/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/020607.mbx C L A S S A C T I O N R E P O R T E R Friday, June 7, 2002, Vol. 4, No. 112 Headlines APPLE COMPUTER: Mounting Vigorous Defense V. Securities Suits in CA BURLINGTON RESOURCES: Faces Suit Over Oil & Gas Royalties in KS Court CATHOLIC CHURCH: Another Lawsuit Alleges Abuse By Lexington Priest CITIZENS INC.: TX Court Yet To Rule on Fraud Suit Certification DAIMLERCHRYSLER CORP.: Second Suit Over Tire Rims Filed in KS Court FLORIDA: Minority Owners Of Burial Policies Share $10M Settlement FLORIDA: High Court Debates Protecting Cemetery Statues By State Law GEORGIA-PACIFIC: GA Court Partially Grants Motions For Summary Judgment HANOVER DIRECT: Appeals OK Court's Certification of Consumer Fraud Suit HANOVER DIRECT: Seeks To Quash Consumer Suit for Lack of Jurisdiction HANOVER DIRECT: Subsidiary Faces Suit For CA Consumer Law Violations HANOVER DIRECT: Subsidiary Faces Consumer Fraud Suit in CA State Court HANOVER DIRECT: Subsidiary Faces Consumer Fraud Suit in CA State Court HECLA MINING: Asks Court To Dismiss Some Claims in Environmental Suit INDIAN FUNDS: Tribes To Craft Provisions For Better Fund Management INTERNATIONAL GAME: Merits Discovery Allowed To Proceed In RICO Suit IOMEGA CORPORATION: Court Approves Settlement For Suit Over Zip Drives LANTRONIX INC.: Milberg Weiss Expands Class Period in Securities Suit MARSH MCLENNAN: IL Court Dismisses Suit Over Mutual Fund Advisor Fees MATTEL INC.: Plaintiffs Appeal CA Court's Dismissal of Securities Suit MATTEL INC.: CA State Court Dismisses Derivative Suits, Others Pending PEMCO AVIATION: Trial in GA Race Bias Suit To Commence in June 2002 PEMCO AVIATION: Completely Settles Claims Over UAW Union Workers Strike TIFFANY'S GATE: Ontario To Join Toronto's Suit Over Contaminated Salad VENTAS INC.: Plaintiffs Appeal Dismissal of Suit Over Kindred Spin-off WISCONSIN: Union Local Agrees To Pay Racial Discrimination Settlement New Securities Fraud Cases ALCATEL SA: Leo Desmond Commences Securities Fraud Suit in New York DUKE ENERGY: Leo Desmond Commences Securities Suit in S.D. New York DYNEGY INC.: Schoengold & Sporn Commences Securities Suit in S.D. TX DYNEGY INC.: Rabin & Peckel Commences Securities Fraud Suit in S.D. TX EXPEDIA INC.: Bull & Lifshitz Files Suit Over USA Networks Tender Offer EXPEDIA INC.: Wechsler Harwood Sues Over USA Networks Tender Offer GREAT ATLANTIC: Charles Piven Commences Securities Suit in New Jersey HALLIBURTON COMPANY: Leo Desmond Commences Securities Suit in N.D. TX LANTRONIX INC.: Cauley Geller Commences Securities Suit in C.D. CA LIGHT MANAGEMENT: Schiffrin & Barroway Lodges Securities Suit in NY MERRILL LYNCH: Zwerling Schachter Launches Securities Suit in S.D. NY MERRILL LYNCH: Rabin & Peckel Commences Securities Fraud Suit in NY MERRILL LYNCH: Cohen Milstein Launches Securities Fraud Suit in S.D. NY MILLER JOHNSON: Chestnut & Cambronne Lodges Securities Fraud Suit in MN MIRANT CORPORATION: Wechsler Harwood Launches Securities Suit in GA SPECIALTY LABORATORIES: Schiffrin & Barroway Lodges Securities Suit CA SPECIALTY LABORATORIES: Scott + Scott Launches Securities Suit in CA VERISIGN INC.: Scott + Scott Commences Securities Fraud Suit in N.D. CA VERISIGN INC.: Schiffrin & Barroway Lodges Securities Suit in N.D. CA ********* APPLE COMPUTER: Mounting Vigorous Defense V. Securities Suits in CA ------------------------------------------------------------------- Computer giant Apple Computer, Inc. faces three securities class action commenced in September 2001 in the United States District Court for the Northern District of California. The suits name the Company and its Chief Executive Officer as defendants. The suits, filed on behalf of purchasers of the Company's publicly traded common stock between July 19,2000 and September 28,2000, allege violations of the 1934 Securities Act and seek unspecified compensatory damages and other relief. The Company believes these claims are without merit and intends to defend them vigorously. BURLINGTON RESOURCES: Faces Suit Over Oil & Gas Royalties in KS Court --------------------------------------------------------------------- Affiliates of Burlington Resources Oil & Gas Co. were named as defendants in a class action pending in the District Court of Stevens County, Kansas, against hundreds of gas production and gas pipeline companies. The suit alleges that the defendants engaged in the mismeasurement of volumes and wrongful analysis of heating content of natural gas and engaged in other activities which resulted in the underpayment of revenue owed to working interest owners, royalty interest owners, overriding royalty interest owners and state taxing authorities. At this time, no estimate can be made as to the amount of any loss in this litigation. The Company intends to vigorously oppose the suit. CATHOLIC CHURCH: Another Lawsuit Alleges Abuse By Lexington Priest ------------------------------------------------------------------ A Lexington, Kentucky man has filed a lawsuit against the Roman Catholic Dioceses of Lexington and Covington, alleging he was sexually abused by a priest at the Cathedral of Christ the King in 1983, according to a report by Associated Press Newswires. Will L. McGinnis III, 33, filing the suit on his own behalf in Fayette Circuit Court, accused the Rev. Bill Fedders of sexually abusing him three times over a period that included his eighth-grade year and the summer before the ninth grade. Rev. Fedders could not be reached for comment. He is pastor at Jesus Our Savior Catholic Church in Morehead, which also serves as the Newman Center for Catholic students at Morehead State University. Mr. McGinnis said in a recent interview that he was a 14-year-old altar boy at the cathedral at the time the abuse allegedly occurred. He says the Covington and Lexington dioceses failed to report the alleged abuse to law enforcement authorities and did not properly supervise priests under their control. The lawsuit seeks unspecified damages. Two church spokesmen, Thomas Shaughnessy of Lexington and Timothy Fitzgerald of Covington, said the dioceses had not seen the lawsuit and had no comment. Lexington churches were part of the Covington diocese until the Lexington diocese was created in 1988. Mr. McGinnis, a real estate broker, ran unsuccessful campaigns for mayor in 1998 and as a Democratic candidate for Congress in 2000. He also worked as a stripper for a "strip-o-gram" service from 1992-2000, he said. This is the second recent sex-abuse lawsuit brought against the Lexington and Covington dioceses. On May 30, Lexington lawyer Robert Treadway filed a $50 million class action on behalf of four unnamed men and one unnamed woman. They allege that priests, who were under the dioceses' control, sexually abused them. Two lawsuits against the Archdiocese of Louisville accuse Lexington Bishop J. Kendrick Williams of sex abuse in 1969 and 1981, when he was a priest. They are among more than a hundred lawsuits filed against the Louisville Archdiocese since mid-April, alleging sexual abuse by more than a dozen priests. CITIZENS INC.: TX Court Yet To Rule on Fraud Suit Certification --------------------------------------------------------------- Citizens, Inc. is awaiting the Travis County State Court in Texas' ruling on class certification for a lawsuit filed against the Company and: (1) Citizens Insurance Company of America, (2) Negocios Savoy, SA, (3) Harold E. Riley, and (4) Mark A. Oliver The suit alleges that life insurance policies sold to certain non-US residents are unregistered securities in violation of the Texas Blue Sky laws. The suit seeks class action status naming a class of all persons who made premium payments who are not residents of the United States as potential members of the class. The defendants have filed an answering motion denying that the case is properly certifiable as a claim action. In April 2002, hearings on the class certification issue were held and the Company is awaiting a ruling. The Company believes the lawsuit is without merit and plans a vigorous defense, although no outcome can be assured. DAIMLERCHRYSLER CORP.: Second Suit Over Tire Rims Filed in KS Court ------------------------------------------------------------------- A second class action alleging that a major car manufacturer made and sold defective tire rims has been filed in Johnson County District Court, according to The Kansas City Star. The latest complaint against Daimler Chrysler Corp. and DaimlerChrysler Motors Corp., seeks damages on behalf of owners or renters of Chrysler Sebring coupes, model years 1997-2001, and Dodge Avengers, model years 1997-2000. The lawsuit alleges that the 17-inch rims on the vehicles tend to bend under normal driving conditions, causing tire deflation, flats and blowouts. The lawsuit is similar to one filed in November by the same Kansas City law firm, Stueve Helder Siegel, against Mitsubishi Motor Manufacturing of America Inc., Mitsubishi Motor Sales of America Inc. and wheel manufacturer Enkei International Inc. That lawsuit seeks damages on behalf of owners or renters of Mitsubishi Eclipses and Eclipse Spyders, model years 1997-2001. "Our investigation has revealed that Mitsubishi, through its joint venture arrangement with Daimler Chrysler, made the Chrysler Sebring and Dodge Avenger and installed the same 17-inch rims on these models as the 17-inch rims on the Mitsubishi Eclipse," Stueve Helder partner Pat Stueve said. Mitsubishi has denied the allegations and said it is working with the National Highway Traffic Safety Administration to investigate. The agency has received dozens of complaints from consumers about the rims. DaimlerChrysler is Mitsubishi's largest shareholder, with a 37 percent stake in the company. Ms. Ann Smith, a spokeswoman for DaimlerChrysler, said that, "only a fraction of one percent of (Mitsubishi's) owners have ever complained about the rim, and any problems that have occurred were not under normal use conditions." The lawsuit against DaimlerChrysler says that more than 200,000 Chrysler Sebring coupes and Dodge Avengers have been sold in the United States since 1997. Most of them, it says, were equipped with the allegedly defective rims. FLORIDA: Minority Owners Of Burial Policies Share $10M Settlement ----------------------------------------------------------------- Nearly 430,000 minority owners of burial policies in Florida will share about $10 million as part of a settlement with two companies that have overcharged black clients, Insurance Commissioner Thomas Gallagher said recently, according to Associated Press Newswires. The settlement follows a review by Florida and Georgia that showed African-Americans were charged higher premiums than white customers for similar or identical coverage. Georgia officials began the investigation in November 2000, and Florida and eight other states joined in, finally reviewing policies dating back to January 1, 1960. The review, with its discriminatory data, "sparked" a nationwide class action against Life Insurance Company of Georgia and Southland Life Insurance Company. The two companies have agreed to pay $50 million to 2.5 million policyholders nationally and $4 million in fines to state insurance commissioners. Florida's share of the fines is expected to be about $688,000. "This kind of discrimination is inexcusable and should not have occurred," said Insurance Commissioner Gallagher. "The relief is a long time coming." Under the settlement, policy holders or their beneficiaries can choose to increase their death benefits to the level received by white customers for the same premium, or receive the difference in cash. "The actual dollar amount is going to vary by the face amount of the policy, what type of insurance plan was purchased and when the policy was issued," said Insurance Department spokeswoman Tami Torres. FLORIDA: High Court Debates Protecting Cemetery Statues By State Law -------------------------------------------------------------------- The Florida Supreme Court is debating the emotional issue of whether government-owned cemeteries can restrict the types of religious monuments people place at gravesites, reports the South Florida Sun- Sentinel. The case stems from a class action filed against Boca Raton in 1998 by cemetery plot owners who said they either were not informed of rules restricting vertical symbols or were told such rules would not be enforced. The western section of the cemetery has been allowed vertical markers, because it is an older area and existed before such rules went into effect. Sparking this landmark debate is the American Civil Liberties Union's (ACLU) appeal of a 1999 decision by US District Judge Kenneth Ryskamp that says the city of Boca Raton had the right to remove and restrict cemetery markers because the crosses and other statues are not essential to the religious practices taught in the Christian, Catholic or Jewish faiths. The federal judge ruled that the statues are more symbols of religious preference and, as such, are not forms of religious expression protected by Florida law, particularly, its Religious Freedoms Restoration Act, or the US Constitution. However, the case is now under appeal before a federal court in Atlanta, and that court has asked the Florida Supreme Court to render its decision first. Therefore, back to the Florida Supreme Court, where the oral arguments in this landmark case are being presented. An attorney for Boca Raton has observed that it would be preposterous to suggest that local governments could be kept from enforcing rules on the height of graveside markers. City Attorney Bruce Rogow, a Nova University law school professor, enlarged on his argument, saying, "This is creating a chaotic scene that is contrary to the rules of a cemetery. We respect the free exercise of religion. But that does not mean you can use it as a weapon to interfere with the rights of others." The city attorney's remarks stem from a current concern of the local government about a crop of vertical markers, such as crosses, Stars of David, a Pearly Gates of Heaven statue, and the like, that have been erected on the east side of the cemetery where the city prefers to allow only ground-level, horizontal markers. The ACLU states that while the city argues, it's a matter of aesthetics, it is really a case about individual's religious rights. The ACLU lawyers want the court to reject a formula that Judge Ryskamp had relied upon to decide whether the markers are of significant religious value. He had said that the city had a right to remove and restrict the cemetery markers because they, and the statues, were more symbols of personal preference, not forms of religious expression. "Nothing will ever qualify under that rule," said ACLU lawyer Douglas Laycock of Austin, Texas. That test (Judge Ryskamp's) "destroys this (religious freedoms) statute." Mr. Laycock was referring to Florida's Religious Freedoms Restoration Act, which states that "the government shall not substantially burden a person's exercise of religion, even if the burden results from a rule of general applicability." Throughout the hearing, the state Supreme Court justices repeatedly questioned lawyers about what sort of formula or test, if any, should be used to decide whether the symbols actually reflect a person's sincerely held religious beliefs. They also gave hints that they are concerned how the case may drastically limit any government's authority on a wide-range of issues. "I can't get by the fact that, in this case, we are really dealing with the government's right to use the government's land and apply conditions to which people can use that land," said Justice Barbara Pariente. Justice Harry Lee Anstead questioned what could stop someone from demanding a monument that could be viewed from more than a quarter-mile away, or one that would be much wider than the rest. City Attorney Rogow's additional remarks echoed this concern, that the government could be prevented from placing restrictions on a wide range of activities if it could not place reasonable restrictions on the use of cemetery lands that it owns. "It creates a terrible precedent for every law of general applicability," said Mr. Rogow. He added that everything from sign ordinances, noise and height restrictions on building construction, and other zoning rules could be "pulverized" if the city loses this case. Governor Jeb Bush joined hands with the ACLU and submitted an amicus curiae brief (friend of the court brief), arguing that the statues were protected under the state's Religious Freedoms Restoration Act. The governor's office has weighed into this case, said spokespersons from his office, because the governor is a strong believer in protecting religious freedoms, and that any encroachment on personal religious beliefs must have a compelling government interest. GEORGIA-PACIFIC: GA Court Partially Grants Motions For Summary Judgment ----------------------------------------------------------------------- The United States District Court for the Northern District of Georgia granted in part and denied in part the summary judgment motions of both Georgia-Pacific Corporation and the plaintiffs in the class action alleging violations under the Employee Retirement Income Security Act of 1974 (ERISA). The suit was filed against the Company and the Georgia-Pacific Corporation Salaried Employees Retirement Plan, seeking recovery of alleged underpayments of lump-sum benefits to persons taking early retirement from the Company, together with interest, attorney's fees, and costs. The Company filed a motion for summary judgment, which the federal court granted in March 1999. The plaintiffs promptly appealed this decision to the United States Court of Appeals for the Eleventh Circuit. The appellate court reversed the federal court's ruling in August 2000 and remanded the case for further proceedings, holding that the terms of the plan required a calculation of lump-sum benefits that could result in additional payments to members of the class. In September 2000, the defendants filed a petition for rehearing and rehearing en banc with the Eleventh Circuit, which was denied. The defendants also filed a petition for certiorari to the United States Supreme Court in January 2001, which was also denied. In March 2002, the federal court issued an order granting in part and denying in part the summary judgment motions of both the plaintiff class and the defendants. In addition, the order remanded some issues to the Plan administrator for interpretation and specified that the parties must file another proposed order implementing these rulings within a certain time period. The Company intends to vigorously oppose the suit. HANOVER DIRECT: Appeals OK Court's Certification of Consumer Fraud Suit ----------------------------------------------------------------------- Hanover Direct, Inc. appealed the State Court of Oklahoma, in and for Sequoyah County's decision granting class certification to a lawsuit filed on behalf of persons who have at any time purchased a product from the Company and paid for an "insurance charge." The suit sets forth claims for: (1) breach of contract, (2) unjust enrichment, (3) recovery of money paid absent consideration, (4) fraud and (5) a claim under the New Jersey Consumer Fraud Act The suit alleges that the Company charges its customers for delivery insurance even though, among other things, the Company's common carriers already provide insurance and the insurance charge provides no benefit to the Company's customers. The plaintiffs also seek a declaratory judgment as to the validity of the delivery insurance. The damages sought are: (i) an order directing the Company to return to the plaintiff and class members the "unlawful revenue" derived from the insurance charges; (ii) declaring the rights of the parties; (iii) permanently enjoining the Company from imposing the insurance charge; (iv) awarding threefold damages of less than $75,000 per plaintiff and per class member; and (v) attorney's fees and costs The Company's motion to dismiss is pending and discovery has commenced. The plaintiff has deposed a number of individuals. On April 12, 2001, the court held a hearing on plaintiff's class certification motion. Subsequent to the April 12, 2001 hearing, the plaintiff filed a motion to amend the definition of the class. In July 2001, the class certification motion was granted, defining the class as "all persons in the United States who are customers of any catalog or catalog company owned by Hanover Direct, Inc. and who have at any time purchased a product from such company and paid money which was designated to be an `insurance' charge." The Company then appealed the order with the Oklahoma Court of Appeals and subsequently moved to stay proceedings in the district court pending resolution of the appeal. No schedule for briefing or hearing of the appeal has yet been set and the district court has not yet ruled on the motion to stay. In January 2002, the Company filed its brief in support of its appeal from the district court's class certification order. At a subsequent status hearing, the parties agreed that issues pertaining to notice to the class would be stayed pending resolution of the appeal, that certain other issues would be subject to limited discovery, and that the issue of a stay for any remaining issues would be resolved if and when such issues arise. The Company believes it has defenses against the claims. However, it is too early to determine the outcome or range of potential settlement, which could have a material impact on the Company's results of operations when settled in a future period. HANOVER DIRECT: Seeks To Quash Consumer Suit for Lack of Jurisdiction --------------------------------------------------------------------- Hanover Direct, Inc. filed a motion to quash the class action pending in the Superior Court for the City and County of San Francisco, California for lack of personal jurisdiction on behalf of several of the defendants, namely the Company and: (1) Hanover Brands, Inc., (2) Hanover Direct Virginia, Inc. The suit, which also names "Does 1-100" as defendants, was commenced in August 2001 by a California resident on behalf of all customers who paid the $0.50 insurance fee charged by catalogs and internet sites operated by subsidiaries of the Company. In January 2002, plaintiff sought leave to name six additional entities as co-defendants: (i) International Male, (ii) Domestications Kitchen & Garden, (iii) Silhouettes, (iv) Hanover Company Store, (v) Kitchen & Home, and (vi) Domestications In March 12, 2002, the Company was served with the first amended suit in which plaintiff named as defendants the Company, Hanover Brands, Hanover Direct Virginia, LWI Holdings, Hanover Company Store, Kitchen and Home, and Silhouettes, and in which all causes of action related to state sales tax have been removed. With the removal of sales tax issues, the suit concerns issues identical to the Oklahoma class action and may make it easier to stay this suit pending the outcome of the Oklahoma case. Ob April 15, 2002, the Company filed a motion to stay this suit in favor of the previously filed Oklahoma suit. The Company believes it has defenses against the claims, however, it is too early to determine the outcome or range of potential settlement, which could have a material impact on the Company's results of operations when settled in a future period. HANOVER DIRECT: Subsidiary Faces Suit For CA Consumer Law Violations -------------------------------------------------------------------- Brawn of California, Inc. (dba International Male and Undergear), a Hanover Direct, Inc. subsidiary, faces a class action pending in the Superior Court of the State of California, City and County of San Francisco. The suit also names as defendants "Does 1-100," internet and catalog direct marketers offering a selection of men's clothing, sundries, and shoes who advertise within California and nationwide. The complaint alleges that: (1) for at least four years, members of the class have been charged an unlawful, unfair, and fraudulent insurance fee and tax on orders sent to them by Brawn; (2) that Brawn was engaged in untrue, deceptive and misleading advertising in that it was not lawfully required or permitted to collect insurance, tax and sales tax from customers in California; and (3) that Brawn has engaged in acts of unfair competition under the State's Business and Professions Code. Plaintiff and the class seek: (i) restitution and disgorgement of all monies wrongfully collected and earned by Brawn, including interest and other gains made on account of these practices, including reimbursement in the amount of the insurance, tax and sales tax collected unlawfully, together with interest; (ii) an order enjoining Brawn from charging customers insurance and tax on its order forms and/or from charging tax on the delivery, shipping and insurance charges; (iii) an order directing Brawn to notify the California State Board of Equalization of the failure to pay the correct amount of tax to the State and to take appropriate steps to provide the State with the information needed for audit; and (iv) compensatory damages, attorney fees, pre-judgment interest, and costs of the suit. The claims of the individually named plaintiff and for each member of the class amount to less than $75,000. On April 15, 2002, the Company filed a motion to stay the above action in favor of the previously filed and substantially Oklahoma action against Hanover Direct, Inc. The Company believes it has defenses against the claims but intends to file a motion for summary judgment in the case. However, it is too early to determine the outcome or range of potential settlement, which could have a material impact on the Company's results of operations when settled in a future period. HANOVER DIRECT: Subsidiary Faces Consumer Fraud Suit in CA State Court ---------------------------------------------------------------------- Hanover Direct, Inc. subsidiary Gump's By Mail, Inc. faces a class action pending in the Superior Court of the State of California, City and County of San Francisco. Argonaut Consumer Rights Advocates Inc., a non-profit public benefit corporation, filed the suit. The suit also names as defendants "Does 1-100," persons whose activities include the direct sale of tangible personal property to California consumers including the type of merchandise that Gump's, the store and the catalog, sell, by telephone, mail order, and sales through the web sites www.gumpsbymail.com and www.gumps.com. The complaint alleges that: (1) for at least four years members of the class have been charged an unlawful, unfair, and fraudulent tax and "sales tax" on their orders in violation of California law and court decisions, including the state Revenue and Taxation Code, Civil Code, and the California Board of Equalization; (2) Gump's engages in unfair business practices; (3) Gump's engaged in untrue and misleading advertising in that it was not lawfully required to collect tax and sales tax from customers in California, is not lawfully required or permitted to add tax and sales tax on separately stated shipping or delivery charges to California consumers; and (4) it does not add the appropriate or applicable or specific correct tax or sales tax to its orders. Plaintiff and the class seek: (i) restitution of all tax and sales tax charged by Gump's on each transaction and/or restitution of tax and sales tax charged on the shipping charges; (ii) an order enjoining Gump's from charging customers for tax on orders or from charging tax on the shipping charges; and (iii) attorney's fees, pre-judgment interest on the sums refunded, and costs of the suit. A status conference has been set for July 26, 2002. The Company has asserted separate affirmative defenses to the complaint, generally denying the allegations of the complaint and each and every cause of action alleged, and denying that plaintiff has been damaged or is entitled to any relief whatsoever. The Company believes it has defenses against the claims but intends to file a motion for summary judgment in the case. However, it is too early to determine the outcome or range of potential settlement, which could have a material impact on the Company's results of operations when settled in a future period. HANOVER DIRECT: Subsidiary Faces Consumer Fraud Suit in CA State Court ----------------------------------------------------------------- Hanover Direct, Inc. subsidiary Domestications LLC faces a class action filed in the Superior Court of the State of California, City and County of San Francisco, filed on behalf of the general public. The suit also names as defendants "Does 1-100," persons responsible for the conduct alleged in the complaint, including the direct sale of tangible personal property to California consumers including the type of merchandise that Domestications sells, by telephone, mail order, and sales through the web site as www.domestications.com. The plaintiff claims that: (1) for at least four years members of the class have been charged an unlawful, unfair, and fraudulent tax and sales tax for different rates and amounts on the catalog and internet orders on the total amount of goods, tax and sales tax on shipping charges, which are not subject to tax or sales tax under California law, in violation of California law and court decisions, including the state Revenue and Taxation Code, Civil Code, and the California Board of Equalization; (2) Domestications engages in unfair business practices; and (3) Domestications engaged in untrue and misleading advertising in that it was not lawfully required to collect tax and sales tax from customers in California. Plaintiff and the class seek: (i) restitution of all sums, interest and other gains made on account of these practices; (ii) prejudgment interest on all sums wrongfully collected; (iii) an order enjoining Domestications from charging customers for tax on their orders and/or from charging tax on the shipping charges; and (iv) attorney's fees and costs of the suit. The Company's response is due by May 8, 2002. A status conference has been set for August 2, 2002. The Company believes it has defenses against the claims but intends to file a motion for summary judgment in the case. However, it is too early to determine the outcome or range of potential settlement, which could have a material impact on the Company's results of operations when settled in a future period. HECLA MINING: Asks Court To Dismiss Some Claims in Environmental Suit --------------------------------------------------------------------- Hecla Mining Corporation asked the Idaho District Court for the County of Kootenai to dismiss several claims in the class action filed in January 2002 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. According to an earlier Class Action Reporter story, 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 seeks certification of three plaintiff classes of Coeur d'Alene Basin residents and current and former property owners to pursue 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 On April 23, 2002, the Company filed a motion with the court to dismiss the claims for relief relating to the medical monitoring programs and the remediation and restoration programs. The Company believes the suit is subject to challenge on a number of bases and intends to vigorously defend itself in this litigation. INDIAN FUNDS: Tribes To Craft Provisions For Better Fund Management ------------------------------------------------------------------- American Indian leaders recently urged Interior Department Secretary Gale Norton to make sweeping changes to the Department's management of more than $1 billion of proceeds from Indian lands, Associated Press Newswires reported. The tribal leaders' report to the Secretary comes as a federal judge is considering holding Ms. Norton and Assistant Secretary for Indian Affairs, Neal McCaleb, in contempt for failing to improve its management of Indian money. Ms. Norton said that the report, from a task force of tribal leaders studying the issue, was not done specifically to influence the court. "This really talks about the way in which the government agencies would be structured," she said. "It is not directly related to the litigation." "Obviously, this is not the end," Tex Hall, co-chairman of the task force and President of the National Congress of American Indians, said at a news conference. The task force was created after Secretary Norton's initial attempt to restructure trust fund management was fought by tribal leaders who complained that they were not consulted. Subsequently, during four meetings, tribal leaders and top Interior officials whittled down a package of 29 reform proposals to five that were included in the report to Secretary Norton and three that the task force endorsed. Mr. McCaleb said that the department will gather comment from tribal Members, present a framework at a congressional hearing later this month and send Secretary Norton a final report by July 25. However, Special Trustee Thomas Slonaker, the top trust official appointed by Congress to supervise the restructuring, has expressed reservations about how effective the proposed "fixes" could be. "My sense is that DOI would be returning to the same basic trust organization that existed in the department in the early 1990s," Mr. Slonaker wrote in a letter to Deputy Interior Secretary J. Steven Griles. All five of the proposal included in the report to Secretary Norton would eliminate Mr. Slonaker's office, a change that would require congressional action. The federal government has managed proceeds from Indian tribal land since 1820, and for individual Indians since 1887. Today, it manages more than 56 million acres of tribal and individual lands with proceeds, or royalties, of more than $1 billion annually. Attorneys for more than 300,00 Indians in a class action contend that Interior's mismanagement of the individual accounts has cost landowners at least $10 billion since the trust fund was established in 1887. US District Judge Royce Lamberth ordered the Interior Department in 1999 to overhaul the trust fund's management and piece together how much the Indians are owed. Judge Lamberth is considering holding Secretaries Norton and McCaleb in contempt because the department has not responded to that mandate with enough speed and knowledgeable awareness of the problems to be managed. INTERNATIONAL GAME: Merits Discovery Allowed To Proceed In RICO Suit -------------------------------------------------------------------- The United States District Court of Nevada, Southern Division allowed certain merits discovery to proceed in a consolidated class action naming International Game Technologies, Inc. as a defendant along with a number of other public gaming corporations. The consolidated suit alleges that the defendants have engaged in fraudulent and misleading conduct by inducing people to play video poker machines and electronic slot machines, based on false beliefs concerning how the machines operate and the extent to which there is an opportunity to win on a given play. The amended complaint alleges that the defendants' acts constitute violations of the Racketeer Influenced and Corrupt Organizations Act, and also give rise to claims for common law fraud and unjust enrichment. In December 1997, the court denied the motions that would have dismissed the consolidated amended suit or that would have stayed the action pending Nevada gaming regulatory action. In November 2001, the court heard oral arguments regarding the issue of certification of the plaintiff class. No decision has been rendered. The Company has answered the complaint and intends to vigorously oppose the suit. IOMEGA CORPORATION: Court Approves Settlement For Suit Over Zip Drives ---------------------------------------------------------------------- The Superior Court of Delaware for New Castle County granted final approval to a multimillion settlement proposed by Iomega Corporation to settle a consumer class action, alleging that a defect in the Company's Zip drives caused an abnormal clicking noise that may have indicated damage to the Zip drive or disks. The plaintiffs originally sought relief pursuant to claims of: (1) breach of warranty, (2) violation of the Delaware Consumer Fraud Act, (3) negligent design and manufacture, and (4) failure to warn. In September 1999, the court dismissed the claims of breach of warranty and violation of the Consumer Fraud Act, granting the plaintiffs the opportunity to amend the latter claim. The plaintiffs later amended the suit, reasserting their claim under the Delaware Consumer Fraud Act and. The Company then moved to dismiss this amended claim. In March 2001, the parties in the suit submitted to the court a request for certification of the class and approval of a settlement of the class action. Following notice to the class members, the court held a hearing in June 2001 to consider final approval of the settlement and the objections raised against such approval. In June 2001, the court issued an order approving the settlement, to become final after all appeals of the order are resolved. An objector to the settlement filed a notice of appeal from the court's order and subsequently filed an appellant's brief in the Supreme Court of the State of Delaware. The Company and the attorneys for the named plaintiffs filed briefs in support of the settlement. On January 15, 2002, that court remanded the matter for further proceedings in the Delaware Superior Court, so that the Superior Court could make additional findings and address additional questions concerning the proposed settlement. Subsequently, the Company, the lawyers for the plaintiffs' and the objector reached agreement on a modified settlement. As a result of this revised settlement agreement, the objector requested the termination of his appeal. The Delaware Supreme Court granted that request, dismissing the appeal on April 16, 2002. On May 8, 2002, the Superior Court issued an order approving the settlement, to become final in approximately thirty days unless the revised order is appealed. The proposed settlement will not be implemented unless and until all appeals are fully resolved. Under the settlement, class members who have not opted out of the settlement will release the Company from all claims that were or which could have been raised in the litigation. For its part, the Company will issue rebates ranging between $5 and $40 to class members who submit a proof of claim. The rebates will remain available for six months and will be valid for the purchase of certain Zip products, Peerless products and CD-RW products. The level of the rebate will depend on whether the class member's Zip drive manifested a clicking problem. In addition, the Company may offer a secondary rebate of $4 to $15 on Zip disks to those class members who make a qualified purchase under the initial rebate program. This would be available if certain conditions in the settlement are met. In addition, the Company would offer an additional discount for a 60-day period for purchases of packs of five or more Zip disks. The exact amount of this additional discount will be computed based upon the number of class members submitting proofs of claims. The Company has agreed, in the proposed settlement, to allow class members an additional 30-day period to submit proof of claim forms. The Company will also provide dedicated technical assistance personnel for addressing, free of charge, customer inquiries regarding alleged clicking Zip drives. It will also make a charitable donation of Zip drives and related software, disks and services, with a total retail value of $1 million. Finally, counsel for the class applied to the court for an award of attorneys' fees and costs in the amount of $4.7 million. As part of the court's June 29, 2001 order, it issued an award of $4.1 million for these attorneys' fees. The Company has funded $4.1 million into an escrow account. LANTRONIX INC.: Milberg Weiss Expands Class Period in Securities Suit --------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP expanded the class period in a securities suit against Lantronix, Inc. (NASDAQ:LTRX) in the United States District Court for the Central District of California to include purchasers of the Company's stock during the period between April 25, 2001 and May 30, 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 a secondary offering of eight million shares, raising proceeds of $64 million on July 17, 2001. The defendants' alleged wrongful course of business: (1) artificially inflated the price of Company stock during the class period; (2) deceived the investing public, including plaintiff and other class members, into acquiring the Company's securities at artificially inflated prices; (3) allowed certain of the individual defendants to sell more than $13 million worth of the shares held/controlled by them and allowed the Company to sell $50 million worth of its own stock; and (4) permitted the Company to grow and benefit economically from the wrongful course of conduct. The Company and its top officers inflated the price of the Company's stock in order to pursue an accelerated securities sale program. Defendants knew that concealing the Company's joint venture and the true impact it would have on the Company provided the only way that they could foster the perception in the business community that the Company was a "growth company," i.e., the only way it could post the revenue and earnings per share growth claimed by defendants. For more details, contact William Lerach by Phone: 800-449-4900 by E- mail: wsl@milberg.com or visit the firm's Website: http://www.milberg.com MARSH MCLENNAN: IL Court Dismisses Suit Over Mutual Fund Advisor Fees --------------------------------------------------------------------- The United States District Court for the Northern District of Illinois dismissed the claims against two of Marsh & Mclennan Companies' subsidiaries, in a class action against approximately two dozen mutual fund companies. The subsidiaries named in the suit are Putnam Investment Management LLC and Putnam Retail Management, Limited Partnership. This purported nationwide class action alleged that: (1) the distribution and advisor fees paid by the various mutual funds from May 1, 1991 to the present were unlawful and excessive; (2) each fund complex exercised a controlling influence over statutorily independent directors of each fund and that these fees were thus not properly approved. The complaint alleged that the defendants' actions violated the Investment Company Act of 1940, as well as common law fiduciary duties, and sought, among other things, actual and punitive damages and declaratory relief. The court later ordered that the respective claims asserted against the defendants be severed into separate actions and transferred to a more convenient forum for each defendant. Following the court's ruling, the plaintiffs voluntarily requested that the court dismiss the action, including all claims against the Putnam entities. The court dismissed the action on March 29, 2002. There is no indication that the claims will be reasserted against the Putnam entities in any forum. MATTEL INC.: Plaintiffs Appeal CA Court's Dismissal of Securities Suit ---------------------------------------------------------------------- Plaintiffs in the securities class action against Mattel, Inc. appealed a California federal court's dismissal of the suit in the United States Ninth Circuit Court of Appeals. The consolidated suit was brought against the Company as successor to Learning Company and the former directors of Learning Company on behalf of former stockholders of Broderbund Software, Inc. who acquired shares of Learning Company in exchange for their Broderbund common stock in connection with the Learning Company-Broderbund merger on August 31, 1998. The suit, filed in the United States District Court for the Northern District of California, generally alleges that Learning Company misstated its financial results prior to the time it was acquired by Mattel. The Company asked the court to dismiss the suit, which the court granted in May 2001. The plaintiffs appealed the dismissal, and the case is currently pending before the Ninth Circuit Court of Appeals, which has scheduled oral argument for June 4, 2002. The Company intends to vigorously oppose the securities suit. MATTEL INC.: CA State Court Dismisses Derivative Suits, Others Pending ---------------------------------------------------------------------- Mattel, Inc. faces several shareholder derivative suits filed by several stockholders on behalf and for the benefit of the Company in three venues: (1) the Court of Chancery in Delaware, (2) Los Angeles Superior Court in California, and (3) the United States District Court for the Central District of California The suits alleged that the Company's directors breached their fiduciary duties, wasted corporate assets, and grossly mismanaged the Company in connection with its acquisition of Learning Company and its approval of severance packages to certain former executives. Plaintiffs in the California state court actions filed an amended suit in February 2002. In May 2002, the California state court sustained, without leave to amend, defendants' demurrer to the amended suit, on the ground that plaintiffs failed to make pre-suit demand on the Board of Directors. The other suits are still in the preliminary stages. The Company intends to vigorously defend against the suits. PEMCO AVIATION: Trial in GA Race Bias Suit To Commence in June 2002 ------------------------------------------------------------------- Trial in the racial discrimination suit against Pemco Aviation Group, Inc. and its Pemco Aeroplex subsidiary is set to begin this month in the United States District Court for the Northern District of Alabama. The suit was filed in December 1999, seeking declaratory, injunctive relief and other compensatory and punitive damages based upon alleged unlawful employment practices of race discrimination and racial harassment by the Company's managers, supervisors, and other employees. The complaint seeks damages in the amount of $75 million. The court later determined that the group would not be certified as a class and the plaintiffs withdrew their request for class certification. Therefore, the Equal Employment Opportunity Commission (EEOC) subsequently entered the case purporting a parallel class action. The Court has denied consolidation of the cases. Nine of the 36 plaintiffs have accepted an Offer of Judgment propounded by the company. Trial is scheduled to begin in early June for the remainder of the plaintiffs. The Company has taken effective remedial and corrective action, acted promptly in respect to any specific complaint by any employee, and will vigorously defend this case. PEMCO AVIATION: Completely Settles Claims Over UAW Union Workers Strike ----------------------------------------------------------------------- The Pemco Aviation Group, Inc. has fully paid the US$400T settlement in the class action brought against it and its Pemco Aeroplex subsidiary in the Circuit Court of Jefferson County, Alabama on behalf of those persons hired as replacement workers during the strike by the Company's UAW union employees, and who were terminated upon settlement of such strike. The company filed for summary judgment on all claims, and the court granted summary judgment to 35 of the plaintiffs. The Court alo required two individual cases to be tried prior to certification of any issues for appeal. These two cases were tried in June 2001. The court directed a verdict on the Company's behalf in one case and a jury returned with a defense verdict in favor of the Company in the other case. The Company later accepted an offer of settlement proposed by the remaining plaintiffs of approximately $0.4 million and the court approved that settlement. In April 2002, the Company paid this settlement amount. TIFFANY'S GATE: Ontario To Join Toronto's Suit Over Contaminated Salad ---------------------------------------------------------------------- The province of Ontario, Canada is joining an $11 million class action initiated by a Toronto resident against Tiffany's Gate, Inc. after it incurred health-care costs from a recent outbreak of shigella bacteria that's believed to be linked to a Greek-style pasta salad produced by the Company, Canada.com reports. More than 600 people were infected by the bacteria during the outbreak. Toronto resident Nickie Tourlos filed the suit after he was hospitalized with diarrhea and vomiting after eating the salad. The salad was distributed to more than 20 stores and cafeterias in large, commercial-size containers and repackaged into smaller containers or sold to consumers in serving portions at deli counters. "There's a cost to (the Ontario Health Insurance Plan) which means there's a cost to the taxpayer," Health Minister Tony Clement told the Canadian Press. "If there's a culpable party that can be identified by the courts . then I believe the taxpayers do have a right to compensation." Mr. Clement added that the action is not unusual, and estimated the government gets about $10 million to $15 million a year of repayments to OHIP through lawsuits. "This is something that does occur from time to time where we seek to get recompense for some of the OHIP-related services that are otherwise on the taxpayers bill," he said. "So we are joining a lawsuit." Tiffany Gate President Adolph Zarovinsky has denied the charges, saying tests by the Company have found no sign of shigella contamination in its pasta. He told Canada.com that the Company will defend itself against the legal action. VENTAS INC.: Plaintiffs Appeal Dismissal of Suit Over Kindred Spin-off ---------------------------------------------------------------------- Plaintiffs in the class action against Ventas, Inc. appealed the United States District Court for the Western District of Kentucky's dismissal of the suit, which was commenced in May 2001 against the Company, and certain of its current and former officers and employees. The suit alleges that the defendants engaged in a fraudulent scheme to conceal the true nature and substance of the spin-off of Kindred Healthcare, Inc. from the Company in 1998. The scheme resulted in: (1) a violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act, (2) bankruptcy fraud, (3) common law fraud and (4) a deprivation of plaintiffs' civil rights. The plaintiffs allege that the defendants failed to act affirmatively to explain and disclose the fact that the Company was the entity that had been known as Vencor, Inc. prior to the spin off and that a new separate and distinct legal entity assumed the name of Vencor, Inc. after the spin off. The plaintiffs contend that the defendants filed misleading documents in the plaintiffs' state court lawsuits that were pending at the time of the spin off and that the defendants deceptively used the bankruptcy proceedings of Vencor, Inc. (now known as Kindred Healthcare, Inc.) to stay lawsuits against the Company. As a result of these actions, the plaintiffs maintain that they and similarly situated individuals suffered and will continue to suffer severe financial harm. The court dismissed the suit in its entirety on February 4, 2002. The plaintiffs filed a motion requesting that the dismissal be altered to allow the plaintiffs to resume this action if they are unable to obtain relief in the Kindred proceedings in the Bankruptcy Court, and the court granted the plaintiffs' motion on April 5, 2002. On May 6, 2002, the plaintiffs filed an appeal of the district court's dismissal of this action. The plaintiffs have also filed a motion with the Kindred Bankruptcy Court requesting, among other things, that the Kindred Bankruptcy Court set aside portions of the releases of the Company contained in the final plan, as such releases apply to the plaintiffs. The Company is vigorously contesting these motions and the appeal. WISCONSIN: Union Local Agrees To Pay Racial Discrimination Settlement --------------------------------------------------------------------- A laborers union local that discriminated against black job applicants has agreed to close its doors, sell its union hall in Madison and hand over to plaintiffs the money it raises as payment for civil damages to the men and women against whom it discriminated, The Plain Dealer reported recently. The settlement involving Local 496 of the Laborers' International Union of North America is the last chapter in a nearly $2 million judgment rendered against the union in 1991 for systematically refusing to hire black workers when the Perry nuclear power plant was under construction more than 20 years ago. The suit, filed in 1984, went four times to the Sixth US Court of Appeals in Cincinnati and once to the US Supreme Court, which declined to hear it. Edward Kramer, the lawyer who represented the 53 people who were members of the class action, said the settlement is apparently the first time in the history of the Civil Rights Act that a discriminating labor union has agreed to shut down as one of the remedies in the case. Mr. Kramer said shutting down the local union was key to a fair resolution. "We wanted Local 496 to no longer be in existence," he said. The sale of the local's union hall in Madison and some computers and phones is expected to raise about $250,000, which will be distributed among those who filed suit. The plaintiffs already have received about US$1.7 million for distribution. David Millstone, head of the labor and employment practice at the Squire Sanders & Dempsey law firm, said he had never seen an instance in which a local union had to dissolve as part of the settlement of a Title VII discrimination case. Eben McNair, lawyer for the local, said its closing was not a punitive move, but a predictable outcome, given that it had to liquidate all its assets. Mr. Kramer, the plaintiffs' lawyer said shutting down was key to resolution, "We didn't want them to just move down the street." Richard Greer, spokesman for the Laborers International Union in Washington, DC, said the international will eventually designate another local to assume jurisdiction over the 130 members of Local 496. The case began in 1984 during construction of the Perry nuclear power plant. By then, Local 496 had grown to more than 500 workers. Black membership during the same period had gone from 16 to 18. Mr. Kramer said Local 496 set up a Catch-22 to freeze out black workers. They had to be a member of Local 406 to work at the Perry plant, but to be a member of Local 496, they needed to already have a job and be sponsored by someone in the union. New Securities Fraud Cases ALCATEL SA: Leo Desmond Commences Securities Fraud Suit in New York ------------------------------------------------------------------- The Law Offices of Leo W. Desmond initiated a securities class action on behalf of: (1) all persons other than defendants who purchased the American Depositary Shares (ADSs) of Alcatel relating to Alcatel's Class O common shares (Nasdaq:ALAO) in or traceable to the initial public offering (IPO) of the ADSs conducted by Alcatel on or about October 20, 2000; and (2) all persons other than defendants who purchased Alcatel's Class A common shares (NYSE:ALA) and Class O common shares in the form of ADSs between October 20, 2000 and May 29, 2001. The case is pending in the United States District Court for the Southern District of New York against the Company, Serge Tchuruk and Jean-Pierre Halbron. It is alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10(b)(5) promulgated thereunder, by issuing a series of materially false and misleading statements to the market throughout the class period which statements had the effect of artificially inflating the market price of the Company's securities. For more details, contact Leo W. Desmond by Phone: 888-337-6663, 561/712-8000 by E-Mail: Info@SecuritiesAttorney.com or visit the firm's Website: http://www.SecuritiesAttorney.com DUKE ENERGY: Leo Desmond Commences Securities Suit in S.D. New York ------------------------------------------------------------------- The Law Offices of Leo W. Desmond initiated a securities class action on behalf of shareholders who acquired Duke Energy Corporation (NYSE:DUK) securities between July 22, 1999 and May 17, 2002, inclusive. The case is pending in the United States District Court for the Southern District of New York against the Company and: (1) Richard Priory, (2) Robert Brace, (3) David L. Hauser, (4) Keith G. Butler, (5) Sandra P. Meyer, (6) Jeffrey L. Boyer and (7) Richard J. Osborne It is alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10(b)(5) promulgated thereunder, by issuing a series of materially false and misleading statements to the market throughout the class period which statements had the effect of artificially inflating the market price of the Company's securities. For more details, contact Leo W. Desmond by Phone: 888-337-6663, 561/712-8000 by E-Mail: Info@SecuritiesAttorney.com or visit the firm's Website: http://www.SecuritiesAttorney.com DYNEGY INC.: Schoengold & Sporn Commences Securities Suit in S.D. TX -------------------------------------------------------------------- Schoengold & Sporn, PC initiated a securities class action on behalf of all persons or institutions who purchased shares of Dynegy, Inc. (NYSE:DYN) between April 17, 2001 through April 25, 2002, in the United States District Court for the Southern District of Texas. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and misleading public disclosures regarding the Company's cash flows from operations and failing to disclose information material to investors, including the details of its "Project Alpha," a transaction that involved two special purpose entities and a partnership the Company created for the purposes of increasing cash flow from operations and decreasing tax costs. As a result of defendants' misleading statements and omissions during the class period, the price of the Company's common stock traded at artificially inflated prices. For more details, contact Ashley Kim or Jay P. Saltzman by Mail: 19 Fulton Street, Suite 406, New York NY 10038 by Phone: 866-348-7700 by Fax: 212-267-8137 or by E-mail: Shareholderrelations@spornlaw.com DYNEGY INC.: Rabin & Peckel Commences Securities Fraud Suit in S.D. TX ---------------------------------------------------------------------- Rabin & Peckel LLP initiated a securities class action in the United States District Court for the Southern District of Texas- Houston Division, on behalf of all persons or entities who purchased Dynegy, Inc. securities (NYSE:DYN) between April 17, 2001 and April 24, 2002, both dates inclusive. The suit names as defendants the Company and: (1) Charles L. Watson, (2) Robert D. Doty, and (3) Stephen W. Bergstrom The complaint charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The suit alleges that the Company and its top officers inflated the price of Company stock in order to sell almost $500 million in stock to the investing public. Defendants knew that concealing the Company's true vehicle, Project Alpha, for creating cash flow from operations and the true impact it would have on the Company provided the only way that they could foster the perception in the business community that the Company was not "Enron Corp.," i.e., the only way it could post the revenue and earnings per share growth claimed by defendants. Prior to the class period, the individual defendants realized that many of their complicated deals to generate reported net income did not generate cash flow. The defendants knew that investors would eventually discover this discrepancy and the Company's stock price would collapse. To prevent this, the Company classified what was essentially a loan from CitiGroup, Inc. as an operating activity rather than as a financing activity as required by Generally Accepted Accounting Principles. The defendants' wrongful course of business: (i) artificially inflated the price of the Company's stock during the class period; (ii) deceived the investing public, including plaintiff and other class members, into acquiring the Company's securities at artificially inflated prices; (iii) allowed the individual defendants to extract millions of dollars in bonuses for creating the appearance of the Company's phenomenal cash flow from operations growth; and (iv) allowed the Company to sell nearly half a billion dollars of its own securities to the unsuspecting public. For more details, contact Eric Belfi or Sharon Lee by Mail: 275 Madison Avenue, New York, NY 10016 by Phone: 800-497-8076 or 212-682-1818 by Fax: 212-682-1892 by E-mail: email@rabinlaw.com or visit the firm's Website: http://www.rabinlaw.com. EXPEDIA INC.: Bull & Lifshitz Files Suit Over USA Networks Tender Offer ----------------------------------------------------------------------- Bull & Lifshitz, LLP initiated a securities class action in the Superior Court of Washington for King County on behalf of all persons, other than defendants and those in privity with defendants, who own the common stock of Expedia, Inc. (NASDAQ: EXPE). The complaint charges that on June 3, 2002, USA Interactive announced its intention to commence exchange offers with three USA public subsidiaries, Expedia, Inc (Expedia), Hotels.com and Ticketmaster pursuant to which USA would seek to increase its equity ownership to up to 100% in each of them. In the exchanges, stockholders of these public companies would be offered the opportunity to exchange their shares for USA shares on the basis of conversion ratios that, in each case, reflect a premium of 7.5% to market as of the close of market on Friday, May 31. Specifically, the suit alleges that the price per share to be paid to the class members is unconscionable, unfair and grossly inadequate consideration. For more details, contact Peter D. Bull or Joshua M. Lifshitz by Phone: 212-213-6222 by E-mail: counsel@nyclasslaw.com or visit the firm's Website: http://www.nyclasslaw.com EXPEDIA INC.: Wechsler Harwood Sues Over USA Networks Tender Offer ------------------------------------------------------------------ Wechsler Harwood Halebian & Feffer LLP initiated a securities class action against Expedia, Inc. (Nasdaq:EXPE) in the Superior Court of Washington For King County. The action was brought following an offer by USA Networks' subsidiary, USA Interactive, to buy each publicly held share of the Company in exchange for 2.6969 USA Interactive shares. Defendant USA Networks and its designees currently hold 64.2% of the Company's outstanding stock and has a 94.9% voting control. Based upon the relative valuations of USA Networks and Expedia, the USA Offer values Expedia shares at $76.86 per share. Expedia shares closed on Friday, May 31, 2002 at $71.50 per share. Therefore, the USA Offer includes a premium of only 7%, which is considerably lower than the norm in instances where a majority stockholder seeks to acquire all of the publicly traded shares of a company. For more details, contact Patricia Guiteau by Mail: 488 Madison Avenue, 8th Floor New York, New York 10022 by Phone: 877-935-7400 or by E-mail: pguiteau@whhf.com GREAT ATLANTIC: Charles Piven Commences Securities Suit in New Jersey --------------------------------------------------------------------- The Law Offices Of Charles J. Piven, PA initiated a securities class action on behalf of shareholders who acquired The Great Atlantic & Pacific Tea Company, Inc. (NYSE:GAP) securities between November 15, 2001 and May 28, 2002, inclusive. The case is pending in the United States District Court for the District of New Jersey, against the Company and: (1) Christian W. E. Haub, (2) Elizabeth Culligan, (3) Fred Corrado, (4) Mitchell Goldstein and (5) Kenneth A. Uhl The complaint charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market and overstating its operating results throughout the class period which conduct had the effect of artificially inflating the market price of Company securities. For more details, contact Charles J. Piven by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202 by Phone: 410-986-0036 by E-mail: hoffman@pivenlaw.com or visit the firm's Website: http://www.pivenlaw.com HALLIBURTON COMPANY: Leo Desmond Commences Securities Suit in N.D. TX --------------------------------------------------------------------- The Law Offices of Leo W. Desmond initiated a securities class action on behalf of shareholders who acquired Halliburton Company (NYSE:HAL) securities between July 22, 1999 and May 28, 2002, inclusive. The case is pending in the United States District Court for the Northern District of Texas against the Company. It is alleged that defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10(b)(5) promulgated thereunder, by issuing a series of materially false and misleading statements to the market throughout the class period which statements had the effect of artificially inflating the market price of the Company's securities. For more details, contact Leo W. Desmond by Phone: 888-337-6663, 561/712-8000 by E-Mail: Info@SecuritiesAttorney.com or visit the firm's Website: http://www.SecuritiesAttorney.com LANTRONIX INC.: Cauley Geller Commences Securities Suit in C.D. CA ------------------------------------------------------------------ Cauley Geller Bowman & Coates, LLP initiated a securities class action in the United States District Court for the Central District of California on behalf of purchasers of Lantronix Inc. (Nasdaq:LTRX) publicly traded securities during the period between April 25, 2001 and May 30, 2002, inclusive. The complaint charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint 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 a secondary offering of eight million shares, raising proceeds of $64 million on July 17, 2001. The defendants' alleged wrongful course of business: (1) artificially inflated the price of Company stock during the class period; (2) deceived the investing public, including plaintiff and other class members, into acquiring the Company's securities at artificially inflated prices; (3) allowed certain of the individual defendants to sell more than $13 million worth of the shares held/controlled by them and allowed the Company to sell $50 million worth of its own stock; and (4) permitted the Company to grow and benefit economically from the wrongful course of conduct. The Company and its top officers inflated the price of its stock in order to pursue an accelerated securities sale program. Defendants knew that concealing the Company's joint venture and the true impact it would have on the Company provided the only way that they could foster the perception in the business community that it was a "growth company," i.e., the only way the Company could post the revenue and earnings per share growth claimed by defendants. For more details, contact Jackie Addison, Sue Null or Shelly Nicholson by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944 by E-mail: info@classlawyer.com or visit the firm's Website: http://www.classlawyer.com LIGHT MANAGEMENT: Schiffrin & Barroway Lodges Securities Suit in NY -------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Southern District of New York, charging the Light Management Group, Inc. (OTCBB:LMGR) of misleading shareholders about its business and financial condition. Plaintiff seeks damages for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (and/or the Securities Act of 1933) on behalf of all investors who bought the Company's securities between June 9, 1999 and November 20, 2001. The suit alleges that the Ontario-based Company misrepresented its financial results, and failed to disclose weaknesses in its financial internal controls. Specifically, the complaint alleges that, during the class period, financial results for fiscal 1999 were restated twice. Financial results for the first, second, and third quarter of 2000 were each separately restated once. In addition, year-end results for fiscal 2000 were also restated. Independent Auditor Defendants, Slayton (auditor for fiscal 1999) and Feldman Sherb (auditor for fiscal 2000) falsely represented that year- end results had been presented in accordance with generally accepted accounting principles (GAAP) based upon an audit that was purportedly conducted in compliance with generally accepted auditing standards (GAAS). Defendants' misconduct included: (1) booking sales that later had to be reversed; (2) failing to account for escalating costs and non-salary based compensation; (3) misclassifying inventory as capital equipment; (4) failing to account for expenses incurred by the Company which were paid by related entities in the period incurred; (5) failing to book expenses due to the settlement of debt with related parties; and (6) substantially understating interest expenses. For more details, contact Marc A. Topaz or Stuart L. Berman by Phone: 1-888-299-7706/ (610) 822-2221 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com MERRILL LYNCH: Zwerling Schachter Launches Securities Suit in S.D. NY --------------------------------------------------------------------- Zwerling, Schachter & Zwerling, LLP initiated a securities class action against Merrill Lynch & Co., Inc., and its former Internet stock analyst and First Vice President, Henry Blodget in the United States District Court for the Southern District of New York on behalf of all persons or entities who purchased or otherwise acquired the securities of Excite@Home Corporation (OTC Bulletin Board: ATHQE) between June 7, 1999 and June 20, 2001, inclusive. The complaint alleges that defendants violated the federal securities laws by issuing analyst reports regarding Excite@Home that recommended the purchase of Excite@Home and which set price targets for Excite@Home common stock which were materially false and misleading and lacked any reasonable factual basis. The complaint further alleges that, when issuing their Excite@Home analyst reports, the defendants failed to disclose significant, material conflicts of interest, which resulted from their use of Mr. Blodget's reputation and his ability to issue favorable analyst reports, in which they recommended the purchase of Excite@Home stock. The complaint also alleges that defendants failed to disclose material, non-public, adverse information that they possessed about Excite@Home. Throughout the class period, the defendants maintained an "ACCUMULATE/BUY" or "ACCUMULATE/ACCUMULATE" recommendation on Excite@Home in order to obtain and support lucrative financial deals for Merrill Lynch. As a result of defendants' false and misleading analyst reports, Excite@Home's common stock traded at artificially inflated levels during the class period. For more details, contact Anthony Prisco or Don Lanier by Phone: 800-721-3900 by E-mail: aprisco@zsz.com or dlanier@zsz.com or visit the firm's Website: http://www.zsz.com MERRILL LYNCH: Rabin & Peckel Commences Securities Fraud Suit in NY -------------------------------------------------------------------- Rabin & 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 Merrill Lynch Internet Infrastructure Holdrs depository receipts issued by the Merrill Lynch Internet Infrastructure Holdrs/SM Trust (AMEX:IIH) between February 24, 2000 through April 8, 2002, both dates inclusive. Merrill Lynch & Co., Inc., Merrill Lynch Pierce Fenner & Smith , the Trust and the signatories of the Registration Statement and Prospectus issued on behalf of the Trust, are named as defendants in the action. The suit alleges that defendants violated sections 11, 12(a)(2), and 15 of the Securities Act of 1933 by issuing a series of false and misleading statements, and omissions of material fact contained in the Prospectus filed with the SEC on February 24, 2000, for the issuance and initial public offering of one billion Internet Infrastructure HOLDRS. In particular, it is alleged that the prospectus was materially false and misleading because it: (1) failed to disclose that defendants recommended the purchase of and set price targets for stocks of certain of the companies that were included as assets of the Trust without any reasonable factual basis therefore; (2) failed to disclose significant material conflicts of interest to obtain investment banking business for Merrill Lynch; and (3) failed to disclose material, non-public, adverse information which they possessed about such companies, as well as their true opinion about such companies. It is further alleged that the Prospectus failed to disclose that, consequently, stocks of the Underlying Securities covered by Merrill Lynch traded at artificially inflated prices, which in turn artificially inflated the price of the Internet Infrastructure Holdrs throughout the class period, causing plaintiff and the other members of the class to suffer damages. For more details, contact Eric Belfi or Sharon Lee by Phone: 800-497-8076 or 212-682-1818 by Fax: 212-682-1892 by E-mail: email@rabinlaw.com or visit the firm's Website: http://www.rabinlaw.com MERRILL LYNCH: Cohen Milstein Launches Securities Fraud Suit in S.D. NY ----------------------------------------------------------------------- Cohen, Milstein, Hausfeld & Toll, PLLC initiated a securities class action in the United States District Court for the Southern District of New York on behalf of purchasers of the common stock of GoTo.com now known as Overture Services, Inc. (Nasdaq: OVER) between the period of January 11, 2001 through June 6, 2001, against Merrill Lynch & Co., Inc. and its internet analyst Henry Blodget. Cohen, Milstein, Hausfeld & Toll, PLLC is also involved in other cases against Merrill Lynch and Mr. Blodget on behalf of purchasers of Infospace, Internet Capital Group, Aether Systems, Excite@Home, and 24/7 Real Media, Inc. stock. The suit alleges that to obtain investment banking business from GoTo, defendants issued positive ratings on GoTo which were materially misleading as they were inconsistent with their own contemporaneous, private adverse assessments of GoTo. For example, on the very day of the initiation of coverage, Mr. Blodget admitted in an e-mail that there was nothing interesting about GoTo except banking fees. The suit also describes how when defendants learned that GoTo had awarded its underwriting business to another firm, defendants downgraded GoTo in retribution. For more details, contact Steven J. Toll or Diana Steele by Mail: 1100 New York Avenue, NW, West Tower, Suite 500, Washington, DC 20005 by Phone: 888-240-0775 or 202-408-4600 by E-mail: stoll@cmht.com or dsteele@cmht.com or visit the firm's Website: http://www.cmht.com MILLER JOHNSON: Chestnut & Cambronne Lodges Securities Fraud Suit in MN ----------------------------------------------------------------------- Chestnut & Cambronne, PA initiated a securities class action in the United States District Court for the District of Minnesota against Miller Johnson Steichen Kinnard, Inc., on behalf of Dr. Daryl Cooper and all others who purchased Stockwalk Group Commercial Paper and held such paper on September 27, 2001. The suit states that approximately $32 million in Stockwalk commercial paper was unregistered and sold in violation of Section 12(1) of the Securities Act of 1933, 15 U.S.C. sec. 77l(1). Since the collapse of the issuer, Stockwalk Group, Inc., and the bankruptcy of that company, the securities have become worthless. For more information, contact Karl L. Cambronne or Jeffrey D. Bores by Mail: 3700 Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, MN 55402 by Phone: 612-339-7300 by E-mail: kcambronne@chestnutcambronne.com or jbores@chestnutcambronne.com. MIRANT CORPORATION: Wechsler Harwood Launches Securities Suit in GA ------------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP initiated a securities class action in the United States District Court for the District of Georgia, on behalf of all shareholders of Mirant Corporation (NYSE:MIR) who purchased stock between January 19, 2001 and May 6, 2002 (the "Class Period"), inclusive, for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. 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 issuing financial statements which included revenue and earnings which were materially inflated because defendants failed to disclose that the Company had failed to establish reserves to provide for the return of revenue illegally obtained as a result of its fraudulent activity in the California energy market, as well as possible state and federal fines in connection with those fraudulent activities. For more details, contact David Leifer by Mail: 488 Madison Avenue, 8th Floor, New York, New York 10022 by Phone: 877-935-7400 (Toll Free) by E-mail: dleifer@whhf.com or visit the firm's Website: http://www.whhf.com SPECIALTY LABORATORIES: Schiffrin & Barroway Lodges Securities Suit CA ----------------------------------------------------------------------- Schiffrin & Barroway LLP initiated a securities class action against Specialty Laboratories, Inc. (NYSE:SP), claiming that the Company misled investors about its business and financial condition. The suit is pending in the US District Court for the Central District of California on behalf of all investors who bought the Company's securities pursuant to its Registration Statement and/or between December 8, 2000 and April 10, 2002. The California-based Company, a research-based clinical laboratory, develops and performs esoteric clinical laboratory tests. The Company went public in 12/00 selling five million shares at $16.00 per share. Specifically, the complaint alleges that in June and October of 2001, the California Department of Health Services representing the State of California and acting as agent of the Centers for Medicare and Medical Services (CMS), inspected Specialty Labs. The inspectors were mortified by their findings. As a result of the inspections, Specialty Labs was initially cited by the State of California with 20 deficiencies, and then in a separate statement in February 2002 for 12 overlapping deficiencies by CMS. The Company was notified that if it failed to correct six of the issues, relating primarily to personnel licensing and the enforcement of regulatory requirements, the Company would face monetary and other penalties, including the possible revocation of its license. The Company's deficiencies in question relate to two broad areas, both of which focus on the number of licensed personnel in the lab. First, historically there have been required ratios for labs in terms of the number of licensed supervisors per the number of testing personnel. Second, California implemented a requirement for labs performing testing in the areas of cytogenetics and molecular genetics. Specifically, directors of such operations must now be at least at the M.D. or Ph.D. level and must also be Board certified in their area of focus. However, defendants sought to avoid compliance with California's laboratory requirements in order to inflate the Company's revenue and EPS. On April 11, 2002, before the market opened, the Company issued a press release, which provided a more comprehensive explanation and discussion of the compliance problems. On this news, the Company's shares plunged to an all time low of $10-1/4, more than an 80% drop from the class period high. For more details, contact the Shareholder Relations Manager by Phone: 888-299-7706/610-822-2221 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com SPECIALTY LABORATORIES: Scott + Scott Launches Securities Suit in CA --------------------------------------------------------------------- Scott + Scott, LLC initiated a securities class action on behalf of purchasers of the securities of Specialty Laboratories, Inc. (NYSE: SP) from December 8, 2000 through April 10, 2002 inclusive, in the United States District Court, Central District of California. The suit alleges that the Company and certain of its officers and directors violated the Securities Exchange Act of 1934 and the Securities Act of 1933. The Company is a research-based clinical laboratory company that develops and performs esoteric clinical laboratory tests. It went public in December of 2000, selling five million shares at $16.00 per share. The suit alleges that in June and October of 2001, the California Department of Health Services, representing the State of California and acting as agent of the Centers for Medicare and Medical Services (CMS), inspected Specialty Labs. The inspections resulted in the State of California citing Specialty Labs with 20 deficiencies. Matters became worse, however, and in a separate statement in February 2002, the CMS cited the Company with 12 overlapping deficiencies. Although the Company was notified of the deficiencies, defendants sought to avoid compliance with California's laboratory requirements in order to inflate the Company's revenue and EPS. The Company took no corrective action, despite being notified that if it failed to correct six of the deficiencies, relating primarily to personnel licensing and the enforcement of regulatory requirements, the Company would face monetary and other penalties, including the possible revocation of its license. The Company's deficiencies in question relate to two broad areas, both of which focus on the number of licensed personnel in the lab. First, historically, there have been required ratios for labs in terms of the number of licensed supervisors per the number of testing personnel. Second, California implemented a requirement for labs performing testing in the areas of cytogenetics and molecular genetics. Specifically, directors of such operations must now be at least at the M.D. or Ph.D. level and must also be Board certified in their area of focus. On April 11, 2002, before the market opened, the Company issued a press release, which detailed the Company's compliance problems. On this news, the Company's shares plunged to an all-time low of $10-1/4, more than an 80% drop from the class period high. For more details, contact Neil Rothstein or David R. Scott by Phone: 800-404-7770 by E-mail: nrothstein@scott-scott.com or drscott@scott- scott.com or visit the firm's Website: http://www.scott-scott.com VERISIGN INC.: Scott + Scott Commences Securities Fraud Suit in N.D. CA ----------------------------------------------------------------------- Scott + Scott, LLC initiated a securities class action on behalf of purchasers of the securities of VeriSign, Inc. (Nasdaq: VRSN) from January 25, 2001 through April 25, 2002, inclusive, in the United States District Court for the Northern District of California. The complaint alleges that the Company and certain of its officers and directors issued false and misleading statements concerning the Company's business and financial condition, in violation of the Securities Exchange Act of 1934. These statements artificially inflated the price of the Company's securities. Specifically, as alleged in the complaint, plaintiff and the class were injured as a result of defendants' misrepresentations, omissions and other fraudulent conduct. The complaint alleges that during the class period, defendants sought to artificially increase the Company's revenue and margins and to create the perception that its deferred revenue growth was derived organically. In fact, approximately 10% of the Company's revenue was derived from sales to small companies in which the Company had invested and from questionable "barter transactions." Although the Company claimed that these barter transactions were separately negotiated and recorded at terms the Company considered to be at arm's length and fair value, the revenue and earnings that the Company recognized from its relationship with these customers was not an accurate measure of the "real" demand for Company products. Also suspect was the quality of the non- monetary portion of revenue recorded from these barter transactions. As part of their attempt to up the price of Company stock, defendants misrepresented the Company's true prospects in an effort to conceal its improper acts until defendants were able to sell at least $26 million worth of their own Company stock and use its shares to acquire companies in stock-for-stock transactions. On April 25, 2002, the Company admitted it violated Generally Accepted Accounting Principles and SEC rules by, among other things, engaging in improper barter transactions and affiliate sales. These transactions had the effect of dramatically overstating the Company's margins and financial statements. On the Company's partial disclosures on April 25, 2002, the Company's shares plummeted by more than 50%. As a result of defendants' misconduct, alleged, plaintiff and the class have suffered substantial damages. For more details, contact Neil Rothstein or David R. Scott by Phone: 800-404-7770 by E-mail: nrothstein@scott-scott.com or drscott@scott- scott.com or visit the firm's Website: http://www.scott-scott.com VERISIGN INC.: Schiffrin & Barroway Lodges Securities Suit in N.D. CA --------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Northern District of California, alleging that VeriSign Inc. (Nasdaq:VRSN) misled shareholders about its business and financial condition. Plaintiff seeks damages for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (and/or the Securities Act of 1933) on behalf of all investors who bought Company securities between January 25, 2001 through April 25, 2002. The suit alleges that the California-based Company, during the class period, and other defendants sought to artificially increase the Company's revenue and margins and to create the perception that its deferred revenue growth was derived organically. In fact, approximately 10% of the Company's revenue was derived from sales to small companies in which it had invested and from dubious "barter transactions." The Company's revenues and earnings derived from related parties were dubious at best. Specifically, whenever a two-way set of transactions occurs in which a company acts as both the lender and service provider, an investor lacks assurance as to whether the related parties would have made similar decisions regarding purchases in the absence of financing from that company. Despite the Company's claims that these transactions were separately negotiated and recorded under terms the Company considered to be at arm's length and of fair value, the revenue and earnings the Company recognized from its relationship with these customers was not an accurate measure of the "real" demand for its products. Equally dubious was the quality of the non-monetary portion of revenue recorded from reciprocal agreements. 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 $26 million worth of their own stock and use the Company's shares to acquire companies in stock-for-stock transactions. In order to overstate revenues and assets, the Company violated Generally Accepted Accounting Principles and SEC rules by, among other things, engaging in improper barter transactions and affiliate sales. These transactions had the effect of dramatically overstating the Company's margins and financial statements. On the Company's partial disclosures on April 25, 2002, the Company's shares plummeted by more than 50%. For more details, contact Marc A. Topaz or Stuart L. Berman by Phone: 888-299-7706, 610-822-2221 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 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. 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