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/raid1/www/Hosts/bankrupt/CAR_Public/020719.mbx C L A S S A C T I O N R E P O R T E R Friday, July 19, 2002, Vol. 4, No. 142 Headlines FLORIDA: Former Felons Commence Lawsuit Over Denial Of Voting Rights HMO LITIGATION: Judge Considers Suit's Future Course V. Managed Care NICOR GAS: Consumers Sue Over Deceptive "Fixed Bill" Plan Marketing NORTEL NETWORKS: Faces Suit Over Revenues Overstatement in Canada Court PEOPLES BANK: Fraud Suit Expanded To Include New Defendants, Charges PHARMACEUTICAL COMPANIES: Two Drugmakers Sued Over Alleged Overpricing ROYAL OUTDOOR: Recalls 1,250 Colonila Vinyl Post Kits For Injury Hazard TERRORIST ATTACK: Compensation For Oklahoma Bombing Victims In Peril UNITED ARTISTS: Arizona Court Revives Lawsuit Over Unsolicited Faxes VENTANA MEDICAL: Appeals Court Upholds Securities Suit Dismissal WORLDCOM INC.: Alabama Pension Program Sues Former Executives, Others WORLDCOM INC.: WV Pension Fund Files Suit Alleging Fraud in Bond Sale WYETH: Cauley Geller Commences Suit Over Prempro Hormone Drug in PA New Securities Fraud Suits APPLIED DIGITAL: Schatz & Nobel Commences Securities Suit in S.D. FL CRYOLIFE INC.: Chitwood & Harley Commences Securities Suit in N.D. GA DUKE ENERGY: Keller Rohrback Files Suit On Behalf of Plan Participants FLEXTRONICS INTERNATIONAL: Stull Stull Commences Securities Suit in NY KNIGHT TRADING: Glancy & Binkow Commences Securities Fraud Suit in NJ MERCK & CO.: Squitieri & Fearon Commences Securities Suit in New Jersey MERRILL LYNCH: Finkelstein Thompson Commences Securities Suit in OR PERKINELMER INC.: Wechsler Harwood Commences Securities Suit in MA REHABCARE GROUP: Cauley Geller Commences Securities Suit in E.D. MO TELLABS INC.: Schiffrin & Barroway Commences Securities Suit in N.D. IL TYCO INTERNATIONAL: Johnson & Perkinson Expands Securities Suit Class UNIROYAL TECHNOLOGIES: Cauley Geller Lodges Securities Suit in M.D. FL UNIROYAL TECHNOLOGIES: Wechsler Harwood Commences Securities Suit in FL ********* FLORIDA: Former Felons Commence Lawsuit Over Denial Of Voting Rights -------------------------------------------------------------------- While most tremors from Florida's 2000 presidential election have quieted, one aspect remains contested in federal court. The denial of voting rights to former felons returned to society, The Baltimore Sun reports. That election is history, but a class action to restore the franchise in behalf of former felons is in the US District Court for Southern Florida, brought by voting rights advocates against Republican Governor Jeb Bush and the state. The issue is whether individuals convicted of a felony deserve to lose this basic right forever or whether, having served their time and having most other rights restored, they should be made whole as functioning, and tax-paying, citizens. The state cites the 14th Amendment in defending the denial of voting rights to felons. Thousands of men and women convicted of a felony who had served their time, were legally barred from casting ballots in that decisive election, which was eventually awarded to George W. Bush by 537 votes and a controversial ruling by the US Supreme Court that stopped the recounts. Thousands more in Florida, particularly in minority communities, have charged they were erroneously listed as former felons on Election Day and were denied ballots, possibly tilting the election to Mr. Bush. The lead petitioner is Thomas Johnson, 52, a black minister, who, a decade ago, served eight months in a New York prison on charges of drug and weapon possession. He now heads an organization working to rehabilitate ex-convicts returned to society. His case is being handled by the Brennan Center for Justice in New York. The class action charges that the state's disenfranchisement laws amount to arbitrary, irrational and intentional race discrimination in violation of the federal Voting Right Act. Nancy Northrup, Director of the Brennan Center's Democracy Program, says, "In our criminal justice system, who gets arrested, who gets prosecuted and who gets convicted of a felony are all decisions that involve a great deal of discretion. Too often, race and class play a role in these decisions. When felony convictions result in voting bans, the result is increasing disenfranchisement of populations that already were marginalized." Florida officials, the Brennan Center says, used unreliable voter registration lists in 2000, to weed out convicted felons and, as a result, many eligible registered voters were erroneously turned away from the ballot box, including a high percentage of African-Americans who had never committed a felony. "Florida is now denying the voting rights of more than five percent of its voting age population, 10 percent among African-Americans, who have paid their debt to society," Ms. Northrup says. In a separate case, the NAACP is suing Florida Secretary of State Katherine Harris, charging improper purging of alleged felons from the voting rolls in the 2000 election. Lori Borgen of the Lawyers Committee for Civil Rights Under Law, says the state violated the Voting Rights Act in "an election practice having a disproportionate impact" on minority citizens. Nearly two years after Florida's troubled presidential election, echoes continue to be heard in the Florida courts over real or alleged abuses which may never be definitively determined and defined, in possibly the most contentious election in United States history. HMO LITIGATION: Judge Considers Suit's Future Course V. Managed Care -------------------------------------------------------------------- A judge coordinating lawsuits by the nation's patients and doctors against the managed care industry, was recently asked to get the cases back on track after a year's detour on appeal, according to a report by the Associated Press Newswires. Attorneys for doctors and patients want US District Judge Federico Moreno to set a trial date next year and open up company records for inspection in lawsuits claiming racketeering and deception by the industry. Attorneys for the industry, meanwhile, want Judge Moreno to make decisions on class action status for the two parallel lawsuits first. If he decides not to grant such status, the cases could simply disappear. An estimated 80 million patients claim that the managed care industry deceived them by promising quality care, but actually skimped on the care provided. About 600,000 doctors claim they are routinely shortchanged in a profit-driven system that makes it costly and time- consuming for them to object. The Judge ended a two-hour hearing by saying he did not know how he would rule, but added that he plans to make a decision on opening company records "within a reasonable time." Attorneys for patients and doctors want wide access to company databases that Aetna attorney Miguel Estrada predicted would be "abusive, oppressive and overreaching." Mr. Estrada, who argued for the industry, wants the judge to force the plaintiffs' attorneys to amend their lawsuit's complaint to fit several orders narrowing the case. "You gave us 90 pages of rulings. They should write a complaint which complies with your rulings," he said. "The notion that this is merely a cleanup of what has long been before this court is just fantasy." Attorneys for patients and doctors said such an amendment was not required and accused the industry of using every possible delaying tactic, including the request for a new complaint, to stall the lawsuits. "They know the issues. They know the assertions. They know the allegations," patients' attorney Richard Scruggs said. He urged Judge Moreno "to get moving on the merits." "These involve fundamental issues of health care for tens of millions of Americans," said Mr. Scruggs. Decisions by a federal appeals court on Judge Moreno's pretrial rulings "are a green light to go forward with this case." When asked Mr. Estrada was asked whether he thought the suggested trial date of November 2003 was too ambitious, Mr. Estrada said he could not gauge that now. The leading companies being sued are: (1) Aetna, (2) Cigna, (3) Health Net, (4) Humana, (5) Prudential and (6) United HealthCare NICOR GAS: Consumers Sue Over Deceptive "Fixed Bill" Plan Marketing ------------------------------------------------------------------- The Citizens Utility Board (CUB) filed a class action accusing Nicor Gas and an unregulated sister company, Nicor Services, of deceptive marketing of the "Fixed Bill" plan, which is causing some consumers' natural gas bills to more than double. The lawsuit, filed in Cook County Circuit Court by CUB and the Chicago law firm of Macey, Chern & Diab, accuses the companies of violating the Illinois Consumer Fraud and Deceptive Business Practices Act. It asks that the companies be ordered to accurately describe the "Fixed Bill" plan in its marketing materials and that punitive damages be awarded to customers who were led to believe they would save money under the plan only to see their bills skyrocket. Usually, customers are charged for their actual gas usage each month, but the "Fixed Bill" plan, which was first marketed to customers in March, offers to charge them 12 equal monthly payments, based on their "gas use profile." Playing off the fear caused by unusually high gas bills in the winter of 2000- 2001, the companies promise customers "a bill that won't go up, regardless of gas prices or weather." However, the Company doesn't reveal that the "Fixed Bill" plan sets the monthly amounts so high that customers are likely to pay far more than if they stayed with the regulated utility. A sample of bills of consumers contacted by CUB showed that the "Fixed Bill" plan increased or would have increased annual bills by 88 percent to 134 percent. "Nicor Gas and Nicor Services are deceiving their customers," CUB Executive Director Martin Cohen said. "The companies promise customers that the `Fixed Bill' plan will protect them from future price spikes - - without telling them that the plan itself has a built-in price spike." Although the "Fixed Bill" plan is a Nicor Services program, Nicor Gas, the public utility, is included in the lawsuit, accused of conspiring with its sister company to defraud customers. Nicor Gas inserted "Fixed Bill" marketing materials into its customers' billing statements, agreed to add the "Fixed Bill" charges to its customers' bills and collect those charges, and allowed Nicor Services to use the Nicor trademark to market the plan, the lawsuit said. "Shopping for natural gas is confusing enough for consumers without deceptive marketing by a company with the same name as the utility," Mr. Cohen said. NORTEL NETWORKS: Faces Suit Over Revenues Overstatement in Canada Court ----------------------------------------------------------------------- Nortel Networks faces a class action, alleging it overstated its revenues in late 2000 and early 2001, when the Company first said it would fail to meet growth targets, the Associated Press reports. Toronto lawfirms, Rochon Genova and Lerner Associates, filed the suit on behalf of three Ontario residents, alleging the Company engaged in numerous improper accounting practices that overstated its revenues, and that its auditor Deloitte & Touche failed to have the Company correct its accounting procedures or warn investors. The Company already faces several class actions in the United States, which were commenced after the Company's February 15, 2001 announcement that it would fail to meet previous growth targets. The announcement caused shares to lose billions of dollars in value. Company spokeswoman Tina Warren told AP the lawsuit was "without merit" and that the company would "vigorously defend" itself. PEOPLES BANK: Fraud Suit Expanded To Include New Defendants, Charges -------------------------------------------------------------------- The class action against Peoples Bank of Northern Kentucky has been expanded to include as defendants the bank's former president and vice president and to include new charges against the bank's former board members, the Kentucky Post reports. The suit was filed on behalf of victimized Erpenbeck Co. homeowners, whose homes are saddled with builders' mortgages. Erpenbeck Co. or its affiliates deposited payoff checks written to various banks into a company account at Peoples Bank, according to bank records. The Kentucky Post reports that while the directors were already named as defendants in the lawsuit, attorneys Brandon Voelker and Stanley Chesley amended the action Tuesday to detail what they say is the directors' role in the debacle, including: (1) Failing to hire employees "who were capable of performing their banking responsibilities." Those responsibilities included understanding when a check was proper for deposit; (2) Failure to establish proper training, policies and procedures; (3) Failure to implement policies and procedures that would have prevented then-president John Finnan and then-vice president Marc Menne from forming JAMS, a private partnership through which the two officers bought Erpenbeck homes and leased them back to Erpenbeck; and (4) Inadequate supervision of employees, including allowing mr. Finnan to take a luxury cruise with Erpenbeck and his employees and friends The plaintiffs want Boone Circuit Judge Jay Bamberger to declare Peoples and its board of directors liable for the millions of dollars in liens still on many homes. They also want the bank to buy homes that homeowners can't sell because of the liens, and to offer new mortgages to homeowners who have had trouble refinancing because of the liens, the Kentucky Post reports. Mr. Voelker told the Post the claims against Finnan, Menne and the board members were added out of necessity. "It's always been our goal to hopefully just resolve it with the bank, but so far that's not happening. We have a duty to our clients, and at this point, we feel this is the only option," he said. Mark Arnzen, Peoples attorney, board member and shareholder, told the Post the board is not responsible for any misdeeds committed by Mr. Finnan or Mr. Menne. "At the time we hired John Finnan and Marc Menne, we believed that they were outstanding, honest bankers who were members of the community for many years. We trusted them as we moved forward over the years, and they breached that trust as we moved forward, and we're very disappointed," Mr. Arnzen said. PHARMACEUTICAL COMPANIES: Two Drugmakers Sued Over Alleged Overpricing ---------------------------------------------------------------------- Two pharmaceutical companies, Biovail Corp., Canada's largest listed drug company and Elan, Ireland's biggest drug manufacturer, are being sued by two union health funds. Federal regulators allege a licensing agreement improperly divided the US market for a blood pressure drug, keeping prices artificially high, The National Post reported. The Post's Michael Lewis writes that according to the unions' separate lawsuits, each seeking class action status and recently filed in US District Court in Washington, D.C., the 1999 licensing agreement between the two drugmakers forced the union health funds and their members to pay inflated prices for generic forms of Bayer AG's Adalat CC, a popular blood pressure drug. The AFL-AGC Building Trades Welfare Plan of Mobile, Alabama, filed its claim on July 2, while the United Food and Commercial Workers Local 56 Health & Welfare Fund of Cherry Hill, New Jersey, followed suit last Wednesday. The two unions are soliciting participation in the lawsuits from other consumers of the generic drugs. The lawsuits further contend that Biovail and Elan agreed not to compete with the other's approved dosage because such competition would result in the lowering of prices. The US Federal Trade Commission continues to consider a probe into drug industry practices. ROYAL OUTDOOR: Recalls 1,250 Colonila Vinyl Post Kits For Injury Hazard ----------------------------------------------------------------------- Royal Outdoor Products is cooperating with the US Consumer Product Safety Commission (CPSC) by voluntarily recalling about 1,250 colonial vinyl post kits. Cracks can develop near the base of the posts. This can allow the railing to collapse, potentially injuring people on the deck. The Company has received seven reports of the posts cracking and one report in which the post failed. The Company is not aware of any injuries associated with the posts cracking or failing. The recalled Royal Colonial Vinyl Deck Post Kit is intended for use with the Royal pre-built vinyl deck rail system. The 4-inch square post has a "lathe turned" design in the middle. A label with the words "Royal Outdoor Products" and "R008-45-136" is affixed to the bottom of each post. Each kit contains one post. The posts were made in Canada. Home Depot stores in the mid-Atlantic region sold these deck post kits from February 2002 through April 2002 for about $30. For more details, contact the Company by Phone: 877-467-6925 between 9 am and 7 pm Monday through Friday, 10 am and 6 pm Saturday, and 11 am and 6 pm Sunday ET or visit the firm's Website: http://www.royaloutdoor.com TERRORIST ATTACK: Compensation For Oklahoma Bombing Victims In Peril -------------------------------------------------------------------- One of the attorneys who is seeking federal terrorism compensation for Oklahoma City bombing victims has withdrawn from the case, the Associated Press Newswires reports. He was one of two attorneys lobbying for the inclusion of the plaintiffs they represent. St. Louis attorney Douglas Dowd, who recently withdrew, said he has filed a report with the Missouri Bar that raises questions about how his co-counsel, Charles E. Polk Jr., got involved with the bombing victims. Mr. Dowd also said that his withdrawal means all the agreements with bombing victims are void. Mr. Polk said about 150 people had signed up, and stated that he has done nothing improper, but would not discuss Mr. Dowd's claims. Mr. Dowd and Mr. Polk had been lobbying for legislation to include the Oklahoma City bombing victims in the compensation fund set up after the September 11 terrorist attacks. They had promised to file a class action lawsuit if the legislation was not enacted. The two attorneys had solicited clients by offering contingency arrangements. They had first required those signing to pay 25 percent of anything they received from the fund even if it was the result of congressional approval. After that fee was criticized by Sen. Don Nickles, R-Okla, and Rep. Ernest Istook, R-Okla, the attorneys said they would take 10 percent for lobbying or negotiating or lobbying for legislation and 25 percent if a class action was filed and successful. The Senate Judiciary Committee debated last week about whether to limit attorney fees, but reached no decision. The committee may take up the issue again this week. Sen. Nickles has been pushing to get federal compensation for the bombing victims, but wants to limit the attorney fees. Mr. Dowd's and Mr. Polk's efforts have come under fire in their hometown. The St. Louis Post-Dispatch carried an editorial last week saying the two attorneys "make ambulance-chasers look reputable." Mr. Dowd called the newspaper that day to say he was withdrawing. Mr. Dowd told The Oklahoman he withdrew from the case because he learned that Mr. Polk had a "secret agreement" with a person who is not an attorney to solicit clients for a fee for the Oklahoma City effort. Mr. Dowd said he called the Missouri Bar to discuss the situation because non-attorneys are prohibited from making solicitations or legal referrals unless they are a legitimate referral service. Mr. Dowd also said it had been his impression initially that the bombing victims "had contacted us and wanted us to represent them. I just was not aware of how Mr. Polk had gotten involved in the whole thing." He would not name the third party or discuss other details. Tom Kight and Gloria Chipman, who lost loved ones in the Oklahoma City bombing, said they were contacted by a man named Jim Helenthal and that Mr. Helenthal had asked Ms. Chipman when she was going to sign an agreement with the two attorneys. She has not signed an agreement. Mr Helenthal, who distributes a "shopper" newspaper in Illinois and once was represented by Mr. Polk in an antitrust case, declined to discuss the case. "I'm a good guy. I think that justice will be served in this situation. That's all I can say now," he said. UNITED ARTISTS: Arizona Court Revives Lawsuit Over Unsolicited Faxes -------------------------------------------------------------------- An Arizona appeals court recently revived a class action which a trial court had blocked because a movie theater chain could face "possibly annihilating punishment" of up to $135 million for sending unsolicited advertisements by fax, the Associated Press Newswires reports. A three-judge Arizona Court of Appeals panel said the trial court should not have denied class action status to the lawsuit filed by an Arizona company, ESI Ergonomic Solutions Inc., against United Artists Theater Circuit Inc. ESI had sued for damages in 1999, after it received a one-page advertisement from United Artists for discount movie packages. The advertisement was transmitted to 90,000 fax machines in the Phoenix area at a cost of $3,375 to United Artists, according to court papers. ESI sued under a federal law, the Telephone Consumer Protection Act that prohibits transmitting unsolicited advertisements to fax machines. The law allows private lawsuits to enforce the law, with damages up to $500 per violation, though damages can be trebled. The trial court denied class action status to the case, a step which would permit ESI's lawyers to represent all recipients of the fax and seek damages from United Artists on their behalf. By then, however, United Artists had filed for US Bankruptcy protection. The trial court ruled that bankruptcy proceedings offered potential claimants a superior way to obtain redress from United Artists for the fax, and that the potential penalty of $135 million was "horrendous, possibly annihilating punishment." The Court of Appeals disagreed, saying that the bankruptcy proceedings might not be suitable for potential claimants. Class actions are intended to allow large penalties to be extracted from defendants to deter misbehavior. "When the amount at issue is small and costs and fees are not recoverable, claimants may well conclude that it would cost more to pursue an individual claim than they would obtain in relief, one of the very circumstances class actions are intended to address," Judge Cecil B. Patterson Jr. wrote in the opinion. United Artists will appeal the ruling to the Arizona Supreme Court, said Keith Beauchamp, the company's attorney. The Court of Appeals ignored previous rulings that allow a trial judge, considering whether to permit a class action, to take into account the effect on the defendant, Mr. Beauchamp said. The case now goes back to Maricopa Superior Court for further proceedings. United Artists is now part of Regal Entertainment Group of Englewood, Colorado. Denver billionaire Philip Anschutz formed the company last year after gaining control of United Artists and two other theater chains while they were in bankruptcy proceedings. VENTANA MEDICAL: Appeals Court Upholds Securities Suit Dismissal ---------------------------------------------------------------- The United States Court of Appeals for the Third Circuit granted summary judgment in favor of Ventana Medical Systems Inc. (Nasdaq: VMSI), in the securities suit filed against it by former shareholders of BioTek Solutions Inc. against the company and certain of its directors and stockholders in the United States District Court for the District of Delaware. The complaint alleged, among other things, that the company violated federal and California securities laws in connection with the BioTek shareholders' consent to the February 1996 merger of BioTek into the Company and the related conversion of BioTek notes into Company notes. On June 5, 2000, the Company filed a motion for summary judgment on all of plaintiffs' claims. The court later issued an order granting the Company's motion for summary judgment in its entirety. Plaintiffs subsequently filed a notice of appeal on Dec. 8, 2000. The hearing of the appeal took place before the Third Circuit on Feb. 4, 2002, and the Third Circuit rendered its opinion affirming the District Court and dismissing the plaintiffs' appeal on July 11, 2002. Separately, on April 1, 1999, a shareholder derivative and class action suit was filed in the Court of Chancery for the State of Delaware entitled Leung v. Ventana Medical Systems Inc. et al. The plaintiff, who was related to the plaintiffs in the above federal securities action, alleged breach of fiduciary duty and breach of contract relating to Ventana's merger with BioTek and the related conversion of BioTek notes into Ventana notes, as well as the company's decision to compensate two of its directors by selling Ventana stock to them at a fixed price. On May 6, 1999, the Company filed a motion to dismiss and on Feb. 29, 2000, the court granted the company's motion, dismissing the action in its entirety. The plaintiff filed his notice of appeal on Oct. 24, 2000, and on May 22, 2001, after a hearing, the Delaware Supreme Court decided in the Company's favor and dismissed the appeal. "We believe the decision by the Court of Appeals brings to a successful close a series of securities law complaints filed by former BioTek investors as early as 1997," Chris Gleeson, Ventana's president and chief executive officer, said in a statement. "Our willingness to successfully contest these complaints in both federal and state lower and appellate courts over a five-year period demonstrates our commitment to vigorously defending all complaints brought without merit against the Company or its directors," added Mr. Gleeson. The Company intends to assess its options for recovering from the plaintiffs the costs of defending these suits. WORLDCOM INC.: Alabama Pension Program Sues Former Executives, Others --------------------------------------------------------------------- Alabama's pension program for active and retired public employees has sued former WorldCom, Inc. executives, and accounting and investment firms, seeking US$1.1 billion in damages over its losses in the Mississippi-based company, the Associated Press Newswires reports. The pension program's CEO David Bronner said he decided to fight in court because he fears the country may be heading toward a 1930s-style depression caused by a lack of public confidence in Wall Street and because he does not believe the federal government is doing enough about accounting irregularities. "I have never been as scared in my life," said Mr. Bronner, who has headed Alabama's $26 billion pension program since 1973. "I have no confidence in the attorney general or the SEC chairman because for nearly a year now we have had one case after another. There has not been one arrest or one indictment. If the attorney general would worry as much about Wall Street as he does about statues and breasts, we would not have to do this (sue over WorldCom's wrongdoing)," Mr. Bronner said, referring to Attorney General John Ashcroft's effort to cover revealing statues at the Justice Department building. Retirement Systems of Alabama's (RSA) lawsuit seeks US$275 million in compensatory damages for losses on WorldCom stocks and bonds, plus $825 million in punitive damages. The lawsuit names as defendants: (1) Bernie Ebbers, former WorldCom CEO, (2) Scott Sullivan, former WorldCom chief financial officer, (3) Arthur Andersen LLP, (4) JP Morgan Chase & Co., (5) Citigroup, (6) Bank of America Corp. and (7) Bear Stearns & Co. Arthur Andersen stood by its recent statement, that its work for WorldCom complied with professional standards and that WorldCom withheld financial information. Other defendants either did not return calls from The Associated Press or said they could not comment because they had not yet seen the lawsuit. RSA has sued both Enron Corp. and Providian Financial Corp. over losses suffered by the pension program. The Enron suit and the WorldCom suit do not name the companies as defendants in order to keep the litigation from being combined with class actions filed by banks and others in federal court, Mr. Bronner said. He also said that he chose to file both cases in state court in Montgomery, Ala., because it moves faster than federal court and it allows treble damages. RSA is the lead plaintiff in a traditional class action filed in federal court in California against Providian Financial Corp. and four of its former officers. RSA lost $3.9 million on Providian, Mr. Bronner said. Mr. Bronner said that WorldCom, Enron and Providian losses won't affect the pension checks for government retirees in Alabama, because they belong to a defined-benefit plan. It will be fiscal 2004 before the losses could have any impact on how much money the pension program seeks from the Legislature. WORLDCOM INC.: WV Pension Fund Files Suit Alleging Fraud in Bond Sale --------------------------------------------------------------------- Beleaguered telecommunications giant WorldCom, Inc. faces another lawsuit, this time from West Virginia's public pension funds. The suit also names the Company's former accountant Arthur Andersen, LLP, Reuters reports. West Virginia's pension funds lost about US$5.6 million on Company bonds, Craig Slaughter, executive director of the West Virginia Investment Management Board told Reuters. The suit is now pending in the Kanawha County Circuit Court. The suit alleges that a bond sale by the Company was based on false financial statements and misleading information. The suit is similar to one suit filed by two Illinois pension funds, relating to a 2001 bond offering by the Company. A spokesman for the Company told Reuters the company does not comment on pending litigation. The funds also lost money in their stock portfolios and Mr. Slaughter told Reuters the state would consider joining a class action suit against WorldCom related to stock losses. The state's management board, responsible for 12 pension and employment security plans, reported having just under 80 million WorldCom shares at a cost of $1.105 million in January. The fair value of those shares was $1.084 million, the board reported in its monthly statement. WYETH: Cauley Geller Commences Suit Over Prempro Hormone Drug in PA ------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP commenced a securities class action in the United States District Court for the Eastern District of Pennsylvania on behalf of all persons who were prescribed the hormone replacement drug Prempro, chemically known as conjugated estrogens/medroxyprogesterone. As alleged in the suit, Wyeth and Wyeth-Ayerst Research are named as the defendants in this action due to their responsibility in manufacturing, promoting, marketing, distributing and/or selling Prempro. The class action seeks to: (1) inform the public that users and consumers of Prempro are at an increased risk of harm and/or death; (2) establish a medical monitoring fund so that every consumer may be tested and treated for the adverse effects of Prempro; (3) reimburse monies paid for the product; and (4) provide compensation to all victims for personal injuries and death. Prempro is a medication commonly prescribed for patients in need of hormone replacement therapy. The drug, which falls within a category of drugs known as progestins, contains conjugated estrogens and medroxyprogesterone acetate. Approximately three million women in the United States take Prempro daily to replace hormones lost at menopause as a means for reducing incidence of post-menopausal symptoms such as hot flashes, night sweats and vaginal dryness. The drug first received FDA approval as a hormone replacement therapy in 1995. Between 1993 and 1998, the Women's Health Initiative (WHI), a group focused on the health and welfare of post-menopausal women, enrolled more than 16,000 women in a set of clinic trials to examine, among other things, the effect of estrogen plus progestin on the prevention of heart disease and hip fractures, and any associated change in risk for breast and colon cancer. The specific drug used during the study was Prempro supplied by Wyeth and Wyeth- Ayerst Research. On May 31, 2002, an independent advisory committee charged with reviewing the results of the clinical trials and ensuring participant safety, recommended that the trials be stopped based on a finding of increased breast cancer risk in the estrogen plus progestin group. On July 8, 2002, participants began receiving letters informing them about the results of the study and instructing them to stop study medications. The specific study findings for the estrogen plus progestin group compared to the placebo included a 41% increase in strokes; 29% increase in heart attacks; 22% increase in total cardiovascular disease; and 26% increase in breast cancer. On July 9, 2002, the Journal of the American Medical Association released an expedited article concerning the WHI Prempro clinical trials. The article, originally scheduled for publication on July 17, 2002, summarizes the wide-ranging harm caused by Prempro, including the "increased risks for cardiovascular disease and invasive breast cancer," and notes that "there were more harmful than beneficial outcomes in the estrogen plus progestin group vs. the placebo group." For more details, contact Liza McPhail or Kandie Gibson by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944 by E-mail: mcphail@classlawyer.com or visit the firm's Website: http://www.classlawyer.com New Securities Fraud Suits APPLIED DIGITAL: Schatz & Nobel Commences Securities Suit in S.D. FL -------------------------------------------------------------------- Schatz & Nobel PC initiated a securities class action status in the United States District Court for the Southern District of Florida on behalf of all persons who purchased the common stock of Applied Digital Solutions, Inc. (Nasdaq: ADSX) from February 11, 2000 through May 10, 2002, inclusive. The complaint charges the Company and its CEO with issuing false and misleading statements concerning the Company's business and financial condition. Specifically it is alleged that throughout the class period, defendants were in possession of materially adverse information concerning the Company's lack of proper accounting controls and improper revenue recognition practices. On April 18, 2002, the Company disclosed that one of its subsidiaries had been booking revenue without evidence of customer acceptance. The Company also disclosed that the subsidiary did not have proper restrictions to vendor access within its accounts payable system. Defendants also made false or misleading misrepresentations that all major hospitals in the West Palm Beach, Florida area would be equipped with VeriChip scanners -- an essential component for use of the Company's VeriChip technology. On May 10, 2002, it was disclosed that no hospital had accepted the scanner. On this news, Applied Digital shares dropped 30%. For more details, contact Nancy A. Kulesa by Phone: 800-797-5499 by E- mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net CRYOLIFE INC.: Chitwood & Harley Commences Securities Suit in N.D. GA --------------------------------------------------------------------- Chitwood & Harley initiated a securities class action in the United States District Court for the Northern District of Georgia, Atlanta Division, on behalf of purchasers of the securities of CryoLife Inc., (NYSE: CRY) between April 2, 2001 and July 5, 2002, inclusive. The suit names as defendants the Company and: (1) Steven G. Anderson, President, CEO and Chairman, (2) James C. VanderWyck, Vice President, Regulatory Affairs and Quality Assurance, (3) D. Ashley Lee, Vice President and CFO and (4) Albert E. Heacox, Vice President, Laboratory Operations The defendants allegedly violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by making material misrepresentations and/or failing to make material disclosures throughout the class period due to their failure to disclose and correct quality control problems in the Company's processing of human tissues and heart valves. As a result, the Company's class period assurances to the investing public that patient safety was of paramount concern to it and that the Company complied with applicable governmental processing and quality regulations were also knowingly false when made. On June 24, 2002 the Company issued a press release stating that the Company had received its first and only warning letter from the FDA and denying that there was any evidence of fungal infection in the heart valves which had triggered the FDA's second inspection of the Company's facilities in March of 2002. On July 5, 2002, the Company issued a corrective press release announcing that it had received a warning letter from the FDA in 1997, and that it had been notified by the CDC that there was evidence of fungal infection in at least one of the heart valves it had supplied. On July 6, 2002, however, the Wall Street Journal Online reported that CDC disagreed with the Company's June 24 and July 5 statements, as a result of a letter the CDC knew the Company had received in March of 2002 in which evidence of the fungal infection was discussed. The market's reaction to the Company's corrective disclosures and to the CDC's disclosure was swift and severe - its common stock dropped from a high of almost $45 per share during the class period and of $23.66 per share just before the disclosure to as low as $9.90 per share on July 10, 2002. In addition, the complaint alleges that the Company misrepresented its 2001 income and earnings during the class period, in violation of generally accepted accounting principles (GAAP), overstating both income and earnings per share by approximately 20%. The Company admitted that its previously issued financial statements were false in a March 29, 2002 press release, which announced that the Company had restated its reported financial results for 2001. For more details, contact Nikole Davenport by Mail: 2900 Promenade II, 1230 Peachtree Street, NE, Atlanta Georgia 30309 by Phone: 888-873-3999 (toll-free) by E-mail: nmd@classlaw.com or visit the firm's Website: http://www.classlaw.com. DUKE ENERGY: Keller Rohrback Files Suit On Behalf of Plan Participants ---------------------------------------------------------------------- Keller Rohrback LLP initiated a 401(k) breach of fiduciary duty class action against Duke Energy Corporation (NYSE:DUK) on behalf of participants and beneficiaries of the Company's 401(k) retirement plan from January 1, 2000 through the present. The complaint filed alleges that the Company, and its plan administrators, breached their fiduciary duties of loyalty and prudence. The complaint continues that the breach occurred when material information was withheld or concealed from the 401(k) Plan participants and beneficiaries with respect to the Company's business, financial results and operations, thereby encouraging current and former Company employees to continue to make and maintain substantial investments in stock in the Plan. On May 17, 2002, 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. The Company had engaged in approximately $1 billion of "round-trip" energy trades, which provided no economic benefit for the Company. For more details, contact Jennifer Tuato'o by Phone: 800-776-6044 by E- mail: investor@kellerrohrback.com or visit the Website: http://www.erisafraud.comor http://www.seattleclassaction.com FLEXTRONICS INTERNATIONAL: Stull Stull Commences Securities Suit in NY ---------------------------------------------------------------------- Stull, Stull & Brody LLP initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of all persons who acquired securities of Flextronics International, Ltd. (NASDAQ:FLEX) between October 2, 2001 and June 4, 2002, inclusive against the Company and: (1) Michael E. Marks, (2) Michael McNamara and (3) Robert R.B. Dykes. 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 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, 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 information, contact Tzivia Brody by Mail: 6 East 45th Street, New York, NY 10017 by Phone: 800-337-4983 by Fax: 212-490-2022 or by E- mail: SSBNY@aol.com KNIGHT TRADING: Glancy & Binkow Commences Securities Fraud Suit in NJ --------------------------------------------------------------------- Glancy & Binkow LLP initiated a securities class action in the United States District Court for the District Of New Jersey on behalf of all persons who purchased securities of Knight Trading Group, Inc. between October 13,1999 and June 3,2002. The suit charges the Company and Kenneth D. Pasternak, Knight's CEO, with violations of sections 10(B) and 20(a) of the Securities Exchange Act of 1934. Among other things, plaintiff claims that defendants' material omissions and materially false and misleading statements regarding the nature of the Company's trading practices, caused Company stock price to become artificially inflated, inflicting damages on investors. The suit alleges that defendants' statements between October 13, 1999 and June 3, 2002 regarding the Company's financial performance and trading practices were materially false and misleading because they failed to disclose and/or misrepresented, among other things: (1) that the Company's employees were engaging in an elaborate system of trading-rule violations known as "front-running," in which customer orders were delayed while defendants' traders made purchases in the same stocks ordered by customers, thereby benefiting themselves at the expense of the customer; and (2) that the Company's front-running practices subjected the Company to the heightened risk that it would be sanctioned by the National Association of Securities Dealers (NASD). On June 3, 2002, the Company disclosed that its trading practices were being investigated by both the Securities and Exchange Commission and the NASD. Following this announcement, on June 4, 2002, when the market opened for trading, shares of the Company plummeted 28% from the previous day's close. For more details, contact Michael Goldberg by Mail: 1801 Avenue of the Stars, Suite 311, Los Angeles, California 90067 by Phone: 310-201-9161 or 888-773-9224 or by E-mail: info@glancylaw.com. MERCK & CO.: Squitieri & Fearon Commences Securities Suit in New Jersey ----------------------------------------------------------------------- Squitieri & Fearon, LLP initiated a securities class action in the United States District Court of New Jersey on behalf of those who purchased or otherwise acquired Merck & Co., Inc. (NYSE:MRK) common stock during the period July 1,1999 through June 21,2002. The suit charges the Company and certain of its officers and directors with violating the federal securities laws. Those officers and directors are: (1) Raymond V. Gilmartin, Chairman, President and Chief Executive Officer, (2) Kenneth C. Frazier, Senior Vice President and General Counsel, (3) Richard C. Henriques, Vice President and Controller, (4) Judy C. Lewent, Executive Vice President, Chief Financial Officer and Principal Financial Officer, and (5) Mary McDonald, Senior Vice President and General Counsel The lawsuit claims that the Company and the officers who are named in the Complaint artificially inflated the Company's sales by improperly including consumer co-payments as revenues in the Company's numerous filings with the Securities and Exchange Commission and its public statements about its financial results during the class period. For more details, contact Lee Squitieri or Stephen J. Fearon, Jr. by Phone: 800-432-8174 or by E-mail: Stephen@sfclasslaw.com MERRILL LYNCH: Finkelstein Thompson Commences Securities Suit in OR ------------------------------------------------------------------- Finkelstein, Thompson & Loughran initiated a securities class action against Merrill Lynch & Co., Inc. and the head of its Internet group, Henry Blodget, on behalf of purchasers of eToys, Inc. (PNK: ETYSQ.PK) securities between June 27, 1999 and March 7, 2001, inclusive. The suit, filed in the United States District Court for the District of Oregon, alleges that Merrill Lynch and its well-known Internet stock analyst Henry Blodget violated the federal securities laws by knowingly issuing false and misleading analyst reports regarding these "new economy" companies during the class period. Based on e-mails and other internal Merrill Lynch communications, which were made public as a result of the investigation conducted by the New York State Attorney General, the suit alleges that the defendants failed to disclose a significant conflict of interest between their investment banking and research departments. Specifically, the suit alleges that Henry Blodget and other Merrill Lynch analysts issued very favorable analyst reports regarding these "new economy" companies to the public when they allegedly knew that the positive recommendations were unwarranted and false. The suit further alleges that, unbeknownst to the investing public, Merrill Lynch's buy recommendations and price targets for these companies were driven by its efforts to attract lucrative investment banking business rather than by the companies' fundamental merits. For more details, contact Conor R. Crowley or Adam T. Savett by Phone: 202-337-8000 or by E-mail: crc@ftllaw.com or ats@ftllaw.com. PERKINELMER INC.: Wechsler Harwood Commences Securities Suit in MA ------------------------------------------------------------------ Wechsler Harwood Halebian & Feffer LLP initiated a securities class action on behalf of purchasers of the securities of PerkinElmer, Inc. (NYSE:PKI) between July 15, 2001 and April 11, 2002, inclusive, in the United States District Court for the District of Massachusetts. The suti 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 during the class period. During the class period, the individual defendants and other Company insiders sold 595,000 shares of Company common stock, reaping gross proceeds in excess of $18.4 million. According to the complaint, the Company issued numerous press releases during the class period, which represented that: (1) the Company's revenues and earnings would continue to increase, (2) the Company's transformation into a provider of health-related products and services was proceeding successfully and (3) the Company would meet its financial performance targets for 2002 The complaint alleges, however, that these and other representations were materially false and misleading because they failed to disclose that: (i) the Company was experiencing a decline in the demand for its products, especially at its Optoeletronics division; (ii) the Company was carrying tens of millions of dollars of obsolete inventory on its books; and (iii) the Company's expenses were soaring due to numerous acquisitions and divestitures it had undertaken. On March 1, 2002, the Company issued a press release revealing that 2002 first quarter revenues and earnings would be materially less than what the Company had represented only three weeks earlier. In reaction to the announcement, the price of the Company's common stock plummeted by 31%. However, the full truth regarding the Company's business was not fully disclosed until April 11, 2002, when the Company issued a press release revealing that its reported earnings would break even, instead of meeting the previously projected target of $0.16 - $0.17 earnings per share that the Company reported on March 1, 2002. In reaction to this announcement, Company stock plummeted by another 28%, falling from $16.70 per share on April 10, 2002 to $12.04, on extremely heavy trading volume. For more details, contact Patricia Guiteau by Mail: 488 Madison Avenue, 8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail: pguiteau@whhf.com. REHABCARE GROUP: Cauley Geller Commences Securities Suit in E.D. MO ------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP initiated a securities class action in the United States District Court for the Eastern District of Missouri on behalf of purchasers of RehabCare Group, Inc. (NYSE: RHB) common stock during the period between February 7, 2001 and January 21, 2002, inclusive. The complaint charges the Company and certain of its officers and directors with violating 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 February 7, 2001 and January 21, 2002. The complaint alleges that, among other things, defendants issued a series of materially false and misleading statements concerning the Company's supplemental staffing division. The complaint alleges these statements were materially false and misleading because they failed to disclose that the supplemental staffing division was experiencing serious operational problems with information systems critical for matching supply with demand and poor employee training and retention and that its revenues and earnings were declining as a result. On January 21, 2002, the Company issued a press release announcing that earnings for its fourth quarter 2001 would be less than half than they had reiterated in late October and that the Company would take a charge of $8.5 to $9.5 million, $3 million of which was for a reorganization of the staffing division. In reaction to the Company's disclosure, as alleged in the complaint, the price of its common stock plummeted by 25% over one trading day on heavy volume, falling from $25.21 per share to $18.70 per share. Prior to the disclosure of the adverse facts described above, as alleged in the complaint, the Company completed a secondary offering of common stock, raising $50 million for the Company and more than $8 million for Company insiders. In addition, Company insiders also sold $4,568,209 worth of Company stock during the class period at artificially inflated prices. For more details, contact Jackie Addison, Sue Null or Ellie Baker 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 TELLABS INC.: Schiffrin & Barroway Commences Securities Suit in N.D. IL ----------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Northern District of Illinois, Eastern Division, on behalf of all purchasers of the common stock of Tellabs, Inc. (Nasdaq: TLAB) from December 11, 2000 through June 19, 2001, inclusive. The complaint charges the Company and certain of its officers and directors with violating 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 December 11, 2000 and June 19, 2001. According to the complaint, the Company had represented to the public, in press releases issued throughout the class period, that: (1) its new products were enjoying strong demand; (2) the seeming slowdown in its business was due to "component- parts shortages which have been corrected;" and (3) the Company's business was strong fundamentally and the Company would meet earnings and revenues expectations. The complaint alleges that these, and other, statements were materially false and misleading because, as alleged in the complaint, its new optical networking line of products were inferior to the competition and their products were not well-received or in high demand. The complaint further alleges that, contrary to its statements to the investing public, the Company's highly-touted acquisition of SALIX was a failure as sales of the product line it gained in the acquisition were falling. On June 19, 2002, the Company issued a press release revealing that second quarter of 2001 revenues would be 35% less than guidance reiterated only weeks before, and that the company's earnings would be breakeven instead of the consensus $0.29 per share. In reaction to the announcement, the price of the Company's common stock fell by 31%, from $23 per share on June 19 to $15.87 on June 20, representing a 75% decline from the class period high. During the class period, one of its executives sold a total of 80,000 shares of Company stock at prices between $64.25 to $65.38 per share, grossing proceeds of more than $5.18 million. 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 TYCO INTERNATIONAL: Johnson & Perkinson Expands Securities Suit Class --------------------------------------------------------------------- Johnson & Perkinson expanded the class period in the securities class action pending in the US District Court for New Hampshire against Tyco International Ltd. (NYSE: TYC) to include purchasers of the Company's securities from April 25, 2002 through June 12, 2002. The complaint asserts claims against the Company and several of its top officers for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Plaintiffs allege: (1) the Company's financial results announced on April 25, 2002 overstated the value of CIT Group, a wholly owned Tyco subsidiary, by $4.5 to $6.5 billion, thereby materially inflating the reported financial results of Tyco; (2) defendants failed to reveal the material risk that the public offering of CIT stock by Tyco would not be able to be competed once the criminal investigation of one of the defendants became public or, if it were, would only occur at a value far below that represented defendants; and (3) defendants failed to reveal the ongoing criminal investigations of one of its top officers. As a result, Company securities were artificially inflated throughout the class period, causing plaintiff and other members of the class to purchase or sell such securities at prices skewed by defendants' conduct. At the end of the class period, the Company announced the need to restate its financial results to write down $4.5 billion of CIT's goodwill. For more details, contact Dennis J. Johnson or Jacob B. Perkinson by Mail: 1690 Williston Road, South Burlington, Vermont 05403 by Phone: 888-459-7855 or by E-mail: JPLAW@adelphia.net. UNIROYAL TECHNOLOGIES: Cauley Geller Lodges Securities Suit in M.D. FL ---------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP initiated a securitie class action in the United States District Court for the Middle District of Florida on behalf of purchasers of Uniroyal Technology Corporation (Nasdaq: UTCI) publicly traded securities during the period between February 8, 2000 and May 13, 2002, inclusive. The suit names as defendants the Company and: (1) George Zulanas, Jr. and (2) Howard R. Curd The complaint charges that the 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 February 8, 2000 and May 13, 2002. According to the complaint, defendants issued a series of press releases touting its financial stability and its acquisition of Sterling Semiconductor, while strategically positioning the Company to increase its participation in the explosive compound semiconductor industry via internal growth. However, unbeknownst to the investing public that purchased the Company stock during the class period: (i) the Company was not a financially stable company; (ii) its acquisition of Sterling was not lucrative at all; and (iii) it was not strategically positioning the Company to increase its participation in the explosive compound semiconductor industry via acquisition and internal growth. But for the Company's financial support, Sterling would probably have been forced to seek protection under the bankruptcy laws. Sterling was a development stage company and not, as defendants touted, "a leading developer of silicon carbide technology and materials." Moreover, in order to materially inflate the Company's net worth and further foster the illusion of growth, defendants agreed to pay an inflated price for Sterling with materially overvalued stock serving as currency. On December 31, 2001, eighteen months after having acquired Sterling in exchange for stock, with a purported value of more than $40 million, the Company shocked the market by announcing that it recorded a write- down of Sterling goodwill of approximately $9,816,000. On January 2, 2002, Company stock closed at $1.69 down from $3.20 the previous day and substantially down from its class period high of $71.125 reached on February 23, 2000. For more details, contact Jackie Addison, Sue Null or Ellie Baker 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 UNIROYAL TECHNOLOGIES: Wechsler Harwood Commences Securities Suit in FL ----------------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP initiated a securities class action in the United States District Court for the Middle District of Florida on behalf of purchasers of Uniroyal Technology Corp. (Nasdaq:UTCI) between February 8, 2000 and May 13, 2002, inclusive against the Company and certain of its officers. 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 February 8, 2000 and May 13, 2002. According to the complaint, defendants issued a series of press releases touting its financial stability and its acquisition of Sterling Semiconductor, while strategically positioning the Company to increase its participation in the explosive compound semiconductor industry via internal growth. However, unbeknownst to the investing public that purchased the Company's stock during the class period: (1) Uniroyal was not a financially stable company; (2) its acquisition of Sterling was not lucrative at all; and (3) it was not strategically positioning the Company to increase its participation in the explosive compound semiconductor industry via acquisition and internal growth. But for the Company's financial support, Sterling would probably have been forced to seek protection under the bankruptcy laws. Sterling was a development stage company and not, as defendants touted, "a leading developer of silicon carbide technology and materials." Moreover, in order to materially inflate the Company's net worth and further foster the illusion of growth, defendants agreed to pay an inflated price for Sterling with materially overvalued stock serving as currency. On December 31, 2001, eighteen months after having acquired Sterling in exchange for stock, with a purported value of more than $40 million, the Company shocked the market by announcing that it recorded a write- down of Sterling goodwill of approximately $9,816,000. On January 2, 2002, Company stock closed at $1.69 down from $3.20 the previous day and substantially down from its class period high of $71.125 reached on February 23, 2000. For more information, contact Craig Lowther by Mail: 488 Madison Avenue, 8th Floor, New York, New York 10022 by Phone: 877-935-7400 or by E-mail: clowther@whhf.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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