/raid1/www/Hosts/bankrupt/CAR_Public/020816.mbx
C L A S S A C T I O N R E P O R T E R
Friday, August 16, 2002, Vol. 4, No. 162
Headlines
BRIDGESTONE/FIRESTONE: Consumers Sue Over Defective Steeltex Tires
CALIFORNIA: Sheriff's Office Settles Suit Over Inmates Jailed Too Long
CAPTEC NET: Plaintiff Opposes Dismissal Motion in CA Securities Suit
CARRIER GUAM: Voluntarily Recalls 2T Air Conditioners For Fire Hazard
CHIRON CORPORATION: Faces Suit Over Average Drug Wholesale Prices in CA
CORRPRO COMPANIES: Faces Suits For Securities Act Violations in N.D. OH
CRAFTEX WHOLESALE: Employees, EEOC Commence Sexual Harassment Suit
LUCENT TECHNOLOGIES: Says Settlement Won't Halt Leasing of Telephones
MATTEL INC.: Appeals Court Upholds Dismissal of Securities Fraud Suit
MATTEL INC.: Prevails in Two Shareholder Derivative Suits in CA Courts
MEDIASTREAM INC.: Plaintiffs File Amended Freelance Authors Lawsuit
MGM MIRAGE: NV Court Refuses Gambling Suit Certification
OSTEOTECH INC.: Faces Consumer Suits Over Organ Donation In CA Court
PATHOGENESIS CORPORATION: Appeals Court Upholds Dismissal of WA Suit
RENT-WAY INC.: PA Court Refuses To Dismiss Consolidated Securities Suit
SAFEGUARD HEALTH: Agrees To Settle Securities Fraud Suit For $1.25M
SUPREMA SPECIALTIES: CEO Asks Court For Severance Pay, Other Benefits
TOBACCO LITIGATION: IL Court Certifies Suits Over False Representations
WORLDCOM INC.: New York State Pension Fund Selected As Lead Plaintiff
ZIMBABWE: White Farmers Consider Suit As President Orders Them To Leave
New Securities Fraud Cases
AOL TIME: Schiffrin & Barroway Lodges Securities Fraud Suit in S.D. NY
AOL TIME: Glancy & Binkow Commences Securities Fraud Suit in S.D. NY
AON CORPORATION: Abbey Gardy Launches Securities Fraud Suit in N.D. IL
CROSS MEDIA: Schiffrin & Barroway Commences Securities Suit in S.D. NY
INSIGHT ENTERPRISES: Milberg Weiss Launches Securities Suit in AZ Court
INSIGHT ENTERPRISES: Cauley Geller Commences Securities Suit in AZ
SONUS NETWORKS: Schiffrin & Barroway Lodges Securities Fraud Suit in MA
MONTANA POWER: Bernard Gross Commences Securities Suit in Montana Court
VIVENDI UNIVERSAL: Wechsler Harwood Commences Securities Suit in NY
XCEL ENERGY: Much Shelist Commences Securities Fraud Suit in MN Court
XCEL ENERGY: Alfred Yates Commences Securities Fraud Suit in MN Court
*********
BRIDGESTONE/FIRESTONE: Consumers Sue Over Defective Steeltex Tires
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A proposed class action was filed recently against
Bridgestone/Firestone Inc., alleging that its Steeltex tires are
defective and prone to tread separations, the Associated Press
Newswires reports.
The lawsuit was filed in Riverside County Superior Court, in
California, on behalf of Roger Littell and asks that
Bridgestone/Firestone recall three models of the tire and reimburse
owners for the cost of the tires.
The lawsuit claims that people have been killed in accidents because of
the alleged failure of the Steeltex tire, but the lawsuit is not a
personal injury claim and does not seek punitive damages. Rather, the
lawsuit asserts that the Company knew that the more than 27.5 million
Steeltex R4S, R4SII and A/T tires that have been sold contained a
lamination defect that could cause the entire tread to separate in a
matter of seconds, leading to the tire's total disintegration.
Earlier this year, the National Highway Traffic Safety Administration
closed a 16-month investigation into the Steeltex tires after saying it
could find no evidence of a design defect.
"Bottom line, neither the agency charged with overseeing the safety of
our roads nor our company, believes any action regarding the Steeltex
line of tire is warranted," the Company said in a recent statement.
"We are disappointed that certain plaintiffs' lawyers will try to
create fear and concern among the driving public for their own personal
gain."
This lawsuit stems from an earlier civil suit filed against the company
in connection with a July 200 accident that killed two people and
injured nine. The 11 passengers were riding in a large Ford passenger
van on Interstate 15 in California, on the way back from Las Vegas,
when a Steeltex tire blew out, causing the van to flip over once. The
suit was settled this April. Terms of the settlement are confidential.
The lawyer representing the plaintiffs in that case said the Company
declined a request to voluntarily recall their Steeltex tire, which
then led to this lawsuit. Joseph Lisoni, the plaintiffs' lawyer, at a
recent news conference, said "This litigation is not about money, it's
about responsibility." He said notices were being sent to 1,300
Firestone dealers through the United States and to government
officials, demanding the immediate recall of the three Steeltex models.
Mr. Lisoni alleged that the Steeltex tire fails much the same way as
the Firestone Wilderness series. "It is the same exact manufacturing
process on a different tire," he said.
The company recalled the 6.5 million Wilderness tires in August 2000,
many of which had been sold as standard equipment with the Ford
Explorer. Last November, state attorneys general announced that
Bridgestone/Firestone would pay $41.5 million in a settlement to end
state lawsuits over the tires.
An Associated Press investigation in Arizona found that problems with
Steeltex tires and other Firestone models worried officers at the
Arizona Department of Public Safety so much in 1998, that the agency's
director had them replaced on all vehicles. However, while the agency
voiced concerns over accidents and tread separation blowouts to
Bridgestone/Firestone, it did not alert federal regulators or the
public.
CALIFORNIA: Sheriff's Office Settles Suit Over Inmates Jailed Too Long
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The California Sheriff's Department reached a tentative settlement in a
federal class action, claiming deputies and local police violated the
legal rights of dozens of inmates by keeping them in jail too long
without filing criminal charges, Associated Press Newswires reports.
Department lawyers would not disclose the terms of the settlement,
which is expected to be presented to the Board of Supervisors on
September 10. Plaintiffs' attorney John Burton said the 80 former
inmates will get about $250,000, including $52,500 in legal fees. Each
inmate will get $100 to $5,000.
State law requires arraignment on criminal charges within 48 hours of
arrest. For years, officers in Ventura County routinely re-arrested
suspects when they were technically released but still in custody. It
gave prosecutors more time to gather evidence to support the charges.
"Thirty people who otherwise would have been free, spent 110 days
behind bars because of this policy," said Mr. Burton. They will
receive $1,250 for each extra day. "For another group, it was much
more of a technical violation, because they ultimately were sentenced
on their crimes and received credit for time served."
CAPTEC NET: Plaintiff Opposes Dismissal Motion in CA Securities Suit
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Calapasas Investment Partnership No. 1 Limited Partnership, the lead
plaintiff in the securities class action pending against Captec Net
Lease Realty, Inc., opposed the Company's motion to dismiss the suit.
The suit was filed in the United States District Court for the Northern
District of California against the Company and:
(1) Commercial Net Lease Realty, Inc.,
(2) Patrick L. Beach,
(3) W. Ross Martin,
(4) H. Reid Sherard,
(5) Richard J. Peters,
(6) Lee C. Howley, and
(7) William H. Krul
The suit alleges that the Company and certain of its directors violated
provisions of the Securities and Exchange Act of 1934 by
misrepresenting the value of certain Captec assets on certain of its
financial statements in 2000 and 2001. The suit asserts that it is
brought on behalf of a class consisting of all persons and entities
(except insiders) that purchased the Company's common stock between
August 9, 2000 and prior to July 2, 2001.
On May 24, 2002, the Company filed a motion to dismiss the suit, and on
July 17, 2002, Calapasas filed a motion in opposition. At this early
stage in the suit, management is not in a position to assess the
likelihood, or amount, of any potential damage award to the plaintiff
class.
CARRIER GUAM: Voluntarily Recalls 2T Air Conditioners For Fire Hazard
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Carrier Guam is cooperating with the United States Consumer Product
Safety Commission (CPSC) by voluntarily recalling about 2,100 window
air conditioners. Salty sea spray can cause the electrical capacitor
within these units to corrode, posing a possible fire hazard. The
Company has not received any reports of fires as a result of corrosion
in these air conditioners.
These are 7,000 BTU window air conditioners, model number 77ZFA007101.
The recalled air conditioners have a serial number within these ranges:
(1) 4895Y10001 to 4895Y10300,
(2) 2196Y10001 to 2196Y10300,
(3) 3096Y12302 to 3096Y12700,
(4) 4396Y00101 to 4396Y00500,
(5) 1697Y20873 to 1697Y21072,
(6) 2097Y21165 to 2097Y21464, and
(7) 2997Y20457 to 2997Y20656
The model and serial numbers are located on the top of the plastic
evaporator scroll behind the unit's front plastic grill. "Carrier" is
written on the front of these units.
The Carrier Guam store in Tamuning, Guam, sold these air conditioners
from October 1995 through July 1997 for about $380.
For more details, contact the Company by Phone: 877-467-3544 between
9 am and 5 pm. Guam time, Monday through Friday.
CHIRON CORPORATION: Faces Suit Over Average Drug Wholesale Prices in CA
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Chiron Corporation was named as a defendant in a class action filed in
the Superior Court of the State of California in Alameda County. The
suit, which also names as defendants 40 other biotechnology and
pharmaceutical companies, was filed in connection with average
wholesale prices for various products, including DepoCyt and oncology
drugs, which are reimbursed by Medicare.
The suit alleges that defendants violated California Business and
Professions Codes by engaging in unfair and fraudulent business
practices, and seeks injunctive relief against such practices as well
as compensatory and punitive damages.
It is not known when nor on what basis these matters will be resolved,
the Company said in a disclosure to the Securities and Exchange
Commission.
CORRPRO COMPANIES: Faces Suits For Securities Act Violations in N.D. OH
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Corrpro Companies, Inc. faces several securities class actions pending
in the United States District Court for the Northern District of Ohio,
Eastern Division on behalf of all persons who purchased the Company's
common stock from April 1,2000 through March 20,2002.
The suits, which also name as defendant former and current officers and
a director of the Company, allege violations of the federal securities
laws resulting in artificially inflated prices of the Company's common
shares during the class period. The suits relate to the Company's
announcement that it had discovered accounting irregularities caused by
apparent internal misconduct in its Australian subsidiary.
The Company is unable at this time to make a determination as to
whether an adverse outcome is likely and whether an adverse outcome
would have a materially adverse affect on its operations or financial
condition.
CRAFTEX WHOLESALE: Employees, EEOC Commence Sexual Harassment Suit
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The owner of Craftex Wholesale & Distributors allegedly forced oral sex
on his male workers and struck the fear of getting beaten into those
who did not go along, according to a lawsuit filed recently by the
Equal Employment Opportunity Commission (EEOC), the Houston Chronicle
reports.
The lawsuit, filed as a class action, alleges that Henry Langdale had
been forcing sex on his male workers for at least nine years, and that
it was first brought to light by worker Samuel Cornejo, who reported it
to the EEOC in February. Mr. Cornejo told the agency that the men,
mostly recent immigrants from Mexico and El Salvador, were so
embarrassed about the forced sex that several never told their wives.
Men who refused to engage in the oral sex were either fired or given
demeaning work duties or sent home from work without pay, the lawsuit
claims.
James Sacher, regional attorney for the EEOC in Houston, claims that
Mr. Langdale forced himself on "at least" dozens of men over the years.
Mr. Langdale also allegedly beat his employees and many were afraid he
would beat them if they did not give in to his sexual demands. The
EEOC has been focusing on the plight of immigrant workers who are
reluctant to come forward and complain about discrimination.
The agency is seeking a permanent injunction to keep Mr. Langdale from
engaging in sexual harassment, as well as monetary damages for the
employees.
It has been only four years since the US Supreme Court ruled that same-
sex harassment is just as illegal as opposite-sex harassment. Until
that landmark ruling, which involved the Houston company, Nabors
Industries, the courts were divided over whether same-sex harassment
violated civil rights laws. Some judges viewed it more as horseplay
than a form of discrimination.
LUCENT TECHNOLOGIES: Says Settlement Won't Halt Leasing of Telephones
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Lucent Technologies agreed last week to settle a class action
concerning its past phone leasing practices, but said the agreement is
unlikely to affect ongoing service to more than one million consumers
who choose to pay far more to rent rather than own their own telephone,
according to The Boston Globe.
The class action was filed against Lucent and AT&T alleging the
companies deceived customers into paying "unconscionably high rental
charges" for residential telephones. The deceptive practices alleged
in the lawsuit included failing to disclose to consumers the total
amount they had paid under their lease, the precise terms of the lease
and the fact that their lease payments far exceeded the value of the
phone.
Many leasing customers never understood the ramifications of the AT&T
breakup and never realized they could do something other than lease a
phone. They could purchase and own their own phone for a small amount
of money, since many new phones retail for less than $10. The reason
the customers did not understand the ramifications is, among other
things, that Lucent was allowed to continue the billing under the
licensing agreement and could continue to use AT&T's name on the bills.
Even though Lucent sold the leasing business in 2000, bills continued
to go out under the AT&T name under the same licensing deal.
In 1984, when AT&T was forced to divest its local phone operations,
customers were given the option of either buying their AT&T phones,
returning them and buying a phone from someone else, or continuing to
lease them. Most Americans quickly realized the economic advantages of
buying their own phones, but millions more, many of them elderly, often
paid four to five times as much in annual lease payments as the phone
was worth.
Two years ago an 82-year-old woman received a letter from AT&T warning
that she had a past-due account that was about to be turned over to a
collection agency. Since 1984 she had been leasing a black, rotary-
dial phone manufactured in 1962, and paying the lease price of $4.45 a
month, nearly $55 a year.
Nonetheless, according to Lucent spokesman, Bill Price, there are no
indications that the proposed settlement will have any impact on the
phone leasing business the company continues to run under the AT& T
name. That business, he said serves more than one million customers.
Under the terms of the settlement, Lucent and AT&T Corp., and two
formerly affiliated companies will pay $300 million to an estimated 30
million people who had leased phones over the past 18 years. Customers
who continued leasing phones after September 1990 could receive up to
$80. Those who ended their lease prior to September 1990, could
receive $15.00. The $50 million will be donated in prepaid phone cards
to charities.
The handful of attorneys who filed the lawsuit, led by Stephen M.
Tillery of St. Louis, reportedly will receive nearly a quarter of the
cash payout or more than $70 million. The settlement terms are subject
to court approval in November.
MATTEL INC.: Appeals Court Upholds Dismissal of Securities Fraud Suit
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The United States Ninth Circuit Court of Appeals affirmed the dismissal
of the securities class action pending against Mattel, Inc., relating
to its role as successor to Learning Company and the former directors
of Learning Company on behalf of former stockholders of Broderbund
Software, Inc. who acquired shares of Learning Company in exchange for
their Broderbund common stock in connection with the Learning Company-
Broderbund merger on August 31, 1998.
The consolidated suit, filed in the United States District Court for
the Central District of California, generally alleges that Learning
Company misstated its financial results prior to the time it was
acquired by Mattel. The plaintiffs have asked for unspecified monetary
damages.
The Company filed a motion to dismiss the suit, which the court granted
in May 2001. The plaintiffs appealed the dismissal and in June 2002
the appeals court affirmed the dismissal.
MATTEL INC.: Prevails in Two Shareholder Derivative Suits in CA Courts
----------------------------------------------------------------------
Mattel, Inc. prevailed in the two shareholder derivative suits filed on
behalf and for the benefit of Mattel, alleging, among other things,
that the Company's directors breached their fiduciary duties, wasted
corporate assets, and grossly mismanaged the Company in connection with
its acquisition of Learning Company and its approval of severance
packages to certain former executives.
These derivative actions have been filed in the Court of Chancery in
Delaware, in Los Angeles Superior Court in California, and in the
United States District Court for the Central District of California,
and are all in a preliminary stage. The plaintiffs have asked for
unspecified monetary damages.
Plaintiffs in the California state court actions filed an amended
consolidated complaint in February 2002. In May 2002, the court in the
California state court actions sustained, without leave to amend,
defendants' demurrer to the amended consolidated complaint, on the
ground that plaintiffs failed to make pre-suit demand on the Board of
Directors.
The plaintiffs in the California state court derivative action have
appealed this dismissal, and the case is currently pending on appeal.
In July 2002, the plaintiffs in the federal court derivative action
dismissed their complaint without prejudice.
The Company labeled the suits "without merit" and intends to continue
defending vigorously against them.
MEDIASTREAM INC.: Plaintiffs File Amended Freelance Authors Lawsuit
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Plaintiffs in the consolidated class action against MediaStream, Inc.
filed an amended complaint with the Judicial Panel on Multidistrict
Litigation.
The suit, which also names other media companies, was brought by or on
behalf of freelance authors who allege that the defendants have
infringed plaintiffs' copyrights by making plaintiffs' works available
on databases operated by the defendants. The plaintiffs are seeking to
be certified as class representatives of all similarly situated
freelance authors.
The suit was initially stayed pending disposition by the US Supreme
Court of the suit styled New York Times Company et al. v. Tasini et
al., No. 00-21. The Supreme Court later ruled that the defendants in
Tasini did not have a privilege under Section 201 of the Copyright
Act to republish articles previously appearing in print publications
absent the author's separate permission for electronic republication.
The judge has ordered the parties in the Multidistrict Litigation to
try to resolve the claims through mediation, which commenced November
2001. The parties have agreed to a limited stay to respond to the
complaint during mediation, which may be terminated by the plaintiffs
upon 30 days prior written notice.
The Company intends to contest liability and vigorously defend their
positions in the litigation, including opposing class certification.
Management is currently unable to predict whether an unfavorable
outcome is likely or the magnitude of any potential loss.
MGM MIRAGE: NV Court Refuses Gambling Suit Certification
---------------------------------------------------------
The United States District Court for the District of Nevada refused to
grant class certification to the consolidated suit filed against MGM
Mirage, Inc. and 40 other manufacturers, distributors and casino
operators of video poker and electronic slot machines,
The consolidated suit claims that the Company and the other defendants
have engaged in a course of fraudulent and misleading conduct intended
to induce people to play video poker and electronic slot machines based
on a false belief concerning how the gaming machines operate, as well
as the chances of winning. Specifically, the plaintiffs allege that
the gaming machines are not truly random as advertised to the public,
but are pre-programmed in a predictable and manipulative manner.
The complaint alleges:
(1) violations of Racketeer Influenced and Corrupt Organizations
Act (RICO),
(2) common law fraud,
(3) unjust enrichment and
(4) negligent misrepresentation
In December 1997, the court granted in part and denied in part the
defendants' motions to dismiss the complaint for failure to state a
claim and ordered the plaintiffs to file an amended complaint, which
they filed in February 1998.
The Company, along with most of the other defendants, have answered the
amended complaint and continue to deny the allegations contained in the
amended complaint. In June 2002, the court ruled that the plaintiffs
met the prerequisite requirements for class action status, but denied
the plaintiff's motion for class action certification, saying that the
proposed class lacked the cohesiveness required to settle common claims
against the casino industry. The court had previously stayed discovery
pending resolution of these class certification issues.
OSTEOTECH INC.: Faces Consumer Suits Over Organ Donation In CA Court
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Osteotech, Inc. faces three class actions filed in the in the Superior
Court for the State of California, Los Angeles County, alleging causes
of action based on:
(1) a violation of the California Business and Professional Code,
(2) negligence,
(3) deceit, and
(4) intentional and negligent infliction of emotional distress
Through dismissals, either by the Court or voluntarily by plaintiffs,
only the California Business and Professional Code claims, which are
based on the allegation that defendants are engaging in the activity of
buying or selling organs or tissue for valuable consideration or
profit, and negligence claims remain with respect to both actions.
It appears that plaintiffs are seeking only injunctive relief against
the defendants, including the Company, with respect to their California
Business and Professional Code claims. To the extent any of the other
causes of action which have not been specifically alleged against the
Company but which may be interpreted as applying to the Company, do in
fact lie against the Company, plaintiffs are seeking damages in an
unspecified amount in addition to class certification.
The Company is in the process of assessing the claims against it and
has not yet responded to the action.
PATHOGENESIS CORPORATION: Appeals Court Upholds Dismissal of WA Suit
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The United States Ninth Circuit Court of Appeals upheld the dismissal
of all eight consolidated securities class action pending against
PathoGenesis Corporation, its chief executive officer and its chief
financial officer.
The suits were filed in the United States District Court for the
Western District of Washington on behalf of all purchasers of the
Company's common stock during the period January 15, 1999 to March 22,
1999. The suits allege that the Company and its officers violated
certain provisions of the federal securities laws by making statements
in early 1999 regarding the Company's 1998 financial results.
The court later ordered the suits dismissed with prejudice and barred
plaintiffs from filing another lawsuit on the matter. In March 2002,
the appeals court affirmed the dismissal order. Plaintiffs did not
appeal the decision, and the matter is therefore concluded.
RENT-WAY INC.: PA Court Refuses To Dismiss Consolidated Securities Suit
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The United States District Court for the Western District of
Pennsylvania denied Rent-Way, Inc.'s motion to dismiss the consolidated
securities suit pending against it and certain of its current and
former officers.
The complaint alleges that, among other things, as a result of
accounting irregularities, the Company's previously issued financial
statements were materially false and misleading thus constituting
violations of federal securities laws by the Company, by its auditors
and by certain officers.
The suit, filed on behalf of purchasers of the Company's common stock
between December 10,1998 and October 27,2000, allege that the
defendants violated Sections 10(b) and/or Section 20(a) of the
Securities Exchange Act and Rule 10b-5 promulgated thereunder.
The Company must file an answer to the complaint by August 9, 2002, and
is continuing to evaluate the complaint and possible defenses thereto.
Pending determination of the motion to dismiss, the Company's
obligation to answer the complaint is stayed.
The Company also faces a shareholder derivative suit, along with
certain of its officers and directors, in the US District Court for the
Western District of Pennsylvania. The derivative complaint purports to
assert claims on behalf of the Company against the defendants for
violation of duties asserted to be owed by the defendants to
The Company and which relate to the events, which gave rise to the
purported class actions described above. All proceedings in the
derivative case have been stayed, pending the resolution of the class
action.
The Company cannot predict the outcome of the litigation. Pursuant to
its bylaws, the Company is obligated to indemnify its officers and
directors under certain circumstances against claims made in these
lawsuits. The Company may also be obligated to indemnify certain of
its officers and directors for the costs they incur as a result of the
lawsuits.
While it is not feasible to predict or determine the final outcome or
timing of these or similar proceedings, or to estimate the amounts or
potential range of loss with respect to these matters, management
believes that an adverse outcome with respect to such proceedings could
have a material adverse impact on the Company's financial position and
results of operations.
SAFEGUARD HEALTH: Agrees To Settle Securities Fraud Suit For $1.25M
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SafeGuard Health Enterprises, Inc. agreed to settle the securities
class action pending against the Company in 1999. The suit alleges
that certain officers of the Company violated securities laws with
respect to certain public statements and filings concerning the
Company's financial results for 1997 and 1998.
The interested parties recently conducted a mediation, and, in view of
the length of time, the expenses, the distractions to management and
the risks associated with the outcome of any complex litigation, the
parties agreed to settle the litigation without an admission of
liability by any party.
The settlement is subject to court approval, completion of final
documentation, and to certain other customary conditions, including the
right of individual class members to opt out. The settlement amount is
$1.25 million, of which the Company's insurance carrier has agreed to
pay $1 million and the Company has agreed to pay $250,000.
Accordingly, during the second quarter of 2002 the Company recorded a
one-time charge of $250,000 as a result of the settlement.
The Company expects that a court hearing to evaluate approval of the
settlement will be held during the fourth quarter of 2002, and the
Company believes that the settlement will be approved at that time.
When approved by the court and final according to its terms, this
settlement will be a full and complete resolution of all class claims
arising from the litigation, and the lawsuit filed against the Company
will be dismissed with prejudice.
James E. Buncher, Company president and chief executive officer,
commented, "We are pleased to have the stockholder litigation resolved.
The Company determined that settling this matter at this time is in the
best interests of our stockholders."
SUPREMA SPECIALTIES: CEO Asks Court For Severance Pay, Other Benefits
---------------------------------------------------------------------
During the final full year of Suprema Specialties' existence, in 2001,
Chief Executive Mark Cocchiola received close to $1 million in
compensation. That was before one of the country's fastest growing
businesses crumbled into bankruptcy six months ago, amid accusations of
fraud by stockholders, who were hit with millions of dollars in losses
and who filed a class action against Mr. Cocchiola. Suppliers were
also stuck with millions more in unpaid bills.
However, Mr. Cocchiola is looking for a little payback - $1,357,487.16,
to be exact, according to The Star Ledger (Newark, NJ). As the
fragments of the cheese company are liquidated, Mr. Cocchiola is asking
the bankruptcy judge for the $1.25 million severance package he says he
is owed, plus $107,487 in wages he earned acting as a company
consultant after the February 24 bankruptcy filing.
"He (Mr. Cocchiola) can make any claims he wants in the bankruptcy
courts, and the bankruptcy trustee will deal with them," said EriK
Sandstedt, one of the attorneys representing shareholders in the class
action. "But the fact remains, he is and will remain a defendant in
our case, and we are going to pursue our claims against him to the
fullest extent possible."
"I think it is ludicrous," said James Drewitz, whose Texas firm
provided public relations services to the Company and who was left
holding a $7,000 bill. It's not fair to all of the shareholders who
lost money and it is not fair to all the vendors who lost money."
However, Michael Conway, Mr. Cocchiola's attorney, refers to papers
filed with the bankruptcy court in New York that provide, in an
employment contract, that if Mr. Cocchiola is terminated he will
receive the higher of $1.25 million, or five times his yearly total
compensation. The contract also provides that he be paid additional
money to cover the cost of any income or excise taxes on the $1.25
million. Mr. Conway also said he was prepared to provide the facts
providing the basis for Mr. Cocchiola's contention that a "severance"
took place.
Even if Mr. Cocchiola is awarded money, it is unclear whether he will
be able to keep it in the end. He and other Suprema executives and
board members are named in the class action brought by shareholders
and a separate lawsuit by one of Suprema's largest institutional
shareholders.
TOBACCO LITIGATION: IL Court Certifies Suits Over False Representations
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Judges in the Third Judicial Circuit Court for Madison County,
Illinois, certified three separate class actions brought against the
nation's three largest tobacco companies, according to a report by
Canada NewsWire. The three suits were brought against Philip Morris,
RJ Reynolds Co. and Brown & Williamson Corporation on behalf of
purchasers of "light" cigarettes in the State of Illinois.
The lawsuits allege that the named companies falsely represented that
their "light" cigarettes deliver lowered tar and nicotine in comparison
to regular, full-flavor cigarettes, when, in fact, "light" cigarettes
are by design not significantly lower in tar and nicotine when actually
smoked, than regular, full-flavor cigarettes.
Plaintiffs and the classes are represented by the Carr Korein Tillery
law firm. The court has approved the notice, which will be sent out to
apprise class members of the lawsuits and their rights in the
litigation.
WORLDCOM INC.: New York State Pension Fund Selected As Lead Plaintiff
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A federal judge has ruled that New York state's pension fund should
serve as lead plaintiff for a group of shareholders suing WorldCom,
Inc., the Los Angeles Times reports.
The New York State Common Retirement Fund, which has assets of $112
billion, claims it lost an estimated $306 million from the collapse of
WorldCom. The fund, for which stat Comptroller H. Carl McCall serves
as trustee, represents the interests of 950,000 active and retired
government employees and their beneficiaries.
As lead plaintiff, the fund and its lawyers can control the litigation
and make significant decisions in legal strategy.
ZIMBABWE: White Farmers Consider Suit As President Orders Them To Leave
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Zimbabwe's President Robert Mugabe insisted recently that the "deadline
stands" for 2,900 of the country's embattled white farmers to leave
their land, and said the transfer of their property for black
resettlement would be completed by the end of August, according to a
report by the Orlando Sentinel. The idea of a legal approach, in the
form of a class action, is being considered by the white farmers.
Justice for Agriculture, a newly formed splinter group of the white-
dominated Commercial Farmers Union, has in recent days urged its
members to thoroughly document the buildings, animals, equipment and
other valuables, in hopes of eventually launching a class action if the
government goes ahead with seizures without compensation.
The organizations, in a recent statement, said that farmers consider
the order to vacate their property illegal and intend to continue
fighting it in court. The group also criticized the government for
failing to hand over land titles to black settlers given plots on the
seized property.
About 60 percent of the targeted farmers, whose property is earmarked
for takeover without compensation, have refused to leave their land.
They had hoped that Zimbabwe's government, facing a severe food
shortage that threatens half of the nation's 12 million people, might
back down on the planned seizures.
President Mugabe has said, however, that he will not back down. "We,
the principled people of Zimbabwe, we, the true owners of this land,
shall not budge," he said. "We shall not be deterred on this one vital
issue, the land. The land is ours."
Government-backed youth militias moved into place around targeted white
farms last Thursday night, as the government's deadline for the farmers
to forfeit their land passed. However, President Mugabe's government
so far has not moved forcibly to seize the properties. Ruling party
workers in Bulawayo suggested Monday that the government might give the
white landowners a grace period of a few more days to comply. No
indication of when forced might start has been given by government
authorities.
President Mugabe also said recently that he would be willing to do
business with white farmers who cooperate. "All genuine and well-
meaning white farmers who wish to pursue a farming career as loyal
citizens of this country will have land to do so," the President said.
Government officials, while insisting white land is needed to resettle
landless black farmers and to correct colonial-era land injustices,
have themselves seized, for their personal use, many of the best farms.
New Securities Fraud Cases
AOL TIME: Schiffrin & Barroway Lodges Securities Fraud Suit in S.D. NY
----------------------------------------------------------------------
Schiffrin & Barroway LLP initiated a securities class action against
AOL Time Warner, Inc. (NYSE:AOL) claiming that the company misled
investors about its business and financial condition. The suit, filed
in the US District Court for the Southern District of New York, on
behalf of all investors who bought Company securities between July 19,
1999 and July 17, 2002.
The complaint alleges that the Company issued numerous materially false
and misleading statements concerning the Company, the synergies derived
from the merger of America Online Inc. and Time Warner, Inc. and the
Company's prospects and earnings projections.
The complaint alleges that these statements were materially false and
misleading because they failed to disclose:
(1) that the Merger was not generating the synergies as
represented by defendants;
(2) that the Company was experiencing declining advertising
revenues; and
(3) that the Company had failed to properly write down the value
of more than $50 billion of goodwill, thereby artificially
inflating its reported financial results and rendering its
published financial statements materially false and misleading
and in violation of Generally Accepted Accounting Principles.
On April 24, 2002, AOL Time Warner issued a press release announcing
its financial results for the first quarter of 2002, and revealed that
it would be taking a "one-time, non-cash charge that reduced the
carrying value of the Company's goodwill by approximately $54 billion.
Following this announcement, AOL Time Warner stock closed at $19.30 per
share, a decline of more than 66% from a class period high of $56.60
per share.
During the class period, prior to the disclosure of the true facts
about the Company, AOL Time Warner insiders sold their personal
holdings of AOL Time Warner common stock to the unsuspecting public for
proceeds in excess of $250 million.
For more details, contact Schiffrin & Barroway by Phone: 888-299-7706
or 610-822-2221 by Fax: 610-822-0002 by E-mail: info@sbclasslaw.com or
visit the firm's Website: http://www.sbclasslaw.com.
AOL TIME: Glancy & Binkow Commences Securities Fraud Suit in S.D. NY
--------------------------------------------------------------------
Glancy & Binkow 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 the common stock of America Online, Inc.
(NYSE:AOL) between July 19, 1999 and January 10, 2001 inclusive, and
all persons who acquired the common stock of AOL Time Warner, Inc.
between January 11, 2001 and July 17, 2002, inclusive.
The suit charges AOL Time Warner and certain of its officers and
directors with violations of federal securities laws. Among other
things, plaintiff claims that during the class period, AOL (and later
AOL Time Warner) made material misrepresentations and/or omissions,
including:
(1) affirmatively misstating AOL and AOL Time Warner's revenue
from online advertising sales by including in such revenues
sums received as one-time payments in connection with the
termination of contracts for online advertising;
(2) artificially inflating AOL's online advertising revenue for
first quarter fiscal 2001 by including in such revenues $16.4
million in online advertising that AOL required an enterprise
called 24dogs.com to purchase in order to settle a legal
dispute; and
(3) artificially inflating AOL Time Warner's revenue from online
advertising sales by including in such revenues sums that AOL
Time Warner received in connection with selling online
advertising for online auction site eBay.
The complaint further alleges that defendant Ernst & Young, LLP
violated the federal securities laws by certifying AOL Time Warner's
financial statements as incorporated in AOL Time Warner's Annual Report
for its fiscal year 2001 even though Ernst & Young knew (or recklessly
failed to discover) that AOL Time Warner had counted in revenue sums
received in connection with selling online advertising for online
auction site eBay.
When The Washington Post revealed the foregoing on July 18, 2002, AOL
Time Warner stock dropped to as low as $11.75, down from its class
period high of $58.51, inflicting damages on investors.
For more details, contact Michael Goldberg by Mail: 1801 Avenue of the
Stars, Suite 311, Los Angeles, California 90067 by Phone: 310-201-9150
or 888-773-9224 or by E-mail: info@glancylaw.com.
AON CORPORATION: Abbey Gardy Launches Securities Fraud Suit in N.D. IL
----------------------------------------------------------------------
Abbey Gardy, LLP initiated a securities class action against Aon
Corporation (NYSE:AOC), and certain of its officers and directors in
the United States District Court for the Northern District of Illinois,
Eastern Division, on behalf of all persons or entities who purchased
Company securities during the period from May 4, 1999, to August 6,
2002, inclusive.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market during the class period, thereby artificially inflating the
price of Company securities.
The complaint alleges that throughout the class period the Company
issued a series of materially false and misleading statements regarding
the Company's earnings and financial performance. The suit alleges,
among other things, that these statements were materially false and
misleading because they failed to disclose and/or misrepresented that:
(1) the Company had materially overstated its net income by $27
million in 1999, by $24 million in 2000 and by $5 million in
the first of 2002;
(2) that the Company lacked adequate internal controls and was
therefore unable to determine its true financial condition.
On August 7, 2002, the company shocked the investing community when it
announced, among other things, that the Securities and Exchange
Commission (SEC) had been investigating its financial results and was
questioning many aspects of the Company's financial statements. The
Company also stated that, if the SEC required, it will have to restate
its earnings for the past three years and reduce its net income by the
numbers stated above. Following this announcement, Company shares fell
over 30% to close at $14.77 per share.
For more details, contact Nancy Kaboolian or Jennifer Haas by Phone:
800-889-3701 or 212-889-3700 or by E-mail: nkaboolian@abbeygardy.com
CROSS MEDIA: Schiffrin & Barroway Commences Securities Suit in S.D. NY
----------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Southern District of New York,
alleging that Cross Media Marketing Corporation (AMEX:XMM) misled
shareholders about its business and financial condition.
The suit seeks damages for violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 on behalf of all investors who
bought Company securities between November 5, 2001 and July 7, 2002.
The complaint alleges that the New York-based Company issued numerous
press releases during the class period which touted the Company's
performance and represented that revenues and earnings were increasing.
The truth regarding the Company was not fully disclosed until July 12,
2002, when defendants finally revealed that the Company would have a
loss for the second quarter of 2002, and that revenues for the year
would be significantly less than previously predicted. The Company
stock dropped to $2.71 per share from $4.88 the previous day.
The defendants had, prior to that date, among other things
misrepresented the impact and nature of FTC proceedings brought against
the Company and others.
For more details, contact Marc A. Topaz or Stuart L. Berman by Phone:
888-299-7706 (toll free) or 610-822-2221 by Fax: 610-822-0002 by E-
mail: info@sbclasslaw.com or visit the firm's Website:
http://www.sbclasslaw.com.
INSIGHT ENTERPRISES: Milberg Weiss Launches Securities Suit in AZ Court
-----------------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class
action in the United States District Court for the District of Arizona
on behalf of purchasers of Insight Enterprises Inc. (Nasdaq:NSIT)
publicly traded securities during the period between April 26, 2002 and
July 17, 2002.
The complaint charges the Company and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
complaint alleges that throughout the class period, defendants
represented that the Company would achieve sequential earnings per
share (EPS) growth in Q2 2002.
The true facts, which were known by the defendants during the class
period but were actively concealed by the defendants, were as follows:
(1) That in April 2002, the defendants learned that the Company
was not on track to achieve Q2 EPS growth or Q2 EPS of $0.31-
$0.35;
(2) That the Company's United Kingdom operations required a
massive restructuring;
(3) That the Company's purchase of Action plc in Q4 2001 had not
been properly integrated into the Company's operations and
moreover was suffering from material adverse trends; and
(4) That on or about May 1, 2002, defendants decided internally to
send senior executives from its recently acquired Comark
acquisition to the Company's Action plc division to try to
solve the division's problems, including the effect of the
adverse trends (reduced demand, greater than projected
operating expenses and declining market share) which
defendants became aware of by April 2002.
During the class period defendants sold over $10 million worth of their
own Company shares at prices as high as $28 per share, or double the
price to which Company shares dropped as the Company's true prospects
began to reach the market.
On July 17, 2002, the Company revealed that, contrary to prior
assurances by defendants of the Company's continuing revenue and EPS
growth, it would post sequential EPS declines, sending Company shares
into a free fall.
For more details, contact William Lerach by Phone: 800-449-4900 by E-
mail: wsl@milberg.com or visit the firm's Website:
http://www.milberg.com
INSIGHT ENTERPRISES: Cauley Geller Commences Securities Suit in AZ
------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the District of Arizona on
behalf of purchasers of Insight Enterprises Inc. (Nasdaq: NSIT)
publicly traded securities during the period between April 26, 2002 and
July 17, 2002, inclusive.
The complaint charges the Company and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
complaint alleges that throughout the class period, defendants
represented that the Company would achieve sequential earnings per
share (EPS) growth in Q2 2002.
The true facts, which were known by the defendants during the class
period but were actively concealed by the defendants, were as follows:
(1) That in April 2002, the defendants learned that the Company
was not on track to achieve Q2 EPS growth or Q2 EPS of $0.31-
$0.35;
(2) That the Company's United Kingdom operations required a
massive restructuring;
(3) That the Company's purchase of Action plc in Q4 2001 had not
been properly integrated into the Company's operations and
moreover was suffering from material adverse trends; and
(4) That on or about May 1, 2002, defendants decided internally to
send senior executives from its recently acquired Comark
acquisition to the Company's Action plc division to try to
solve the division's problems, including the effect of the
adverse trends (reduced demand, greater than projected
operating expenses and declining market share) which
defendants became aware of by April 2002.
During the class period defendants sold over $10 million worth of their
own Company shares at prices as high as $28 per share, or double the
price to which Company shares dropped as Insight's true prospects began
to reach the market. On July 17, 2002, the Company revealed that,
contrary to prior assurances by defendants of its continuing revenue
and EPS growth, it would post sequential EPS declines, sending
Insight's shares into a free fall.
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
SONUS NETWORKS: Schiffrin & Barroway Lodges Securities Fraud Suit in MA
-----------------------------------------------------------------------
Schiffrin & Barroway LLP initiated a securities class action against
Sonus Networks, Inc. (Nasdaq:SONS) claiming that the Company misled
investors about its business and financial condition. The complaint
was filed in the US District Court for the District of Massachusetts on
behalf of all investors who bought Company securities between December
11, 2000 and January 16, 2002.
The complaint alleges that the Massachusetts-based Company issued
numerous statements which highlighted the Company's financial
performance and described the Company's success in acquiring and/or
developing new products which it was then able to offer to current and
prospective customers.
As alleged in the complaint, these statements were materially false and
misleading because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(1) that certain products that Sonus claimed it had sold to Qwest
Communications International, Inc. would not be ready for
deployment in time to meet Qwest's needs and would result in
Qwest having to purchase competing products from Nortel;
(2) that the Company's highly-touted transaction with Qwest, which
contributed more than 10% of Sonus' first quarter 2001
revenues, was actually a quid pro quo deal wherein Sonus had
to agree to buy a $20 million Irrevocable Right of Use (IRUs)
from Qwest in exchange for a $20 million order from Qwest;
(3) that contrary to defendants' representations, Sonus' products
were not carrier class as they did not have 99.999%
availability, did not have voice quality as good as circuit-
switched networks and did not have sophisticated network
management and configuration capabilities; and
(4) as a result, Sonus was not on track to report revenues of $195
million in 2001.
On January 16, 2002, the last day of the class period, the Company
announced its disappointing fourth quarter and year-end 2001 results
and revealed that revenues for the year were just $173 million compared
to class period estimates exceeding $200 million. Following this
announcement, shares of Company stock fell below $5 per share.
For more details, contact Schiffrin & Barroway by Phone: 888-299-7706
(toll free) or 610-822-2221 by Fax: 610-822-0002 by E-mail:
info@sbclasslaw.com or visit the firm's Website:
http://www.sbclasslaw.com.
MONTANA POWER: Bernard Gross Commences Securities Suit in Montana Court
-----------------------------------------------------------------------
The Law Offices of Bernard M. Gross initiated a securities class action
in the United States District Court for the District of Montana, Butte
Division, on behalf of all persons and entities who purchased or
otherwise acquired the common stock of Touch America Holdings f/k/a
Montana Power Company (NYSE:TAA) between January 30, 2001 and November
14, 2001, inclusive.
The complaint charges Montana Power Company and Robert Gannon with
violations of Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934, and Rule 10b-5, by issuing a series of materially false and
misleading statements to the market during the class period.
As alleged in the suit, in June 2000, the Company purchased two hundred
fifty thousand customer accounts from Qwest Communications
International. Shortly after the purchase, Montana Power started to
experience problems with those assets and with its relationship with
Qwest. For example, Qwest failed to transfer certain customers to
Montana Power as required by their agreement and improperly assessed
costs to Montana Power. As a result, Montana Power lost revenues. As
a result of these problems, Montana Power's transformation from an
energy company to a telecommunications company was becoming
increasingly more difficult.
Rather than disclose the problems with the assets the Company had
purchased from Qwest, which now constituted Montana Power's sole line
of business, defendants concealed those problems in order, in part, to
enable the Company to obtain shareholder approval of the sale of its
energy operations.
On February 21, 2001, Montana Power issued a press release announcing
that it had closed the sale of its independent power business for $84.5
million in cash to privately held CES Acquisition Corp.
On May 1, 2001, Montana Power issued a press release announcing its
financial results for the first quarter of 2001, this period ending
March 31, 2001. The Company reported that consolidated new income
increased to $0.58 per share. On August 1, 2001, Montana Power issued
a press release announcing its financial results for the second quarter
of 2001, the period ending June 30, 2001. The Company reported net
losses of $0.11 per share "mainly due to loses of $0.51 per share
related to market based power purchases from the buy out of a large
electric supply contract." In response to this announcement, the price
of Montana Power stock declined from $10.13 per share to $7.94 per
share on August 1, 2001.
On September 21, 2001, Montana Power issued a press release announcing
that "shareholders representing more than two-thirds of the outstanding
common stock of the" Company had approved the sale of the Company's
remaining utility operations to Northwestern Corporation and approved
the restructuring of the Company to allow Touch America to become the
"trade company." On October 31, 2000, Montana Power issued a press
release announcing that it would be delaying the release of its third
quarter financial results. In response to this announcement, the price
of Montana Power declined from $5.96 per share to $5.07 per share.
Finally, on November 14, 2001, the last day of the class period,
Montana Power issued a press release announcing its third quarter 2001
results. The Company reported a loss of $0.26 per share. Defendant
Gannon stated that the quarterly losses "reflect the continued slowing
of the nation's economy and the difficult transition of Montana Power
from a diversified energy company to Touch America..." The press
release further revealed that, as a result of its poor third quarter
results, the Company was not is compliance with certain financial
covenants under its Senior Secured Credit Facility. Finally, the press
release revealed that the Company was engaged in litigation with Qwest
concerning the June 2000 Qwest Sale, litigation ongoing since August
2001, but not meaningfully disclosed. Following this announcement, the
price of Montana Power common stock further declined from $5.16 per
share to $4.70 per share on heavy trading.
For more details, contact Deborah R. Gross or Susan Gross by Mail: 1515
Locust Street, Second Floor, Philadelphia, PA 19102
VIVENDI UNIVERSAL: Wechsler Harwood Commences Securities Suit in NY
-------------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf all persons who purchased or acquired Vivendi
Universal, S.A. (NYSE:V) (Paris Bourse: EX FP) securities between the
period of April 23, 2001 and July 2, 2002, inclusive against the
Company and certain of its officers and directors.
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.
Prior to and during the class period, defendant Jean-Marie Messier took
Vivendi on an acquisition binge that, according to published reports,
resulted in the Company amassing approximately $18 billion in debt as
he attempted to turn the Company from a water concern into an
entertainment powerhouse.
During the class period, defendants made misrepresentations and/or
omissions of material fact, including the following:
(1) Misstating Vivendi's cash position and ability to service its
debt obligations;
(2) Misstating Vivendi's earnings in its public filings with the
SEC and elsewhere as a result of failing to record write-downs
of goodwill and other intangible assets associated with, inter
alia, the merger among Vivendi, Seagram and Canal+ long after
it had become apparent that such assets were being carried at
values vastly higher than their true values;
(3) Failing to disclose that the exchange ratio for the merger
between MP3.com, Inc. and Vivendi was distorted due to
artificial inflation in the price of Vivendi American
Depositary Receipts (ADRs);
(4) Affirmatively misstating the value of goodwill and other
intangible assets associated with, inter alia, the merger
among Vivendi, Seagram and Canal+ by carrying such assets at
the cost of acquiring them long after it had become apparent
that Vivendi had overpaid to acquire such assets; and
(5) Failing to disclose that Vivendi had significant off-balance-
sheet liabilities in the form of its undisclosed sale of put
options on tens of millions of dollars worth of Vivendi shares
during 2001 in order to pay for stock options it awarded to
executives.
During the class period, defendants' false statements artificially
inflated Vivendi ADRs to as high as $68.80 per ADR. Defendants reported
favorable, but misleading, financial results to the market and
represented that Vivendi was not as susceptible to economic problems as
competitors and that the Company had the "highest resiliency and lowest
sensitivity to recessionary environment." The defendants also
represented that Vivendi was successfully implementing recent mergers
which were being reorganized quickly to generate synergies.
These positive but false statements allowed the Company to complete
additional acquisitions in its $100 billion buying spree between 1998
and 2001. Late in June 2002, news leaked from Vivendi that its debt was
at alarming levels, causing Vivendi's ADRs to decline in price from $28
to $20. Vivendi's ordinary shares declined in similar fashion.
Nonetheless, Mr. Messier reassured the market that liquidity was not a
problem. However, as ratings agencies continued to downgrade the
Company's debt, the ADRs continued to decline. On July 2, 2002,
Vivendi's debt was downgraded again and the Company was in danger of
default. On July 3, 2002, Messier was forced to resign.
Vivendi ADRs collapsed upon these revelations, falling to $15-21/32 on
July 3, 2002, on huge volume of 8 million shares. This collapse wiped
out billions of dollars in Vivendi shareholder value, compared to the
end of 2001. Later, on July 9, 2002, Bloomberg News reported that the
Commission des Operations de Bourse was reviewing statements released
by Vivendi to ensure "they abide by our rules." The regulators had
raided Vivendi's Paris headquarters as part of an investigation into
whether Vivendi had disclosed relevant information to investors in the
prior 18 months.
For more details, contact Craig Lowther by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
clowther@whhf.com or visit the firm's Website: http://www.whhf.com
XCEL ENERGY: Much Shelist Commences Securities Fraud Suit in MN Court
---------------------------------------------------------------------
Much Shelist Freed Denenberg Ament & Rubenstein, PC initiated a
securities class action against Xcel Energy, Inc. (NYSE:XEL), and
certain officers and directors in the United States District Court for
the District of Minnesota, on behalf of all persons and entities who
purchased the Company's securities during the period January 31, 2001
through July 26, 2002, inclusive. The suit names as defendants the
Company and:
(1) James J. Howard, Chairman of the Board of Directors,
(2) Wayne H. Brunetti, President and Chief Executive Officer, and
(3) Edward J. McIntyre, Vice President and Chief Financial
Officer
The defendants allegedly violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by issuing a series of materially false and misleading statements to
the market. These alleged misstatements had the effect of artificially
inflating the price of Company securities.
Specifically, the suit alleges that the defendants misled the public by
failing to disclose or by misrepresenting the following adverse facts
during the class period:
(i) the Company had engaged in "round trip" or "wash" transactions
- simultaneous energy trades in the same amount and price that
yielded no economic benefit to the Company;
(ii) the Company and its unregulated energy trading subsidiary, NRG
Energy, Inc. had entered into credit agreements with lenders
that had cross-default provisions and covenants, such that, in
the event of a default by NRG, the Company would lose access
to $800 million in credit;
(iii) the Company management lacked a coherent plan to remedy NRG's
credit and liquidity difficulties; and
(iv) the Company lacked internal controls to adequately monitor the
trading of its power.
After the market closed on July 25, 2002, the Company issued a press
release announcing its financial results for the quarter ending June
30, 2002. The Company disclosed that its earnings had declined
precipitously on NRG's exposure to the energy trading market and that
its full-year earnings would miss expectations.
The Company further revealed that it had received subpoenas from both
the Commodities Futures Trading Commission and the Securities and
Exchange Commission relating to its "round trip trades" in electricity
and natural gas.
In a conference call the next day, management disclosed the extent of
the Company's liquidity crisis. Analysts were horrified to learn that
the liquidity and credit crisis extended to the Company itself under
the "cross-collateral default" provisions. Later that day S&P cut
NRG's credit rating to junk status. By the end of trading on June 26,
2002, the Company's common stock had suffered a one-day, 36% plunge to
close at 7.55 per share.
For more details, contact Carol V. Gilden or Michael E. Moskovitz by
Phone: 800-470-6824, or by E-mail: investorhelp@muchshelist.com. E-
mail should refer to Xcel.
XCEL ENERGY: Alfred Yates Commences Securities Fraud Suit in MN Court
---------------------------------------------------------------------
Alfred G. Yates, Jr. initiated a securities class action in the United
States District Court for the District of Minnesota on behalf of
purchasers of Xcel Energy, Inc. (NYSE: XEL) common stock during the
period between January 31, 2001 and July 26, 2002, inclusive.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between January 31, 2001 and July 26, 2002, thereby artificially
inflating the price of Company securities.
As alleged in the suit, the Company made statement, including filings
with the SEC, regarding its financial performance. 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 earnings had declined. In a conference
call the very next day, defendants finally disclosed the true extent of
Company liquidity and credit difficulties and its management's
inability to effectively remedy such difficulties stemming from the
operations of NRG. Company stock closed at $7.55, a more than 36% one-
day decline, on extremely heavy trading volume.
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 Jessica Carver by Mail: 519 Allegheny
Building, 429 Forbes Avenue, Pittsburgh, Pennsylvania 15219 by Phone:
800-391-5164/412-391-5164 or by Email: yateslaw@aol.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
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