-off of Overhill Farms. The Court of Appeals
denied the request and directed them to address their request to the
Federal Court. The plaintiffs thereafter filed an application with the
Federal Court, which restrained the spin-off for a few days until a
hearing could be conducted with respect to the proposed spin-off.
Following a hearing at which counsel for all parties appeared, the
Federal Court dissolved its temporary restraining order, thereby
allowing the Company to proceed with the proposed spin-off. The
plaintiffs have not appealed the decision.
The Company and its subsidiaries believe that the above suits will be
resolved without material effect on its financial condition, results of
operations or cash flows.
PRI AUTOMATION: Hearing On Motion To Dismiss Fraud Suit Pending
---------------------------------------------------------------
PRI Automation, Inc., along with three of its directors, face a
securities class action filed on behalf of purchasers of the Company's
stock from January 27,2000 through September 11,2000, alleging federal
securities violations.
The suit claims that the defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and also
Sections 11 and 15 of the Securities Act of 1933. The defendants
allegedly issued statements and omissions that were materially false or
misleading.
A group of five persons has been appointed as lead plaintiffs, and the
Court has approved the group's selection of lead counsel. An argument
on the defendants' motion to dismiss is scheduled for February 26,
2002.
The Company intends to defend against the claims vigorously. However,
the Company could incur substantial costs defending the lawsuit, has no
insurance coverage relating to these claims, and has undertaken to
indemnify the individual defendants for any losses they may suffer.
QUEST COMMUNICATIONS: Rabin Peckel Initiates Securities Suit in CO
------------------------------------------------------------------
Rabin and Peckel LLP filed a securities class action in the United
States District Court for the District of Colorado on behalf of all
persons or entities who purchased Quest Communications International
Inc. common stock (NYSE: Q) between April 19, 2000 and February 13,
2002, both dates inclusive. Joseph P. Nacchio, and Robin R. Szeliga
are named as defendants in the action.
The suit alleges that defendants violated Section 10(b) of the
Securities and Exchange Act of 1934 by issuing a series of materially
false and misleading statements about the Company's financial results
announced during the class period.
The defendants engaged in transactions designed to misleadingly
increase the Company's revenues and decrease its debt. Quest sold
assets paid for by means of funds categorized as "capital expenditures"
and then categorized the proceeds received from the sale of those
assets as "revenues," so that debt was understated and revenues
overstated and the stock sold at a higher price than if the truth had
been disclosed.
For further details, Eric Belfi or Maurice Pesso by Mail: 275 Madison
Avenue, New York, NY 10016 by Phone: 800-497-8076 or 212-682-1818 by
Fax: 212-682-1892 or by E-mail: email@rabinlaw.com.
QWEST COMMUNICATIONS: Rabin Peckel Commences Securities Suit in CO
------------------------------------------------------------------
Rabin and Peckel LLP initiated a securities class action in the United
States District Court for the District of Colorado on behalf of all
persons or entities who purchased Qwest Communications International
Inc. common stock (NYSE: Q) between April 19, 2000 and February 13,
2002, both dates inclusive. Joseph P. Nacchio, and Robin R. Szeliga
are named as defendants in the action.
The suit alleges that defendants violated Section 10(b) of the
Securities and Exchange Act of 1934 by issuing a series of materially
false and misleading statements about the Company's financial results
announced during the class period. Defendants engaged in transactions
designed to misleadingly increase the Company's revenues and decrease
the Company's debt.
Quest sold assets paid for by means of funds categorized as "capital
expenditures" and then categorized the proceeds received from the sale
of those assets as "revenues," so that debt was understated and
revenues overstated and the stock sold at a higher price than if the
truth had been disclosed.
For more information, contact Eric Belfi or Maurice Pesso by Mail: 275
Madison Avenue, New York, NY 10016 by Phone: 800-497-8076 or 212-682-
1818 by Fax: 212-682-1892 or by E-mail: email@rabinlaw.com.
RHYTHMS NETCONNECTIONS: Federman Sherwood File Securities Suit in CO
--------------------------------------------------------------------
Federman & Sherwood initiated a securities class action in the United
States District Court for the District of Colorado on behalf of
purchasers of Rhythms NetConnections, Inc. (formerly OTC Bulletin
Board: TRHMQ) publicly traded securities during the period between
January 6, 2000 and April 2, 2001, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing a series of material misrepresentations 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:
(1) that the Company lacked the financial resources necessary to
execute its business plan of a full national network
expansion;
(2) 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;
(3) 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;
(4) 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
through 2001, as it had earlier guaranteed; and
(5) that without the influx of additional capital, the Company
would be forced to seek bankruptcy protection, which would
render the Company and other insiders collectively sold
600,000 shares of common stock for gross proceeds in excess of
$16 million, of which over $12.6 million alone was received
by defendant Catherine Hapka, and the Company raised hundreds
of millions of dollars in preferred stock sales and debt
issuances.
For further details, contact William B. Federman by Mail: 120 North
Robinson Avenue, Suite 2720, Oklahoma City, Oklahoma 73102 by Phone:
405-235-1560 by Fax: 405-239-2112 or by E-mail: wfederman@aol.com.
RICA FOODS: Securities Suits Will Not Have Adverse Effect on Operations
-----------------------------------------------------------------------
Rica Foods, Inc. faces several class actions pending in the United
States District Court for the Southern District of Florida alleging
violations of federal securities laws. The suit names as defendants
the Company and:
(1) Calixto Chaves,
(2) Jose Pablo Chaves,
(3) Randall Piedra and
(4) Monica Chaves
The suit alleges violations of Section 10(b) and 10(b)(5) of the
Securities Exchange Act of 1934 and violations of Section 20(A) of the
Securities Exchange Act of 1934.
The Company is confident that the ultimate disposition of these matters
will not have a material adverse effect on its consolidated financial
position, results of operations or liquidity.
RICA FOODS: Wolf Haldenstein Lodges Securities Suit in S.D. Florida
-------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action in the United States District Court for the Southern District of
Florida on behalf of purchasers of Rica Foods, Inc. (AMEX: RCF) common
stock between January 16, 2001 and December 28, 2001, inclusive,
against the Company and:
(1) Calixto Chaves, at all relevant times, Chairman, President,
and Chief Executive Officer,
(2) Randall Piedra, at all relevant times, Chief Financial
Officer,
(3) Jose Pablo Chaves, at all relevant times, Chief Operating
Officer and a Director, and
(4) Monica Chaves Zamora, at all relevant times, Secretary and a
member of the Board of Directors of Corporation Pipasa
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 the Securities and Exchange Commission (SEC), by issuing
materially false and misleading statements to the market.
Specifically, throughout the class period, defendants filed documents
with the SEC which failed to disclose that the Company was not in
compliance with a credit agreement entered into with Pacific Life
Insurance Company on January 16, 2001.
For more information, contact Fred Taylor Isquith, Gregory M. Nespole,
George Peters, Michael Miske or Derek Behnke by Mail: 270 Madison
Avenue, New York, New York 10016 by Phone: 800-575-0735 by E-mail:
classmember@whafh.com or visit the firm's Web site:
http://www.whafh.com. E-mail should refer to Rica.
ROTTLUND COMPANY: Reaches Agreement To Settle Shareholder Suit in MN
--------------------------------------------------------------------
Rottlund Company agreed to settle the class action brought on behalf of
all its shareholders in Hennepin County District Court in Minneapolis,
Minnesota, charging the Company and its Board of Directors of breaching
their fiduciary duties by:
(1) failing to take reasonable steps to maximize shareholder
value;
(2) favoring their own interests and/or the interests of certain
of the defendants; and
(3) disseminating materially misleading and incomplete tender
offer materials to the Company's shareholders.
On February 18, 2002, the parties to the lawsuit entered into a
memorandum of understanding setting forth an agreement in principle to
settle the pending litigation. Pursuant to this agreement, the Company
has proposed to pay $9.15 per share to all tendering shareholders as
well as the attorney fees of counsel to the plaintiff. The memorandum
is subject to a number of conditions set forth therein and must be
approved by the Court.
RURAL METRO: Motion To Dismiss Securities Suit Still Pending In AZ
------------------------------------------------------------------
The United States District Court in Arizona has yet to decide whether
to dismiss the securities class action against Rural Metro Corporation,
despite hearing oral arguments for the dismissal late last month.
The suit, entitled Ruble V. Rural Metro Corporation, et. al., was
commenced in September 1998 against the Company and:
(1) Warren S. Rustand, former Chairman of the Board and Chief
Executive Officer of the Company,
(2) James H. Bolin, former Vice Chairman of the Board, and
(3) Robert E. Ramsey, Jr., former Executive Vice President and
former Director
Another similar suit was filed in August 1998, entitled Haskell V.
Rural Metro Corporation, et. al, in Pima County, Arizona Superior
Court. The two lawsuits, which contain virtually identical
allegations, were brought on behalf of persons who purchased the
Company's publicly traded securities between April 28, 1997 and June
11, 1998.
The Haskell suit asserts claims under the Arizona Securities Act, the
Arizona Consumer Fraud Act, and under Arizona common law fraud, while
the Ruble suit seeks damages under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, as amended.
Both suits allege that during the class period, the defendants issued
certain false and misleading statements regarding certain aspects of
the Company's financial status and that these statements allegedly
caused the Company's common stock to be traded at artificially inflated
prices. The suits also allege that Mr. Bolin and Mr. Ramsey sold stock
during this period, allegedly taking advantage of inside information
that the stock prices were artificially inflated.
In May 1999, the Arizona State Court granted the Company's request for
a stay of the Haskell action until the Ruble action is finally
resolved. The Company then moved to dismiss the Ruble action.
In January 2001, the Federal Court granted the motion to dismiss,
but granted the plaintiffs leave to re-plead. On March 31, 2001, the
plaintiffs filed a second amended complaint, which the defendants again
moved to dismiss.
The Company warns that if the suits were ultimately determined
adversely, it could have a material adverse effect on the Company's
business, financial condition, cash flows and results of operations.
SPX CORPORATION: Faces Suit For Failed Merger With VSI Holdings, Inc.
---------------------------------------------------------------------
SPX Corporation faces a class action filed by VSI Holdings, Inc. on
behalf of itself and of its 1,600 shareholders and option holders,
after the merger between the two Companies fell through.
The suit, filed against the Company and its directors, alleges that the
Company had failed to perform its obligations under an agreement and
plan of merger between the two entities. The suit asks that the court
either require the Company to complete the proposed merger with VSI
Holdings or award the plaintiffs class damages.
In late December 2001, SPX filed an answer denying VSI Holdings
allegations and a counterclaim alleging breach of contract and seeking
recovery of damages and a termination fee of approximately $9,000,000.
The Company has vowed to vigorously defend against the suit.
SUPREMA SPECIALTIES: Rabin Peckel Commences Securities Suit in NJ
-----------------------------------------------------------------
Rabin and Peckel LLP initiated a securities class action in the United
States District Court for the District of New Jersey on behalf of all
persons or entities who purchased Suprema Specialties, Inc. common
stock (Nasdaq:CHEZ) between August 8, 2001 and December 21, 2001, both
dates inclusive.
The suit charges defendants with violations of 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 (SEC). Plaintiff
alleges that during the class period, defendants issued a series of
material misrepresentations to the market in press releases and SEC
filings thereby artificially inflating the price of Company securities.
Specifically, the complaint charges that defendants issued quarterly
and annual press releases and filed reports with the SEC favorably
portraying the Company's business and financial condition. The
complaint charges that the representations were materially false and
misleading because the Company was using suspect accounting practices
in reporting its financial performance, which distorted its reported
financial statements.
In November 2001, the Company commenced a secondary offering of common
stock pursuant to a registration statement filed with the SEC
containing allegedly misleading financial information. In the secondary
offering, the Company and certain shareholders including, defendants,
Mr. Cocchiola and Mr. Venechanos, sold a total of 4,050,000 shares at a
price of $12.75 per share.
Subsequently, on December 21, 2001, the Company issued a press release
announcing that it is conducting an internal investigation into its
previously filed financial statements and that Mr. Venechanos has
resigned from his position as Chief Financial Officer. Immediately
after this announcement, the Nasdaq Stock Exchange halted trading in
Company stock pending its receipt of additional information. The
Company's common stock has not resumed trading.
For more information, contact Eric Belfi or Maurice Pesso by Mail: 275
Madison Avenue, New York, NY 10016 by Phone: 800-497-8076 or 212-682-
1818 by Fax: 212-682-1892 or by E-mail: email@rabinlaw.com.
TYCO INTERNATIONAL: Marc Henzel Commences Securities Suit in S.D. NY
--------------------------------------------------------------------
The Law Office of Marc S. Henzel initiated a securities class action in
the United States District Court for the Southern District of New York
on behalf of holders of Tyco International, Ltd. (NYSE: TYC) common
stock between February 5, 1999 and February 4, 2002, inclusive, against
the Company, its CEO, L. Dennis Kozlowski and its CFO, Mark H. Swartz.
The suit alleges that defendants, violated sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated
thereunder, by failing to disclose hundreds of acquisitions during the
class period, which improperly inflated reported revenue and earnings.
For further information, contact Marc S. Henzel by Mail: 273 Montgomery
Ave, Suite 202 Bala Cynwyd, PA 19004-2808 by Phone: 888-643-6735 or
610-660-8000 by Fax: 610-660-8080 by E-mail: Mhenzel182@aol.com or
visit the firm's Web site: http://members.aol.com/mhenzel182.
*********
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
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Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima
Antonio and Lyndsey Resnick, Editors.
Copyright 2002. All rights reserved. ISSN 1525-2272.
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