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/raid1/www/Hosts/bankrupt/CAR_Public/020624.mbx C L A S S A C T I O N R E P O R T E R Monday, June 24, 2002, Vol. 4, No. 123 Headlines APPLERA CORPORATION: Asks For Dismissal of Consolidated Securities Suit ARGONAUT INSURANCE: Tentatively Agrees to Settle Insurance Claims Suit ARIZONA: Tucson Residents to Receive Payment for Water Project Damage BY US INTERNATIONAL: Recalls 132T Mountain Bikes Over Injury Hazard CATHOLIC CHURCH: Plaintiffs in Boston Abuse Suits Agree to Negotiations CRITICAL PATH: CA Court Grants Final Approval to $17.5M Suit Settlement DATRONIC EQUIPMENT: Asks for Dismissal of Breach of Contract Suit in CO DOMINION TELECOM: Landowners Sue Seeking Compensation for Use of Land FLORIDA: Appeals Court Says State Not Required to Refund Unlawful Tax HOMEAMERICAN CREDIT: Faces Consumer Suit Over Document Fees in N.D. IL LEASECOMM CORPORATION: To Mount Vigorous Defense in Fraud Suit in CA MEDICAL RESIDENTS: Medical Group Reduces Trainee Physician's Work Hours MICROSOFT CORPORATION: Resists States' Remedies in Antitrust Litigation NABORS INDUSTRIES: TX Court Approves Settlement of Wages Antitrust Suit NEW YORK: City's Parks Dep't Charged With Racial Bias Against Blacks PENNSYLVANIA: Pittsburgh Officials Agree to Settle Police Abuse Cases PINNACLE SYSTEMS: Plaintiffs File Third Amended Securities Suit in CA TOBACCO LITIGATION: Lorillard to Appeal Award in Secondhand Smoke Suit TRISTATE CREMATORY: Property Inspection Reveals More Human Remains TYCO INTERNATIONAL: Faces Several Securities Fraud Suits in NY, FL UICI: Parties Fail to Reach Resolution in Securities Suit in N.D. TX UL UNITED: Voluntarily Recalls Electrical Paintings for Shock Hazard UST LIQUIDATING: CA Appeals Court Reinstates Suit Over Veeder-Root Sale VERISIGN INC.: Enters Agreement Prohibiting Mailing of Domain Notices WISCONSIN: Judge Clarifies Rules for Mentally Ill at Supermax Prison XOMA LTD.: Plaintiffs File Amended Unfair Competition Suit in CA Court ********* DUKE ENERGY: Emerson Firm Commences Securities Fraud Suit in S.D. NY EDISON SCHOOLS: Emerson Firm Commences Securities Fraud Suit in S.D. NY FLEXTRONICS INTERNATIONAL: Bernstein Liebhard Lodges Suit in S.D. NY PEROT SYSTEMS: Wolf Haldenstein Commences Securities Suit in N.D. TX RELIANT ENERGY: Schiffrin Barroway Lodges Securities Fraud Suit in TX ********* APPLERA CORPORATION: Asks For Dismissal of Consolidated Securities Suit ----------------------------------------------------------------------- Applera Corporation filed a motion to dismiss the consolidated securities class action relating to its 2000 offering of shares of Applera - Celera stock. The suit was initially filed as five lawsuits on behalf of purchasers of Applera - Celera stock in the Company's follow-on public offering of Applera - Celera stock completed on March 6, 2000. In the offering, the Company sold an aggregate of approximately 4.4 million shares of Applera - Celera stock at a public offering price of $225 per share. The consolidated suit generally alleges that the prospectus used in connection with the offering was inaccurate or misleading because it failed to adequately disclose the alleged opposition of the Human Genome Project and two of its supporters, the governments of the United States and the United Kingdom, to providing patent protection to the Company's genomic-based products. Although the Celera Genomics group has never sought, or intended to seek, a patent on the basic human genome sequence data, the complaint also alleges that the Company did not adequately disclose the risk that it would not be able to patent this data. The Company's dismissal motion is now pending before the court. Although the Company believes the asserted claims are without merit and intends to defend the case vigorously, the outcome of this or any other litigation is inherently uncertain. ARGONAUT INSURANCE: Tentatively Agrees to Settle Insurance Claims Suit ---------------------------------------------------------------------- Argonaut Insurance Company has tentatively agreed to settle a class action filed in Los Angeles Superior Court alleging that the Company in isolated instances inadvertently miscoded loss data regarding workers' compensation claims reported to the California Workers Compensation Insurance Rating Bureau from 1989 through 1993. Following mediation, the Company tentatively agreed, without admitting liability or any wrongdoing and subject to court approval, to enter into a class action settlement resolving all claims. The Company accrued $1.0 million for legal fees as of March 31, 2002. Management is unable to reasonably estimate at this time the amounts, which may be paid to class members under the tentative settlement. ARIZONA: Tucson Residents to Receive Payment for Water Project Damage --------------------------------------------------------------------- A Pima County judge has ordered the city of Tucson, Arizona to abide by a settlement with thousands of Tucson homeowners who sued over damage caused by Central Arizona Project (CAP) water, the Associated Press Newswires reports. Damage payments to the 4,300 class action plaintiffs could total nearly US$10 million, the Tucson Citizen reports. "That's fantastic. I'm totally stunned," said Lupe Escobar, who still has not paid the $5,000 repair bill from CAP water-related damage to her home. Tucson Water Director David Modeer and Mayor Robert Walkup said the city will not appeal the decision. The city has the money to pay the claims, said Mr. Modeer. The ruling by Judge Charles V. Harrington should begin a process allowing participants in the suit to file damage claims with the city. This process was halted after the city attorneys balked at the provision in the agreement asking the city to pay the plaintiffs' attorney fees. Judge Harrington ruled that the matter of attorneys' fees may be decided after the settlement agreement is resolved. CAP was designed to augment the city's dwindling groundwater supplies with Colorado River water delivered to 80,000 homes through a 336-mile canal. From 1992 to 1994, the utility delivered CAP water to its customers directly, without a filtration process, with disastrous results. The residents' water pipes and appliances were damaged. Some homes received rust-colored, foul-smelling and bad-tasting water that corroded or burst pipes, plus a mutiplicity of other problems like growth of mold spores, trees growing in holes in their homes and tiles falling off the walls. CAP delivery stopped in 1994 and an improved water program surfaced after years of infrastructure improvements. In 1995, Tucson approved the Water Consumer Protection Act to prevent any recurrence of CAP's direct treatment and delivery of CAP water. BY US INTERNATIONAL: Recalls 132T Mountain Bikes Over Injury Hazard ------------------------------------------------------------------- BY US International Co. Ltd. is cooperating with the US Consumer Product Safety Commission (CPSC) by voluntarily recalling about 132,000 Next Ultra Shock mountain bicycles with "Ballistic 105" front suspension forks. Dynacraft Industries Inc., of San Rafael, Calif., was the sole distributor of these bicycles. The Company manufactured the forks on these bicycles that can break apart, causing riders to lose control, fall and suffer serious injury. CPSC previously announced the recall of about 103,000 of these forks sold on bicycles manufactured by Brunswick Corp. There have been 20 reports of the suspension forks breaking on the Next Ultra Shock bicycles, resulting in 19 riders suffering injuries that include abrasions, concussions and chipped teeth. The recall includes only Next Ultra Shock bicycles, which are blue, with model numbers 8524-14 and 8526-20. They were manufactured between April 1999 and November 9, 1999. A label affixed to the frame near the crank housing identifies the model and date of manufacture. The name "Ultra Shock" is written on the bicycle down tube in white lettering. Wal-Mart stores nationwide sold these mountain bikes from May 1999 through December 2000 for about $150. For more information, contact Dynacraft Industries by Phone: (800) 288- 1560 between 7 am and 4 pm PT Monday through Friday or visit the firm's Website: http://www.dynacraftbike.comfor information on receiving a free replacement fork and free installation. CATHOLIC CHURCH: Plaintiffs in Boston Abuse Suits Agree to Negotiations ----------------------------------------------------------------------- Attorneys for the people who alleged they were molested by priests in the Archdiocese of Boston agreed to suspend investigations for 30 days and discuss a settlement, the Associated Press reports. Donna M. Morrissey, a spokeswoman for the Boston Archdiocese, confirmed that the Archdiocese and lawyers for 275 alleged victims planned to enter preliminary discussions. The negotiations will mean that a deposition of Cardinal Bernard Law that had been scheduled for Thursday will not take place. Attorney Roderick MacLeish told AP that other depositions and similar discovery will be postponed for at least 30 days while the lawyers and the archdiocese attempt to set a framework for a settlement, MacLeish said. However, one key attorney in the suit said that he will not go along with the negotiations. Attorney Mitchell Garabedian, who represents 86 people who say they were molested by defrocked priest John J. Geoghan, said he plans to ask a judge next month to force the archdiocese to honor a tentative US$15-30 million settlement, that the archdiocese and his clients put together. The archdiocese later backed out. The archdiocese is also under investigation by a grand jury, convened by Massachusetts Attorney General Thomas Reilly, which wants to know if Cardinal Law and his associates failed to keep accused sex abusers away from contact with children, according to an AP report. CRITICAL PATH: CA Court Grants Final Approval to $17.5M Suit Settlement ----------------------------------------------------------------------- The United States District Court for the Northern District of California granted final approval to a settlement in the securities class action against Critical Path, Inc. (Nasdaq:CPTH). The suits allege violations of federal securities laws relating to financial restatements for the third and fourth quarters of 2000. As previously announced, the settlement provides for a payment of $17.5 million in cash -- which will be covered by the Company's liability insurance -- and the issuance by the Company of warrants to purchase 850,000 shares of Company common stock at an exercise price of $10.00 per share. "We are pleased that the Court has given the settlement its approval, and we are excited to continue to build upon Critical Path's momentum in the marketplace," said Critical Path Chief Executive Officer William McGlashan, Jr., who restored the company to financial stability last year and refocused its business with a new management team. For more information, contact Marcie Powers by Phone: 415/541-2662 (For Reporters) or by E-mail: shane.dolgin@cp.net or contact Mike Bishop by Phone: 415/541-2619 or by E-mail: Mike.bishop@cp.net DATRONIC EQUIPMENT: Asks for Dismissal of Breach of Contract Suit in CO ----------------------------------------------------------------------- Datronic Equipment Income Fund XVI, LP asked Colorado State Court to dismiss a class action filed against it and: (1) Lease Resolutions Corporation (its general partner), (2) other limited partnerships of which Lease Resolution Corporation is the general partner, and (3) certain "unnamed" officers and directors of the general partner The suit prays for a declaratory judgment concerning certain winding up decisions and expenses of the Company and the other partnerships, including the reserve fund for potential liabilities which was established under Delaware law, and that the general partner and its officers and directors shall not be indemnified or have their attorneys' fees and costs to be incurred in the filed action paid by the Company. The suit also asks for an accounting of the Company and the other limited partnerships, and alleges breach of contract and fiduciary duty, certain tortious business conduct and negligence. On May 9, 2002, the defendants filed a motion to dismiss the suit because, among other things, it merely seeks collateral review with regard to matters directly within the scope of the continuing jurisdiction of the federal court in Chicago under the 1993 settlement of the class actions. The plaintiffs contested this, saying the motion to dismiss is precluded by federal court order from bringing the action in Colorado because the Colorado plaintiff is an inappropriate putative class representative and because Colorado is an inappropriate jurisdiction with respect to the plaintiff's allegations. The Company believes the allegations are spurious and totally without merit, and has retained counsel in Colorado. If the motion to dismiss is not granted, the Company intends to vigorously contest this action and, if appropriate, to seek sanctions against the plaintiff and its counsel. DOMINION TELECOM: Landowners Sue Seeking Compensation for Use of Land --------------------------------------------------------------------- Landowners filed a class action against Dominion Telecom and Virginia Electric & Power Company (VEPCO) today in the United States District Court in Richmond, Virginia, demanding that landowners in Virginia and North Carolina be compensated for the Company's improper occupation of their land. Dominion Resources is the parent company of both Dominion Telecom and VEPCO. Dominion Telecom makes its money by selling telecommunications services to the public, and provides these services through fiber optic cable which it has strung across private landowners' property in Virginia and North Carolina without permission or payment. Under state law, this taking of land entitles landowners to damages for trespass and unjust enrichment. The complaint states that punitive damages should also be awarded because the defendants' conduct "evidenced a conscious disregard for the rights of the class members." "Damages for the class are estimated in the millions of dollars," said Richmond attorney, Sam Hixon, of the Williams Mullen law firm, one of the lead counsel for the landowners. The complaint against Dominion Telecom and VEPCO is brought by class counsel who have successfully sued other major telecommunications companies for installing fiber optic cable on land without permission or payment. Washington attorney Nels Ackerson, one of the lead attorneys for the class of landowners, explained, "The telecommunications companies act like the land is free when they install their cable. They use the cable to make billions in revenue. They know the land is not theirs. They know they have to pay, but they hope they will not be caught. They forget the Constitution that guarantees that property will not be taken without compensation. They forget the law. This lawsuit will make them remember." For more details, contact Kathleen C. Kauffman of The Ackerson Group, Chartered by Mail: 1666 K Street, NW, Ste 1010, Washington, D.C. 20006- 1217 by Phone: (202) 833-8833 by E-mail: kkauffman@ackersonlaw.com or visit the firm's Website: http://www.ackersonlaw.com FLORIDA: Appeals Court Says State Not Required to Refund Unlawful Tax --------------------------------------------------------------------- A state appeals court ruled that Florida does not have to repay hundreds of people who paid a state tax on illegal narcotics that was declared unconstitutional, the Associated Press Newswires reports. The Third District Court of Appeal in Miami ruled recently that a class action by the taxpayers seeking refunds had been filed too late, because Florida law provides only three years to ask for a refund after paying taxes. The ruling overturned a lower court's decision that had ordered the state to issue the refunds. The tax on illegal narcotics was enacted by the state in 1986. It gave the state Department of Revenue the power to tax anyone who had engaged in the unlawful sale, use, possession manufacture or distribution of certain controlled substances. The Florida Supreme Court ruled that the tax was unconstitutional in 1994. "When the state takes someone's money through an unconstitutional tax, the state should refund them," said Stephen Bronis, attorney for the taxpayers in the class action that sought their refunds. The 815 people who were plaintiffs in the lawsuit, and whom the state accused of being drug dealers, paid a total of $3 million on the illegal narcotics to the state and were asking for a refund. For many of the taxpayers, however, the three-year window to file for the refund had expired the tax was declared unconstitutional in 1994. The lawsuit was filed in 1996. Mr. Bronis said he was considering appealing the ruling to the Florida Supreme Court. HOMEAMERICAN CREDIT: Faces Consumer Suit Over Document Fees in N.D. IL ---------------------------------------------------------------------- HomeAmerican Credit, Inc. (doing business as Upland Mortgage) faces a class action pending in the United States District Court for the Northern District of Illinois, on behalf of borrowers in Illinois, Indiana, Michigan and Wisconsin who paid a document preparation fee on loans originated since February 4, 1997. The plaintiff alleges that the charging of, and the failure to properly disclose the nature of, a document preparation fee were improper under applicable state law. The plaintiff seeks restitution, compensatory and punitive damages and attorney's fees and costs, in unspecified amounts. The Company believes that its imposition of this fee is permissible under applicable law and intends to vigorously defend the case. LEASECOMM CORPORATION: To Mount Vigorous Defense in Fraud Suit in CA -------------------------------------------------------------------- Leasecomm Corporation faces a purported class action suit filed in January 2002 in the Superior Court of the State of California, County of Los Angeles, alleging that, two individuals were acting as agents of The Company, and that they solicited the plaintiff to enter into a lease agreement with the Company. The complaint seeks declaratory and injunctive relief against all defendants based upon alleged violations of California law. The plaintiff purports to represent two subclasses comprised of: (1) business entities who entered into commercial lease agreements with the Company, and (2) all California residents who entered into lease agreements with the Company for consumer goods. The Company intends to vigorously defend the action. Because of the uncertainties inherent in litigation, the Company cannot predict whether the outcome will have a material adverse effect on its results of operations or consolidated financial position. MEDICAL RESIDENTS: Medical Group Reduces Trainee Physician's Work Hours ----------------------------------------------------------------------- The American Medical Association passed a resolution restricting the number of hours that trainee physicians work, following standards created last week relating to the working hours of residents in graduate medical programs, Reuters reports. The American Medical Association decreed that residents' working hours should be limited to 80 hours a week, over a two-week period. Residents currently work up to 120 hours a week. The AMA resolution called for restricting on-call assignments to 24 hours, with up to six additional hours to complete transfer of care, patient follow-up and education. It also limited on-call shifts to no more than every third night and required one day off in every seven days. "The AMA is deeply concerned with patient safety and the welfare of our physicians in training," Peter Watson, a resident trustee of the group, told Reuters. "Instituting these rules will greatly enhance medical education across the nation and, in turn, produce the highest quality new physicians." Last week, the Accreditation Council for Graduate Education reduced standards for working hours. The association accredits 7,800 medical residency training programs that employ 100,000 residents. Both groups hoped the workweek and other restrictions would head off federal legislation on the issue. MICROSOFT CORPORATION: Resists States' Remedies in Antitrust Litigation ----------------------------------------------------------------------- As the four-year antitrust proceedings against Microsoft Corporation draws to a close, a federal judge in Washington, DC, pushed both sides to narrow their demands, but the Company's refusal to do so suggests that a compromise in the dispute remains unlikely, The Wall Street Journal reports. Lawyers for both sides made their final presentations, with the nine states reiterating their call for tough penalties to curb what they called Microsoft's "thuggish-like tactics" in the marketplace. In an unexpected move, U.S. District Judge Colleen Kollar-Kotelly, in an order dated Tuesday of this week, told both sides to prioritize the most important components of their competing proposals. Calling the states' plan "truly disastrous," Company attorney John Warden said their remedy was fundamentally flawed and offered no provisions where common ground might be found. Indeed, he said, the Company could not consider accepting any part of the states' proposal. "We cannot remedy any of this by changing a few words here and there," Mr. Warden said. Microsoft attorney Daniel Webb said that pulling back the curtain on the Company's proprietary computer code would "virtually wipe out" all of its intellectual property and destroy its incentive to improve its products and develop new ones. Mr. Webb said that the intellectual- property disclosures go "far beyond anything Judge Jackson even thought about," referring to US District Judge Thomas Penfield Jackson, who in the earlier liability phase of the Company's trial found it violated antitrust laws. The states told the judge that the Company, above all else, should release key technical data to rivals, and that its fears about its intellectual property were exaggerated. "Priority No. 1 really is disclosure," said Steven Kuney, a lawyer representing the group of states led by California, Iowa and Connecticut. "If you forced us to articulate the single highest priority, that's it." Famed states attorney Brendan Sullivan also directly criticized Microsoft Chairman Bill Gates - who testified here as a witness two months ago - calling Mr. Gates and other executives' penchant for threatening business partners "mind boggling." Judge Kollar-Kotelly's last-minute prioritization order appeared to be a blow for Microsoft, as it hinted at a willingness on the judge's part to find a middle ground between the two sides. The Company has argued that the states are entitled to no relief, and already has asked the judge to approve a settlement reached with the Justice Department and a group of other states in November of last year. This settlement was criticized as full of loopholes by the nine states engaged in the present antitrust action now nearing its end. Any significant additions to the Justice Department accord could be viewed as a justification for the nine states' continuing court battle of the past several months. However, Judge Kollar-Kotelly cautioned against interpreting her questions as to the most important components of the two sides' competing proposals as a foreshadowing of her ultimate decision. "As the court has stated previously, questions posed by the court should not be viewed as an indication of future rulings," the judge wrote. In a frank passage directed at Microsoft, she added, "As the defendant is well aware, its proposal has been criticized for 'exceptions which swallow the rule.'" The states' response to the prioritization order elicited what appeared to be a realistic approach in ranking their preferences. They grouped in a second tier of demands their calls for a modular version of Windows to allow substitution of rival software, the mandatory distribution of Sun's Java programming language and the placing in the public domain of the source code for the Internet Explorer Web browser. The first tier dealt with less onerous requests. In addition to technical disclosures, they included intellectual- property licensing, industry standards and protecting personal-computer makers from threats and retaliation. Lead counsel for the states, Mr. Sullivan, said Microsoft had gone too far with its dire predictions and still failed to understand the kind of changes needed to address its antitrust violations. "I suggest to to you," he told the judge, "that Microsoft still doesn't get it, and you are the only one left to tell them." Even if Judge Kollar-Kotelly rules in Microsoft's favor, the Company still faces private antitrust lawsuits brought by competitors AOL Time Warner Inc.and Sun Microsystems Inc., a class action being heard in federal court in Baltimore and a case brought by European antitrust enforcers in Brussels. NABORS INDUSTRIES: TX Court Approves Settlement of Wages Antitrust Suit ----------------------------------------------------------------------- The United States District Court for the Southern District of Texas, Galveston Division, approved the settlement proposed by Nabor Industries' offshore drilling subsidiaries to settle a class action charging them with conspiracy to depress wages and benefits paid to their offshore employees. The settlement payment is expected to be made in the second quarter, absent any appeal. The settlement amounts to be paid by the Company's subsidiaries are not material to such subsidiaries or to the Company. In the event the settlement is not finalized, the Company continues to believe the allegations in this lawsuit are without merit and will defend vigorously the claims brought against them. In such event, the Company is unable to predict the outcome of this lawsuit or the costs to be incurred in connection with its defense and there can be no assurance that this litigation will be resolved in our favor. NEW YORK: City's Parks Dep't Charged With Racial Bias Against Blacks -------------------------------------------------------------------- The United States government recently sued New York City's parks department, saying it had violated the Civil Rights Act by discriminating against black and Hispanic employees when giving promotions, the Associated Press Newswires reports. The lawsuit in US District Court in Manhattan follows an investigation opened when black and Hispanic employees of the Department of Parks and Recreation complained that they had been discriminated against because of their race and national origin. The employees filed their own lawsuit against the parks department a year ago, saying the discriminatory practices reached top management in the department. Lewis M. Steel, who represents nine current and two former parks department employees in the lawsuit they filed against the city last year, said the federal government's action will help chances that their lawsuit will be certified as a class action. "It is very helpful, very significant, for the government to come into a case like this." Mr. Steel said that no trial date has been set for a lawsuit that was proceeding slowly, in part, because the case involves more than 20,000 documents. He also said that the evidence he had seen shows that the parks department "has at best turned a blind eye toward the epidemic problem of racial discrimination." The parks department employs about 2,000 workers, half of whom are black or Hispanic, at more than 1,700 parks, playgrounds and recreational facilities throughout the city. The civil rights division of the Justice Department, in its lawsuit, said the parks department' senior managers seek out and promote whites to management positions without announcing job openings or conducting formal interviews. It said the parks department had disregarded its own stated equal employment opportunity policies, significantly under- representing blacks and Hispanics in its managerial ranks since at least 1995. Michael Cardozo, the city' top lawyer, said in a statement that the city was "incredibly disappointed" that the federal government had brought the lawsuit after it was told that the parks department had taken a new direction regarding promotions. The US government said the parks department had failed to improve its record even after 1997, when the city's Equal Employment Practices Commission and its Division of Citywide Equal Employment Opportunity directed the department to promote more minorities. The US government's lawsuit demands that the parks department promote fairly in the future and pay damages to those who were injured in the past. US Attorney James Comey said in a statement that "employment practices that exclude people from opportunities for advancement because of their race or ethnic background cannot be tolerated anywhere." PENNSYLVANIA: Pittsburgh Officials Agree to Settle Police Abuse Cases --------------------------------------------------------------------- Pittsburgh officials agreed to settle dozens of lawsuits that alleged widespread abuse and misconduct by Pittsburgh police officers, claims that led to federal oversight of the police department, the Associated Press Newswire reports. The city council must approve the plan to settle the 32 cases for a total of US$275,000. Attorneys for the city told US District Judge Robert Cindrich that the city decided to settle to save the taxpayer money that would have been spent on defending police, which could have totaled at least $200,000, the Pittsburgh Post-Gazette reported on its Web site. Pittsburgh's attorney, Susan Malie, said city officials were not admitting any wrongdoing by settling the cases. After a series of trials in federal court, 32 cases remained from a 1996 class action filed by the American Civil Liberties Union, which accused the city, its highest officials and 75 officers of condoning a pervasive pattern of abuse. The allegations were forwarded to the US Department of Justice, and the city consented to federal oversight and reforms a year later. The trials, some of which involved more than one plaintiff, would have determined whether people who were part of the class action, were victims of what the Justice Department called a "pattern and practice of civil rights abuses by Pittsburgh officers" and, and if so, whether they deserve any damages. City officials and police viewed the lawsuits as one of two steps, along with having a federal consent decree lifted, to restore the department's reputation and resolve the old misconduct allegations. PINNACLE SYSTEMS: Plaintiffs File Third Amended Securities Suit in CA --------------------------------------------------------------------- Plaintiffs in the consolidated securities class action against Pinnacle Systems filed a third amended suit in the United States District Court for the Northern District of California. Several suits were commenced in July 2000, against the Company and certain of its officers and directors. These suits were later consolidated. The consolidates suit alleges that the defendants violated the federal securities laws by making false and misleading statements concerning the Company's business during a putative class period of April 18, 2000 through July 10, 2000. Plaintiffs filed a consolidated amended complaint in December 2000, which the defendants thereafter moved to dismiss. In May 2001, the court dismissed the suit, but permitted plaintiffs to file an amended complaint. The plaintiffs then filed a second amended complaint in June 2001, which the defendants again moved to dismiss. On January 25, 2002, the court dismissed the second amended complaint and granted plaintiffs leave to amend. The Company is defending the case vigorously. The Company has not accrued any liability related to this contingency since a liability cannot be reasonably estimated. TOBACCO LITIGATION: Lorillard to Appeal Award in Secondhand Smoke Suit ---------------------------------------------------------------------- Lorillard Tobacco Company vowed to appeal a Miami Circuit Court's decision awarding damages to a flight attendant who filed a suit alleging personal injury due to exposure to environmental tobacco smoke (ETS). Flight attendant Lynn French claimed her chronic sinusitis was the result of exposure to environmental tobacco smoke (ETS) while working on flights in the 1970s and 80s. "This decision runs contrary to the clear evidence presented during the trial. We are disappointed and continue to believe that plaintiff's ETS exposure was unrelated to her chronic sinusitis, and that the jury had no basis to assess the amount of damages it did in favor of Ms. French, who had complained of a stuffy nose and an occasional headache. We intend to ask the Court to overturn the verdict, or at least substantially reduce the amount, and we will certainly pursue an appeal while we continue to vigorously defend against similar claims," said Ronald S. Milstein, Lorillard's Vice President and General Counsel. "We look forward to challenging the court's trial plan, which prevented us from asserting many defenses that we would have otherwise been able to present." The suit is the third ETS lawsuit by a former flight attendant to proceed to trial and is the fourth individual ETS suit to reach a verdict. Two previous trials ended in defense verdicts, while one flight attendant case ended in a mistrial and was subsequently dismissed. TRISTATE CREMATORY: Property Inspection Reveals More Human Remains ------------------------------------------------------------------ An inspection of Tri-state Crematory property by counsel for parties in the class action against the Company revealed more human remains in various locations on the property. The Walker County sheriff's department re-sealed the property, investigators from the Georgia Bureau of Investigation came to the scene and the inspection was discontinued for a short period of time. Dr. William Bass, an expert witness retained by Lieff Cabraser Henmann & Bernstein LLP, lawyers for the plaintiffs, was on the scene. Dr. Bass, who has been retained by other plaintiffs' counsel as well, believed that the remains uncovered today are sufficient for DNA testing. Along with a team of lawyers and Dr. Bass, the firm had industry experts, including a photographer, at the inspection to record these findings. Lawyer Kathryn Barnett of the Nashville office of Lieff Cabraser commented that, "This gruesome discovery further demonstrates the need for a Court Order in the civil cases prohibiting anyone from tampering with or disturbing the Tri-State property." She added, "We have asked the Courts to take control over this property for the benefit of the community of families impacted by this tragedy, so that no further harm or disrespect will befall the remains of their loved ones." The firm filed motions asking for such an order on March 8, 2002 and April 18, 2002 in their cases pending in the Walker County and in Rome, Georgia. Alistair Newbern, one of the Lieff Cabraser lawyers on the scene was stunned by the state of the property and said, "The lack of dignity and respect given to bodies sent here for cremation is obvious even now." Mr. Newbern personally discovered abandoned remains on the property and noted that while the remains of more than 300 decedents were previously recovered, it is now clear that the remains of many, many more have been mistreated on the property. Ms. Barnett commented that today's discovery underscores the fact that the story of what happened at Tri-State and when is just beginning to be uncovered. "Our hearts go out to the many families who must now wonder if the remains that were uncovered today were the remains of their loved one or if the remains of their loved one still lie hidden on the property." She added, "This is exactly why the civil justice system critical. Only through this process can we ensure that every effort that should be made to identify and bring a respectful disposition of the remains desecrated on the property is made." Charles Griffin, of Nashville, Tennessee, one of the named plaintiffs in the suits remarked, "I am saddened to learn that remains were left behind. I wonder what else has been missed. I wonder when this nightmare is going to end for all of us." For more details, contact Kathryn Barnett by Phone: 615/313-9000 or by E-mail: kbarnett@lchb.com TYCO INTERNATIONAL: Faces Several Securities Fraud Suits in NY, FL ------------------------------------------------------------------ Tyco International face several securities class actions pending in the United States District Courts for the Southern District of New York and the Southern District of Florida, filed on behalf of purchasers of the Company's securities during various periods from February 1999 to February 2002. The suits charge the Company and certain of its executive officers with violations of the securities laws in connection with the Company's financial disclosures concerning certain mergers and acquisitions and its accounting thereof. In March 2002, another class action was filed in the Southern District of New York against the Company and eleven of its directors, on behalf of the Tyco Retirement Savings and Investment Plan and a purported class of participants in the Plan whose accounts held shares of Company stock from April 12, 1998 through January 28, 2002. Plaintiff seeks damages on account of alleged violations of the Employee Retirement Income Security Act of 1974 (ERISA) in connection with the Company's financial disclosures concerning certain mergers and acquisitions and its accounting thereof. In May 2002, the Office of the Clerk of the Judicial Panel on Multidistrict Litigation issued conditional transfer orders transferring twenty-two of the securities cases and the ERISA case to the United States District Court for the District of New Hampshire for coordinated and consolidated pretrial proceedings. Certain plaintiffs have objected to the conditional transfer order, and it has been stayed pending further briefing. In February 2002, an action was filed in the Superior Court of New Hampshire, Rockingham County, by John Gebhardt, purporting to bring suit derivatively on behalf of the Company against the current directors of Tyco International Ltd., a former director and the Company as a nominal defendant, alleging that the individuals named as defendants breached their fiduciary duties, committed waste and disseminated misleading and inaccurate information in connection with payments aggregating $20 million made to the former director and a charity designated by him in connection with the acquisition of The CIT Group, Inc. The Company labels the suits "without merit" and intends to vigorously defend against them. UICI: Parties Fail to Reach Resolution in Securities Suit in N.D. TX -------------------------------------------------------------------- Parties in the consolidated securities class action against UICI failed to resolve the suit, after the first mediation session adjourned last April 23,2002. The suit is pending in the United States District Court for the Northern District of Texas and names the Company and certain of its executive officers as defendants. The suit alleges, among other things, that the Company's periodic filings with the SEC contained untrue statements of material facts and/or failed to disclose all material facts relating to the condition of the Company's credit card business. The suit alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, on behalf of persons who purchased the Company's common stock from February 10,1999 through December 9, 1999. The Company asked the court to dismiss the suit, but in October 2001, the court denied defendants' motion to dismiss the case. At a required scheduling meeting held in November 2001, the parties agreed to voluntarily submit the dispute to early mediation, and the parties designated a mediator and scheduled the mediation. Discovery and other pretrial motions have been suspended pending the outcome of the mediation. At the first mediation session held on April 23, 2002, the parties reached no resolution in the case. The parties did agree to continue the stay in the discovery phase of the proceeding until a second mediation. The Company believes that the allegations in the complaint are without merit, and intends to vigorously contest the allegations in the case. UL UNITED: Voluntarily Recalls Electrical Paintings for Shock Hazard -------------------------------------------------------------------- UL United, Inc. is cooperating with the US Consumer Product Safety Commission (CPSC) by voluntarily recalling about 150 electrical paintings. The electrical paintings can short circuit, posing a shock or fire hazard. The Company has not received any reports of injuries. This recall is being conducted to prevent the possibility of injury. The recalled paintings show 13 scenes of waterfalls and other bodies of water, sold as "The Motion Picture" series. The images are painted on glass and are illuminated by a light bulb. The paintings give the impression of water spilling over a waterfall and have the sound of running water, birds and music. "MADE IN CHINA" appears on the packaging of the paintings. Flea markets sold the paintings in Texas and Arkansas from December 2001 through April 2002 for between $18 and $50. For more information, contact the Company by Phone: (866) 332-6643 between 9 am and 5 pm CT Monday through Friday. UST LIQUIDATING: CA Appeals Court Reinstates Suit Over Veeder-Root Sale ----------------------------------------------------------------------- The California court of appeals reversed a trial court's decision granting UST Liquidating, Inc.'s demurrer to a class action filed on behalf of certain common shareholders of the Company, and allowed the plaintiffs to file a personal non-derivative claim. The suit alleges alleging that the Company and other parties breached their fiduciary duty to the plaintiffs in connection with the Veeder- Root sale. The plaintiffs also filed a derivative claim alleging corporate waste. In August 2000, the plaintiffs filed a motion for a preliminary injunction, which was denied in a court hearing held in September 2000. The Company and certain other parties subsequently filed a demurrer to the suit contending that the plaintiffs failed to state a valid cause of action, which was granted in October 2000. The plaintiffs filed a notice of appeal regarding the demurrer and voluntarily dismissed the derivative claim alleging corporate waste, which the trial court also dismissed. The briefing on the appeal has been completed and oral argument was heard before the California Court of Appeals. The appellate court then reversed the trial court with respect to the demurrer and ruled that the plaintiffs could assert a personal, non-derivative claim. The Company intends to continue to contest this case vigorously, and in the opinion of management, the ultimate resolution of this matter is not expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows. VERISIGN INC.: Enters Agreement Prohibiting Mailing of Domain Notices --------------------------------------------------------------------- Domain registrar VeriSign, Inc. entered a legal agreement that prohibits it from sending controversial domain name expiration notices to customers. The Mountain View, California-based Company and Go Daddy Software signed the order that forces the Company to not only stop sending the solicitations to Go Daddy's customers, but also to the customers of all other registrars Arizona federal judge Mary Murguia entered the stipulated order into the courts, which effectively extends an injunction against the Company forcing it to abandon its current marketing campaign. Earlier this month, the rival discount domain name registrar, accused the Company of consumer fraud, deceptive advertising and misappropriation of trade secrets. "It is our hope that this order will send a strong message to anyone in this industry contemplating the use of such dubious marketing tactics to clean up their act," said Go Daddy founder and president Bob Parsons. The suit stems from a direct marketing campaign launched earlier this year by the Company, which Go Daddy and Baltimore-based BulkRegister said duped their customers into believing their domain names were about to expire, and prompting them to pay the Compny to take over their domains. Go Daddy said it was forced to take this issue to court when the Company refused to respond to two formal requests to stop the mailings and comply with the ICANN Registrar Accreditation Agreement. This agreement limits the use of a registrar's customer contact database (Whois) to lawful purposes such as the inquiries necessary to register domain names or modify existing registrations. The Company reported to Go Daddy that it stopped mailing the domain expiration notices on May 14, the day a preliminary injunction was entered in Maryland in a similar suit filed by BulkRegister. But customers of registrars like Go Daddy continued to receive the notices well into June, sparking the lawsuits. Go Daddy said its customers had been "flooded" by the mailings, which were labeled "Domain Name Expiration Notices" and marked with "Reply By" dates that Go Daddy said bore no relation to users' actual domain expiration dates. This is the second injunction rallied against the Company by a competitor and the fourth action spawned by the effort to date. In May, lawyers at the Los Angeles law firm of Weiss & Yourman filed for damages on behalf of consumers, aiming to receive class-action status for the suit. In March, the non-profit California Consumers Action Network filed a similar complaint. Despite the injunctions, both BulkRegiser and Go Daddy said they would continue seeking their legal cases for damages. WISCONSIN: Judge Clarifies Rules for Mentally Ill at Supermax Prison -------------------------------------------------------------------- US District Judge Barbara Crabb ruled last year that seriously mentally ill inmates should not be sent to Supermax prison or remain there. However, in a recent ruling, she left open the possibility that there may be exceptions to that rule, the Associated Press Newswires reports. Seriously mentally ill inmates who are so dangerous that they cannot be safely placed anywhere but the state's ultra-security Supermax prison can be incarcerated there, but it should be a "very, very rare exception," Judge Crabb wrote. "There may be very rare situation in which one inmate, possibly two, need the kind of protection that Supermax offers," the judge said, adding that "it should be a very, very rare exception in which an inmate who is seriously mentally ill stays at Supermax." The recent ruling is part of a class action filed by Supermax inmates who claimed they were subjected to living conditions that were that were cruel and unusual, in violation of the Eighth Amendment to the US Constitution. Both sides agreed to a settlement that included new outdoor exercise areas, expanded face-to-face visits with friends and and family members and a new prison name. State prosecutors petitioned the court to set guidelines for when inmates are so dangerous as to warrant confinement at Supermax despite their mental illness, or when inmates who were previously diagnosed as seriously mentally ill can be sent back to the prison because they no longer suffer from the illness. Judge Crabb said in her ruling that there could be instances in which one of those conditions were met. However, prison officials must first contact the inmates' lawyers and give them a chance to object, either to a court-appointed independent monitor, or in court. An independent clinician review board could make decisions about whether an inmate still suffered from a mental illness that would be worsened by confinement at Supermax, she said. David Fathi, a lawyer with the American Civil Liberties Union's National Prison Project in Washington, DC, said all mentally ill inmates should be permanently barred from Supermax. However, Judge Crabb's safeguards would help ensure that if such inmates are allowed to remain or return, it would be only in rare cases, he said. Mr. Fathi pointed out, however, that "Serious mental illness is not like the flu, which goes away over time . Mental illnesses like schizophrenia are chronic and do not go away with time.Getting the seriously mentally ill out of Supermax has been a top priority for us." XOMA LTD.: Plaintiffs File Amended Unfair Competition Suit in CA Court ---------------------------------------------------------------------- Plaintiffs in the class action against Xoma Ltd. filed an amended suit in California Superior Court in San Diego County, extending the time period reference in the suit to April 5,2002. The suit was initially commenced in January 2002, and names the Company, Genentech, Ltd. and certain unidentified "John Doe" defendants. The plaintiff purports to assert claims under the California Unfair Competition Act, seeking injunctive relief and other equitable remedies in connection with the defendants' alleged misrepresentations and omissions concerning the anticipated timetable for the filing of the XanelimT Biologics License Application (BLA). In March 2002, the Company filed a demurrer and a motion to strike the suit. Thereafter, Genentech filed its own demurrer and joined in the Company's motion to strike the suit. In May 2002, the plaintiff responded to the demurrers and motion to strike by filing an amended suit, which tracks in material respects the allegations contained in the plaintiff's original suit, but expands the time period at issue to include the April 5, 2002 press release issued by Genentech and the Company. The Company anticipates that, by agreement among the parties, the deadline by which it must respond to the amended suit will be extended. ********* DUKE ENERGY: Emerson Firm Commences Securities Fraud Suit in S.D. NY -------------------------------------------------------------------- The Emerson Firm initiated a securities class action in the United States District Court for the Southern District of New York on behalf of purchasers of Duke Energy Corporation (NYSE:DUK) publicly traded securities during the period between July 22, 1999 and May 17, 2002, inclusive. The suit alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between July 22, 1999 and May 17, 2002, thereby artificially inflating the price of Company securities. Throughout the class period, as alleged in the suit, defendants issued numerous statements and filed quarterly and annual reports with the SEC which described the Company's increasing revenues and financial performance. As alleged in the suit, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the Company had engaged in approximately $1 billion of "round-trip" energy trades that provided no economic benefit for the Company; (2) that the Company lacked the necessary internal controls to adequately monitor the trading of its power; and (3) that as a result, the value of the Company's revenues and financial results were materially overstated at all relevant times. On May 17, 2002, the last day of the class period, the Company issued a press release announcing that it had "analyzed its trades for the three-year period from 1999 through 2001 to identify those trades which may have some of the characteristics of sell/buy-back trades." These trades, known as "round-trip" or "wash" transactions, involve the simultaneous buying and trading of power in the same price and same amount and provide no economic benefit to the Company. Following this announcement, shares of the Company fell $1.18 per share to close at $33.52 per share, after reaching a split-adjusted class period high of $44.97 on November 30, 2000, on volume of more than 11.5 million shares traded, or more than three times the average daily volume. For more details, contact Tanya R. Autry by Phone: (800) 663-9817 or by E-mail: tanya.autry@worldnet.att.net EDISON SCHOOLS: Emerson Firm Commences Securities Fraud Suit in S.D. NY ----------------------------------------------------------------------- The Emerson Firm initiated a securities class action in the United States District Court for the Southern District of New York on behalf of purchasers of Edison Schools, Inc. (Nasdaq:EDSN) publicly traded securities during the period between November 11, 1999 and May 14, 2002, inclusive. The suit names as defendants the Company and: (1) Chris Whittle (President and CEO), (2) Adam Feild (Chief Financial Officer) and (3) Christopher Cerf (Chief Operating Officer) The defendants allegedly violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between November 11, 1999 and May 14, 2002. Throughout the class period, the Company issued numerous quarterly press releases reporting its supposedly growing revenue stream and increasing income. Such representations were repeated in reports filed with the Securities and Exchange Commission (SEC). According to the complaint, these representations were materially false and misleading because the Company was improperly recognizing revenue by recognizing as revenue monies that were remitted to their clients, comprised of school districts and charter schools, even though the Company did not receive this money. Accordingly, the complaint charges, the Company's revenues and other financial data reported throughout the class period were materially false and misleading. On May 14, 2002, the Company revealed that it had been the subject of an SEC investigation and has entered into a settlement with the SEC under which it agreed to reclassify the revenues that the Company had reported for numerous quarters. At the time of the disclosure, the common stock of the Company was trading at $1.50 to $2 per share, after reaching a class period high of $36.75 per share. For more details, contact Tanya R. Autry by Phone: (800) 663-9817 or by E-mail: tanya.autry@worldnet.att.net FLEXTRONICS INTERNATIONAL: Bernstein Liebhard Lodges Suit in S.D. NY -------------------------------------------------------------------- Bernstein Liebhard & Lifshitz LLP initiated a securities class action on behalf of all persons who purchased or acquired Flextronics International, Ltd. (Nasdaq: FLEX) securities between October 2, 2001 and June 4, 2002, in the United States District Court for the Southern District of New York against the Company and: (1) Michael E. Marks, (2) Michael McNamara, and (3) Robert R. B. Dykes The defendants allegedly violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between October 2, 2001 and June 4, 2002, thereby artificially inflating the price of Company securities. Throughout the class period, as alleged in the complaint, the Company consistently represented that its business was thriving in the global electronics, telecommunications and handheld device markets. Unbeknownst to investors, however, the Company was suffering from a host of undisclosed adverse factors that were negatively impacting its business and which would cause it to report declining financial results, materially less than market expectations. On June 4, 2002, the final day of the class period - and only months after certain officers and directors unloaded over $500 million of Company shares priced at almost $26.00 per share upon unsuspecting investors - defendants shocked the market when they finally revealed that the restructuring, which was purportedly paid for in October 2001 and substantially completed thereafter, was still far from complete. Defendants admitted that there were at least an additional $150 million in restructuring charges that had to be recorded. In addition, defendants also stated that they could not possibly meet the Company's previous earnings and revenue forecasts for its first fiscal quarter 2003. Defendants admitted that the Company would earn as little as $0.05 per share, as little as one-third the $0.13 per share Defendants forecast at the time of the January public offering and thereafter throughout the class period. Revenue estimates too were suddenly reduced, with only $3 billion in revenue now forecast for the first quarter 2003, compared to prior estimates of $3.3 billion. For more details, contact Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E- mail: FLEX@bernlieb.com or visit the firm's Website: http://www.bernlieb.com. PEROT SYSTEMS: Wolf Haldenstein Commences Securities Suit in N.D. TX -------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action in the United States District Court for the Northern District of Texas, on behalf of purchasers of the securities of Perot Systems Corporation (NYSE: PER) between February 2, 1999 and June 7, 2002, inclusive. The suit alleges that the Company and certain of its officers violated the federal securities laws by issuing materially false and misleading statements throughout the class period that had the effect of artificially inflating the market price of the Company's securities. Specifically, the complaint alleges that defendants failed to disclose critical facts concerning some of the Company's hazardous business practices. Pursuant to attempting to generate new consulting business and additional revenues, the Company had made use of proprietary information regarding the architecture of California's power grid and weaknesses and loopholes that could be used to cause artificial congestion on such grid and enable power traders to reap supracompetive profits to power trader Reliant. The complaint further alleges that the Company faces considerable potential legal liability regarding its improper disclosures of proprietary information and the possibility that power traders utilized the information to abuse such flaws for their own profit. It is also alleged that the Company did not have adequate management controls in place to avoid its personnel from using private information acquired in the course of its consulting work as a selling point in attempting to attain beneficial consulting business. Company stock fell 19% on June 5, 2002 and dropped an additional 11.3% to close at $12.90 on June 6, 2002, down from its class period high of $85.75. For more details, contact Fred Taylor Isquith, Katherine DuBose, Gustavo Bruckner, 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 Website: http://www.whafh.com. All e-mail correspondence should make reference to Perot Systems. RELIANT ENERGY: Schiffrin Barroway Lodges Securities Fraud Suit in TX --------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Southern District of Texas-Houston Division on behalf of all purchasers of the common stock of Reliant Energy, Inc. (NYSE: REI) and Reliant Resources, Inc. (NYSE: RRI) from May 14, 1999 through May 9, 2002, inclusive. The complaint charges the Company and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that on May 10, 2002 and May 13, 2002, defendants disclosed that the revenue of the Reliant Companies had been artificially inflated due to power trading transactions involving simultaneous purchases and sales at the same price (referred to as "round-trip" trades). Defendants further disclosed that these "round trip" trades had the effect of materially and artificially increasing reported revenues over the three-year period of 1999, 2000 and 2001. For more details, contact Marc A. Topaz or Stuart L. Berman by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1- 888-299-7706 (toll free) or 1-610-667-7706 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. 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 * * *