/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/020704.mbx C L A S S A C T I O N R E P O R T E R Thursday, July 4, 2002, Vol. 4, No. 131 Headlines APARTHEID LITIGATIONS: More Lawsuits Filed V. US Companies For Damages APARTHEID LITIGATIONS: Federal Council Distances Itself From Fagan Suit APPLIED MICRO: CA Court Dismisses Without Prejudice Securities Suit APPLIED MICRO: Forms Special Committee To Evaluate CA Derivative Suits AVATEX CORPORATION: TX Court Grants Certification To Securities Suit dELiA*S INC.: Merits Discovery Commenced in NY Securities Fraud Suit dELiA*S INC.: Court Grants Final Approval to Securities Suit Settlement DIGITAL IMPACT: Securities Suit Coordinated With Other Suits in S.D. NY INDIAN FUNDS: Plaintiffs Ask Court To Disconnect Dept Computers Again LA LIGHTER: Recalls 1,800 Disposable Cigarette Lighters For Fire Hazard LOG ON AMERICA: Expects Plaintiffs To File Amended Suit in Rhode Island MEAT PACKERS: Cattle Ranchers Sue Four Companies for Insider Trading MESABA HOLDINGS: Securities Suit Over Northwest Proposal Dismissed MOBIL-ESSO: High Court Opens Way For Suits Over Longford Explosions MONTANA RESOURCES: Former Employees Upset Over Suit Settlement Checks NETSOLVE INC.: $2.7M Suit Settlement Hearing Set For September 2002 NETSOLVE INC.: Securities Suit Coordinated With Similar Suits in NY NVIDIA CORPORATION: Plaintiffs To Consolidate Securities Suits in CA OIL COMPANIES: GA Woman Files Consumer Suit Over "Environmental Fees" PM INTERNATIONAL: Recalls 22T Adapter Plugs Due To Electrocution Hazard RAFFLES TOWN: Did Not Promise To Limit Memberships, Plaintiffs Concede SYCAMORE NETWORKS: Plaintiffs File Amended Securities Suit in S.D. NY VICINITY CORP.: Court Sets Sept 2002 As Deadline for Dismissal Motions WHIRLPOOL CORP.: Recalls Washer and Gas Dryer Units For Fire Hazard WORLDCOM INC.: Bondholders' Suit Likely V. Banks, Lawyers, Accountants WORLDCOM INC.: Probing New Accounting Problems With Reserve Accounts XEROX CORPORATION: Employees File Suit Challenging Soundness of Stock New Securities Fraud Cases 360NETWORKS INC.: Milberg Weiss Commences Securities Suit in S.D. NY 360NETWORKS INC.: Cauley Geller Commences Securities Suit in S.D. NY 360NETWORKS INC.: Schiffrin & Barroway Commences Securities Suit in NY AMDOCS LTD.: Robbins Umeda Commences Securities Fraud Suit in E.D. MO FLEXTRONICS INTERNATIONAL: Schiffrin & Barroway Files Suit in S.D. NY KNIGHT TRADING: Shapiro Haber Commences Securities Suit in New Jersey MERCK & CO.: Berman DeValerio Commences Securities Suit in New Jersey OMNICOM GROUP: Kaplan Fox Commences Securities Fraud Suit in S.D. NY VERISIGN INC.: Cohen Milstein Commences Securities Suit in N.D. CA ********* APARTHEID LITIGATIONS: More Lawsuits Filed V. US Companies For Damages ---------------------------------------------------------------------- Apartheid victims are to launch additional lawsuits demanding billions of dollars in compensation from International Business Machines Corp., Deutsche Bank AG, Allianz AG's Dresdner Bank and Commerzbank AG for allegedly profiteering in white-ruled South Africa, their lawyers said, according to a recent AFX News report. This move follows lawsuits filed in New York against UBS AG, Credit Suisse Group and Citibank on June 19. "Claims against IBM and also Deutsche Bank, Dresdner Bank and CommerzBank" will be filed," John Ngcebetsha, the lead South African lawyer acting for the plaintiffs, told Agence France-Presse. "As early as 1952, United States computer companies began to supply apartheid South Africa with computer technology and systems, that better enabled the system of institutionalized racial discrimination and repression to function," the claim against IBM says. It states that IBM, and other United States and European computer companies yet to be named, knew their technology facilitated "the violation of human rights and the commission of atrocities." Mr. Ngcebetsha said the German banks have been targeted for "extending loans of $4.5 billion to the apartheid regime." US attorney Ed Fagan, working with a team of lawyers from South Africa, the United States and Europe, is spearheading the class actions, modeled on successful compensation claims by Holocaust survivors. The number of initial plaintiffs, who will highlight gross human rights violations such as torture or murder in their claims, has risen to five to include Nyameka Goniwe, the wife of slain Eastern Cape leader, Matthew Goniwe. The number is expected to soar after a hotline for victims received more than 1,000 calls in its first week, Mr. Ngcebetsha said the South African legal team has met Justice Minister Penuell Maduna, who "said the government would do nothing to stop us and was following the proceedings with keen interest." The initial claims have been filed on behalf of: (1) Lulu Petersen, younger sister of Hector Petersen, the first victim of police shootings during the June 16 student riots of 1976; (2) Sigqibo Mpendulo, the father of two 12-year-old twin brothers who were shot dead in a 1993 police raid at a house in Umtata; (3) Ntsebeza's brother Lungisile, who was detained and banished several times; and (4) Themba Maqhubela, a United States citizen who fled South Africa after refusing to testify against Ntsebeza in a political trial. APARTHEID LITIGATIONS: Federal Council Distances Itself From Fagan Suit ----------------------------------------------------------------------- The Federal Council issued its first statement recently on the class action filed in New York against a number of defendants, including the two large Swiss banks, UBS AG and Credit Suisse Group, with regard to their business dealings with the government in power during apartheid- era South Africa, in the Swiss newspaper Neue Zuercher Zeitung web site. Speaking to the media, Vice-Chancellor Achille Casanova said that the federal executive wants no part of the South Africa class action and that an initial examination had shown that the charges are summary and lacking in factual foundation. The two Swiss banks, said Mr. Casanova, intend to fight the charges in court. Mr. Casanova noted that the Federal Council made no comment on whether the charges were justified. He added that it was the council's view that this kind of class action in an American court is not the appropriate vehicle with which to solve the problem of other countries. Nor can such court actions respond to the question of economic cooperation with countries in which international law and human rights are violated. Mr. Casanova underscored the close ties between Switzerland and South Africa and noted that the federal council would do everything possible to further strengthen them. APPLIED MICRO: CA Court Dismisses Without Prejudice Securities Suit ------------------------------------------------------------------- The United States District Court for the Southern District of California dismissed the consolidated securities class action pending against Applied Micro Circuits Corporation and certain of its executive officers and directors. The suit alleges violations of the Securities Exchange Act of 1934 and is brought as a purported shareholder class action under Sections 10(b), 20(a) and 20A of the 1934 Act and Rule 10b-5 under the 1934 Act. In general, the suit alleges that the Company and the individual defendants misrepresented the Company's financial prospects for the quarter ending March 31, 2001 to inflate the value of the Company's stock. The defendants brought a motion to dismiss the suit in March 2002. On May 9, 2002, the court granted the motion dismissing the complaint but giving plaintiffs 45 days to file an amended complaint. No discovery has been conducted in this lawsuit. The Company labeled the allegations "without merit" and intends to vigorously defend against any amended suits that might be filed. APPLIED MICRO: Forms Special Committee To Evaluate CA Derivative Suits ---------------------------------------------------------------------- Applied Micro Circuit Corporation formed a special litigation committee to evaluate the claims in a consolidated shareholder derivative lawsuit against the Company and certain of its directors and executive officers, in the Superior Court of California in the County of San Diego. The suit alleges: (1) overstatement of the financial prospects of the Company, (2) mismanagement, (3) inflation of stock value and (4) sale of stock at inflated prices for personal gain during the period from November 2000 through February 2001 Defendants demurred to the consolidated suit, which demurrer was partially granted and partially overruled in February 2002. Defendants took a writ of mandate seeking review of the court's order by the Court of Appeal of California, which writ was dismissed in March 2002. Defendants have petitioned the Supreme Court of California for review of the denied portion of the demurrer. The petition has not yet been granted or dismissed. In February 2002, the Company's Board of Directors formed a special litigation committee to evaluate the claims in the consolidated suit. The special litigation committee has retained independent legal counsel. The San Diego Superior Court has stayed discovery against the Company until July 2002 when the special litigation committee is currently scheduled to deliver its report to the court. Limited discovery against the individual defendants in this lawsuit and third parties has commenced. The Company believes that the allegations in the suit are without merit and intends to defend the lawsuits vigorously. The Company cannot predict the likely outcome of the suit, and an adverse result in either lawsuit could have a material, adverse effect on the Company. AVATEX CORPORATION: TX Court Grants Certification To Securities Suit -------------------------------------------------------------------- The United States District Court for the Northern District of Texas, Dallas Division granted class certification to a consolidated securities class action against the Company and certain of its current and former officers and directors. The suit, filed on behalf of purchasers of the Company's common and former Series A and convertible preferred stock during the period July 19, 1995 through August 27, 1996, alleges that the Company and the defendant officers and directors made misrepresentations of material facts in public statements or omitted material facts from public statements, including the failure to disclose purportedly negative information concerning FoxMeyer's National Distribution Center and Delta computer systems and the resulting impact on the Company's existing and future business and financial condition. The Company asked the court to dismiss the amended the suit, but the court denied the motion. In January 2002, the court granted the plaintiffs' unopposed motion to certify a class of purchasers of common stock as to federal claims, and reserved judgment on all other class certification issues. Discovery is proceeding in the lawsuit, and the Company intends to continue to vigorously defend itself in the lawsuit. dELiA*S INC.: Merits Discovery Commenced in NY Securities Fraud Suit -------------------------------------------------------------------- Merit discovery in the securities class action against dELiA*S, Inc. has been concluded in the United States District Court for the Southern District of New York. Two securities suits were commenced in 1999 against the Company and certain of its officers and directors, and one former officer of a subsidiary. The suits were later consolidated and an amended and consolidated complaint was filed. The suit, filed on behalf of the purchasers of the Company's securities during the period January 20, 1998 through September 10, 1998, generally alleges that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by making material misstatements and by failing to disclose allegedly material information regarding trends in our business. The complaint also alleges that the individual defendants are liable for those violations under Section 20(a) of the Securities Exchange Act. The complaint seeks unspecified damages, attorneys' and experts' fees and costs. The defendants filed a motion to dismiss the lawsuit, but the court denied the motion. In December 2001, the court certified the class. The Company filed its answer to the suit in February 2002. The Company intends to continue to vigorously defend against this action, and does not expect the ultimate resolution of this lawsuit to have a material adverse effect on its results of operations, financial position or cash flow. dELiA*S INC.: Court Grants Final Approval to Securities Suit Settlement ----------------------------------------------------------------------- The Delaware Chancery Court granted final approval to a settlement for a consolidated securities class action against dELiA*S, Inc. relating to its merger with iTURF, Inc. Three suits were commenced in August 2000 on behalf of stockholders of iTurf, alleging that the Company and iTurf's Board of Directors members breached their fiduciary duties to iTurf's public stockholders and that the merger exchange ratio was unfair to iTurf's public stockholders. The Company earlier moved to dismiss the suit. On January 15, 2002, all parties entered into a stipulation and agreement of compromise, settlement and release, which became final in May 2002. Pursuant to the settlement, the Company issued one million shares of its Class A common stock, of which 300,000 have been distributed and the remaining 700,000 shares will be distributed upon the completion of the claims administration process. DIGITAL IMPACT: Securities Suit Coordinated With Other Suits in S.D. NY ----------------------------------------------------------------------- The consolidated securities class action pending against Digital Impact, Inc. has been coordinated for pre-trial purposes with other similar class actions against other companies under Judge Shira Scheindlin of the United States District Court for the Southern District of New York In June 2001, a series of securities suits were filed against the Company, certain of its officers and directors and certain investment bank underwriters for the Company's initial public offering (IPO). The suit alleges undisclosed and improper practices by the underwriters concerning the allocation of the Company's IPO shares, in violation of the federal securities laws, and seek unspecified damages on behalf of persons who purchased the Company's stock during the period from November 22, 1999 to December 6, 2000. The Company believes it has meritorious defenses to the claims against it and will defend itself vigorously. In the opinion of management, after consultation with legal counsel and based on currently available information, the ultimate disposition of these matters is not expected to have a material adverse effect on its business, financial condition or results of operations, and hence no amounts have been accrued for these cases. INDIAN FUNDS: Plaintiffs Ask Court To Disconnect Dept Computers Again --------------------------------------------------------------------- Plaintiffs in the class action against the Department of Interiors over Indian royalties have asked US District Judge Royce Lamberth to disconnect the Office of Surface Mining from the Internet for the second time, USA Today reports. Judge Lamberth asked the Department to disconnect its websites from the internet last December 2001, after it was discovered that hackers could easily access the its Trust Asset and Accounting Management System. The OSM Web site went back online nearly two months later with many more Interior agencies, including the National Park Service, following suit. "Contemnors again have placed individual Indian trust data at imminent risk of loss, corruption, deletion or unlawful manipulation because OSM systems are connected to the Internet and security is inadequate," attorneys for the plaintiffs wrote in an introduction to an emergency motion filed June 27, USA Today reports. OSM officials declined to comment. Interior has held American Indian-owned lands in trust for more than 100 years, leasing the properties and processing revenue earned from farming and drilling. A group of beneficiaries filed a class action lawsuit in 1996, claiming that poor bookkeeping has prevented landowners and their descendants from determining their account balances. They estimate as much as $10 billion in lost or missing funds. LA LIGHTER: Recalls 1,800 Disposable Cigarette Lighters For Fire Hazard ----------------------------------------------------------------------- LA Lighter, Inc. is cooperating with the US Consumer Product Safety Commission (CPSC) by voluntarily recalling about 1,800 disposable cigarette lighters. The lighters may have child-resistant mechanisms that do not meet federal safety standards. Young children may be able to operate these lighters, which could pose a fire hazard. The Company has not received any reports of incidents. This recall is being conducted to prevent the possibility of injuries. The recalled lighters are made of metal, come in different colors, and have a top that resembles a pencil across a protractor and triangle. To open the port and ignite the flame, consumers press on the pencil. The lighters, which are about three inches high, 7/8 inches wide and 1/4 inch deep, have a ruler along the side. A label on the lighter has the UPC code 7 63052 20108 5 and the words, "MADE IN CHINA" and "SLIDE PUSH." Retailers and distributors nationwide sold these lighters between December 2000 and May 2001 for about $5. For more details, contact the Company by Phone: 800-499-4708 between 9 am and 5 pm PT Monday through Friday to receive a full refund. LOG ON AMERICA: Expects Plaintiffs To File Amended Suit in Rhode Island ----------------------------------------------------------------------- Log On America expects that an amended suit will be filed by plaintiffs in the securities class actions pending against it and two of its officers in the United States District Court in Providence Rhode Island. The suits, filed on behalf of the purchasers of the Company's common stock between April 22, 1999 and November 20, 2000, inclusive, allege that the Company, together with certain officers, conveyed in its public filings, press releases and other publications false, misleading and incomplete information pertaining to the Company's operations and finances. The plaintiffs filed motions to consolidate the complaints and to appoint "lead counsel" is pending. The Company anticipates filing a responsive pleading which it anticipates will be either a motion to dismiss or an answer denying any liability. The Company believes that it has at all times acted completely legally in connection with the matters at issue and intends to defend the suits vigorously. The Company is, however, at this time unable to quantify its potential exposure or to opine upon the likelihood that the resolution of the suits will have any material effect on its financial position. MEAT PACKERS: Cattle Ranchers Sue Four Companies for Insider Trading -------------------------------------------------------------------- Cattle ranchers from three states have filed a class action against the nation's four biggest meatpackers, accusing them of insider trading, the Associated Press Newswires reports. Herman Schumacher of South Dakota, Michael P. Callicrate of Kansas and Roger D. Koch of Nebraska, recently filed the suit in US District Court in Pierre, South Dakota, against: (1) Excel Corp., (2) ConAgra Beef Co., (3) Farmland National Beef Packing Co. and (4) Tyson Foods, which recently bought Dakota Dunes-based IBP. The suit, filed on behalf of all cattle owners who sold livestock to the companies in April and May 2001, accuses the packers of not correcting a US Department of Agriculture mistake on the reported price of boxed beef. The meatpackers knew the numbers reported by USDA were too low during the 29-day period and took advantage of the situation to get cheaper beef, the suit claims. "In that space of time there, while the box beef was misreported, the packers, in my opinion, were buying cattle a lot cheaper," Mr. Schumacher said in an interview. Mr. Schumacher likened the situation to the allegations against Enron and WorldCom, which both have come under fire for unethical business practices. James O'Conner, a lawyer for the plaintiffs, estimates meatpackers made an extra $40 million during the 29-day period the incorrect numbers were being reported. Gary Mickelson, a spokesman for defendant IBP, said he had not seen the lawsuit yet. Its claims are troubling he said. "We can tell you we are disturbed by the claims apparently made in the suit," Mr. Mickelson said. "We depend on independent cattle producers to supply our plants and have no reason to hurt them." Mark Klein, a spokesman for Excel disputed the lawsuit's claims. "I would have to say the lawsuit is without merit, and we will defend ourselves vigorously.It is ironic that the same people who clamored for changes in meat pricing are now the ones complaining about it." Mr. Schumacher said he expected many more cattlemen to join the lawsuit. "I will not settle out of court," he said. "Everybody is going to be involved." MESABA HOLDINGS: Securities Suit Over Northwest Proposal Dismissed ------------------------------------------------------------------ The Hennepin County District Court granted Mesaba Holdings, Inc.'s motion to dismiss without prejudice the securities class action filed against it, each of its current directors and Northwest Airlines. The suit arose out of the proposal by Northwest to acquire all of the outstanding shares of the Company's common stock which Northwest did not presently own. The lawsuits alleged that the defendants had breached their fiduciary duties to the Company's shareholders in connection with the proposed transaction. Each of the lawsuits sought to enjoin the defendants from proceeding with the proposed transaction and, if the transaction was completed, to rescind the transaction or to compensate the Company's shareholders for alleged damages. MOBIL-ESSO: High Court Opens Way For Suits Over Longford Explosions ------------------------------------------------------------------- The High Court in Victoria cleared the way for class actions to proceed against Mobil-Esso in Victoria over contaminated aircraft fuel and the Longford gas plant explosion, the AAP News reports. The Company is facing two class actions, but had challenged the legal standing of state legislation sanctioning the civil suits. Victorian businesses and residents affected by the 1998 Longford gas plant explosion, which severed gas supplies to the state for a fortnight, have mounted one suit against the Company. A second suit was lodged in 2000 over the 1999 avgas aviation fuel contamination crisis, which grounded thousands of small piston engined aircraft which used Mobil avgas from the Company's Altona refinery in Victoria between November 21 and December 23. Both suits have been stalled pending the outcome of the High Court case. The full bench of the High Court today dismissed the Company's claim that Victorian government legislation enabling class actions was invalid. The Company had argued that an amendment to the Victorian Supreme Court Act was beyond the legislative power of the state government and incompatible with the judicial power of the Victorian Supreme Court. If upheld, this argument would have stopped the suits from being brought in Victoria. However, five of the six judges totally rejected the Company's claim. Justice Ian Callinan agreed the legislation was valid, but sought provisions on the legislation that would have limited all suit claims to Victorian residents and businesses. The ruling now enables the suits underway in the Victorian Supreme Court to proceed. Company spokesman Alan Bailey told AAP that the Company was obviously disappointed at the decision, but the result would give greater certainty to the legal issues related to the class actions. "What happens now is up to the Supreme Court," Mr. Bailey said. Law firm Slater and Gordon was involved in the launching of both suits. Slater and Gordon partner Lisa Nichols said the decision validated the Victorian Supreme Court provisions, which were similar to those of the Federal Court. "Class actions provide a cost-effective way to treat large-scale claims, allowing individuals to take on large corporations with equality," Ms. Nichols said. "Importantly, that legal mechanism now remains available to Victorians. Similarly, it is unlikely that the Supreme Court of Victoria will face a flood of class actions." MONTANA RESOURCES: Former Employees Upset Over Suit Settlement Checks --------------------------------------------------------------------- Taxes, payroll costs and attorney's fees took as much as 87 percent of settlement checks received by former Montana Resources employees, the Associated Press Newswires reports. The employees had filed a class action after the Company closed two years ago with just a week's notice, violating the Worker Adjustment and Retraining Notification Act (WARN). The settlement for the estimated 315 was US$1.7 million. However, when individual employees received their checks, there were fewer zeros than expected. For example, one worker's wages were calculated at $5,357 but his net check was $730. The deductions were; $1,445 in federal withholding tax, $348 in state withholding tax, about $400 for FICA, $566 in payroll costs, and $1,856 in attorney fees. Many of the former employees called the McCarthy Law Office and the Corette law firm, which represented the plaintiffs, to complain. Much of the anger apparently stems from a misunderstanding between the workers and their lawyers. Workers told The Montana Standard they believed attorneys fees would be paid on top of the settlement, or they said they did not know they would be responsible for the payroll tax, which is usually paid by the employers. Lori Armstrong of the McCarthy Law Firm said workers were aware of the attorney fees, which were set at $566,666 plus costs. They may not have known about the payroll taxes, which pay for unemployment insurance and other costs. NETSOLVE INC.: $2.7M Suit Settlement Hearing Set For September 2002 ------------------------------------------------------------------- The fairness hearing for US$2.7 million settlement of the consolidated securities class action pending against Netsolve, Inc. has been set for September 13, 2002 in the United States District Court for the Western District of Texas, Austin Division. The suit commenced in February 2001 against the Company and certain of its officers, on behalf of purchasers of the Company's common stock between April 18, 2000 and August 18, 2000. The suit alleged that the defendants engaged in a fraudulent scheme by issuing false and materially misleading statements regarding the Company's business during class period. The Company moved to dismiss the suit for failing to state a claim under which relief could be granted and for failing to comply with the pleading requirements of the Private Securities Litigation Reform Act of 1995, 15 U.S.C. (S) 78u-4 et seq. The court granted this motion in part and denied it in part, dismissing claims against one officer of the Company and certain of the theories under which plaintiffs alleged liability against the Company. However, the court let stand certain of the stated claims against the Company and certain of its officers. In December 2001, the Company and individual defendants reached a settlement of this action. The plaintiff class will receive $2,750,000 in connection with the settlement, all of which will be funded by the Company's insurance carrier. This settlement is subject to court approval. NETSOLVE INC.: Securities Suit Coordinated With Similar Suits in NY ------------------------------------------------------------------- The securities class action pending against Netsolve, Inc. has been coordinated for pretrial purposes in the United States District Court for the Southern District of New York. The suit also names as defendants certain of the Company's officers and the underwriters of its initial public offering. The suit, filed on behalf of purchasers of the Company's common stock between September 29, 1999 and December 6, 2000, alleges that the defendants failed to properly disclose certain commissions, discounts and purported tie-in arrangements related to the Company's initial public offering. The plaintiffs allege claims under Sections 11 and 15 of the Securities Act against the Company, and the plaintiffs allege claims under Section 11 and 12 of Securities Act, and Section 10 (b) of the Exchange Act, against the Company's underwriters. The Company intends to vigorously defend against the suit. It stated in a disclosure to the Securities and Exchange Commission, however, that it is not yet feasible to predict or determine the final outcome of the suit, and if the outcome were to be unfavorable, the Company's business, financial condition, cash flow and results of operations could be materially adversely affected. NVIDIA CORPORATION: Plaintiffs To Consolidate Securities Suits in CA -------------------------------------------------------------------- Plaintiffs in the securities class actions against NVIDIA Corporation intend to file a consolidated suit in August 2002 in the United States District Court for the Northern District of California. The suits were commenced in February 2002 against the Company and certain of its officers, alleging violations of the federal securities laws arising out of the Company's announcement on February 14, 2002 of an internal investigation of certain accounting matters. As of April 30, 2002, approximately 13 similar actions were filed in the Northern District, along with three related derivative actions against the Company, certain of its executive officers, directors and its independent auditors, KPMG LLP, in California Superior Court and in Delaware Chancery Court. The suits allege claims in connection with various alleged statements and omissions to the public and to the securities markets and seek damages together with interest and reimbursement of costs and expenses of the litigation. The derivative actions also seek disgorgement of alleged profits from insider trading by officers and directors. The suits are in the preliminary stages. No discovery has been conducted. The Company intends to vigorously defend these suits, but is unable to predict the ultimate outcome of the suits. OIL COMPANIES: GA Woman Files Consumer Suit Over "Environmental Fees" --------------------------------------------------------------------- A Cherokee County woman filed a class action in Georgia district court against Pennzoil-Quaker State Co. and Jiffy Lube International, Inc., over "environmental fees" that consumers have to pay each time an oil change is performed at Jiffy Lube Stores. Stephani Bayhille filed the suit alleging that, for many years, the two Companies charged and engaged in the improper practice of requiring that consumers to pay generically entitled "environmental fee," environmental service fee or "environmental/GF 3 fee" each time an oil change is performed at one of the wholly-owned or franchised Jiffy Lube stores, the Tahlequah Daily Press reports. The suit further alleges customers are not told they will be charged such a fee prior to the service being rendered. The fees charged to customers purport to be a legitimate governmental and or regulatory charge when, in fact, there is no such lawful regulatory charge. The suit further states, if there is such a governmental charge, the fee charged bears no correlation or reasonable relationship to any legitimate governmental charge. The suit alleges the defendants internally refer to the fees as "profit enhancers." The practice of charging the fees has dramatically increased the profits of the defendants nationwide and allegedly cheated numerous customers who make up membership of the class. PM INTERNATIONAL: Recalls 22T Adapter Plugs Due To Electrocution Hazard ----------------------------------------------------------------------- PM International, Ltd. is cooperating with the US Consumer Product Safety Commission (CPSC) by voluntarily recalling about 22,000 international 2-prong adapter plugs. The Company imported the adapter plugs from a manufacturer in China. The adapter plug can separate when the plug is removed, exposing live electrical conductors, posing an electric shock or electrocution hazard to consumers. The Company received one report of a consumer who received an electric shock when he contacted the exposed conductors when he removed the plug. The 2-prong, slip-on adapter plugs are used to connect American 2- pronged electrical plugs into various foreign outlets. The adapter plugs are plastic with a white matte finish. The only marking on the plug is "6A250V," which is molded on the bottom surface between the prongs of the adapter. No other writing appears on the adapters. The Company sold the adapter plugs individually and as part of a traveling kit with voltage converters. Only adapter plugs sold individually are included in the recall. Catalogs and electronic stores nationwide sold the adapter plugs from November 2000 through March 2002 for about $3. For more details, contact the Company by Phone: 800-377-6332 between 9 am and 5 pm ET Monday through Friday. RAFFLES TOWN: Did Not Promise To Limit Memberships, Plaintiffs Concede ---------------------------------------------------------------------- Plaintiffs in the class action against Singapore club Raffles Town Club conceded that the club did not explicitly promise to limit its membership to 5,000 to 7,000, the Singapore Business Times reports. Several members of the club recently filed the suit on behalf of 4,885 club members, alleging the Company misled them into joining by telling them that the club was an exclusive and limited club in November 1996. Club members allegedly discovered that long queues and crowds when the club opened in March 2000. The plaintiffs primarily assert that membership in the club totaled 19,000. However, in the opening day of the hearing, attorney for the plaintiffs Molly Lim told Justice S. Rajendran "We concede that there was no explicit mention of 5,000 to 7,000 members, but when we are promised things like space and comfort, by no measure is 19,000 `limited.'" In the months leading up to the hearing, the figures `5,000 to 7,000' were mentioned many times by aggrieved members as what they believed the clubs total membership to be, before they found out in March last year that it was actually over 19,000, The Singapore Business Times reports. Ms. Lim also revealed in her opening statement that the club's former director and shareholder Dennis Foo told the media in 1996 as saying the club hoped to recruit 5,000 to 6,000 members. Mr. Foo was also quoted as saying this figure would include founding members who were offered a special joining rate of $28,000, and members recruited from the public at $40,000 a head. Club attorney K. Shanmugam, denied the allegations, saying the reports were hearsay and that neither the reporters who wrote the articles nor Mr. Foo would be testifying. He said, in his opening statement, that the representations were statements of future intention and not misrepresentations of facts, and added said such statements of intention are not actionable in law unless they can be shown to be part of a contract or the party that made them had no intention of fulfilling them, the Singapore Business Times reports. "They are no more than advertising statements which cannot give rise to any cause of action, and further, the club has been built in an opulent and luxurious manner," Mr. Shanmugam said. The plaintiffs aim to show that representations in the club's prospectus, including statements that members would enjoy `unparalleled privileges and facilities,' that memberships would be `exclusive and limited' and that the club would be `without peer in terms of size, facilities and opulence' were misleading. SYCAMORE NETWORKS: Plaintiffs File Amended Securities Suit in S.D. NY --------------------------------------------------------------------- Plaintiffs in the securities class actions against Sycamore Networks, Inc. filed an amended suit in the United States District Court for the Southern District of New York. The amended suit names as defendants the Company, several of its officers and directors and the underwriters for the Company's initial public offering on October 21, 1999. The amended complaint, filed on behalf of persons who purchased the Company's common stock between October 21, 1999 and December 6, 2000, alleges violations of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, primarily based on the assertion that the Company's lead underwriters, the Company and the other named defendants made material false and misleading statements in the Company's Registration Statements and Prospectuses filed with the SEC in October 1999 and March 2000 because of the failure to disclose: (1) the alleged solicitation and receipt of excessive and undisclosed commissions by the underwriters in connection with the allocation of shares of common stock to certain investors in the Company's public offerings and (2) that certain of the underwriters allegedly had entered into agreements with investors whereby underwriters agreed to allocate the public offering shares in exchange for which the investors agreed to make additional purchases of stock in the aftermarket at pre-determined prices. The amended complaint alleges claims against the Company, several of its officers and directors and the underwriters under Sections 11 and 15 of the Securities Act. It also alleges claims against the Company, the individual defendants and the underwriters under Sections 10(b) and 20(a) of the Securities Exchange Act. The action against the Company is being coordinated with over three hundred other nearly identical actions filed against other companies. No date has been set for a response to the amended complaint. The Company believes that the claims against it are without merit and intends to defend against the complaints vigorously. The Company is not currently able to estimate the possibility of loss or range of loss, if any, relating to these claims. VICINITY CORP.: Court Sets Sept 2002 As Deadline for Dismissal Motions ---------------------------------------------------------------------- The United States District Court for the Southern District of New York gave Vicinity Corporation until September 2002 to file motions for dismissal of the consolidated securities class action pending against it and certain of its former officers and directors. The suit, filed on behalf of individuals who purchased shares of the Company's common stock between February 9, 2000 and December 6, 2000, alleges that the Company, certain of its former officers and directors, and its securities underwriters violated various sections of the Securities Act of 1933, the Securities Exchange Act of 1934, and related rules, including Rule 10b-5, by reason of alleged false statements and omissions relating to underwriting discounts and market stabilization transactions. The Company stated in a disclosure to the Securities and Exchange Commission that the suit is one of a large number of such actions brought against numerous securities underwriters and issuers of securities that appear to be related to an investigation currently being conducted by the SEC of the conduct of certain securities underwriters. These lawsuits, including the suit against the Company, have been transferred to a consolidated docket for coordination and decision of pre-trial motions, discovery and related matters other than trial. Certain underwriter defendants have brought a motion to recuse the judge charged with managing the consolidated docket. The judge has denied the motion and the Second Circuit Court's has denied a petition for a writ of mandamus ordering the recusal. The Court recently set a schedule for defendants to make motions to dismiss, such that the motions should be submitted to the Court by the end of September 2002. At present, discovery has not commenced and the Company has not responded to any of the complaints in the consolidated action. The Company believes that the claims against the Company and certain of its former officers and directors are without merit and the Company intends to vigorously defend against them. WHIRLPOOL CORP.: Recalls Washer and Gas Dryer Units For Fire Hazard ------------------------------------------------------------------- Whirlpool Corporation is cooperating with the United States Consumer Product Safety Commission (CPSC) by voluntarily recalling about 17,000 combination washer and gas dryer units. The gas dryer can overheat, posing a fire hazard. The Company has received two reports of the unit overheating. No injuries or property damage have been reported. The recalled 24-inch washer and gas dryer units were sold under the Whirlpool, Kenmore and General Electric brand names, which is written on the control panel of the units. They are white or light tan. The model and serial number are located behind the dryer door at the top of the opening. Model and serial numbers of units covered by this recall are as follows: (1) Whirlpool Compact Thin Twin - Model Numbers: LTG5243DZ2, LTG5243DT2, LTG5243DQ2, LTG5243DQ3, LTG5243DT3; Serial Number: Begins with MM, ML or MK; (2) Kenmore Laundry Center - Model Numbers: 110.98752792, 110.98752793; Serial Number: Begins with MM, ML or MK; (3) General Electric Unitized Spacemaker - Model Numbers: WSM2480TBAWW, WSM2480TCAWW; Serial Number: Has Z, A or D as the second character Home improvement and department stores, new construction builders and remodelers sold these units nationwide from January 2000 through May 2002 for between $800 and $960. For more details, contact the Company by Phone: 866-251-1607 or visit the firm's Website: http://www.repair.whirlpool.com. WORLDCOM INC.: Bondholders' Suit Likely V. Banks, Lawyers, Accountants ---------------------------------------------------------------------- WorldCom, Inc. bondholders plan to sue the disgraced company's banks, lawyers, accountants and directors for millions of dollars as early as this week, for endorsing an $11.9 billion bond issue last May, The Daily Telegraph reports. Pension funds that bought into the offering claim to have done so under false pretenses, because they were unaware of the $3.8 billion "black hole," since found in the accounts. The Company, which has been charged with fraud by the Securities & Exchange Commission (SEC), used the proceeds from the $11.9 billion offering to write down debts. Lawyers negotiating with the pension funds over representation claimed the banks should have unearthed the error during due diligence. JP Morgan and Salomon Smith Barney were the lead underwriters. Deutsche Bank Alex Brown, ABN Amro and Bank of America Securities also will be targeted for compensation. Milberg Weiss Bershad Hynes & Lerach, a US law firm best known for its class action litigation, plans to take a lead role in this litigation. It already is representing plaintiffs in similar suits against Enron. Public sector bodies exposed to the collapse in the bond price are already heavily involved. The New York State Common Retirement Fund is seeking lead plaintiff status in one lawsuit, and the Florida State Board of Administration, which has lost $60 million since Company bonds collapsed to levels suggesting imminent bankruptcy, also plans to take action. Other victims include Calpers, the largest US pension fund, which has $235 million in WorldCom shares and $330 million in its bonds. JP Morgan said it was aware of the impending action, but claimed to have been duped just like the bondholders. "We did thorough due diligence," a spokesman said. "But the kind of fraud that WorldCom has revealed is not the kind of irregularity that could have been picked up by standard due diligence." The auditors, Andersen, and legal experts who undertook the due diligence, are also likely to be named in the lawsuit alongside Company directors. Salomon Smith Barney was unavailable for comment yesterday. The extent of the Company's accounting irregularity could yet prove to be bigger than that already reported. US investigators are seeking evidence that the deception was wider and larger. WORLDCOM INC.: Probing New Accounting Problems With Reserve Accounts -------------------------------------------------------------------- It seems that beleaguered communications giant WorldCom, Inc.'s troubles will still escalate after it revealed that it is investigating possible new accounting problems with its reserve accounts, the Associated Press reports. Securities and Exchange Commission head Harvey Pitt criticized the report, saying it was "wholly inadequate and incomplete." He added that it "demonstrates a lack of commitment to full disclosure to investors and less than full cooperation with the SEC." The Company's troubles began when it revealed last week the discovery that questionable accounting had caused it to misrepresent US$3.8 billion in expenses. The announcement lead to a 90% plunge in the Company's stock price to 6 cents a share this week from a high of US$64. As a result, shareholders, investors and other stakeholders filed securities suits alleging that the Company failed to disclose significant adverse information in its financial reports which resulted in the artificial inflation of the Company's stock price. One Company reserve account that appeared to shrink substantially during 1999 and 2000 was the one it used to cover liabilities it would assume from the many companies it was buying up. The Company added $2.81 billion to that accounting line from 1998 to 2000, its annual filings with the SEC show, according to an Associated Press report. It did not appear from the filings the company had paid off most of the liabilities. If money had been moved from the reserve account to the company's revenue line, it would make WorldCom's business look much healthier but would probably be a violation of accounting rules, according to Wayne Shaw, an accounting professor at Southern Methodist University in Dallas. Mr. Shaw told AP such accounts can easily be set up during an acquisition and then be used to quietly, and improperly, cover regular business costs, inflating the company's bottom line. In its statement to the SEC, the Company said its audit committee was reviewing financial records for 1999 through 2001 because questions were raised about significant changes in reserves against potential financial losses. "No conclusion has been reached regarding these entries," said the statement. The SEC is continuing its civil investigation of the company, and Mr. Pitt said, "Criminal charges may be too good for the people who brought about this mess." "Today's filing is consistent with our pledge to be forthright and open and to cooperate fully with both internal and external investigations," Company President and Chief Executive Officer, John Sidgmore, said in a statement. XEROX CORPORATION: Employees File Suit Challenging Soundness of Stock --------------------------------------------------------------------- Employees of Xerox Corporation have filed a class action, alleging the Company misled employees about the soundness of its stock, Ananova.com reports. The suit was filed on behalf of former employee Thomas Patti on behalf of more than 50,000 participants in the Company's retirement plan. The Company had earlier announced that it would restate billions of dollars in revenue from 1997 through 2001. The suit states the Company's false statements caused staff to lose millions of dollars in their retirement plans. Bill McKee, a Xerox spokesman, says company officials have not seen the lawsuit and cannot comment, Ananova.com reports. The company will vigorously defend its actions in court, he says. New Securities Fraud Cases 360NETWORKS INC.: Milberg Weiss Commences Securities Suit in S.D. NY -------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the shares of 360Networks Inc. (NASDAQ: TSIXQ.PK) between November 8, 2000 and June 28, 2001, inclusive, in the United States District Court, Southern District of New York against: (1) Gregory B. Maffei, (2) Jimmy D. Byrd, (3) Larry Olsen, (4) Ron Stevenson, (5) Vanessa Wittman and (6) Steve Baker 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 November 8, 2000 and June 28, 2001, thereby artificially inflating the price of Company shares. The complaint alleges that throughout the class period, the Company reported strong year-over-year revenue growth. Unbeknownst to investors, however, as alleged in the complaint, the Company was experiencing diminishing revenue growth. The complaint alleges that in order to create the impression that the Company was continuing to experience growth, the Company engaged in a series of reciprocal transactions with certain competitors for the purchase and sale of dark fiber optic cable -- the so-called dark fiber swap. The complaint alleges that as a result of these transactions, the Company artificially inflated its operating results and materially misrepresented its financial results at all relevant times. For more details, contact Steven G. Schulman or Samuel H. Rudman by Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by Phone: 800-320-5081 by E-mail: 360Networkscase@milbergNY.com or visit the firm's Website: http://www.milberg.com 360NETWORKS INC.: Cauley Geller Commences Securities Suit in S.D. NY -------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP initiated a securities class action in the United States District Court for the Southern District of New York on behalf of purchasers of 360Networks Inc. (OTC Pink Sheets: TSIXQ) publicly traded securities during the period between November 8, 2000 and June 28, 2001, inclusive, against: (1) Gregory B. Maffei, (2) Jimmy D. Byrd, (3) Larry Olsen, (4) Ron Stevenson, (5) Vanessa Wittman and (6) Steve Baker 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 November 8, 2000 and June 28, 2001, thereby artificially inflating the price of Company shares. The complaint alleges that throughout the class period, the Company reported strong year-over-year revenue growth. Unbeknownst to investors, however, as alleged in the complaint, the Company was experiencing diminishing revenue growth. The suit alleges that in order to create the impression that the Company was continuing to experience growth, the Company engaged in a series of reciprocal transactions with certain competitors for the purchase and sale of dark fiber optic cable -- the so-called dark fiber swap. The complaint alleges that as a result of these transactions, the Company artificially inflated its operating results and materially misrepresented its financial results at all relevant times. 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 360NETWORKS INC.: Schiffrin & Barroway Commences 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 on behalf of all purchasers of the common stock of 360networks Inc. (OTC Pink Sheets: TSIXQ) from November 8, 2000 through June 28, 2001, inclusive. The suit 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 throughout the class period, the Company reported strong year-over-year revenue growth. Unbeknownst to investors, however, as alleged in the complaint, the Company was experiencing diminishing revenue growth. The complaint alleges that in order to create the impression that the Company was continuing to experience growth, the Company engaged in a series of reciprocal transactions with certain competitors for the purchase and sale of dark fiber optic cable, the so-called dark fiber swap. The complaint alleges that as a result of these transactions, the Company artificially inflated its operating results and materially misrepresented its financial results at all relevant times. 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: 888-299-7706 (toll free) or 610-667-7706 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com AMDOCS LTD.: Robbins Umeda Commences Securities Fraud Suit in E.D. MO --------------------------------------------------------------------- The Law Firm of Robbins Umeda & Fink, LLP initiated a securities class action in the United States District Court for the Eastern District of Missouri on behalf of purchasers of the common stock of Amdocs Limited (NYSE:DOX) between July 18, 2000 and June 20, 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 these statements failed to disclose, among other things, that the Company's business and operations were being negatively affected by a host of adverse factors, including, but not limited to, the following: (1) the Company was experiencing declining sales as its business began to be affected by adverse market forces; and (2) the Company artificially inflated its financial statements by maintaining inadequate reserves for doubtful accounts and failing to disclose that its revenue growth improperly included revenues from a recent acquisition. Furthermore, defendants lacked a reasonable basis upon which to publish and/or affirm the revenue guidance they provided to analysts and investors. For more details, contact Marc M. Umeda by Mail: 1010 Second Ave., Suite 2360 San Diego, CA 92101 by Phone: 800-350-6003 or by E-mail: info@ruflaw.com CMS ENERGY: Scott + Scott Commences Securities Fraud Suit in E.D. MI -------------------------------------------------------------------- Scott + Scott, LLC initiated a securities class action on behalf of purchasers of the securities of CMS Energy Corporation (NYSE: CMS) between August 3, 2000 and May 10, 2002 inclusive. The suit is pending in the United States District Court for the Eastern District of Michigan against the Company and: (1) William T. McCormick Jr. (Chairman and CEO), (2) David W. Joos (President and Chief Operating Officer) and (3) Alan M. Wright (Chief Financial and Administrative Officer) The complaint charges 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 materially false and misleading statements to the market between August 3, 2000 and May 10, 2002. According to the complaint, the Company had, throughout the class period, improperly recognized approximately $4.4 billion in revenues by engaging in transactions lacking any economic substance using what are known as "round-trip" trading transactions. The improperly recognized revenues were, according to the complaint, reported in the Company's quarterly and annual press releases and in financial filings with the Securities and Exchange Commission (SEC), throughout the class period. On May 10, 2002, the Company announced that the SEC was investigating the propriety of its "round-trip" trading practices. In response to the announcement, its common stock price collapsed, falling from a high of $20.06 on May 10, 2002 to a low of $15.72 on May 13, 2002, a drop of more than 21% on extremely heavy trading volume. 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 FLEXTRONICS INTERNATIONAL: Schiffrin & Barroway Files Suit in S.D. NY --------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Southern District of New York on behalf of all purchasers of the common stock of Flextronics International Ltd. (Nasdaq: FLEX) publicly traded securities from October 2, 2001 through June 4, 2002, inclusive. The suit 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 the Company failed to disclose that its business and operations were being negatively affected by a host of adverse factors, including, but not limited to, the following: (1) that the Company was experiencing declining sales as its business began to be affected by adverse market forces. Throughout the Class Period, defendants repeatedly emphasized that the Company was not being affected by the slowdown in the US or global economy, when, in fact, that was not true; (2) throughout the Class Period, many of the Company's customers were experiencing severe financial difficulty such that it was highly foreseeable that they would be unable to complete anticipated sales, thereby causing the Company to suffer a decline in its revenues. At all times throughout the class period, defendants lacked a reasonable basis upon which to publish and/or affirm the revenue guidance they provided to analysts and investors; and (3) defendants had purposely and/or recklessly under-reported the amount of financing needed to complete the Company's restructuring and over-stated the status of the completion of this reorganization, as well as made false statements concerning the Company's financial and operational condition because it was critical that defendants raise cash by selling more equity during the upcoming months. On June 4, 2002, the last day of the class period, 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 now admitted that there were at least an additional $150 million in restructuring charges that must 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. 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: 888-299-7706 (toll free) or 610-667-7706 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com KNIGHT TRADING: Shapiro Haber Commences Securities Suit in New Jersey --------------------------------------------------------------------- Shapiro Haber & Urmy LLP initiated a securities class action against in Knight Trading Group, Inc. (Nasdaq: NITE ) and its former Chief Executive Officer Kenneth D. Pasternak, alleging that the defendants made materially false and misleading public statements that wrongfully inflated the price of Knight securities, thereby damaging investors. The case is pending in the United States District Court for the District of New Jersey in Newark, New Jersey. The suit alleges that during the class period (February 29, 2000 to June 3, 2002, inclusive) Company traders routinely engaged in the improper trading practice known as "front-running". The traders delayed execution of the Company's customer stock purchase orders so that the traders could first purchase those same stocks and then benefit from an increase in the stock price as a result of the customer orders. The complaint alleges that this practice forced the Company's customers to pay higher stock prices and generated undeserved windfall profits for the Company and Company traders. The complaint has been filed on behalf of all persons who purchased the Company's common stock from February 29,2000 to June 3,2002, inclusive. On June 3, 2002, the improper trading practices were exposed when it was announced that the National Association of Securities Dealers (NASD) and the SEC were investigating the Company's trading practices. The following day, the market price of Company stock dropped from its closing price of $5.92 per share on June 3, 2002, to close at $4.65 per share on June 4, 2002. For more information, contact Thomas G. Shapiro or Liz Hutton by Mail: 75 State Street, Boston, MA 02109 by Phone: 800-287-8119 by Fax: 617-439-0134 or by E-mail: cases@shulaw.com. MERCK & CO.: Berman DeValerio Commences Securities Suit in New Jersey --------------------------------------------------------------------- Berman DeValerio Pease Tabacco Burt & Pucillo initiated a securities class action against pharmaceutical firm Merck & Co., Inc. (NYSE: MRK) and several top officers, claiming the company improperly inflated revenues by billions of dollars. The complaint was filed in the US District Court for the District of New Jersey, on behalf of all investors who bought the Company's common stock from July 1, 1999 through June 21, 2002. According to the complaint, the Company overstated revenues by billions of dollars from its subsidiary Merck-Medco Managed Care, LLC by including consumer co-payments for prescription drugs in its revenues. During the class period, Merk-Medco's revenues made up over 50% of Merck's total revenues. The lawsuit claims that the Company violated Generally Accepted Accounting Practices because neither company bills for the co-payments, gets billed for them, or otherwise comes into contact with co-payment money. Patients make co-payments directly to pharmacies when they purchase medicine. On June 21, 2002, The Wall Street Journal reported on the Company's accounting practices and estimated that Merck and Merck-Medco may have pumped up their 2001 revenues by as much as $4.6 billion. Similar overstatements may have occurred for 1999 and 2000, the complaint says. That same day, according to the complaint, a Company spokesman admitted that the Company had been recording prescription drug co-payments as revenue since it acquired Merk-Medco in 1993. In the wake of these revelations, Company stock immediately dropped 4.25% from its closing price of $52.20 on June 20, 2002 to a closing price of $49.98 on June 21, 2002, its lowest closing price since late 1997. For more details, contact Steve D. Morris or Michael G. Lange by Mail: One Liberty Square, Boston, MA 02109 by Phone: 800-516-9926 by E-mail: law@bermanesq.com or visit the firm's Website: http://www.bermanesq.com. OMNICOM GROUP: Kaplan Fox Commences Securities Fraud Suit in S.D. NY -------------------------------------------------------------------- Kaplan Fox and Kilsheimer initiated a securities class action against Omnicom Group, Inc. (NYSE: OMC) and certain of its officers and directors, in the United States District Court for the Southern District of New York. This suit is brought on behalf of all persons or entities who purchased or otherwise acquired Company securities between April 25, 2000 and June 11, 2002, inclusive. The complaint alleges that the Company and certain of its officers and directors violated the federal securities laws. The suit alleges, among other things, that during the class period defendants reported that Omnicom was experiencing growth in its revenues and earnings, despite the overall economic slowdown and the worst decline in advertising revenue that the industry had ever experienced. Defendants attributed the Company's growth to, for the most part, the numerous acquisitions made by the Company. During 2000 and 2001, the Company acquired 73 companies. It, however, failed to reveal that it strung out the payments on its acquisitions for years to come, yet immediately accounted for the revenue from the acquired companies, thereby pumping up the its organic growth rate. During the class period, the Company failed to disclose $250 to $350 million in liabilities created by having to make future payments on its acquisitions. Moreover, the Company accounted for "earn-out payments" (payments to the acquired companies) as acquisition expenses, rather than compensation, so that the amounts were not subtracted from the Company's net income. The complaint further alleges that during the class period, the Company failed to disclose that under certain circumstances, it would be obligated to purchase certain companies in which it had invested. Thereby, the Company misrepresented its liabilities. The Company also failed to disclose that it transferred its holdings in several troubled internet companies to Seneca, a company it created, so that it would avoid writing down the losses on the investments. Its consideration for the transfers was $280 million in Seneca stock, which constituted an overstatement of the value of the investments. As a result of Defendants' false and misleading statements, investors were damaged, by purchasing Omnicom securities at artificially inflated levels during the Class Period. For more details, contact Frederic S. Fox, Shelley Thompson, by Mail: 805 Third Avenue, 22nd Floor, New York, NY 10022 by Phone: 800-290-1952 by Fax: 212-687-1980 or by E-mail: mail@kaplanfox.com VERISIGN INC.: Cohen Milstein Commences Securities Suit in N.D. CA ------------------------------------------------------------------ Cohen, Milstein, Hausfeld & Toll, PLLC filed a securities class action on behalf of purchasers of the securities of VeriSign, Inc. (Nasdaq:VRSN) between January 25, 2001 and April 25, 2002, inclusive. The action is pending in the United States District Court for the Northern District of California against the Company, and certain of its officers and directors. The complaint 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 January 25, 2001 and April 25, 2002, thereby artificially inflating the price of Company securities. As alleged in the complaint, the Company provides digital trust services to businesses engaged in securing digital commerce and communications. Plaintiff alleges that during the class period, defendants artificially increased the Company's revenue and margins thereby created the false perception that its deferred revenue growth was derived organically. As part of their effort to boost Company stock price, defendants misrepresented its true prospects and concealed improper accounting activities until they could effect the sale of at least $26 million worth of their own Company stock and use Company shares to acquire other companies in stock-for-stock transactions. The truth began to materialize on April 25, 2002, as the Company reported substantial employee lay-offs and revenue well below previously represented forecasts. By market closing the following day, Company stock had fallen $8.35 to close at $9.89, wiping out roughly $2 billion of the Company's market value. As a result of defendant's alleged misconduct, plaintiff and the class have suffered substantial damages. For more details, contact Steven J. Toll or Robert Smits by Phone: 888-240-0775 or 202-408-4600 by E-mail: stoll@cmht.com or rsmits@cmht.com or visit the firm's Website: http://www.cmht.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. 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