/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/020321.mbx C L A S S A C T I O N R E P O R T E R Thursday, March 21, 2002, Vol. 4, No. 57 Headlines BERMUDA: Group Calls For Better Rights For Fathers in Custody Cases CURATIVE HEALTH: Agrees To Settle For $10.5 Mil Securities Fraud Suit FLORIDA: Broward County To Join Fight v. Canker Eradication Program FLORIDA: Orlando Officials Ask Firefighters To Reimburse Legal Fees FLORIDA POWER: Supreme Court To Hear Arguments On Claims Under ADEA GLOBALSANTAFE CORP.: Settles For $9.3M Wage Antitrust Suit in S.D. TX HECLA MINING: To Mount Vigorous Defense To Idaho Environmental Suit IBP INC.: Faces Suit For Hiring Illegal Immigrants in Illinois Plants KANEB PIPELINE: Settles Pipeline Rupture Suit For $2.25M PATRICK CORPORATION: $8M Settlement Reached in "Union-Busting" Suit PELE-PHONE INC.: Settles Suit Over Telephone Rates For $1.19 Million PREPAID LEGAL: Sales Associates Sue For "Unregistered" Marketing Plan SMART & FINAL: Labels "Without Merit" Employees Suit in CA State Court UNOCAL CORPORATION: Sued For Mistreatment, Forced Labor in Myanmar UNOCAL CORPORATION: Sued For Conspiring To Fix CARB Diesel Fuel Prices VIDEOGAME COMPANIES: CO Federal Court Dismisses Columbine High Case WARREN GENERAL: Certification Allows 500 Patients To Join Privacy Suit Securities Fraud ARTHUR ANDERSEN: Singapore Partners Say Suits Will Not Affect Them CORNING INC.: Wolf Haldenstein Commences Securities Suit in W.D. NY FLEMING FOOD: Oklahoma Court's Ruling Dismissing Securities Suit Stands FUNDTECH LP: NJ Court Dismisses Without Prejudice Securities Fraud Suit MEDI-HUT CO.: Denies Securities Suits Allegations in New Jersey METAWAVE COMMUNICATIONS: Kirby McInerney Files Securities Suit in WA METAWAVE COMMUNICATIONS: Milberg Weiss Lodges Securities Suit in WA NOVELL INC.: Asks Utah Federal Court To Dismiss Amended Securities Suit PREPAID LEGAL: Securities Suit Dismissed, Appeal Deadline Set For April PREPAID LEGAL: Expects Dismissal of Suits For Failure To State Claim PRG SCHULTZ: Faces Suit For Securities Act Violations in N.D. Georgia TYCO INTERNATIONAL: Weiss Yourman Commences Securities Suit in S.D. NY WELLS FUND: Limited Partners File Securities Fraud Suit In N.D. GA WILLIAMS COMPANIES: Schoengold Sporn Lodges Securities Suit in N.D. OK ********* BERMUDA: Group Calls For Better Rights For Fathers in Custody Cases ------------------------------------------------------------------- The Bermuda government faces a possible class action filed by a group called Fathers In Action, over the way it handles child custody cases, the Royal Gazette reports. The group was allegedly a broad-based group whose objectives are to improve decision making in custody cases for divorcees. An advertisement in the Royal Gazette described the group as representing "individuals who believe that the Government Department of Child and Family Services has been discriminatory in both the approach to and the content of Social Inquiry reports prepared for cases which appear before the courts." The group is now undertaking legal research and compiling case histories and is inviting people who believe they have been wronged by a Social Inquiry report compiled by the Child and Family Services Department to join the action. Childwatch President, Eddie Fisher, said a survey conducted by his group showed that in child custody cases, most social service reports were done by women and that fathers' concerns tended to be ignored, and that good fathers often ended up as bit players in their children's lives once they lost custody in divorce cases. He is not connected with Fathers In Action but supported their campaign asking the government to improve fathers' rights. CURATIVE HEALTH: Agrees To Settle For $10.5 Mil Securities Fraud Suit --------------------------------------------------------------------- Curative Health Services reached a tentative agreement to settle for US$10.5 million a securities class action filed against it after the US Justice department charged it with engaging in illegal Medicare reimbursements, Newsday reports. In April 1999, the Justice Department charged the Company with Medicare fraud. Government documents said that the Company engaged in improper patient referrals and also that it had charged excessive fees to Columbia/HCA, a hospital company, which were reimbursed by Medicare, according to a Newsday report. The development caused the Company's stock to fall from $11 to about $4, a 60% in one day. The suits alleged that the Company's improper practices, "caused the company's publicly-reported revenues and earnings to be materially overstated." Under the settlement, the Company will pay $6.5 million in common stock or cash to settle the class action suits against it. The remaining $4 million, it said, will be paid from insurance. The Court has yet to approve the settlement. Joe Feshbach, the Company's Chairman and interim Chief Executive Officer, said in a statement that he believed the class-action claims were "without merit," but that settlement was in the best interests of shareholders, according to Newsday. FLORIDA: Broward County To Join Fight v. Canker Eradication Program ------------------------------------------------------------------- Broward County is joining a class action suit against the State of Florida over its controversial citrus canker law, after county commissioners voted 8-0, agreeing to let the County Attorney's Office represent homeowners in the challenge, the South Florida Sun-Sentinel reports. Florida has instituted a program which authorizes it to cut healthy citrus trees to stop the spread of "canker," a bacteria that causes brown blemishes on fruit and can cause it to drop prematurely from trees. Governor Jeb Bush signed a law last week, which allows the State to destroy healthy trees located within 1,900 feet of a tree infected with citrus canker. The program has spurred enormous criticism from homeowners, who say the State is trespassing on their land to protect the citrus industry. Broward County Commission Chairwoman, Lori Parrish, told the Sun- Sentinel the County must take on the legal challenge. She explains, "No homeowner could take on the State government, (this is for) the people of Broward County who couldn't afford to do it by themselves . You go to work and you wind up with four guys in your backyard with a McCulloch chain saw." State officials say stopping the disease is a priority in Central Florida, where citrus is a key industry. FLORIDA: Orlando Officials Ask Firefighters To Reimburse Legal Fees ------------------------------------------------------------------- Officials of Orlando, Florida want the firefighters who filed a class action against the City for its alleged failure to inform them of serious medical problems to reimburse the City for its legal expenses after the 5th District Court of Appeals refused to hear their lawsuit for the second time, the Orlando Sentinel reports. Thirteen firefighters sued the City in July, alleging that doctors at an employee medical clinic neglected to tell them about their serious medical problems like hepatitis and heart and lung ailments. The suit was later rejected, and the firefighters filed an appeal with the 5th District. Now that the Appeals Court has rejected the suit, the City is demanding that the firefighters reimburse more than $220,000 in legal fees. City Attorney Scott Gabrielson told the Sentinel, "The claim against these individuals was frivolous.The idea that there was a 20-year conspiracy to cover up these firefighters' health problems - there was no evidence to support that." The firefighters described the City's push for attorneys' fees as "vindictive." Firefighter Alba Hall told the Sentinel, "It just holds with what they've done all along. They didn't tell us about our illnesses because of money, and now they're trying to go after our money because we tried to protect our health.They're just trying to rub our noses in it." FLORIDA POWER: Supreme Court To Hear Arguments On Claims Under ADEA ------------------------------------------------------------------- The US Supreme Court scheduled for today a hearing on oral arguments regarding whether disparate claims can be brought under the Age Discrimination in Employment Act (ADEA) in the class action against Florida Power Corporation. The suit charges the company with age discrimination and seeks back pay, reinstatement or front pay through their projected dates of normal retirement, costs and attorneys' fees. The number of plaintiffs remains at 116, but four of those plaintiffs have had their federal claims dismissed and 74 others have had their state age claims dismissed. In October 1996, the Atlanta Federal Court approved an agreement between the parties to provisionally certify this case as a class action suit under the ADEA. The Company then filed a motion to decertify the class, which the Court granted. In October 1999, the judge certified the question of whether the case should be tried as a class action to the Eleventh Circuit Court of Appeals for immediate appellate review. In December 1999, the Court of Appeals agreed to review the judge's order decertifying the class. In anticipation of a potential ruling decertifying the case as a class action, plaintiffs filed a virtually identical lawsuit, which identified all opt-in plaintiffs as named plaintiffs. In July 2001, the Appellate Court ruled that as a matter of law, disparate claims cannot be brought under the ADEA, thus decertifying the suit as a class action. The plaintiffs filed a petition in the United States Supreme Court, requesting a hearing of the case, on the issue of whether disparate claims can be brought under the ADEA. On December 3, 2001, the United States Supreme Court agreed to hear the case. As of this date, the trial court has not stayed the litigation pending the decision of the Supreme Court. GLOBALSANTAFE CORP.: Settles For $9.3M Wage Antitrust Suit in S.D. TX --------------------------------------------------------------------- GlobalSantaFe Corporation agreed to settle for US$9.3 million a class action suit filed in the US District Court for the Southern District of Texas against their predecessors, alleging a conspiracy to fix wages of employees of their offshore contract drilling business. The suit names as defendants the Company's predecessors Global Marine, Inc., Santa Fe International and a number of other participants in the offshore contract drilling business in the Gulf of Mexico. Global Marine and Santa Fe later merged to form the Company. The suit alleges a conspiracy among the defendants to fix or restrain wages and benefits paid to their offshore employees, and seeks an unspecified amount of damages, treble damages and other relief. Although both Global Marine and Santa Fe International vigorously denied the allegations, each agreed to settle the suit, prior to the date of their merger. Global Marine agreed to pay a total of $8.7 million and Santa Fe International agreed to pay $0.6 million. The settlements are subject to court approval, which has already rendered its preliminary approval. The Company expects the settlements to receive the required approval. However, should the settlement be disapproved, the Company vowed to vigorously defend the lawsuit. The Company does not expect that the matter will have an adverse effect on its business or financial position. HECLA MINING: To Mount Vigorous Defense To Idaho Environmental Suit ------------------------------------------------------------------- The Hecla Mining Company faces a class action pending in the Idaho District Court, County of Kootenai, against it and several other corporate defendants, demanding that the Companies finance medical monitoring to identify and treat health problems allegedly caused by their mining and smelting activities, which poisoned the region's water and soil with lead and other heavy metals. The suit was filed on behalf of residents within a 21-square mile Superfund site surrounding the Bunker Hill mining complex, known as the Box, and those living within the greater Coeur d'Alene river basin, which includes an estimated half-million people residing in Post Falls, Idaho and Spokane, Wash. The class area includes all those living in the Coeur d'Alene river basin. The suit pursues three types of relief: (1) various medical monitoring programs, (2) a real property remediation and restoration program, and (3) damages for diminution in property value, plus other damages and costs. The Company believes the suit is subject to challenge on a number of bases and intends to vigorously defend itself in this litigation. IBP INC.: Faces Suit For Hiring Illegal Immigrants in Illinois Plants --------------------------------------------------------------------- IBP Inc. faces a class action in Rock Island, Illinois, accusing it of using an underground network of recruiters to bring illegal immigrants into the United States to work in its beef packing plant in Joslin, Illinois, the Independent.com reports. The Company allegedly violated racketeering laws by bringing in illegal immigrants to work in their packing plants, to save on wages by keeping them at unnaturally low levels. The Company allegedly used recruiters who smuggled the immigrants into the country, and set them up with phony documents. These workers are paid as little as US$7 an hour, and are induced to continue working due to their fear of apprehension. The suit states, "Owing to their constant fear of apprehension by law enforcement authorities, IBP's illegal immigrant workers tolerate deplorable workplace conditions and do not file workers' compensation claims when they are injured on the job." The Company also allegedly hired recruiters, who are paid $200 to $500 for each worker, who are told to look for people who are "vulnerable, submissive, have little knowledge of the US legal system and a pressing need for immediate employment," the Independent.com reports. The Company has denied the charges, saying in a statement, "We are extremely offended by the accusations made in this lawsuit.The plaintiffs are trying to paint a picture of our Company that is unfair and grossly inaccurate." Company spokesman Gary Mickelson told the Independent.com, "The references in the lawsuit are flat out inaccurate. We don't want to employ anybody in this country without proper authorization." KANEB PIPELINE: Settles Pipeline Rupture Suit For $2.25M --------------------------------------------------------- Kaneb Pipe Line Partners LLP's Support Terminal Services (ST Services) agreed to settle for US$2.25 million a class action commenced due to damages brought about by an April 2000 fuel oil pipeline rupture in Maryland. The pipeline was owned by Potomac Electric Power Company (PEPCO) and operated by a partnership in which ST Services is general partner. The suits were commenced in Maryland Trial Court by property and/or business owners, alleging damages in unspecified amounts under various theories, including under the Oil Pollution Act (OPA). The suits were later consolidated. The Maryland Court recently granted preliminary approval of the settlement, with ST Services and PEPCO each contributing half of the settlement fund. Notice of the proposed settlement will be sent to putative class members and putative class members have until March 26, 2002 to opt out. A hearing on final settlement will be held on April 15, 2002. The Company expects that most class members will elect to participate in the class settlement, but does not discount the possibility that even if the settlement becomes final, the Company may still face litigation from opt-out plaintiffs. However, the Company is confident that these actions will not have a material adverse effect on its financial condition. PATRICK CORPORATION: $8M Settlement Reached in "Union-Busting" Suit ------------------------------------------------------------------- Australian stevedoring company Patrick Corporation has agreed to settle for US$8 million two federal class actions filed by 200 of its former employees, after it attempted to break a union stronghold on the docks in a 1998 waterfront dispute, the Sunday Mail reports. The suit alleges that the Company engaged in misleading and deceptive conduct under the Trade Practices Act in employing the workers, mainly current or ex-servicemen to join the Producers and Consumers Stevedores (PCS) as "union busters". The Company and the National Farmers Federation had allegedly conspired to secretly train PCS workers in Dubai to replace union labor on the docks. In a statement, the Company said the action had been ongoing for four years and had consumed hundreds of hours of management time and legal costs. "The proceedings were settled for a total of $8 million dollars of which approximately half comprised the claimants' legal and other costs," the statement said. PELE-PHONE INC.: Settles Suit Over Telephone Rates For $1.19 Million --------------------------------------------------------------------- Israeli communications company Pele-phone, Inc. has agreed to settle a class action filed by Mordechai Levy, owner of SR Sophisticated Industries, alleging the Company overcharged on reciprocal compensation rates and phone-to-phone rates. According to Israel's Business Arena, the Company asserted it acted properly and in good faith, and the sums collected from its subscribers were justified under Ministry of Communications regulations. The disputed sum totaled ILS10 million (US$2.1 million), and the parties compromised on ILS5.5 million (US$1.19 million). Under the compromise agreement, the Company will provide 1.8 million subscribers a monetary credit worth five minutes of airtime. The Company also admitted no wrongdoing in entering the settlement. PREPAID LEGAL: Sales Associates Sue For "Unregistered" Marketing Plan --------------------------------------------------------------------- Prepaid Legal Services, Inc. faces a class action pending in the United States District Court for the Western District of Oklahoma against the Company and certain of its executive officers, on behalf of all of the Company's sales associates. The suit alleges that the marketing plan offered by the Company constitutes a security under the Securities Act of 1933 and seeks remedies for failure to register the marketing plan as a security and for violations of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 in connection with representations alleged to have been made in connection with the marketing plan. The suit also alleges violations of: (1) the Oklahoma Securities Act, (2) the Oklahoma Business Opportunities Sales Act, (3) breach of contract, (4) breach of duty of good faith and fair dealing (5) unjust enrichment, (6) violation of the Oklahoma Consumer Protection Act, and (7) negligent supervision. The Company intends to vigorously defend this case. The case is in the preliminary stages and the ultimate outcome is not yet determinable. SMART & FINAL: Labels "Without Merit" Employees Suit in CA State Court ---------------------------------------------------------------------- Smart & Final, Inc. faces a class action filed in the Superior Court for the State of California for the County of Los Angeles, on behalf of the Company's store managers and assistant managers in California. The suit alleges that the Company misclassified the status of store managers and assistant managers in California as "exempt" employees. The Company is actively investigating the merits of this action and believes: (1) the merits of this action do not warrant class action status; (2) that it has certain defenses to the claim; and (3) that the ultimate determination of this action will not have a material adverse effect on its results of operations or financial position. UNOCAL CORPORATION: Sued For Mistreatment, Forced Labor in Myanmar ------------------------------------------------------------------ Unocal Corporation faces several class actions in California federal and state courts, holding the Company liable for alleged mistreatment and forced labor in Myanmar in connection with the construction of the Yadana natural gas pipeline. Several suits are pending in the US District Court for the Central District of California, on behalf of residents and former residents of the Tenasserim region of Myanmar. The suits contained numerous counts and alleged violations of several US and California laws and US treaties during the construction of the pipeline, which transports natural gas from fields in the Andaman Sea across Myanmar to Thailand. In its answers to amended complaints in both actions, the Company denied that it was either properly named as a party or subject to joint venture, partnership or other liability with respect to the Yadana pipeline. In 2000, the Court granted the Company's motions for summary judgment in the suits. The Court also ordered the federal law claims dismissed with prejudice and, after declining to exercise jurisdiction over the pendant state law claims, ordered them dismissed without prejudice. Subsequently, the plaintiffs in both actions appealed the final judgments to the US Court of Appeals for the Ninth Circuit, where oral argument was conducted in December 2001. The court's ruling on the appeals remains pending. In 2000, following the dismissal of their claims by the Federal Court, the plaintiffs filed actions against the Company in the Superior Court of the State of California for the County of Los Angeles, Central District. The suits allege that, by virtue of the Company's participation in the Yadana project, it is liable under California law for alleged acts of mistreatment and forced labor by the government of Myanmar. The suits contain numerous counts alleging various violations by the defendants of the constitution, statutes and common law of California. With respect to liability for alleged unfair business practices, the federal suit is also styled as a purported class action on behalf of two classes of plaintiffs: (1) all affected residents and former residents of the Tenasserim region of Myanmar; and (2) all California residents and the general public within the State of California The Company's demurrers, which sought to have the actions dismissed from the State Court, were denied in September 2001. Subsequently, the Company moved for summary judgment in both actions on all claims, which motions remain pending. UNOCAL CORPORATION: Sued For Conspiring To Fix CARB Diesel Fuel Prices ---------------------------------------------------------------------- Unocal Corporation faces a purported class action pending in the California Superior Court for Sacramento County against the Company and eight major California oil refiners by direct and indirect purchasers of diesel fuel in the state of California from March 1996 through 1997. The suit alleges that the defendants conspired to restrict the production and fix the price of "CARB" diesel fuel in violation of the California Cartwright and Unfair Competition Acts. The Company and its co-defendants believe that there is no merit to the plaintiffs' claim that there was a conspiracy to fix prices or restrict the supply of CARB diesel fuel. Moreover, even if such an agreement did exist among some of the defendants, the Company believes that there is no evidence linking it to such an agreement. Further, the Company believes that the sale of its marketing and refining assets to Tosco in 1997 would be deemed to constitute an effective withdrawal from any alleged conspiracy. In 2000, the Court entered a stay in this case pending the decision of the California Supreme Court in the case of Aguilar v. Atlantic Richfield Company. In light of the decision favorable to the defendants in the Aguilar case by the California Supreme Court in June 2001, the Company no longer considers this case to be material. VIDEOGAME COMPANIES: CO Federal Court Dismisses Columbine High Case ------------------------------------------------------------------- The US District Court for the District of Colorado dismissed a class action filed against several video and computer game publishers on behalf of all persons killed or injured by the shootings which occurred at Columbine High School on April 20, 1999. The suit alleged that the video game defendants negligently caused injury to the plaintiffs as a result of their distribution of unidentified "violent" video games, which induced two minors to kill a teacher and to kill or harm their high school classmates. The suit sought: (1) compensatory damages in an amount not less than $15,000 for each plaintiff in the class, but up to $20 million for some of the members of the class; (2) punitive damages in the amount of $5 billion; (3) statutory damages against certain other defendants in the action; and (4) equitable relief to address the marketing and distribution of "violent" video games to children. WARREN GENERAL: Certification Allows 500 Patients To Join Privacy Suit ---------------------------------------------------------------------- Ohio Judge Mary Cacioppo granted class certification to a class action suit against the former Warren General hospital, charging it with providing confidential medical records to a private law firm. The ruling allowed 555 patients to join the suit, the Tribune Chronicle reports. The hospital, presently being managed by HM Health Services, allegedly provided the records to law firm Elliot, Heller, Maaz, Moro and Magill, who used the records for a program to assist disabled persons collect Social Security benefits that would help in the payment of their medical bills. The firm collected admissions records each week and reviewed them to identify patients suffering from disability and was paid for its services by Social Security Administration, the Tribune reports. The class certification covers inpatients, outpatients, emergency room patients or walk-in medical clinic patients between April 29, 1993, and June 6, 1995. The suit was originally assigned to Judge W. Wyatt McKay and later to Cacioppo, who in October 1996 granted a summary judgment to the hospital and the law firm, dismissing the case. The 11th District Court of Appeals overturned the ruling in March 1998. Securities Fraud ARTHUR ANDERSEN: Singapore Partners Say Suits Will Not Affect Them ------------------------------------------------------------------ Arthur Andersen's Singapore partners remain confident that legal actions taken against the Company and its global parent, Andersen Worldwide, will not have a material effect on its operations, the Straits Times reports. The local partnership allegedly is a separate entity from Andersen Worldwide, because it is owned by Singapore partners, and that the Swiss-based Andersen Worldwide does not hold a stake in any of the partnerships around the world. However, lawyer Steve Berman of Hagens Berman disagreed, saying all Andersen affiliates were liable for the actions of the parent company, Bloomberg News reported. "[If] Andersen partners think they are going to walk away from liability, they are mistaken," Mr. Berman said. He added that the "profit-sharing, exchange of advertising and sharing of costs" between Andersen's worldwide partners make them liable. The controversial accounting firm faces numerous class actions for its role in the collapse of Enron Corporation. The suits accuse Enron and the firm of accounting inaccuracies and destruction of documents related to its financial position. Mr. Berman told Bloomberg News, he may broaden the focus of the current United States lawsuit to include the global partnership. The firm's Spanish and Chilean partners are planning to separate from the firm, as are its Italian, French and Portuguese partners. CORNING INC.: Wolf Haldenstein Commences Securities Suit in W.D. NY ------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action in the United States District Court for the Western District of New York on behalf of purchasers of Corning, Inc. (NYSE: GLW) securities between September 27, 2000 and July 10, 2001, inclusive, against the Company and certain of its officers and directors. The suit alleges that defendants violated the federal securities laws by issuing false and misleading statements throughout the class period that had the effect of artificially inflating the market price of the Company's securities. On November 6, 2000, the Company raised approximately $4.4 billion through the previously announced dual tranche offering of common stock and convertible debt. As announced earlier, the proceeds were used to provide for an aggressive expansion of the Company's optical production capacity and to pay for the previously announced $3.6 billion cash acquisition of Pirelli S.P.A.'s interest in Pirelli's optical components and devices business. The complaint alleges that the prospectus of the offering was false and misleading. The prospectus expressed that the Company's growth would remain potent, while the demand for its optical cable network technologies was slowing as its primary customers were undergoing severe and relentless business slowdowns. The alleged "exceptionally robust demand" the Company had reported in the prospectus was the result of a substantial inventory buildup at the Company's customers' businesses. The Company was amassing hundreds of millions of dollars of obsolete inventory. Finally, an acquisition from Pirelli, was marked with problems as the business that the Company had acquired had only one customer, Cisco, which in turn was struggling with a considerable downswing in its business. The projection of 25% earnings growth, reflected in the prospectus, in 2001 was lacking in probability. Following the offering, the Company continued to tell analysts that demand for its photonics products was strong, that it would continue to be healthy throughout 2001, and that it had taken the steps to isolate itself from the current troubles in the telecommunications industry. However, on January 24, 2001, in a release announcing its fourth- quarter earnings, the Company gave the primary indication that the market for its photonics products was not as robust as it had earlier indicated. On July 10, 2001, the Company announced that it was taking a $5.1 billion charge chiefly related to the acquisitions of Pirelli and NetOptix, that it would also write off $300 million in excess and obsolete inventory, and that it would cut 1000 jobs and close three plants. For more details, contact Fred Taylor Isquith, Gregory Nespole, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 800-575-0735 by E-mail: classmember@whafh.com or visit the firm's Web site: http://www.whafh.com. E-mail should refer to Corning. FLEMING FOOD: Oklahoma Court's Ruling Dismissing Securities Suit Stands ----------------------------------------------------------------------- An Oklahoma federal court's dismissal of a securities class action against Fleming Food Management Company LLC and certain of its present and former officers and directors stands unchanged, after plaintiffs failed to object to an appellate court's refusal to grant a rehearing. The suit was commenced in United States District Court for the Western District of Oklahoma and in 1997, alleging the Company engaged in "deceptive business practices." The Company also allegedly failed to properly account for and disclose the contingent liability created by the David's Supermarkets case, a suit the Company settled in April 1997 in which David's charged it with overcharging for products. The suit further alleged that the Company's deceptive business practices led to the David's case and to other material contingent liabilities, caused the Company to change its manner of doing business at great cost and loss of profit, and materially inflated the trading price of its common stock. In 1999, the Court dismissed the suit but gave the plaintiffs the opportunity to restate their claims, and they did so in amended complaints. The Company asked the Court to dismiss the suits, and in February 2000, the Court dismissed the suits with prejudice. The plaintiffs appealed the decision to the Tenth Circuit Court of Appeals, but in September 2001, the Appeals Court affirmed the lower Court's decision. The plaintiffs then asked for a full bench rehearing with the Appeals Court, but the request was denied in October. Since the plaintiffs did not request a review of the judgment of the lower courts to the United States Supreme Court, all appeals by plaintiffs are exhausted and the Court's judgment will stand unchanged. FUNDTECH LP: NJ Court Dismisses Without Prejudice Securities Fraud Suit ----------------------------------------------------------------------- The United States District Court for the District of New Jersey dismissed without prejudice the securities class action filed against Fundtech LP in October 1999, on behalf of purchasers of the Company's stock on October 6,1999. The suit alleged violation of section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by making statements at an analysts conference before the opening of the market on October 6, 1999 that did not reveal that later that day the Company would announce an earnings decrease. MEDI-HUT CO.: Denies Securities Suits Allegations in New Jersey ---------------------------------------------------------------- Medi-Hut Co., Inc. labeled "without merit" the securities class actions pending in the United States District Court for the District of New Jersey on behalf of all purchasers of its common stock from April 4, 2000 through February 4, 2002, inclusive. The suit names as defendants the Company and: (1) Joseph A. Sanpietro, President and CEO, (2) Laurence M. Simon, CFO, (3) Robert Russo, Treasurer, (4) Vincent Sanpietro, Secretary, (5) James G. Aaron, director, and (6) James S. Vacarro, director The suit alleges violations of of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The defendants allegedly disseminated materially false and misleading statements and omissions that misrepresented the Company's business, operations and financial performance. These statements specifically refer to the relationship of Company Vice President Lawrence Marasco to Larval Corporation, one of the Company's biggest customers. Mr. Marasco had a controlling interest in Larval, and based on generally accepted accounting principles, the Company should have revealed this information, and filed income from Larval as "related party transactions." The Company failed to do this. The Company denies these allegations and said it will vigorously oppose the suit in a disclosure to the Securities and Exchange Commission. METAWAVE COMMUNICATIONS: Kirby McInerney Files Securities Suit in WA -------------------------------------------------------------------- Kirby McInerney & Squire, LLP commenced a securities class action in the United States District Court for the Western District of Washington on behalf of all purchasers of Metawave Communications Corporation (Nasdaq:MTWV) common stock during the period from April 24, 2001 and March 14, 2002, inclusive. The suit charges the Company as well as its Chief Executive Officer and Chief Financial Officer, 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 and misleading financial statements and financial projections during the class period, which had the effect, during the class period, of artificially- inflating the price of Company shares. On March 14, 2002, after the close of the markets, the Company issued a press release disclosing a number of surprises concerning the Company, including: (1) that it would restate its 2001 earnings, reducing revenue by $5 million to $7 million out of the $43.6 million of total revenue previously reported, a change of 11% to 15%, because of "unauthorized commitments" made to customers in Asia; (2) that it would terminate its SpotLight GSM product line due to "insufficient customer demand;" (3) that it would close its Taiwan facilities, cut its Chinese operation and reduce its United States workforce by 42% in an effort to lower operating expenses; (4) that the restructuring would result in a first quarter (2002) charge of $23 million to cover inventory and accounts receivable write-offs, employee severance, facilities closures, and other shutdown costs; (5) that it had fired its Chief Financial Officer, Stuart Fuhlendorf; and (6) that it had revised its first-quarter 2002 revenue guidance to about $6 million, well below the $8.5 million to $9 million range Wall Street had been led to expect for the Company's first quarter (2002) revenue. After disclosure that the Company's current financial results would not be as expected, and that previously-reported financial results would be even lower than reported, its shares swiftly lost more than 70% of their value. For more information, contact Pamela E. Kulsrud or Diem Tran by Mail: 830 Third Avenue, 10th Floor, New York, New York 10022 by Phone: 212-317-2300 or 888-529-4787 by E-Mail: dtran@kmslaw.com or visit the firm's Web site: http://www.kmslaw.com METAWAVE COMMUNICATIONS: Milberg Weiss Lodges Securities Suit in WA ------------------------------------------------------------------- Milberg Weiss Bershad Hynes and Lerach initiated a securities class action in the United States District Court for the Western District of Washington on behalf of purchasers of Metawave Communications Corporation (NASDAQ:MTWV) publicly traded securities during the period between April 25, 2001 and March 14, 2002. The suit charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The suit alleges that during the class period, defendants caused the Company's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. As a result of this inflation, the Company was able to complete private placement offerings, raising net proceeds of $30 million during the class period. On March 14, 2002, just months after the last offering was completed, the Company revealed that its FY 2001 results were false when issued. The stock dropped below $1 per share on this news. 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 NOVELL INC.: Asks Utah Federal Court To Dismiss Amended Securities Suit ----------------------------------------------------------------------- Software company Novell, Inc. asked the United States District Court for the District of Utah to dismiss an amended securities class action accusing the Company and certain of its directors of federal securities violations. The suit was initially filed in February 1998, alleging the defendants violated federal securities laws by concealing the true nature of the Company's financial condition. The suit was filed on behalf of purchasers of the Company's common stock from November 1, 1996 through April 22, 1997. The Court dismissed the original complaint in November 2000. However, the plaintiffs filed an amended complaint in an effort to remedy inadequacies in the original complaint. The Company then moved the Court to dismiss the amended complaint on the same grounds relied on in its dismissal of the original complaint. If the case continues, the Company intends to vigorously defend against the allegations. While there can be no assurance as to the ultimate disposition of the lawsuit, the Company does not believe that the resolution of this litigation will have a material adverse effect on its financial position, results of operations, or cash flows. PREPAID LEGAL: Securities Suit Dismissed, Appeal Deadline Set For April ----------------------------------------------------------------------- Plaintiffs in the securities class action against Prepaid Legal Services, LLC have until the first week of April to appeal the US District Court for the Western District of Oklahoma's dismissal of the suit with prejudice. The suit charged the Company and various of its executive officers with issuing false and misleading financial information, primarily related to the method the Company used to account for commission advance receivables from sales associates. On March 5, 2002, the Court granted the Company's motion to dismiss the complaint, with prejudice, and entered judgment in its favor. The deadline for plaintiffs to file notice of their intent to appeal, if any, is thirty days from the date on which the judgment is entered. PREPAID LEGAL: Expects Dismissal of Suits For Failure To State Claim -------------------------------------------------------------------- Prepaid Legal Services, LLC expects that the shareholder derivative suits pending against its directors will be dismissed, because the plaintiffs failed to make the requisite demand that the Company pursue the claims of alleged misconduct and failed to state a claim. The suits were commenced in June 2001 seeking unspecified actual and punitive damages on behalf of the Company based on allegations of breach of fiduciary duty, corporate waste and mismanagement by the defendant directors. In August 2001, the suits were amended to add Deloitte & Touche, the Company's previous outside auditors, as defendants. The suits allege that the defendants caused the Company to: (1) violate generally accepted accounting principles and federal securities laws by improperly capitalizing commission expenses; (2) allegedly pay increased salaries and bonuses based upon financial performance which was allegedly improperly inflated; and (3) expend significant dollars in connection with the defense of its accounting policy, including cost incurred in connection with the defense of the securities suits in Oklahoma, and in connection with the repurchase of its own shares on the open market at artificially inflated prices. The derivative actions have been consolidated and are in the preliminary pleading stage. The Company believes that these derivative actions are related to the Oklahoma securities class actions and may be intended to circumvent the restrictions on those actions imposed by the Private Securities Litigation Reform Act of 1995. In February 2002, the defendants moved to stay the derivative action pending a decision on the motion to dismiss the related securities class actions. In March 8, 2002, the defendants withdrew that motion as moot in light of the Oklahoma federal court's order dismissing the putative securities class actions. On March 1, 2002, the plaintiffs filed a consolidated amended derivative complaint making claims and allegations similar to those contained in the original derivative complaints. The Company vowed to mount a vigorous defense against these suits, and is confident that the litigation will not have a material effect on its business operations and financial position. PRG SCHULTZ: Faces Suit For Securities Act Violations in N.D. Georgia --------------------------------------------------------------------- PRG Schultz International, Inc. and its President John M. Cook face a consolidated securities class action in the United States District Court for the Northern District of Georgia, Atlanta Division. The suit alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by allegedly disseminating materially false and misleading information about a change in the Company's method of recognizing revenue and in connection with revenue reported for a division. The suit further alleges that these misstatements and omissions led to an artificially inflated price for the Company's common stock during the putative class period, which runs from July 19, 1999 to July 26, 2000. The Company believes the alleged claims in this lawsuit are without merit and intends to defend the lawsuit vigorously. However, due to the inherent uncertainties of the litigation process and the judicial system, it is unable to predict the outcome of the suit. TYCO INTERNATIONAL: Weiss Yourman Commences Securities Suit in S.D. NY ---------------------------------------------------------------------- Weiss and Yourman initiated a securities class action against Tyco International, Ltd. (NYSE:TYC) in the United States District Court for the Southern District of New York on behalf of purchasers of Tyco securities, between December 13, 1999 and February 5, 2002. The suit charges defendants with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants issued false and misleading statements, which artificially inflated the stock. For more details, contact Mark D. Smilow, James E. Tullman or David C. Katz by Mail: The French Building, 551 Fifth Avenue, Suit 1600, New York, New York 10176 by Phone: 888-593-4771 or 212-682-3025 or by E- mail: info@wynyc.com WELLS FUND: Limited Partners File Securities Fraud Suit In N.D. GA ------------------------------------------------------------------ Wells Fund I and its general partners face an amended securities class action pending in the United States District Court for the Northern District of Georgia, Atlanta Division, accusing them of violations of federal securities laws, and breaches of the partnership agreement. The suit was initially filed on December 2001 on behalf of all Class A Wells Fund I limited partners. The suit alleges, among other things, that: (1) the 2000 Consent Solicitation contained material misrepresentations or omissions of fact in violation of Rule 14a-3 promulgated under Section 14(a) of the Securities Exchange Act of 1934, and (2) the acts and omissions of Wells Fund I and the general partners constituted a breach of the Partnership Agreement. In addition to seeking any compensatory damages that might be suffered, the plaintiffs in this action sought an injunction against Wells Fund I and the general partners from: (i) continuing to solicit proxies pursuant to the 2000 Consent Solicitation; (ii) using the proxies obtained pursuant to the 2000 Consent Solicitation; (iii) modifying the Partnership Agreement of Wells Fund I without the approval of 100% of the Class A limited partners; (iv) distributing the proceeds from the sale of assets of Wells Fund I to Class B limited partners that rightfully should be distributed to Class A limited partners; and (v) requiring that the net sale proceeds currently held by Wells Fund I be promptly disbursed pursuant to the terms of the Partnership Agreement, in addition to requesting the court for an award of attorneys' fees be made to plaintiffs' counsel. In January 2002, Wells Fund I filed an amendment to the 2000 Consent Solicitation with the Securities and Exchange Commission withdrawing and terminating the 2000 Consent Solicitation. Shortly thereafter, the termination notice was mailed to the Wells Fund I limited partners. While the general partners received an 87% favorable response rate from the limited partners holding Class A Units who responded to the 2000 Consent Solicitation, the general partners became convinced that 100% approval by the Class A limited partners was not attainable. On January 31, 2002, Wells Fund I and the general partners filed a motion to dismiss the suit on the basis that the withdrawal and termination of the 2000 Consent Solicitation by Wells Fund I rendered the issues raised in the suit as moot. After the filing of their motion to dismiss, Wells Fund I and the general partners were served with an amended complaint in the first suit alleging, among other things, that the defendants breached their fiduciary duties to the plaintiffs by reallocating capital accounts to artificially create positive capital accounts for the Class B limited partners, by holding funds that should be distributed to the Class A limited partners, and by engaging in acts and omissions calculated to benefit the Class B limited partners at the expense of the Class A limited partners. The plaintiffs in the amended complaint allege that they have been damaged in that they have not received distributions to which they are entitled pursuant to the Partnership Agreement, have incurred costs, fees and expenses in the prosecution of the lawsuit to recover their damages, and have suffered damages from the loss of the use of the funds. In addition, the plaintiffs in the amended complaint requested that an equitable accounting be made of the nature and amount of proceeds received by Wells Fund I and the appropriate distribution, and time for distribution, of such funds. Wells Fund I and the general partners have until March 20, 2002, to file their answer to the amended complaint. WILLIAMS COMPANIES: Schoengold Sporn Lodges Securities Suit in N.D. OK ---------------------------------------------------------------------- Schoengold & Sporn, PC initiated a securities class action against against Williams Companies, Inc. (NYSE: WMB) and Williams Communications Group, Inc. (NYSE: WCG) and certain of its key officers and directors in the United States District Court for the Northern District of Oklahoma on behalf of all purchasers of WMB and WCG securities during the period between July 24, 2000 and January 29, 2002. The suit charges defendants with violations of Sections 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and alleges that during the class period, defendants issued to the investing public false and misleading financial statements and press releases concerning the Company's publicly reported earnings, net income and liabilities. The suit further states that the Company failed to disclose material information necessary to make its prior statements not misleading. On January 29, 2002, the Company shocked the market by announcing that it would be delaying the release of its 2001 earnings "pending an internal assessment of Williams' contingent obligations to Williams Communications." According to the press release, WMB "expects to be able to estimate the financial effect, if any, regarding its ultimate obligation related to WCG's $1.4 billion debt and network lease agreement covering assets that cost $750 million." In response to WMB's shocking announcement, the price of WMB common stock, which was already substantially eroded from its prior year's high, declined sharply, falling from approximately $24 per share to as low as $18.70 per share, and the already depressed WCG common stock declined to as low as $1.30 per share. For more information, contact Ashley Kim by Mail: 19 Fulton Street, Suite 406, New York, New York 10038 by Phone: 212-964-0046 or 866-348-7700 by Fax: 212-267-8137 or by E-Mail: shareholderrelations@spornlaw.com ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2002. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *