/raid1/www/Hosts/bankrupt/CAR_Public/020806.mbx
C L A S S A C T I O N R E P O R T E R
Tuesday, August 6, 2002, Vol. 4, No. 154
Headlines
AMERICAN AIRLINES: Three Men File Race Discrimination Suit in NJ Court
BELLSOUTH CORP.: Worker Reductions On Hold As Racial Bias Suit Intrudes
CANADA: BC Court Allows Suit Over Same-Sex Partners Pensions To Proceed
CATHOLIC CHURCH: Cleveland Congregation Voices Support For Priest
CATHOLIC CHURCH: Archbishop Law Says Geoghan Case Settlement Not Final
CINAR CORPORATION: NY Court Grants Preliminary Settlement Approval
HMO LITIGATION: Judge Orders Insurers To Provide Internal Records
ILLINOIS: Lisle Residents Collect Money In Lockformer Pollution Suit
ILLINOIS: Hamilton County Faces Suit Over Unauthorized Corpse Photos
INDIANA: Cost Of Medicaid Suit For Disabled Less Than Initially Set
JOHNSON & JOHNSON: NJ Court Rejects Propulsid Suit Certification
LOTO-QUEBEC: Suit For Pathological Gamblers Seek $579,000 In Damages
MARTHA STEWART: Stockholder Sues After Stock Price Experiences Drop
MONTANA POWER: Court Grants Securities Suit Class Certification
OXMOOR HOUSE: Faces Suit For Sending Unwanted Books Automatically
PENNSYLVANIA: Pittsburgh Charged With Delaying Misconduct Investigation
QWEST COMMUNICATIONS: Working For Settlement of SEC Accounting Probe
TERRORIST ATTACK: 9/11 Fund's Payouts Watched As Guide For Compensation
UNITED COMPANIES: Investors Oppose $20.5M Securities Suit Settlement
*Senate Panel To Discuss Bill To Change Handling Of Class Actions
New Securities Fraud Cases
CRYOLIFE INC.: Berger & Montague Commences Securities Suit in N.D. GA
CRYOLIFE INC.: Berman DeValerio Commences Securities Suit in N.D. GA
EMPYREAN BIOSCIENCE: Charles Piven Commences Securities Suit in N.D. OH
HALLIBURTON COMPANY: Finkelstein & Krinsk Files Securities Suit in TX
ICN PHARMACEUTICALS: Cauley Geller Commences Securities Suit in C.D. CA
ICN PHARMACEUTICALS: Schiffrin & Barroway Launches CA Securities Suit
ICN PHARMACEUTICAL: Bernstein & Liebhard Commences CA Securities Suit
JOHNSON & JOHNSON: Schiffrin & Barroway Commences Securities Suit in NJ
MERCK & CO.: Berger & Montague Commences Securities Suit in New Jersey
MERRILL LYNCH: Rabin & Peckel Commences Securities Fraud Suit in NY
VIVENDI UNIVERSAL: Rabin & Peckel Commences Securities Suit in S.D. NY
XCEL ENERGY: Schiffrin & Barroway Commences Securities Fraud Suit in MN
XCEL ENERGY: Charles Piven Commences Securities Fraud Suit in MN Court
*********
AMERICAN AIRLINES: Three Men File Race Discrimination Suit in NJ Court
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American Airlines faces a lawsuit from four New Jersey men who were
allegedly removed from an airplane in March and strip-searched because
of their Arabic names, the Associated Press reports. The men stated
that they were on their way to a Florida vacation when airline
officials asked them to get off the plane prior to takeoff.
The men, all US citizens of Palestinian descent, filed the suit in the
US District Court in Newark, New Jersey. They claim that they were
searched in full view of other passengers for 30 minutes and were
forced to lift up their shirts and lower their pants. The men said the
captain eventually apologized and allowed them to get back on the
plane.
The three men are Eyhab Matari, 25, of Prospect Park, Ehab Abdelaziz,
22, of Paterson, Osama Zeidan, 20, of Clifton, and Waesam Hamdan, 22,
of Paterson. "I don't feel American now," Mr. Hamdan, who was born in
the United States, said during a news conference at a Teaneck mosque,
AP reports. "I feel second class."
A spokesman for the Fort Worth, Texas-based airline declined to comment
on the suit, saying the Company would not discuss pending litigation,
according to AP.
The suit is the second suit filed against the Company, after last
year's terrorist attacks. The American Civil Liberties Union, which
has filed a handful of lawsuits on behalf of passengers, has blamed
poor airline policies drawn up in response to the threat of terrorism
since Sept. 11.
BELLSOUTH CORP.: Worker Reductions On Hold As Racial Bias Suit Intrudes
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Some local BellSouth Corporation employees want to take advantage of
the Company's plan to reduce its work force by taking early retirement.
However, a race discrimination class action filed recently, in Alabama,
against the company has put the expected reduction on hold, the Macon
Telegraph reports.
The Atlanta-based Company announced in May that it planned to cut 4,000
to 5,000 of about 80,000 employees in its nine-state area due to the
weak economy and stiff competition. However, this reduction action has
been put on hold while the Company awaits a court ruling to determine
whether the standard waiver that employees sign when leaving a job will
protect the Company if those who leave are involved in the class
action.
The standard waiver says that the employee does not have a claim
against BellSouth, said Terry Smith, district manager in Macon. "What
is decided by the court will determine what the next step will be,"
said Mr. Smith.
The racial discrimination lawsuit was filed in early May in Birmingham,
Alabama, by a number of African-American employees, Mr. Smith said.
The lawsuit alleges that the Company routinely impedes the advancement
of African-American employees and pays them less than similar white
employees.
The employee reduction initially will be voluntary, Mr. Smith said.
However, if enough people do not take advantage of it, the Company may
be forced to cut jobs, since the company has to change the way it does
business due to the economy, said Mr. Smith.
Since 1996, BellSouth has lost more than four million customer lines to
competition in Georgia, Florida, Alabama, North Carolina, South
Carolina, Tennessee, Kentucky, Mississippi and Louisiana.
CANADA: BC Court Allows Suit Over Same-Sex Partners Pensions To Proceed
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British Columbia's Supreme Court allowed a $240 million class action
filed by gays and lesbians seeking survivor benefits under the Canada
Pension Plan to proceed, the Associated Press reports.
Justice Marion Allan found a class action was appropriate to determine
the issues raised by Eric Brogaard and Gail Meredith in their lawsuit
against the Attorney General of Canada. "In the absence of a class
proceeding, there could be a proliferation of individual actions
seeking virtually identical relief," Judge Allan wrote in her decision.
The cost of suing the government individually would preclude many
legitimate claims, she wrote, AP reports.
The suit accuses the government of discriminating against same-sex
partners because it collects pension plan premiums from all Canadians,
but denies survivor pensions to gays and lesbians whose partners died
before Jan. 1, 1998.
A bill was introduced granting a variety of rights to same-sex couples,
but the government imposed a cutoff date in 2000. Gays and lesbians
say the date is arbitrary and without legal justification, denying
survivor benefits to an estimated 10,000 gays and lesbians, according
to Associated Press. The lawsuit seeks benefits for all applicable gay
and lesbian survivors retroactive to April 17, 1985, the day equality
guarantees were enshrined in the Canadian Charter of Rights and
Freedoms.
CATHOLIC CHURCH: Cleveland Congregation Voices Support For Priest
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Members of a church in the Cleveland Catholic Diocese spoke out,
sometimes angrily, in defense of a longtime priest now on
administrative leave amid allegations of sexual abuse of minors, the
Associated Press Newswire reports.
The diocese recently placed the Rev. James Viall, 73, pastor at St.
Rose of Lima Church, on leave, along with two priests in other parishes
Lawyer William M. Crosby, is seeking class action status for a lawsuit
alleging that victims include "children of numerous St. Rose of Lima
Church parishioners." The Cleveland Diocese has 235 parishes with more
than 800,000 Catholics. Fifteen priests are on leave pending
investigation.
About 300 St. Rose parishioners recently packed a church hall for a
meeting with the Rev. Lawrence Jurcak, director of clergy personnel for
the diocese. Rev. Jurcak said the meeting was one in a series of
informational sessions he is attending throughout the diocese to make
sure church members have their concerns and questions answered about
church policy regarding abuse allegations.
Rev. Jurcak acknowledged the congregation's loyalty to Rev. Viall and
the anger that he has been removed from ministry, although possibly
only temporarily. When Rev. Jurcak mentioned there are new allegations
against Rev. Viall in a civil lawsuit filed recently in Cuyahoga County
Common Pleas Court, and that those allegations were made through an
unidentified John Doe plaintiff, alleging child endangering among the
other alleged wrongful acts, the church members jeered.
This lawsuit, which seeks class-action status, alleges that Rev. Viall
"has been molesting altar boys and grooming children for pedophilia
since shortly after Father Viall's ordination as a priest in 1954."
Church members strongly denied having any knowledge of improper
behavior by their priest. An information sheet some members
distributed said Rev. Viall "adamantly denies engaging in any improper
misconduct with children as well as any and all other accusations of
improper conduct."
CATHOLIC CHURCH: Archbishop Law Says Geoghan Case Settlement Not Final
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Boston Archbishop Bernard F. Law maintained that the settlement
proposed by the Archdiocese of Boston to settle claims of sexual abuse
against defrocked priest John J. Geoghan was not final, in a hearing in
a Boston federal court, the Associated Press reports.
Lawyers for the alleged abuse victims will try to persuade the court to
order the archdiocese to honor the settlement. The deal, initially
announced in March, fizzled out when the archdiocese backed out of it
due to financial concerns.
During the hearing, attorney for the plaintiffs Mitchell Garabedian
confronted Archbishop Law with a newspaper article in the archdiocese's
newspaper The Pilot, in which Archbishop Law was quoted as saying,
"this settlement is an important step in reaching closure" for Fr.
Geoghan's alleged victims.
Archbishop Law denied that he believed the archdiocese reached a final
deal with the victims, saying, "I believed this to be a proposed
settlement." According to AP reports, Archbishop Law said he should
have done so but maintained under repeated questioning that the context
was clear and that the settlement would not be final until all 86
accusers and the archdiocese finance committee had signed it.
"I did not use that word as a qualifier, I wish obviously now that I
had used it," he said. "It would have expressed the intent of my words
more effectively."
Archdiocese spokeswoman Donna Morrissey said she had not read the
article and had no comment, AP reports. Next week, Archbishop Law is
scheduled to give depositions in separate abuse cases. Settlement
talks with lawyers for alleged victims in the 240 other pending cases
recently broke down.
CINAR CORPORATION: NY Court Grants Preliminary Settlement Approval
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CINAR Corporation entered a settlement agreement to end class actions
brought against it and certain other defendants in the United States
and Canada. The settlement agreement formalizes the terms of the
agreement in principle announced on April 26, 2002. The United States
District Court for the Eastern District of New York has preliminarily
approved the terms of the settlement.
The Company's troubles began in 1999 with allegations that it
fraudulently qualified for Canadian-content tax credits by putting the
names of Canadians on scripts actually written by Americans. Then came
news of unauthorized offshore investments of company cash. Chief
Financial Officer, Hasanain Panju, was fired soon after. The next
upheaval was the ouster from executive positions of co-founders
Micheline Charest and Ronald Weinberg.
Shareholder lawsuits resulted from these troubling scenarios, with the
plaintiffs charging that they were misled about the state of the
Company's financial affairs. The plaintiffs have agreed in principle
to accept the settlement, which will still need the approval of
American and Quebec courts.
Pursuant to the settlement that was preliminarily approved by the US
Court, the plaintiffs have agreed to receive an aggregate amount of
US$25 million in full settlement of their claims against the Company
and certain other defendants. Furthermore, the court directed that
notice describing the terms of the settlement be distributed by
plaintiffs to members of the class.
The final court hearing in the United States to approve the settlement
is expected to occur on or about November 19, 2002. The settlement is
also conditional on the approval of the Quebec Superior Court, and the
parties are proceeding to seek that approval.
HMO LITIGATION: Judge Orders Insurers To Provide Internal Records
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Big health insurers lost a motion recently to bar plaintiffs' lawyers
from obtaining internal records in cases that accuse the companies of
skimping on patient care, Dow Jones Business News reports. The federal
judge in Florida has lifted a stay blocking discovery in the lawsuits
that doctors and patients have filed against several leading health
insurers.
In a court order, Miami US District Federico Moreno gave Aetna Inc.,
Cigna Corp., Humana Inc. and other insurers until September 30, to
begin providing the documents requested by the plaintiffs' lawyers,
said Archie Lamb, co-lead counsel representing the state medical
associations of California, Florida, Georgia, Louisiana and Texas.
Mr. Lamb said this move allows lawyers for plaintiffs to investigate
allegations against the HMOs, including racketeering charges. "We can
now look behind the curtain of secrecy," he said. The plaintiffs have
accused health maintenance organizations of conspiring to deny medical
claims that insurers had given doctors incentives to limit care.
Representatives of the health insurance industry said Judge Moreno's
decision is merely a "procedural step" and does not actually order the
start of the discovery process. Judge Moreno has yet to set the ground
rules for discovery, such as the duration and the nature of the
evidence that can be presented, and must still rule on the plaintiffs'
request to unite all the lawsuits into one class action, said Stephanie
Kanwit, general counsel for the American Association of Health Plans.
"This does not open the door to discovery," said Ms. Kanwit.
The most important ruling yet to come, according to some analysts, is
the plaintiffs' request for class certification, which is necessary to
consolidate the array of lawsuits into a class action. The plaintiffs
are seeking to consolidate 50 separate lawsuits into a class action
that could involve millions of patients and physicians.
"It makes little sense to move forward on discovery until motions to
dismiss and for class certification are resolved," wrote Banc of
America Securities Analyst Todd Richter. "A decision . may
significantly narrow the scope of the discovery or eliminate the need
for it."
Prudential Securities Analyst David Shove said he expected Judge Moreno
to address other issues before tackling discovery. However, the judge
has two months to resolve such issues before the stay on discovery is
actually lifted, said Mr. Richter of Banc of America.
ILLINOIS: Lisle Residents Collect Money In Lockformer Pollution Suit
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Residents of Lisle, Illinois, recently picked up their share of a $10
million settlement in the Lockformer pollution class action, at their
local library, the Chicago Daily Herald reports.
However, there was no talk of spending the money on exotic vacations or
expensive cars. Instead, most people talked happily about simple
pleasures like drinking tap water or taking a hot shower once they hook
up to Lake Michigan water, or not having to worry anymore about the
pollution and poisons in their wells.
The class action filed in November 2000, accused Lockformer, a
manufacturer of machinery, of allowing gallons of trichloroethylene
(TCE) to spill on its property between the 1970s and 1990s. The
chemical seeped into the aquifer and tainted local wells to the south,
authorities say. TCE is used by manufacturers to degrease metal and
has been linked to illnesses such as cancer, when consumed or inhaled
in large concentrations.
A total of 186 families were represented in the case, which went to
trial May 6 and settled May 22, 2002. After legal fees of about $3.3
million plus expenses, the average homeowner in the lawsuit should
receive about $22,000. The money will cover the costs of hooking up to
Lisle's public water system, sealing basements against TCE fumes and
will compensate people for an estimated five percent decline in home
values.
The Company did not admit guilt as part of the settlement. The
Company's former chemical supplier Honeywell International was also a
defendant in the case.
Shawn Collins, one of the residents' attorneys, said, "This case was
about corporate recklessness and irresponsibility." Some people said
they wished the case could have gone to the jury. The EPA officials
said mitigation of the TCE plume on the site should start in September.
ILLINOIS: Hamilton County Faces Suit Over Unauthorized Corpse Photos
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Several families from Hamilton County, Illinois filed a class action
against the County, former deputy coroner Jonathan Tobias and
photographer Thomas Condon, over unauthorized pictures taken of their
dead relatives.
The prosecutor reports that Mr. Condon struck up a friendly
relationship with Dr. Tobias, who allowed him to make a film of an
autopsy for training purposes and take still photographs as well, the
Chicago Tribune reports. Some months later, in January 2001, Mr.
Condon took a roll of pictures to a developing shop, where a technician
looked at them and called the police. The two men were indicted and
convicted of eight counts of abuse of a corpse, and Mr. Tobias was
suspended from his post. Mr. Condon was sentenced to 2 1/2 years in
prison, after the photographer's lawyers unsuccessfully argued that he
was working on an artistic series intended to portray the cycle of life
and death.
The lawsuit charges that the defendants violated the privacy of the
dead and that the County failed to exercise proper custodial care of
the corpses.
In pronouncing sentence against Mr. Condon, Judge Norbert Nadel of the
Hamilton County Court of Common Pleas, referring to Mr. Condon's
defense that he was working on an artistic series, said that he saw no
redeeming value in the photographs. Denying a defense motion asking
that Mr. Condon be released early, because he already has served three
months of his term, Judge Nadel said, "Nothing has been presented which
can override the devastation caused by the illegal and intrusive acts
of the defendant."
Mr. Condon's lawyer, H. Louis Sirkin, also presented the defense that
his client had been acting with what he believed was the full
permission from the coroner's office and that he had never intended to
demean anyone's memory while pursuing his objective. At a hearing, Mr.
Condon's lawyer told the judge that he had instructed his client not to
say who gave him permission to make the photographs because of a
pending lawsuit brought by the families of the deceased.
INDIANA: Cost Of Medicaid Suit For Disabled Less Than Initially Set
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The state's loss of an eight-year court battle over Medicaid
eligibility likely will cost about $50 million, far less than the $323
million that state officials thought the state might have to pay to
disabled Indiana residents, the Associated Press Newswires reports.
After losing a class action, the state sent out letters to nearly
17,600 people that extended Medicaid benefits to people with treatable
disabilities that could have been corrected, but had been classified as
ineligible for treatment under Medicaid. The letters were sent to the
last-known addresses of people who were denied coverage from December
1993 through December 2001.
An actuarial analysis concluded that the state could be liable for as
much as $323 million in payments. The new estimate, therefore, is good
news for Indiana's treasury. A top lawmaker said it was also proof
that Gov. Frank O'Bannon's administration had grossly overestimated the
financial blow to the state.
"I think it (the overestimate) was really misleading on the
administration's part - either that or bad management - that they used
to support larger tax increases than were necessary," said Rep. Jeff
Espich, the top Republican on the budget-writing House Ways and Means
Committee.
The General Assembly passed a package of tax increases during the
recent special session, in part to help shore up a projected $1 billion
budget deficit, and at least partly to respond to the $323 million
estimate of Medicaid payments.
However, as of this week, only 3,665 people had become part of the
class deemed eligible for Medicaid payments they were wrongfully
denied. Medicaid Director Melanie Bella now projects an actual cost of
about $50 million.
Attorneys who successfully sued the state had said that the $323
million might be inflated because many people who were denied coverage
died, could not be found or never suffered financial losses because
they did not try to get other care.
JOHNSON & JOHNSON: NJ Court Rejects Propulsid Suit Certification
----------------------------------------------------------------
A New Jersey state court refused to certify as a class action a
consumer fraud and products liability claims lawsuit, representing
millions of plaintiffs against Johnson & Johnson, manufacturer of the
gastric reflux drug Propulsid, reported the publication Trial (vol.
38).
The plaintiffs' lawsuit alleges that the drug, known generically as
cisapride, caused damaging heart arrhythmia and, in some cases, death.
The court found that the fraud claims were flawed because the
plaintiffs had failed to show "ascertainable loss," and it held that
the products liability claims involved too many individual issues to
let the plaintiffs proceed as a national class.
Defendants called the decision a victory, but plaintiff lawyers said
triumph may be short-lived for two reasons. First, the decision has no
precedential value and, second, it is being appealed. The issue of
class certification should soon be decided in federal multidistrict
litigation (MDL) pending in Louisiana.
"If a national class is certified in the MDL, all state court class
actions would be enjoined from proceeding," said Barry Hill, a Wheeling
West Virginia plaintiff lawyer who chairs the American Trial Lawyers
Association's (ATLA) Propulsid Litigation Group.
The crux of the problem with the New Jersey products liability claims,
Superior Court Judge Cordemus said, was that consumers received
multiple warnings about the dangers of Propulsid in the years before it
was removed from the market in 2000. She noted that the warning label
was changed several times - twice in 1995, once in 1997, again in 1998
and for the last time, in 2000. Given this, the more than 30 million
adults and children who took the drug for gastric reflux, or heartburn,
from the early 1990s until it was withdrawn from the market in 2000,
would have to be divided into at least seven subclasses. Class members
who initially took Propulsid when there were no warning might be deemed
to not to have been adequately warned.
There were other issues creating individual differences as well, such
as medications taken along with Propulsid, prescribing the medication
for different ailments under assorted circumstances.
Although it is defendant's conduct that is at issue, not the
plaintiffs', still, the members of the class "have too many individual
situations to ignore," Judge Corodemus said.
The New Jersey Propulsid case is just one of about 16,000 currently
pending nationwide, Mr. Hill said, including the federal MDL. All
allege products liability against Johnson & Johnson, and about one-
third include medical negligence claims against prescribing doctors.
Mr. Hill also noted that because the federal claims were filed later
than those in New Jersey, they were stronger cases. "A lot of
scientific information was developed after the New Jersey claims were
filed (in late 2001). We submitted our claims with a great deal more
scientific support," Mr. Hill said.
LOTO-QUEBEC: Suit For Pathological Gamblers Seek $579,000 In Damages
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Formal notice has been filed in the class action against Loto-Quebec,
on behalf of Quebec residents who became addicted to the Company's
video-lottery terminals (VLTs), Montreal (Canada.com) reports.
In court documents filed in Montreal and Quebec City, the suit sets
damages at US$579,000 for around 119,000 people who have allegedly
become pathological gamblers due to the VLTs.
Kean Brochu, a Quebec City-area lawyer and former municipal councillor
who defrauded his professional association of about $50,000 to feed his
daily gambling habit, is the lead plaintiff in the case, Montreal
reports. After receiving treatment, Mr. Brochu is again practicing
law.
The suit seeks for each gambler:
(1) $2,800 to cover 30 days of therapy,
(2) $500 for psychological follow-up,
(3) $500 for medical expenses,
(4) $963 for lost salary during treatment and
(5) $100 for miscellaneous expenses
The trial is to take place in Quebec City.
MARTHA STEWART: Stockholder Sues After Stock Price Experiences Drop
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A Florida stockholder in Martha Stewart Living Omnimedia Inc. recently
filed a class action against Chief Executive Martha Stewart, blaming
her for the recent drop in the Company's share price, the Chicago
Tribune reports.
Conrad Hahn brought the action in Manhattan Supreme Court, accusing Ms.
Stewart of "breach of her fiduciary duty." In the 13-page complaint,
Mr. Hahn alleges that he suffered damages of at least $75,000 as a
result of Ms. Stewart's being embroiled in an insider trading scandal.
Ms. Stewart was reported to have sold shares of drugmaker ImClone
Systems Inc. just before regulators dealt the Company a setback by
refusing to review its cancer drug Erbitux. Sam Waksal, ImClone's
former chief executive and a close friend of Ms. Stewart, was arrested
on insider trading charges on June 12.
The Company posted higher quarterly profits, boosted by its flagship
magazine last week, but acknowledged that the insider trading probe
into Ms. Stewart's activities could hit future earnings.
Mr. Hahn said in his complaint that Ms. Stewart had put "her own
personal gain and self-interest above those of her shareholders." Mr.
Hahn cited the Martha Stewart Living Omnimedia (MSO) 1999 prospectus as
saying, "Our business would be adversely affected if Martha Stewart's
image or reputation were to be tarnished. Our continued success and
the value of our brand name therefore depends to a large degree, on the
reputation of Martha Stewart."
Therefore, Mr. Hahn concludes that, "Martha Stewart's name and
reputation and associated goodwill (are) the primary asset of MSO."
Lawyers for Ms. Stewart could not be reached immediately for comment.
MONTANA POWER: Court Grants Securities Suit Class Certification
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A Montana federal court granted class certification to the securities
lawsuit filed against the former Montana Power Co., on behalf of its
shareholders, the Montana forum reports.
The suit alleges that the Company's shareholders were harmed when the
Company decided to become a telecommunications firm. Stock prices have
dropped from a high of $65 in March 2001, when the firm was Montana
Power, to 79 cents Thursday for Touch America stock.
The rulings mean that the shareholders' lawsuit is allowed to proceed
with shareholders represented under a class-action status.
OXMOOR HOUSE: Faces Suit For Sending Unwanted Books Automatically
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Oxmoor House faces a class action in Florida federal court, for sending
unordered books to customers, the St. Petersburg Times reports.
Lead plaintiff Gordon Sanderson ordered and paid for a gardening book,
and subsequently received a bill for a second similar book from Oxmoor
House, from which he had purchased the first book. This led to Mr.
Sanderson filing the suit, along with another man who had the same
experience.
The suit says the Company enrolls people who legitimately order a book
in an "automatic delivery plan," sending more books that they did not
order or billing them for books that never arrive. The Tampa, Florida
law firm handling the case, James, Hoyer, Newcomer & Smiljanich, called
the Company's marketing plan an attempt to "mislead, intimidate and
shame consumers into paying nonexistent debt."
The Company sends out a mail solicitation that tells customers about
the automatic delivery plan. The trouble is, says the lawsuit, the
solicitation looks like junk mail, and may customers simply throw it
away. If the customer does not send back the refusal form, the books
and/or bills start arriving, the lawsuit says. Customers who don't pay
the bills are sent letters demanding payment and if they don't pay, the
letters say the customer can be placed into a "bad debt" file, the
lawsuit says.
Last year, the company entered into a plea agreement with the Florida
Attorney General's Office to refund money to Floridians who had paid at
least US$50 for any automatically shipped books. The Attorney
General's Office said the company had not adequately advised customers
that buying a book would obligate them to receive future books in the
series.
Officials with Oxmoor House, which markets books under series labels
including Southern Living, Cooking Light and Martha Stewart Living,
could not be reached for comment, the St. Petersburg Times reports.
PENNSYLVANIA: Pittsburgh Charged With Delaying Misconduct Investigation
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The auditor appointed to monitor the city of Pittsburgh's police
conduct said the City delayed looking into some misconduct complaints
and did not adequately investigate police behavior, including one
allegation that an infant was strip-searched, the American Civil
Liberties Union (ACLU) said recently, according to a report by the
Associated Press Newswires.
The monitoring of the Pittsburgh police takes place within a special
historical context. In 1996, the city agreed to the Justice
Department's consent order, after the ACLU filed a class action on
behalf of people who claimed the city condoned a pattern of abuse by
the police. The consent order put in place federal controls and
standards for investigating complaints against the police.
In a statement, the ACLU's Pittsburgh chapter cited auditor James
Ginger's report and called on the mayor and City Council "to make the
necessary commitment to fix" the problem. "The city has come too far
and spent too much money trying to bring accountability to an out-of-
control police bureau to abandon the process now," said Witold Walczak,
the Pittsburgh ACLU's executive director.
In his latest report, Mr. Ginger had found the police department
largely in compliance with standards. He did say, however, that
several credible complaints against officers have not been investigated
quickly enough by the Office of Municipal Investigations (OMI). Some
of these complaints waited four to 10 years before even being acted
upon. In one of them, Mr. Ginger wrote, a man alleged the police
removed his infant son's diaper during a search. However, the auditor
did not note in the report what the search was for and when the alleged
incident took place. However, he said OMI's investigation was lacking.
In another case, a complaint was filed saying an off-duty officer
pounded on a homeowner's door early one morning and would not leave
until the homeowner called the police. "The assessment failed to note
that the officer has four other open OMI complaints involving
allegations of inability to control his temper, but states instead that
the officer has `no relevant OMI history,'" Mr. Ginger wrote.
ACLU director Walczak said ACLU has received complaints that the city
was not adequately examining some complaints because there is a rush on
to clear an OMI backlog. Some people believe the backlog must be
cleared before the Justice Department will lift the consent decree. If
this is true, the rush to lift the consent decree is inspiring the very
conduct which brought the consent decree into the police community in
the first place.
"The fact that these problems do indeed exist is terribly distressing,"
Mr. Walczak said. "It is beginning to appear that our reform efforts
have much further to go than we once thought."
QWEST COMMUNICATIONS: Working For Settlement of SEC Accounting Probe
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Beleaguered telecommunications company Qwest Communications
International Inc. is reportedly trying to reach a settlement with the
United States Securities and Exchange Commission (SEC), over its probe
of the Company's accounting practices, the Associated Press reports.
The Wall Street Journal, quoting an unnamed source, reported Thursday
that the company and the agency have begun negotiations and that Qwest
Chief Executive Officer Richard Notebaert is open to a settlement as
long as the SEC "wipes the (company's) slate clean." The SEC refused
to comment, the newspaper said.
Qwest spokesman Steve Hammack said the company has met with SEC
representatives. "We are co-operating with the SEC's ongoing
investigation and pursuing an appropriate resolution as expeditiously
as practical," Hammack said in a written statement.
The Journal reported that Qwest would consider a settlement as long as
it does not have to admit it committed fraud. The company has denied
that its accounting errors amounted to fraud.
TERRORIST ATTACK: 9/11 Fund's Payouts Watched As Guide For Compensation
-----------------------------------------------------------------------
For the families of those killed and injured on September 11, a starkly
pragmatic answer to the age-old question - what is a life worth? - will
come soon, as Kenneth Feinberg, the special master of the federal
victims' compensation fund, releases his first round of payment
calculations, according to a recent report by Newsday.
Lawyers advising victims and their families on whether or not to apply
for payouts from the Fund, are watching the initial round of decisions
closely. Those who participate in the program lose their right to sue
the city, be it individually or through a class action, so this will be
a critical decision. The initial payouts from the Fund will provide a
window into how generously Mr. Feinberg is interpreting the Fund's
complex formula, which allows him considerable discretion.
Mr. Feinberg's decisions in the initial round will provide a special
insight into his interpretations as this round of cases were chosen as
Test Cases. Mr. Feinberg selected the cases. Trial Lawyers Care, the
group of plaintiffs' lawyers who are giving free legal assistance to
many victims and their families.
"Generally, we tried to pick cases in which the issues would have broad
application for a number of cases that come along," said Larry Stewart,
a Florida attorney who serves as president of Trial Lawyers Care, which
was established after September 11, by the American Trial Lawyers
Association.
In the months following Mr. Feinberg's appointment to lead the
compensation fund, which is expected to pay an average award of $1.5
million, the Justice Department published a set of rules for
determining how the payments will be calculated.
Families will be paid for the anticipated lifetime earnings of a
victim, plus a flat payment for "pain and suffering" of at least
$250,000. The plan also will deduct taxes, the part of their salaries
victims would have spent on themselves, and will subtract insurance
payments and other death benefits. It is expected that the average
award will be about $1.5 million.
Still, like a law that has not yet endured a court challenge, the rules
are subject to interpretation, Mr. Feinberg said. Mr. Feinberg, a
Washington, D.C. lawyer, known for mediating large class-action cases,
has told attorneys that the compensation rulings will "case by case
build a common law of victims' compensation."
UNITED COMPANIES: Investors Oppose $20.5M Securities Suit Settlement
--------------------------------------------------------------------
A group that invested in United Companies Financial Corporation is
objecting to a proposed $20.5 million settlement of securities class
action, saying it is too small and is unfair to some former
stockholders, The Baton Rouge Advocate reports. A hearing to determine
whether the settlement will be approved is scheduled for August 21
before US District Judge James Brady, in Baton Rouge.
The group, Findim Investments, claims it lost about US$29 million but
would receive only about five percent of that money back under the
proposed agreements. Attorneys for Findim Investments claim that
United Companies, based in Baton Rouge, has the ability to pay more
than the proposed settlement.
"The Findim parties understand from other sources that the defendants
have approximately $50 million in available insurance coverage,"
attorney George Freeman said in a written objection this week in US
District Court in Baton Rouge.
Under the terms of the settlement filed in February, the Company would
not have to admit any wrongdoing. Lloyds of London and AIG Europe
would pay the settlement costs.
Marjorie McKeithen, one of the attorneys representing the plaintiffs
and who helped negotiate the settlement, said the Findim Investment
group has little to claim in the case. "They are trying to hijack a a
settlement they have nothing to do with," Ms. McKeithen said.
The proposed settlement comes in the case of Norman Lasky of Goose
Creek, SC, who sued the executives of United Companies in 1999. Mr.
Lasky and other investors claim that J. Terrell Brown, United
Companies' former chief executive officer and president and Dale
Redman, the former chief financial officer, hid from investors hundreds
of millions of dollars in debt. That `misleading information' led
people to continue to buy the stock, thinking the Company was on a
stable financial footing, the lawsuit claims.
As one of the nation's biggest "sub-prime lenders," the Company has
provided loans to people who could not get conventional bank or
mortgage company financing. The Company raised additional revenue with
its strategy of using its own home-equity loans to back securities that
were sold to investors and sold more than $11 billion of bonds during
the 1990s.
The settlement covers anyone who, like Mr. Lasky, bought Company stock
between April 29, 1998, and February 2, 1999. The bulk of Findim's
Investments occurred before that time frame, said Lynn Sarko, another
of the attorneys representing Mr. Lasky. "If this was a lion," she
said, "everything but the tail they purchased is outside the class
period."
Mr. Freeman claims that is exactly why the proposed settlement should
be rejected. The alleged fraud started long before the period outlined
in the agreement, Mr. Freeman said.
Mr. Lasky's lawsuit is only one of seven against Mr. Brown and Mr.
Redman and the Company. A lawsuit filed by Findim Investments was
dismissed.
*Senate Panel To Discuss Bill To Change Handling Of Class Actions
-----------------------------------------------------------------
Legislation to change the handling of class actions is scheduled for a
hearing before the US Senate Judiciary Committee, the Albuquerque
Journal reports. The legislation (HB2341) passed the House of
Representatives by a vote of 233 to 190. The Senate's version of the
bill, SB 1712, The Class Action Fairness Act could come to a vote this
year.
The measure would make it easier to move large, multistate class
actions from state to federal court, according to the United States
Chamber of Commerce, a supporter of the legislation. Similar
legislation has been introduced annually since 1997. Although many of
the bills cleared the House, none has received Senate approval.
Under present law, federal courts do not have jurisdiction over class
actions unless every plaintiff is from a different state then every
defendant. In addition, each plaintiff in a class action must be
seeking damages in excess of $75,000. These rules make it practically
impossible, or at least rare, for national class actions to be heard in
federal court.
SB 1712 would change the law to provide federal jurisdiction over the
lawsuits if any plaintiffs are from a different state than any
defendants, so long as the aggregate amount at issue in the lawsuit
exceeds $2 million.
The bill would also create a "plaintiffs' bill of rights" that would:
(1) ensure that judges review the fairness of proposed settlements
that give plaintiffs no cash awards but only coupons for the
Company's goods or services;
(2) prevent higher settlements to plaintiffs recruited by lawyers
to file the lawsuit;
(3) ban settlements that end up costing the plaintiffs money;
(4) require that all settlement notices are written in "plain
English."
New Securities Fraud Cases
CRYOLIFE INC.: Berger & Montague Commences Securities Suit in N.D. GA
---------------------------------------------------------------------
Berger & Montague, PC initiated a securities class action against
CryoLife, Inc. (NYSE:CRY) and certain of its principal officers and
directors in the United States District Court for the Northern District
of Georgia on behalf of all persons or entities who purchased the
Company's securities between April 2, 2001 and July 5, 2002.
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 the Securities and Exchange Commission by issuing
materially false and misleading statements throughout the class period
regarding quality control problems in the Company's processing of human
tissues and heart valves that had the effect of artificially inflating
the market price of the Company's securities.
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 knowingly false when made. The Company has
demonstrated a pattern of nondisclosure or severe reckless disregard
with respect to its disclosures to shareholders.
Despite having been put on notice in 2001 that the Centers for Disease
Control (CDC) was concerned about infections from tissue implants
obtained from the Company and despite having been notified at least by
March 22, 2002 that at least one, if not two, patients in whom the
Company processed heart valves had been implanted had developed fungal
endocarditis, the Company failed to correct its false assurances of
quality control and failed to disclose that the Company was being
investigated by the CDC and the US Food & Drug Administration (FDA) for
violation of quality control regulations.
In fact, on March 29, 2002, no mention of these problems was made at
the annual shareholders' meeting. After rumors began to surface in June
2002, the Company revealed to the investing public the fact that it had
received a warning letter from the FDA citing material violations of
FDA safety regulations.
In an attempt to downplay the warning letter's significance and to
assure investors that the Company would react swiftly to any discovery
of areas in need of improvement, the Company falsely assured its
investors that it had never before received such a warning. On June
24, 2002, the Company also denied that there was any evidence of fungal
infection on either heart valve. The CDC disagreed, however, and
called the Company on July 3, 2002 to confirm that it had received a
letter in March 2002 showing that signs of infection had been
confirmed.
Then on July 5, 2002, a day on which the stock markets closed at 1:00
p.m., the Company issued a press release admitting that it provided an
infected heart valve to a California patient, which led to a frequently
fatal fungal infection and removal of the valve.
The Company also 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%, requiring a restatement of its reported financial results for
2001.
The market's reaction to the Company's belated disclosures was swift
and severe. Following these disclosures, the market price of the
Company's common stock dropped from a high of almost $45 per share
during the class period and from $23.66 per share just before the
disclosure to as low as $9.90 per share on July 10, when the disclosure
had been digested.
For more details, contact Sherrie R. Savett, Carole A. Broderick,
Barbara A. Podell or Kimberly A. Walker by Mail: 1622 Locust Street,
Philadelphia, PA 19103 by Phone: 888-891-2289 or 215-875-3000 by Fax:
215-875-5715 by E-mail: InvestorProtect@bm.net or visit the firm's
Website: http://www.bergermontague.com
CRYOLIFE INC.: Berman DeValerio Commences Securities Suit in N.D. GA
--------------------------------------------------------------------
Berman DeValerio Pease Tabacco Burt & Pucillo initiated a securities
class action against CryoLife, Inc. (NYSE:CRY) and several top
officers, claiming the medical devices company misled shareholders
about its compliance with governmental safety regulations and its
financial results.
The suit, filed in the United States District Court for the Northern
District of Georgia, on behalf of all investors who bought the
Company's common stock from April 2, 2001 through July 5, 2002.
The lawsuit claims that the Company and four of its officers failed to
notify investors about warnings it received as far back as 1997 from
the US Food and Drug Administration (FDA) concerning quality-control
problems at the company.
The Company, which processes and stores human tissues for later
implantation into patients, also was notified in 2001 that the Centers
for Disease Control and Prevention (CDC) and/or the FDA were concerned
about infections stemming from the company's tissue implants.
In addition, the lawsuit says the Company knew that one or possibly two
patients implanted with CryoLife-processed heart valves had developed
serious fungal infections. The Company failed to tell shareholders
about these problems, the complaint alleges.
After rumors of problems began to surface in June 2002, the Company
finally revealed that the company had received one letter from the FDA
citing safety violations. The complaint claims the Company falsely
assured investors it had never before received such a warning and
denied any evidence of heart valve infections. According to the CDC,
the Company had, in fact, received a letter in March 2002 concerning
test results that showed evidence of infection. On July 5, 2002, the
Company issued a press release correcting its previous misstatements.
The market reacted severely to the news. The Company's stock price
dropped from $23.66 per share just before the belated disclosures to as
low as $9.90 on July 10, 2002. Company stock had traded at a high of
almost $45 per share during the class period.
In addition, the complaint alleges that the Company overstated its 2001
income and earnings per share by approximately 20%. In a March 29,
2002 press release, the Company announced that its previously issued
financial statements were false and that the Company had restated its
reported financial results for 2001.
For more details, contact Sara B. Davis 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.
EMPYREAN BIOSCIENCE: Charles Piven Commences Securities Suit in N.D. OH
-----------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired Empyrean Bioscience, Inc.
(OTCBB: EMDG) securities between July 30, 1999 through December 7,
2001, inclusive. The suit, filed in the United States District Court
for the Northern District of Ohio against the Company and certain of
its current and former officers and directors.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven, PA by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
HALLIBURTON COMPANY: Finkelstein & Krinsk Files Securities Suit in TX
---------------------------------------------------------------------
Finkelstein & Krinsk initiated a securities class action against
Halliburton Company alleging violations of the federal securities laws.
The lawsuit was filed in the United States District Court for the
Northern District of Texas on behalf of all the Company's shareholders
who purchased the Company's securities between June 22, 1999 through
May 28, 2002.
The lawsuit alleges that the Company and certain management insiders
including Dick Cheney artificially inflated the Company's stock price
and misrepresented its business condition. This was accomplished
through a change in accounting and booking speculative revenue while
otherwise violating GAAP.
For more details, contact Jeffrey R. Krinsk by Mail: 501 West Broadway,
San Diego, CA 92101 by Phone: 877-493-5366 by Fax: 619-238-5425 or by
E-mail: fk@class-action-law.com
ICN PHARMACEUTICALS: Cauley Geller Commences Securities Suit in C.D. CA
-----------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Central District of
California on behalf of purchasers of ICN Pharmaceuticals (NYSE: ICN)
common stock during the period between May 3, 2001 and July 10, 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 during the class period, defendants' false statements artificially
inflated the Company's stock to as high as $34.72 per share. Defendants
reported favorable, but false and misleading, financial results to the
market and represented that the Company's 2002 results would be
extremely favorable as well, with revenues for specialty
pharmaceuticals exceeding $700 million. These positive but false
statements allowed the Company to complete a debt offering in July
2001, for $400 million.
Also, as a result of the Company's inflated stock price, certain of the
defendants were able to sell 236,833 shares of their Company stock for
proceeds of $7.35 million. On July 11,2002, (before the market
opened), the Company pre-announced its 2ndQ '02 results, including that
revenues were only $236 million compared to estimates of $257 million+
and that earnings were only $0.15 to $0.20 per share compared to
estimates of $0.43.
Company stock dropped upon these revelations, falling 53% to $9.30 on
July 11,2002, on huge volume of 19.9 million shares, its steepest
decline ever. In fact, the Company had pulled sales from future
periods into class period quarters to inflate sales.
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
or by E-mail: info@classlawyer.com or visit the firm's Website:
http://www.classlawyer.com
ICN PHARMACEUTICALS: Schiffrin & Barroway Launches CA Securities Suit
---------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Central District of California on
behalf of all purchasers of the common stock of ICN Pharmaceuticals,
Inc. (NYSE: ICN) during the period between May 3, 2001 and July 10,
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 during the class period, defendants' false statements artificially
inflated Company stock to as high as $34.72 per share. Defendants
reported favorable, but false and misleading, financial results to the
market and represented that the Company's 2002 results would be
extremely favorable as well, with revenues for specialty
pharmaceuticals exceeding $700 million. These positive but false
statements allowed the Company to complete a debt offering in July 2002
for $400 million.
Also, as a result of the Company's inflated stock price, certain of the
defendants were able to sell 236,833 shares of their Company stock for
proceeds of $7.35 million. On July 11,2002, (before the market opened),
the Company pre-announced its 2ndQ '02 results, including that revenues
were only $236 million compared to estimates of $257 million+ and that
earnings were only $0.15 to $0.20 per share compared to estimates of
$0.43.
Company stock dropped upon these revelations, falling 53% to $9.30 on
July 11,2002, on huge volume of 19.9 million shares, its steepest
decline ever. In fact, the Company had pulled sales from future
periods into class period quarters to inflate sales.
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
ICN PHARMACEUTICAL: Bernstein & Liebhard Commences CA Securities Suit
---------------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class action
on behalf of all persons who purchased or acquired ICN Pharmaceuticals,
Inc. (NYSE: ICN) securities between May 3, 2001 and July 10, 2002,
inclusive. The action is pending in the United States District Court
for the Central District of California against the Company and:
(1) Milan Panic,
(2) Richard A. Meier, and
(3) David C. Watt
The complaint charges the Company and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
Company is a research-focused global pharmaceutical company that
manufactures and distributes prescription and non-prescription
pharmaceuticals.
The complaint alleges that during the class period, defendants' false
statements artificially inflated Company stock to as high as $34.72 per
share. Defendants reported favorable, but false and misleading,
financial results to the market and represented that the Company's 2002
results would be extremely favorable as well, with revenues for
specialty pharmaceuticals exceeding $700 million. These positive but
false statements allowed the Company to complete a debt offering in
July 2001 for $400 million.
Also, as a result of the Company's inflated stock price, certain of the
defendants were able to sell 236,833 shares of their stock for proceeds
of $7.35 million. On July 11,2002, (before the market opened), the
Company pre-announced its 2ndQ 02 results, including that revenues were
only $236 million compared to estimates of over $257 million and that
earnings were only $0.15 to $0.20 per share compared to estimates of
$0.43.
Company stock dropped upon these revelations, falling 53% to $9.30 on
July 11,2002, on huge volume of 19.9 million shares, its steepest
decline ever. In fact, the Company had pulled sales from future
periods into class period quarters to inflate sales.
For more details, contact Ms. Linda Flood, Director of Shareholder
Relations by Mail: 10 East 40th Street, New York, New York 10016 by E-
mail: 800-217-1522 or 212-779-1414 or by E-mail: ICN@bernlieb.com.
JOHNSON & JOHNSON: Schiffrin & Barroway Commences Securities Suit in NJ
-----------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the District of New Jersey on behalf
of all purchasers of the common stock of Johnson & Johnson (NYSE:JNJ)
from April 16, 2002 through July 18, 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 in the Company's press release and during the earnings conference
call held that day, defendants repeatedly attributed the Company's
financial performance to the success of EPREX, stating, for example,
that, "This amazing product has delivered consistent double-digit
growth over the past five years. And in the first quarter of this
year, we hit a record sales level of a billion dollars."
Moreover, defendants discussed the reported incidences of PRCA and
assured investors that EPREX "continues to be a trusted brand that
people are using," and that the Company was "working very closely with
. the experts, as well as health authorities in understanding (PRCA),
why it occurs. And we're doing whatever we can to understand the risk
and mitigate it."
Defendants' statements during the class period, however, were
materially false and misleading because defendants knew but failed to
disclose that by April 2002, the US Food and Drug Administration's
Office of Criminal Investigation, spurred on by the increasing number
of cases of PRCA in EPREX patients, sought a stay of a qui tam
(whistleblower) action in order to investigate the allegations
regarding the Company's EPREX manufacturing facility located in Puerto
Rico.
The whistleblower action was filed by Hector Arce, a former employee at
the Company's EPREX factory, in March 2001. Mr. Arce contends in the
lawsuit that he was pressured to falsify data to cover up manufacturing
lapses at the EPREX manufacturing facility, and then was suspended a
few days before an expected interview with FDA inspectors. This
information, which defendants failed to disclose, was information a
reasonable investor would have wanted to know, especially as the
reported incidences of PRCA continued to climb during the class period
in regard to EPREX, and its U.S. version, PROCRIT. EPREX and PROCRIT
accounted for over 10% of the Company's revenues in 2001 and was
projected to account for 11% of revenues in 2002.
The facts concerning the existence of the criminal investigation of
Johnson & Johnson and the allegations of the qui tam action were first
revealed in The New York Times on July 19, 2002. That same day, Johnson
& Johnson admitted that it was aware of the criminal investigation
since April 2002. Once the foregoing information was revealed, Johnson
& Johnson shares fell $7.88 per share to close on July 19, 2002, at
$41.85, a fall of 16%.
For more details, contact Marc A. Topaz or Stuart L. Berman 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
MERCK & CO.: Berger & Montague Commences Securities Suit in New Jersey
----------------------------------------------------------------------
Berger & Montague PC initiated a securities class action against Merck
& Co. Inc. ("Merck") (NYSE:MRK) and certain of its principal officers
and directors in the United States District Court for the District of
New Jersey on behalf of all persons or entities who purchased the
Company's common stock between July 23, 1999 and July 3, 2002.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of Merck's common stock.
Merck's operations are comprised of two reportable segments: Merck
Pharmaceutical and Merck's wholly owned subsidiary, Merck-Medco Managed
Care, LLC, which manages pharmacy benefits for employers, insurers and
other plan sponsors. Consumers who are members of pharmacy benefits
plans must make co-payments directly to the pharmacy when purchasing
prescriptions.
Since Merck acquired Merck-Medco in 1993 and throughout the class
period, Merck and Merck-Medco have falsely inflated their reported
revenues by billions of dollars, by approximately $14 billion from
1999-2002, by including consumer co-payments for prescription drugs in
revenue, contrary to the revenue recognition practices of two of Merck-
Medco's biggest competitors and concealing these facts in violation of
Generally Accepted Accounting Principles (GAAP). As a result,
defendants concealed these facts, overstating Merck-Medco's total
economic activity, making it appear more successful than it actually
was.
On July 5, 2002, Merck filed with the SEC Amendment No. 4 to the Form
S-1 Registration Statement for the initial public offering (IPO) of
shares of Medco Health Solutions, Inc., its former Merck-Medco unit.
In that document, defendants disclosed for the first time the material
amounts of the co-payments included in product net revenues, as
follows:
(1) Retail co-payments included in product net revenues amount to
approximately $2,838 million in 1999, $4,036 million in 2000,
$5,537 million in 2001, $1,378 million in the first quarter of
2001 and $1,640 million in the first quarter of 2002, each
with a corresponding equivalent amount recorded in cost of
product net revenues
Therefore, between 1999 and 2001, co-payments represented nearly 10% of
Merck's overall reported revenue. Medco's co-payments of $5.5 billion
booked as revenue in 2001 represented approximately 11% of Merck's 2001
overall revenue of $50.69 billion. The co-payment revenue booked in
2000 was $4.04 billion, or approximately 9.4% of Merck's total reported
revenue, while it was $2.84 billion in 1999, or approximately 8.1% of
total revenue.
Following defendants' July 5, 2002 disclosure of approximately $14
billion of co-payments included in product net revenues from 1999-2002,
the price of Merck stock dropped approximately 14% to as low as $45 and
Merrill Lynch dropped its "buy" rating on Merck stock. The Medco IPO
has been delayed three times and Merck has reduced the expected price
range to $20-$22 from $22-$24.
For more details, contact Sherrie R. Savett, Carole A. Broderick,
Barbara A. Podell or Kimberly A. Walker by Mail: 1622 Locust Street,
Philadelphia, PA 19103 by Phone: 888-891-2289 or 215-875-3000 by Fax:
215-875-5715 by E-mail: InvestorProtect@bm.net or visit the firm's
Website: http://www.bergermontague.com
MERRILL LYNCH: Rabin & Peckel Commences Securities Fraud Suit in NY
-------------------------------------------------------------------
Rabin & Peckel LLP initiated a securities class action in the United
States District Court for the Southern District of New York on behalf
of all persons or entities who purchased Internet HOLDRS/SM/Trust
(AMEX:HHH) depository receipts between September 22, 1999 and April 26,
2002, both dates inclusive.
The complaint asserts claims under sections 11, 12(a)(2), and 15 of the
Securities Act of 1933 based on false and misleading statements in the
Registration Statement, which included a Prospectus, issued in
connection with the initial public offering of the Internet HOLDRS
depository receipts.
The Internet HOLDRS depository receipts are "basket securities." Each
Internet HOLDRS depository receipt represents an undivided beneficial
ownership in the Internet companies specified in the prospectus. Thus,
the price of the Internet HOLDRS is directly related to and moved with
the price of the Underlying Securities. As alleged, the Prospectus was
false and misleading and/or failed to disclose certain information
concerning the Underlying Securities.
Specifically, the complaint alleges that the Prospectus failed to
disclose that during the class period the stock prices of Internet
companies covered by Merrill Lynch, which included many of the
Underlying Securities, were artificially inflated as a result of
Merrill Lynch's analyst reports and stock ratings that did not set
forth the true opinions held by those analysts of the subject Internet
companies.
Also alleged not to have been disclosed in the Prospectus is that
Merrill Lynch's Internet group analysts, often under pressure from the
Merrill Lynch's investment bankers, were initiating, continuing and/or
manipulating research coverage to maintain and attract investment
banking business.
The complaint's allegations are based, in part, on information from the
investigation of Merrill Lynch and its Internet group analysts
conducted by the New York State Attorney General.
For more details, contact Eric J. Belfi or Sharon Lee by Phone:
800-497-8076 or 212-682-1818 by Fax: 212-682-1892 by E-mail:
email@rabinlaw.com or visit the firm's Website: http://www.rabinlaw.com
VIVENDI UNIVERSAL: Rabin & Peckel Commences Securities Suit in S.D. NY
----------------------------------------------------------------------
Rabin & Peckel LLP initiated a securities class action in the United
States District Court for the Southern District of New York on behalf
of all persons or entities who purchased securities of Vivendi
Universal (NYSE:V) between February 11, 2002 and July 3, 2002, both
dates inclusive. The Company and Jean-Marie Messier are named as
defendants in this action.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of the Company's securities. Specifically, prior to and
during the class period, Mr. Messier took Vivendi on an acquisition
binge that, according to published reports, resulted in the Company
amassing approximately $18 billion in debt as he turned the Company
from a water concern into an entertainment powerhouse.
Under Mr. Messier's leadership, Vivendi completed a $30 billion buyout
of Canada's Seagram and a $10.3 billion purchase of USA Networks Inc.,
the cable and entertainment company owned by Hollywood mogul Barry
Diller. Concomitantly, Mr. Messier orchestrated a scheme to conceal
the severity of Vivendi's liquidity problems stemming from the massive
debt load incurred as a result of these, and other transactions.
In fact, only days before his ouster by Vivendi's Board, Mr. Messier
caused the Company to issue several press releases that falsely stated
that Vivendi did not face an immediate and severe cash shortage that
threatened the Company's viability going forward absent an asset fire
sale. It was only after Vivendi's Board dislodged Mr. Messier that the
Company's new management disclosed the severity of the crisis and that
the Company would have to secure immediately both bridge and long-term
financing or default on its largest credit obligations.
As detailed in the suit, Mr. Messier failed to disclose the true
contours of Vivendi's cash crisis and his affirmative
misrepresentations to the contrary have given rise to an investigation
by French authorities concerning whether Mr. Messier disclosed in a
timely fashion that the Company was in dire financial straits.
Published reports also indicate that Vivendi is engaged in urgent
discussions with lenders to secure financing and is both considering
and negotiating the sale of assets.
For more details, contact Eric J. Belfi or Sharon Lee by Phone:
800-497-8076 or 212-682-1818 by Fax: 212-682-1892 by E-mail:
email@rabinlaw.com or visit the firm's Website: http://www.rabinlaw.com
XCEL ENERGY: Schiffrin & Barroway Commences Securities Fraud Suit in MN
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Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the District of Minnesota on behalf of
all purchasers of the common stock of Xcel Energy, Inc. (NYSE: XEL)
between January 31, 2001 and July 26, 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 defendants issued numerous statements and filed quarterly and
annual reports with the Securities & Exchange Commission (SEC) which
described the Company's financial performance and the financial
performance of NRG Energy, Inc. (NRG), the Company's majority-owned
subsidiary.
As alleged in the suit, these statements were materially false and
misleading because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(1) that the Company had engaged in "round-trip" energy trades
that provided no economic benefit for the Company;
(2) that the Company's and NRG's credit agreements with lenders
contained cross-default provisions and covenants, the result
of which was that in the event of a default by NRG, among
other adverse effects, the Company would lose access to $800
million in credit;
(3) that the Company lacked the necessary internal controls to
adequately monitor the trading of its power; and
(4) that as a result, the value of the Company's revenues and
financial results were materially overstated at all relevant
times.
After the close of the market on July 25, 2002, the Company issued a
press release announcing its financial results for the second quarter,
the period ended June 30, 2002, and disclosed that its earnings had
declined and that it was revising its earnings expectations for fiscal
2002.
In a conference call the very next day, defendants finally disclosed
the true extent of the Company's liquidity and credit difficulties and
its management's inability to effectively remedy such difficulties
stemming from the operations of NRG.
As reported in several business articles dated July 26, 2002, analysts
were horrified to learn that the liquidity and credit difficulties
extended to the Company itself under the "cross-collateral default"
provisions the Company and NRG had entered into with lenders.
Market reaction to these revelations was swift and brutal. On July 26,
2002, Company stock closed at $7.55, a more than 36% one-day decline,
on extremely heavy trading volume. Subsequently, on July 28, 2002,
defendants disclosed that the Company was being investigated by the
SEC, among other regulators, for engaging in "round-trip" or "wash"
transactions, which involve the simultaneous buying and trading of
power at the same price and same amount and provide no economic benefit
to the Company.
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 or by E-mail:
info@sbclasslaw.com
XCEL ENERGY: Charles Piven Commences Securities Fraud Suit in MN Court
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The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired Xcel Energy, Inc. (NYSE:
XEL) securities between January 31, 2001 and July 26, 2002, inclusive.
The suit is pending in the United States District Court for the
District of Minnesota, against the Company and:
(1) James J. Howard,
(2) Wayne H. Brunetti and
(3) Edward J. McIntyre
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
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