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/raid1/www/Hosts/bankrupt/CAR_Public/020819.mbx C L A S S A C T I O N R E P O R T E R Monday, August 19, 2002, Vol. 4, No. 163 Headlines ARGOSY GAMING: NV Court Refuses To Certify Gambling Companies Suit ARTHUR ANDERSEN: Tells Court There Are No Plans For Dissolution BRIDGESTONE/FIRESTONE INC.: Suit Demands Steeltex Tire Recall CALPINE CORPORATION: Faces Fifteen Securities Fraud Suits in N.D. CA CANNONDALE CORPORATION: Recalls 1,300 Bicycles Due To Defective Stems CAVAGNA NORTH: Recalls 6,100 Safety Relief Valves For Fire, Burn Hazard CNA FINANCIAL: Ex-Workers File Suit For Overtime Wage Law Violations DPL INC.: Corrects Earnings Statements To Comply With SEC Deadline GERMANY: Will Legislate Personal Liability For Corporate Executives IKON OFFICE: Salt Lake Workers Pension Account Suit Gets Court Approval INDONESIA: Family Group Threatens To File Lawsuit Over Virginity Survey MARIN MOUNTAIN: Voluntarily Recalls 1T Mountain Bikes For Injury Hazard METRETEK TECHNOLOGIES: Faces Suit Over Business Trust Transactions METRETEK TECHNOLOGIES: Trial in Investors Suit Set For March 4, 2003 PSS WORLD: FL Court Refuses To Dismiss Consolidated Securities Suit PSS WORLD: Seeks Wage Violations Suit Transfer To FL Federal Court RENT-A-CENTER INC.: Suit Settlement Fairness Hearing Set for October RENT-A-CENTER INC.: Faces Suit For Securities Act Violations in TX RENT-A-CENTER INC.: Faces Suit For Consumer Law Violations in PA Court SOLVAY PHARMACEUTICALS: Columbine Drug Suit May Become Class Action New Securities Fraud Cases 360NETWORKS INC.: Cohen Milstein Commences Securities Suit in S.D. NY AOL TIME: Spector Roseman Commences Securities Fraud Suit in S.D. NY AOL TIME: Chitwood Harley Commences Securities Fraud Suit in S.D. NY CAPITAL ONE: Spector Roseman Commences Securities Fraud Suit in E.D. VA CHARTER COMMUNICATIONS: Schatz & Nobel Files Securities Suit in C.D. CA ECLIPSYS CORPORATION: Bernard Gross Files Securities Suit in S.D. FL INSIGHT ENTERPRISES: Schiffrin & Barroway Lodges Securities Suit in AZ JOHNSON & JOHNSON: Weiss & Yourman Launches Securities Suit in NJ MERCK & CO.: Spector Roseman Commences Securities Fraud Suit in NJ MERRILL LYNCH: Finkelstein Thompson Files Securities Suit in N.D. CA NICOR INC.: Spector Roseman Commences Securities Fraud Suit in N.D. IL XCEL ENERGY: Spector Roseman Commences Securities Suit in MN Court XCEL ENERGY: Bernstein Liebhard Commences Securities Suit in MN Court ********* ARGOSY GAMING: NV Court Refuses To Certify Gambling Companies Suit ------------------------------------------------------------------ The Las Vegas, Nevada federal court refused to certify as a class action the lawsuit filed against Argosy Gaming and 41 of the country's largest gaming operators, two gaming equipment suppliers, and four gaming distributors, The suit alleges that the companies engaged in a course of fraudulent and misleading conduct intended to induce people to play their gaming machines based upon a false belief concerning how those gaming machines actually operate, as well as to the extent to which there is actually an opportunity to win on any given play. The plaintiffs are currently appealing this denial. ARTHUR ANDERSEN: Tells Court There Are No Plans For Dissolution ---------------------------------------------------------------- The end of the month does not mean the end of beleaguered accounting firm Arthur Andersen, LLP, the Company told the court recently in court papers. In a motion filed in federal court, the Chicago-based firm gave the first indication of its plans after August 31, when it will have to close its audit practice, the Chicago Tribune reports. Andersen's motion stems from a dispute with the lead plaintiffs in a class action brought by Enron Corporation shareholders, in which Andersen is a defendant. The plaintiffs fear that Andersen plans to sell off its assets and spread the proceeds among its partners, making it difficult for the plaintiffs to collect any damages should they win their case. While claiming that Andersen is an ongoing entity, the firm's spokesman, Patrick Dorton, did not say what kinds of business Andersen would be involved in after August 31. Almost all of the firm's US offices will close over the next few weeks, with only a skeleton staff left to service remaining consulting assignments and continue working on the mass of litigation against the firm. Many observers believe Andersen will be forced to file for bankruptcy under the weight of legal claims arising out of the financial reporting problems related to its auditing of high-profile companies. BRIDGESTONE/FIRESTONE INC.: Suit Demands Steeltex Tire Recall ------------------------------------------------------------- A California lawyer filed a lawsuit demanding that Bridgestone Corporation's US unit recall 27.5 million Steeltex tires, which he claims suffers from a tread-separation defect similar to the one that led to a massive recall of its tires two years ago, Reuters English News Service reports. The suit seeks class action status and could cost Bridgestone/Firestone Inc., the US unit of Japan's Bridgestone, up to $2.75 billion to recall roughly 27.5 million Steeltex R4S, $4SII and A/T tires, attorney Joseph Lisoni told reporters at a recent news conference. The lawsuit was filed in California Superior Court in Riverside County, east of Los Angeles. The suit is patterned on the landmark 1999 lawsuit in Oakland, California, in which a judge ordered Ford to fix two million cars that stalled. A national consumer advocacy group has hailed the lawsuit as an important tool in calling attention to a "stealth defect tire" whose danger to motorists, it said, is as great as that posed by Firestone's now discredited Wilderness tire. "The problem with tracking these problems in the Steeltex . is that it is not associated with a particular make and model (of automobile)," Clarence Ditlow, a spokesman for the Center for Auto Safety in Washington, DC, told Reuters. The Wilderness tire was the standard equipment on the Ford Explorer and several other sport utility vehicles. About 20 million Wilderness tires were recalled, 14 million by Ford and 6.5 million by Firestone. Mr. Ditlow said, "The Steeltex is the utilitarian version of the Wilderness. They are just as bad." However, a Bridgestone/Firestone spokeswoman has said that Steeltex tires are perfectly safe and had been tested by the National Highway Traffic Safety Administration (NHTSA) from September 2000, through April 2002, with no defects being found. The study "clearly indicated there was no indication of any type of manufacturing or design defect," said the spokeswoman. The NHTSA closed the investigation after determining that only one death and eight injuries had resulted from Steeltex tread separations. The agency concluded in a report, "Claims of tread separation are not necessarily evidence of a tire defect. Tread separations can also result from external factors, such as tire injury or poor maintenance." The NHTSA report also determined that the complaint levels recorded between the summer of 2000 and the summer of 2001, "were influenced by the public's greater sensitivity to tire failures in the wake of the substantial media coverage" of the Wilderness recall. The plaintiffs' attorney Joseph Lisoni has accused Bridgestone of cutting a deal with the Bush administration to close the investigation with no finding of fault in order to preserve the Company's financial health. Consumer advocate Clarence Ditlow, addressing the agency's characterization of the reason for the increase in Steeltex tire complaints, said the claims of the attorney Joseph Lisoni were not far- fetched. "The fact that there was a government investigation and they did uncover high complaint rates, suggests that there is a problem that was not addressed," he said. "As a consumer advocate.I am increasingly concerned that the government does not have the resources or the willpower to do adequate investigations." Mr. Lisoni said he decided to file the suit after Firestone rejected his demand that the tires be recalled as part of the settlement of another Steeltex lawsuit - a case that involved a 1992 rollover accident in Barstow, California, that killed two people and injured nine. Firestone paid an undisclosed sum to settle the case, Mr. Lisoni said. "All we want to do is get these tires off the road. And sometimes we have to take the law into our own hands when the government watchdog agencies are not there for us." The latest class action was filed on behalf of Roger Littell of Riverside, California, who has seen five Steeltex tires on his 1999 motor home disintegrate, and on behalf, as well, of all other owners of Steeltex tires nationwide, Mr. Lisoni said. Mr. Littell is a racing car enthusiast and was involved in road testing Firestone tires between 1955 and 1974. The lawsuit contends the tires contain a lamination defect that can cause the tread to separate from the rest of the tire, "in a matter of seconds, leading to the tire's total destruction." Mr. Lisoni said that, "Without question, millions of people are currently at risk who are riding the roads on Steeltex tires." CALPINE CORPORATION: Faces Fifteen Securities Fraud Suits in N.D. CA -------------------------------------------------------------------- Calpine Corporation faces fourteen securities class actions pending in the United States District Court for the Northern District of California, on behalf of purchasers of the Company's common stock between February 6,2001 and December 13,2001. The suits allege that, during the purported class periods, certain senior Company executives issued false and misleading statements about the Company's financial condition in violation of Sections 10(b) and 20(1) of the Securities Exchange Act of 1934, as well as Rule 10b-5. The Company expects that these suits, as well as any related actions that may be filed in the future, will be consolidated by the court into a single securities class action. In addition, a fifteenth securities class action was filed in May 2002. The underlying allegations in the above suit are substantially the same to those in the above-referenced actions. However, the suit is brought on behalf of purchasers of the Company's 8.5% Senior Notes due February 15, 2011 from October 15, 2001, through December 13, 2001. The above suit alleges that, in violation of Sections 11 and 15 of the Securities Act of 1933, the Prospectus Supplement dated October 11, 2001, for the 2011 Notes contained false and misleading statements regarding the Company's financial condition. This action names the Company, certain of its officers and directors, and the underwriters of the 2011 Notes offering as defendants. The Company expects that this action will either be consolidated with the above-referenced actions or will proceed as a parallel related action before the same judge presiding over the other actions. The Company considers the allegations against the Company in each of these lawsuits to be without merit, and intends to defend vigorously against them. CANNONDALE CORPORATION: Recalls 1,300 Bicycles Due To Defective Stems --------------------------------------------------------------------- Cannondale Corporation is cooperating with the United States Consumer Product Safety Commission (CPSC) by voluntarily recalling about 1,300 bicycles with defective stems. The stem can break away from the bicycle, causing a loss of control, falls and serious rider injuries. The Company has received four reports of stems breaking, including one minor injury. The recalled stems are black and have the model name - 3T ZEPP XL printed in white on the sides of the body of the stem. The faceplate also has "3T" printed in white at the front of the stem. The stems were installed on 2002 and 2003 model year Cannondale bicycles. The recalled stems were manufactured in Italy by 3T (Tecno Tubo Torino) and distributed by parent company, Gruppo, SPA. Authorized Cannondale Bicycle dealers nationwide sold the stems from March 2001 through July 2002 for between $3,400 and $5,000 (includes the cost of the bicycle). For more details, contact the Company by Phone: (800) BIKEUSA or visit the Company's Website: http://www.cannondale.com CAVAGNA NORTH: Recalls 6,100 Safety Relief Valves For Fire, Burn Hazard ----------------------------------------------------------------------- Cavagna North America, Inc. is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling about 6,100 safety relief valves manufactured by Omeca, of Bresia, Italy. These valves, imported by Cavagna, are designed to relieve excess pressure in large propane tanks, typically the 500- to 1,000-gallon size. The recalled valves can have sharp internal edges that can cut into gasket seals in the valves, causing a propane gas leak. This poses a risk of fire or burn injuries. The Company has received 18 reports of leaking valves. No fires or injuries have been reported. The valves, model 66-1031, are approximately 7-inches long. Writing on the valve reads "OMECA 66-1031." Only valves that contain year and batch codes of "99.02," "99.16," "99.27," or "99.28" are included in the recall. The valves from these batch codes were installed on tanks that were refurbished or manufactured after May 1999. The valves were sold to propane processors and distributors nationwide from May 1999 through May 2002 for between $10 and $15. LP distributors, LP tank owners and propane gas users with recalled valves should immediately contact the Company to schedule an appointment to have the safety relief valve replaced at no charge. For more information, contact the Company by Phone: 866-422-8246 between 9 am and 4:30 pm ET Monday through Friday. CNA FINANCIAL: Ex-Workers File Suit For Overtime Wage Law Violations -------------------------------------------------------------------- Two former CNA Financial Corporation employees are seeking class action status in lawsuits against the Company over overtime pay, according to a regulatory filing recently released, the Associated Press Newswires reports. The lawsuits, filed in Los Angeles Superior Court on behalf of purported classes of CNA employees, said that they should have been compensated for overtime work at a rate of one-and-a-half times their base hourly wage over a four-year period. The Company, which is based in Chicago, said in its quarterly report with the Securities and Exchange Commission, that, in June, it had filed a response to the lawsuit denying its material allegations. The Company also said that it intends to defend itself vigorously. "The outcome will not materially affect the equity of the company, although results of operations may be adversely affected," CNA said in its response. DPL INC.: Corrects Earnings Statements To Comply With SEC Deadline ------------------------------------------------------------------ Energy Company DPL Inc. is having a busy time, as it faces two class actions, and is now scrambling against a deadline as it rewrote its financial reports to comply with a federal order requiring executives to swear to the accuracy of their earnings statements, Associated Press Newswires reports. The Company announced the correction of its statement on Wednesday, August 14, just meeting a deadline set by the federal Securities and Exchange Commission. The Company is one of 947 companies - all with revenues exceeding $1.2 billion - ordered by the government to submit the sworn statements from their CEOs and chief financial officers. At the insistence of its outside auditor, PricewaterhouseCoopers, the company announced that it cut 2001 profits by $19 million, or 16 cents a share, and raised reported profits for the first half of this year by $23 million, or 20 cents per share. DPL, the parent company of Dayton Power and Light Co., also revealed the holdings of its $1 billion financial portfolio for the first time on Wednesday. "The level of interest in the details of these investments has increased dramatically as a result of national topics," said Arthur Meyer, the Company's vice president for legal and corporate affairs. "In response to that level of interest, we decided to provide it." Attorney Stanley M. Chesley of Cincinnati says he believes DPL officials scrambled to make changes in its financial statement in order to meet the federal deadline, because the Company's chief executive, Allen M. Hill, otherwise would have been unable to truthfully endorse the previous earnings statement. Mr. Chesley recently filed a class action against DPL, claiming that the company, its officers, directors and accountants disguised the true nature of high-risk investments totaling more than $1.3 billion. A similar lawsuit was filed against DPL on behalf of Buckeye Electric Co. Retirement Plan and investors, who bought DPL stock during the last seven years. Both lawsuits stem from DPL's announcement in July that it wrote off $155 million in failed Latin American investments during the second quarter. Reacting to pressure from investors and analysts, DPL also disclosed the 27 investment firms that manage DPL's private equity funds and the 500 companies in the utility's $1 billion investment portfolio as of June 30. Mr. Meyer, the Company's vice president for legal and corporate affairs, said the disclosure had nothing to do with the lawsuits. GERMANY: Will Legislate Personal Liability For Corporate Executives ------------------------------------------------------------------- German corporate executives whose firms are found to have submitted statements or reports that mislead the equity market can expect to face personal liability charges, no matter who wins the September general election, say politicians from both the left and the right, according to the National Post. The government is also discussing a proposal to allow small shareholders to launch class actions against company directors, a move the conservatives tend to dismiss as impossible given Germany's legal system. All of Germany's main political parties are drawing up plans to hold company directors personally liable if their firms deliberately mislead investors in their mandatory statement to the market, a move long called for by shareholder lobby groups. The purpose, the aim, is to help restore German investor confidence, which has been hit by large- scale insolvencies in Germany and accounting scandals in the United States. Both Chancellor Gerhard Schroeder's ruling Social Democrats and the conservative opposition want private shareholders to be able to claim compensation from individual board members if they can prove a company deliberately misled the market. Currently, shareholders can lodge a claim against only the company as a whole. A shareholder suing the company as a whole is not considered an effective remedy. "At the moment, any shareholder who takes action against the company is taking action against himself, as it is the company that pays," said Christian Arns, a spokesman for the Justice Ministry. Therefore, the need for legislation that enables a shareholder to hold a director personally liable. Conservative proposals stop at holding directors personally responsible for making misleading mandatory statements - information that must be made available to investors because it could affect the firm's share price. However, the current government also wants the directors to be held personally liable for accounting irregularities and misleading company reports. The government is also considering a proposal that would allow small shareholders to bring class actions against company directors. Some conservatives have dismissed the idea out of hand, noting that would be contrary to Germany's legal system. "For legal reasons that would not be possible," said one party official. "Our legal system is built on an individual right to sue. Class actions would go against that." All these proposals for increased personal liability within the corporations come as the deadline looms in the United States for executives at nearly 1,000 companies to take a "clean-book pledge" required by the US Securities and Exchange Commission, by signing off on their firm's financial statements. The highest profile corporate meltdowns have come from across the Atlantic, involving Enron Corp. and WorldCom Inc. and the like, but Germany itself has not been immune to corporate scandal. Reinhild Keitel, board member of shareholder lobby group SdK, says the country has had its small WorldComs and Enrons, just not as spectacular as in the United States. She points to, as illustration, the exclusion of Comroad AG from the Neuer Market growth bourse in April because of false accounting. The traffic information systems firm said a special audit had revealed that 98.5 percent of sales reported in its 2001 annual report did not exist. "These plans are right, if a little belated. Only with personal liability is the deterrent big enough," Ms. Keitel said of the measures being proposed by the respective parties. "The proposals have to be seen in the context of a deep, deep crisis of confidence in the stock market," she added. IKON OFFICE: Salt Lake Workers Pension Account Suit Gets Court Approval ----------------------------------------------------------------------- A federal judge in Pennsylvania approved the settlement of a class action filed by Salt Lake City employees of Ikon Office Solutions, whose retirement account contributions were matched with company stock they could not sell until they turned 55, the Associated Press Newswires reports. The lawsuit began in Utah as a complaint by a Salt Lake City worker, who alleged she lost her job after reporting accounting irregularities at Malvern, Pa.-based Company. Consequently, after investigation, the lawsuit later was amended to allege the company had breached its responsibility to 401(k) retirement plan participants, who saw the company shares and their account balances plummet as a result of alleged faulty financial statements. "This is a significant case in that it is the first such resolution of several lawsuits of this type," said David L. Wray, president of the Profit Sharing/401(k) Council of America. He said the resolution in favor of Company employees may provide a precedent that will bolster the claims of plaintiffs in other lawsuits. Under the settlement, the employees will receive no money, but the Company will make important changes to its 401(k) plan: (1) the company no longer will require employees to wait until age 55 to sell shares received as a match to their own contributions, said Roger Hoole, who represented lead plaintiff Julia Whetman; and (2) although plaintiffs will receive no money in the settlement recently announced, they have been notified that they will receive part of an US$111 million settlement in a separate set of securities fraud cases settled by Ikon in late 1999, Mr. Hoole said. Mr. Wray said companies legally can offer employees stock as a match, just as the Company did and they can restrict the sale of shares they provide as a match to employee contributions until employees reach a certain age, as the Company did. "The issue in all these lawsuits is not about plan design and restriction in the sale of company stock," Mr. Wray said. "The critical issue is whether the company was acting prudently, (at the given moment), on behalf of the employees." INDONESIA: Family Group Threatens To File Lawsuit Over Virginity Survey ----------------------------------------------------------------------- The recent survey which indicates that most female students in universities in Yogyakarta are no longer virgins, has sparked a public uproar in the sultanate city, angering many who have questioned the study's validity and its motives, according to a report by The Straits Times. So angry are the study's critics that one critic, a family planning group, has promised to bring a class action, along with other groups, unless the survey's executive director retracts the conclusions of the survey. The study, which concluded that 97.5 percent of Yogyakarta's female varsity students have lost their virginity, was conducted by the Institute of Love and Humanity Studies (LSCK), a relatively unknown research group linked to the Inonesian Islamic University. The Institute's executive director, Iip Wijayanto, blamed the high rate of pre-marital sexual activities on the failure of the country's education system to pay sufficient respect to religious values. The survey has made headlines in Yogyakarta and drawn the attention of the national media, causing the provincial government to react. As an initial measure, the provincial government is considering enacting a law that would require boarding schools to impose night curfews. The survey came up with such other startling conclusions as, for example, that most of the sexual activities went on in the students' boarding house rooms or rented homes and that 25 percent of 1,660 female students surveyed had had sex more than once and that 98 students had abortions. Critics are accusing the survey of being biased and manipulative, and some local leaders raised the possibility that it was politically motivated, especially as it was revealed that the survey was led by a proponent of Islamic law. However, the strongest response and call to action came from Ms. Budi Wahyuni of the Indonesian Family Planning Association in Yogyakarta. She told The Strait Times newspaper that "the executive director of LSCK, Iip Wijayanto, said his goal with the survey is to improve the method of religious preaching in Islam, which he said is not effective. But why did he have to focus on virginity, and not other pressing issues like corruption or dishonesty?" Ms. Budi Wahyuni said, "We want him to retract the survey; otherwise, several NGOs (non-governmental organizations) and student groups will file a class-action lawsuit, because we think that his study has hurt our morale." MARIN MOUNTAIN: Voluntarily Recalls 1T Mountain Bikes For Injury Hazard ----------------------------------------------------------------------- Marin Mountain Bikes is cooperating with the United States Consumer Product Safety Commission (CPSC) by voluntarily recalling about 1,000 Marin-brand, aluminum-framed mountain bikes. The steer tube on the front of these bicycles can break off from the two main tubes of the frame causing the rider to lose control, fall and possibly suffer serious injury. The Company has received two reports of the steer tube breaking off, resulting in two injuries that included broken bones, broken teeth, cuts and abrasions. The recall involves Marin-brand mountain bikes with aluminum frames. There are seven model bikes with 11.5-inch frames and one model with a 13.5-inch frame. The 11.5-inch bikes have the following model names: (1) Bobcat Trail, (2) Hawk Hill, (3) Palisades Trail, (4) Pioneer Trail, (5) Nail Trail, (6) Stinson and (7) Rocky Ridge The 13.5-inch model has the model name Quake. The model name is written on the top tube of the mountain bikes. To determine the size of the frame (11.5-inch or 13.5-inch), measure from the center of the crank arm to about 1 inch below the seatpost clamp. One of the 11.5- inch frame Marin models being recalled. Independent bicycle stores nationwide sold these mountain bikes from August 1998 through July 2002 for between $280 and $900. For more details, contact the Company by Phone: 800-876-9840 between 9 am and 5 pm PT Monday through Friday, or visit the Company's Website: http://www.marinbikes.com. METRETEK TECHNOLOGIES: Faces Suit Over Business Trust Transactions ------------------------------------------------------------------ Metretek Technologies, Inc. faces a class action initially filed in the United States District Court for the City and County of Denver, Colorado. The suit also names as defendants (collectively known as the Metretek Defendants): (1) Marcum Midstream 1997-1 Business Trust (the 1997 Trust), (2) Marcum Midstream-Farstad, LLC (MMF), (3) Marcum Gas Transmission, Inc. (MGT), (4) Marcum Capital Resources, Inc. (MCR), (5) W. Phillip Marcum, (6) Richard M. Wanger and (7) Daniel J. Packard The suit also names another group of defendants called the Farstad Defendants: (i) Farstad Gas & Oil, LLC (Farstad LLC), (ii) Farstad Oil, Inc., and (iii) Jeff Farstad The 1997 Trust is an energy program of which MGT, a wholly-owned subsidiary of the Company, is the managing trustee, and Mr. Marcum, Mr. Wanger and Mr. Farstad are or were the active trustees. The 1997 Trust raised approximately $9.25 million from investors in a private placement in 1997 in order to finance the purchase, operation and improvement of a natural gas liquids processing plant located in Midland, Texas. The suit alleges that the Metretek Defendants and the Farstad Defendants, either directly or as "controlling persons," violated certain provisions of the Colorado Securities Act in connection with the sale of interests in the 1997 Trust. Specifically, the plaintiff claims that his and the class's damages resulted from the defendants allegedly negligently, recklessly or intentionally making false and misleading statements, failing to disclose material information, and willfully participating in a scheme or conspiracy and aiding or abetting violations of Colorado law, which scheme and statements related to the specification of the natural gas liquids product to be delivered under certain contracts, for the purpose of selling the 1997 Trust's units. In May 2001, the court granted in part the defendants' motions to dismiss by narrowing certain claims and dismissing the fourth claim for relief, the allegation that the Farstad Defendants, Mr. Packard, MCR and MGT are liable under Colorado law for giving substantial assistance in further any of securities violations, as to all defendants except MCR. The court also granted a motion to dismiss the claims against the Farstad Entities. The Metretek Defendants filed answers to the suit, generally denying its allegations and claims and making cross-claims against the Farstad Defendants. The Metretek Defendants have filed additional cross-claims and third party complaints against the Farstad Defendants alleging fraud, negligent misrepresentation and contractual indemnification and contribution, among other claims. The Farstad Defendants have filed answers generally denying these claims and have asserted cross-claims and third party counter-claims against the Metretek Defendants. The Metretek Defendants have denied the allegations of the Farstad Defendants. The court later granted the plaintiff's motion to certify a class consisting of all investors in the 1997 Trust. Ten investors, representing a net investment of approximately $288,000, have opted out of the class. These investors are pursuing a separate lawsuit in California. A trial date had not been set in the suit and no significant discovery had been conducted. METRETEK TECHNOLOGIES: Trial in Investors Suit Set For March 4, 2003 -------------------------------------------------------------------- Trial in the investors' class action against Metretek Technologies, Inc. has been set for March 4,2003 in the Superior Court in the State of California for the County of San Diego. The suit was commenced by 21 individual plaintiffs, including Michael Mongiello and Charlotte Mongiello, trustees of the Mongiello Family Trust and also names as defendants: (1) Marcum Midstream 1997-1 Business Trust (the 1997 Trust), (2) Marcum Midstream-Farstad, LLC (MMF), (3) Marcum Gas Transmission, Inc. (MGT), (4) Marcum Capital Resources, Inc. (MCR), (5) W. Phillip Marcum, (6) Richard M. Wanger, (7) Daniel J. Packard, (8) Farstad Gas & Oil, LLC (Farstad LLC), (9) Farstad Oil, Inc., (10) Jeff Farstad, (11) United Pacific Securities, Inc., (12) GBS Financial Corporation, (13) IFG Network Securities, Inc., and (14) numerous officers, directors, employees and brokers related to such brokerage houses. The suit contains allegations against the Metretek Defendants similar to those contained in the federal suit. The net investment in the 1997 Trust by the Mongiello Plaintiffs is approximately $542,000. The Mongiello Plaintiffs' claims for relief include: (i) breach of fiduciary duty, (ii) sale of securities in violation of California blue sky laws, (iii) fraud and deceit, (iv) negligent misrepresentation and omission, (v) mutual mistake, (vi) rescission, (vii) negligence, (viii) fraud on senior citizens and (ix) declaratory relief In October 2001, the court granted the motion by the Metretek Defendants to dismiss the claims against Metretek Technologies, Mr. Marcum and Mr. Wanger for lack of personal jurisdiction. The court also granted a similar motion dismissing the claims against the Farstad Defendants for lack of personal jurisdiction. On November 5, 2001, MGT, MCR, MMF, Mr. Packard and the 1997 Trust, as the remaining Metretek Defendants, filed an answer generally denying the allegations and claims in the Mongiello Case. On March 6, 2002, the remaining Metretek Defendants filed a motion to dismiss the claims of the non-California resident Mongiello Plaintiffs on forum non conveniens grounds. On or about March 29, 2002, the California Court granted this motion, dismissing the claims of 11 of the 21 Mongiello Plaintiffs. The net investment of the remaining Mongiello Plaintiffs is approximately $288,000. These remaining Mongiello Plaintiffs have opted out of the suit. Only limited discovery has been conducted. PSS WORLD: FL Court Refuses To Dismiss Consolidated Securities Suit ------------------------------------------------------------------- The United States District Court for the Middle District of Florida refused to dismiss the amended consolidated class action pending against PSS World Medical, Inc. The court also ordered the Company to answer the suit by August 12, 2002. The suit, filed on behalf of persons who purchased or acquired the Company's common stock at various times during the period between October 26, 1999 and October 3, 2000, alleges, among other things, violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeks unspecified damages. The plaintiffs allege that the Company issued false and misleading statements and failed to disclose material facts concerning, among other things, the Company's financial condition. The plaintiffs further allege that because of the issuance of false and misleading statements and/or failure to disclose material facts, the price of the Company's common stock was artificially inflated during the class period. The suit arose from ten related class action complaints, the first of which was filed in July 2001. The suits were later consolidated and following that consolidation, the lead plaintiffs served their amended suit. On May 14, 2002, defendants filed their motion to dismiss the suit, and, on August 1, 2002, the court entered an order denying that motion and directing the Company to answer the suit by August 12, 2002. The Company believes that the allegations contained in the suit are without merit and intends to defend vigorously against the claims. There can be no assurance that this litigation will be ultimately resolved on terms that are favorable to the Company. PSS WORLD: Seeks Wage Violations Suit Transfer To FL Federal Court ------------------------------------------------------------------ PSS World Medical, Inc. asked for the transfer of a class action filed by three former and present employees to the United States District Court in Jacksonville, Florida. The suit, initially filed in the US District Court for the Central District of California, Santa Ana Division, allege that the Company wrongfully classifies its purchasers, operations leader trainees, and accounts receivable representatives as exempt from the overtime requirements imposed by the Fair Labor Standards Act and the California Wage Orders. The plaintiffs seek court approval to proceed as a: (1) collective action under the Fair Labor Standards Act, (2) representative action under California's Unfair Competition Act, and/or (3) class action on behalf of all persons in the United States who have occupied any one of the three positions within the pertinent limitations period. The Company will oppose this motion, though it is likely that the court will tentatively approve a collective action and allow discovery on the issue of who is eligible to participate in the collective action. The Company is vigorously defending against the claims and is working with human resource personnel to collect personnel and payroll information necessary to determine: (i) the employees who are potentially eligible to participate in the suit; and (ii) the extent of overtime liability, if any There can be no assurance that this litigation will be ultimately resolved on terms that are favorable to the Company. RENT-A-CENTER INC.: Suit Settlement Fairness Hearing Set for October -------------------------------------------------------------------- Fairness hearing for the settlement of a gender discrimination class action against Rent-A-Center, Inc. has been set for October 4, 2002, in the United States District Court in East St. Louis, Illinois. The first suit was filed by Claudine Wilfong and eighteen other plaintiffs, alleging that the Company engaged in class-wide gender discrimination following its acquisition of Thorn Americas. The allegations underlying Wilfong involve charges of: (1) wrongful termination, (2) constructive discharge, (3) disparate treatment and (4) disparate impact In addition, the EEOC filed a motion to intervene on behalf of the plaintiffs, which the court granted on May 14, 2001. On December 27, 2001, the court granted the plaintiff's motion for class certification. In December 2000, similar suits filed by Margaret Bunch and Tracy Levings in the United States District Courtin the Western District of Missouri were amended to allege class action claims similar to those in the Wilfong case. In November 2001, the Company announced that we had reached an agreement in principle for the settlement of the Bunch matter. Under the terms of the Bunch settlement, while not admitting any liability, the Company agreed to pay an aggregate of $12.25 million to the agreed upon class, plus plaintiffs' attorneys fees as determined by the court and costs to administer the settlement subject to an aggregate cap of $3.15 million. On November 29, 2001, the court in the Bunch suit granted preliminary approval of the settlement and set a fairness hearing on such settlement for March 6, 2002. In early March 2002, we reached an agreement in principle with the plaintiffs attorneys in the Wilfong case and the EEOC to resolve the Wilfong suit and the Tennessee EEOC action. The definitive settlement agreement documents were filed with the Wilfong court in June 2002, and the court granted preliminary approval of the settlement on July 19, 2002. Under the terms of the Wilfong settlement, while not admitting any liability, the Company agreed to pay an aggregate of $47.0 million to approximately 6,000 female employees and a yet to be determined number of female applicants who were employed by or applied for employment with us during the period commencing on April 19, 1998 and ending on June 19, 2002, plus up to $375,000 in settlement administrative costs. The $47.0 million payment includes the $12.25 million payment discussed in connection with the Bunch settlement. Attorney fees for class counsel in Wilfong will be paid out of the $47.0 million settlement fund in an amount to be determined by the court. The settlement agreement contemplates the settlement would be subject to a four-year consent decree, which could be extended by the court for an additional one year upon a showing of good cause. Also, under the settlement agreement, the Company agreed to: (1) augment its human resources department and its internal employee complaint procedures; (2) enhance its gender anti-discrimination training for all employees; (3) hire a consultant mutually acceptable to the parties for two years to advise it on employment matters; (4) provide certain reports to the EEOC during the period of the consent decree; (5) seek qualified female representation on its board of directors; (6) publicize its desire to recruit, hire and promote qualified women; (7) offer to fill job vacancies within its regional markets with qualified class members who reside in those markets and express an interest in employment by the Company to the extent of 10% of the Company's job vacancies in such markets over a fifteen month period; and (8) take certain other steps to improve opportunities for women. The Company has initiated many of the above programs prior to entering into the settlement agreement. Under the settlement agreement, the Company has the right to terminate the settlement under certain circumstances, including in the event that more than 60 class members elect to opt out of the settlement. The Wilfong settlement contemplates that the Bunch case will be dismissed with prejudice once such settlement becomes final. At the parties' request, the court in the Bunch case stayed the proceedings in that case, including postponing the fairness hearing previously scheduled for March 6, 2002. Similarly, the court in the Tennessee EEOC action has stayed the proceeding in that case and the EEOC has agreed to having the case dismissed once the Wilfong settlement is finalized. In June 2002, the Company separately agreed to contribute an additional $2.0 million to a dispute resolution fund in which approximately 100 class members in Bunch will participate. This dispute resolution fund has been approved by the Bunch court and counsel to the plaintiffs in Bunch support the dispute resolution fund and the Wilfong settlement preliminarily approved by the Wilfong court. Notices have been mailed to the Wilfong class members. Members of the class who do not wish to participate in the settlement have been given the opportunity to opt out of the settlement. While the Company believes the proposed settlement is fair, it cannot give any assurance that the settlement will be approved by the court in its present form. RENT-A-CENTER INC.: Faces Suit For Securities Act Violations in TX ------------------------------------------------------------------ Rent-A-Center, Inc. faces a securities class action pending in the United States District Court in Texarkana, Texas, on behalf of purchasers of the Company's common stock from April 25,2001 through October 8,2001. The suit also names as defendants certain of the Company's current and former officers and directors. The suit alleges that the defendants violated Sections 10(b) and/or Section 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by issuing false and misleading statements and omitting material facts regarding the Company's financial performance and prospects for the third and fourth quarters of 2001. The Company anticipates that the court will consolidate similar actions with this one. The Company believes that these claims are without merit and intends to vigorously defend itself. However, it cannot give any assurance that it will be found to have no liability in this matter. RENT-A-CENTER INC.: Faces Suit For Consumer Law Violations in PA Court ---------------------------------------------------------------------- Rent-A-Center, Inc. faces a class action filed in Philadelphia State Court, on behalf of a class of customers in Pennsylvania, alleging that the Company violated the Pennsylvania Goods and Services Installment Sales Act, and the Pennsylvania Unfair Trade Practices and Consumer Protection Law. The amended complaint asserts that the Company's rental purchase transactions are, in fact, retail installment sales transactions, and as such, are not governed by the Pennsylvania Rental-Purchase Agreement Act, which was enacted after the adoption of the Pennsylvania Goods and Services Installment Sales Act and the Pennsylvania Unfair Trade Practices Act. Although the Company believes that these claims are without merit, a recent trial court decision in a similar case to which it was not a party held that rental purchase transactions in Pennsylvania are in fact retail installment sales transactions not governed by the Pennsylvania Rental-Purchase Agreement Act. The Company strongly disagrees with this decision. However, it cannot give any assurance that it will be found to have no liability in this matter and it intends to vigorously defend itself in this case. SOLVAY PHARMACEUTICALS: Columbine Drug Suit May Become Class Action ------------------------------------------------------------------- A lawsuit that claims Eric Harris's rampage at Columbine High School on April 20, 1999, was triggered by the antidepressant Luvox, may be converted into a class action on behalf of all Columbine victims, the lawyer representing Columbine survivor Mark Taylor said, according to a report by the Denver Post. Mark Taylor, 19, is the last of the plaintiffs who filed suit against Solvay Pharmaceuticals, maker of Luvox. In April, the families of three of the students backed out of the lawsuit and agreed not to file future claims against the company. However, John DeCamp, Mark Taylor's lawyer, said that he believes all Columbine victims should be brought into the lawsuit. Mr. Taylor, shot seven times in the chest, arm and leg, claims that Luvox made Eric Harris manic and psychotic and triggered the rampage that resulted in the deaths of 12 students, one teacher and the suicides of Mr. Harris and fellow Columbine shooter Dylan Klebold. Mr. DeCamp said that US District Judge Clarence Brimmer made a series of rulings in favor of Mr. Taylor and against the Company that permitted Mr. Taylor's lawsuit to survive. He referred particularly to Judge Brimmer's ruling that Dr. Donald Marks might be an expert testifying for Mr. Taylor. In the lawsuit, Mr. Taylor claims that the Company failed to adequately warn either the treating psychologist for Eric Harris or his general practitioner of the risks and dangers of prescribing Luvox. In a preliminary report filed in US District Court, Dr. Marks said that in his opinion the Company "acted in an unreasonable manner" by marketing Luvox without prominent and adequate warnings about the risks of akathisia (inner restlessness), suicide and homicide, in view of the evidence of strong and likely causal relationship between SSRI medications, of which Luvox is one, and these symptoms (akathisia/suicide/homicide). Judge Brimmer refused to throw out Dr. Marks' preliminary findings and said the doctor would be allowed to review the thousands of documents now kept in a vault at the federal courthouse. In recent weeks, lawyers representing the parties have spent more than 16 hours deposing the parents of Eric Harris. New Securities Fraud Cases 360NETWORKS INC.: Cohen Milstein Commences Securities Suit in S.D. NY --------------------------------------------------------------------- Cohen, Milstein, Hausfeld & Toll, PLLC initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of its client and purchasers of 360Networks, Inc. (OTC: TSIXQ) securities during the period between November 8, 2000 to June 28, 2001. The suit alleges that throughout the class period, the Company reported strong year-over-year revenue growth. Unbeknownst to investors, however, as alleged in the suit, the Company was experiencing diminishing revenue growth. The complaint alleges that in order to create the impression that the Company was continuing to experience growth, the Company engaged in a series of reciprocal transactions with certain competitors for the purchase and sale of dark fiber optic cable - the so-called dark fiber swap. The complaint alleges that as a result of these transactions, the Company artificially inflated its operating results and materially misrepresented its financial results at all relevant times. The suit names certain officers and directors of the company as defendants along with the accounting firm of PriceWaterhouseCoopers, LLP. For more information, contact Steven J. Toll or Angela Wallis by Mail: 1100 New York Avenue, N.W., Suite 500 - West Tower, Washington, D.C. 20005 by Phone: 888-240-0775 or 202-408-4600 by E-mail: stoll@cmht.com or awallis@cmht.com or visit the firm's Website: http://www.cmht.com. AOL TIME: Spector Roseman Commences Securities Fraud Suit in S.D. NY -------------------------------------------------------------------- Spector Roseman & Kodroff filed a securities class action against AOL Time Warner, Inc. (NYSE:AOL) on behalf of all persons who purchased or otherwise acquired the Company's securities during the period October 19, 2000 through July 17, 2002, inclusive, in the United States District Court for the Southern District of New York. The suit alleges that during the class period, the Company recognized revenue on a variety of transactions in violation of generally accepted accounting principles in an effort to mask the decline in advertising revenues. The true facts were disclosed to investors, only after the Company's common stock plummeted in value by more than 70% from its trading price at the beginning of the class period ($46.91) to its trading price at the end of the class period. When the true facts concerning the Company's recognition of revenue in violation of GAAP were revealed in a Washington Post article on July 18, 2002, Company shares declined an additional 10%, to close on July 18, 2002 at $12.45. On July 24, 2002, the Company then disclosed that it is the subject of an SEC investigation concerning the Company's accounting of advertising revenue. For more details, contact Robert M. Roseman by Phone: 888-844-5862 by E-mail: classaction@srk-law.com or visit the firm's Website: http://www.srk-law.com. AOL TIME: Chitwood Harley Commences Securities Fraud Suit in S.D. NY -------------------------------------------------------------------- Chitwood & Harley initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of all purchasers of the publicly traded securities of America Online, Inc. between October 18, 2000 and January 10, 2001 and all persons who purchased, converted, exchanged or otherwise acquired the securities of AOL Time Warner between January 11, 2001 and April 24, 2002, against the Company and certain of its officers and directors for violations of the Securities Exchange Act of 1934. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule 10b-5, by issuing a series of materially false and misleading statements relating to the nature of AOL Time Warner's business operations, which caused AOL Time Warner's stock price to become artificially inflated. The complaint alleges that by the start of the class period, AOL Time Warner was required to take a substantial write down of the value of its goodwill. It did not do so, thereby artificially inflating its financial results throughout the class period. The complaint further alleges that the following factors, among others, required that AOL Time Warner write down billions of dollars of its goodwill earlier than it did: (1) a material decline in the advertising market: the Company was experiencing a dramatic decline in demand for advertising, which had typically represented 20% of the Company's revenues. The decrease in advertising revenues had been escalating since the fourth quarter of 2000; (2) in the months prior to the consummation of the merger, America Online, Inc. executives were advised that it faced the risk of losing more than $140 million in ad revenue the following year; and (3) the merger was not creating any synergies: the merger between America Online and Time Warner was not being effectively integrated and the Company lacked an effective plan to integrate the two companies. Prior to the disclosure of the true facts about the Company, insiders, including several of the individual defendants, sold their personal holdings of AOL Time Warner common stock to the unsuspecting public. In total, these sales generated more than $250 million in illicit proceeds. For more details, contact Nikole Davenport by Mail: 2900 Promenade II, 1230 Peachtree Street, NE, Atlanta GA 30309 by Phone: 888-873-3999 by E-mail: nmd@classlaw.com or visit the firm's Website: http://www.classlaw.com. CAPITAL ONE: Spector Roseman Commences Securities Fraud Suit in E.D. VA ----------------------------------------------------------------------- Spector, Roseman & Kodroff, PC initiated a securities class action in the United States District Court for the Eastern District of Virginia, Alexandria Division, against Capital One Financial Corporation (NYSE:COF), on behalf of purchasers of the Company's stock during the period from January 15, 2002 and July 16, 2002, inclusive. The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market during the class period. According to the complaint, the Company issued numerous press releases regarding its performance during the class period which represented that the Company was experiencing quarter after quarter of record earnings and revenue growth while maintaining "stringent risk management practices" and adequate loan loss reserves. The complaint further alleges that these, and other, representations were materially false and misleading because they failed to disclose that the Company was in violation of federal guidelines regarding adequate levels of capitalization and loan loss reserves and that it was not effectively managing its rapid growth. On July 16, 2002, the Company revealed that it had entered into an agreement with regulators, which required the Company to boost reserves by $247 million in the second quarter of 2002, tie-up additional capital and institute infrastructure reforms in order to deal adequately with its high rate of growth, especially in the subprime market. In reaction to the announcement, Company stock plummeted by 39%, falling from a $50.60 per share close on July 16 to $30.48 per share by the close of July 17, on extremely heavy trading volume. During the class period, as alleged in the complaint, Company insiders profited by selling a total of over $8.2 million in Company stock at artificially inflated prices and the Company undertook a convertible debt offering for $650 million on April 19, 2002. For more details, contact Robert M. Roseman by Phone: 888-844-5862 CHARTER COMMUNICATIONS: Schatz & Nobel Files Securities Suit in C.D. CA ----------------------------------------------------------------------- Schatz & Nobel PC initiated a securities class action in the United States District Court for the Central District of California on behalf of all those who purchased or otherwise acquired the publicly traded securities of Charter Communications, Inc. (Nasdaq: CHTR) between November 9, 1999 and July 17, 2002, inclusive. The suit alleges that the cable television Company, and two top corporate officers made materially false and misleading representations concerning the Company's financial condition during the class period. The suit alleges these defendants overstated the Company's revenue, failed to appropriately account for installation costs, and artificially inflated the number of subscribers for the Company's basic cable services. On July 18, 2002, when a Merrill Lynch analyst expressed concerns about potentially misleading accounting practices, Company stock fell more than 13%. Additionally, a subsequent article in Forbes discusses a Credit Suisse First Boston report that further amplifies these concerns and describes how the Company handles the impact of labor and advertising costs on the Company's balance sheet, by improperly capitalizing approximately 30% of its installation labor costs over an extended time period. For more details, contact Nancy A. Kulesa by Phone: 800-797-5499 by E- mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net ECLIPSYS CORPORATION: Bernard Gross Files Securities Suit in S.D. FL -------------------------------------------------------------------- The Law Offices of Bernard M. Gross initiated a securities class action in the United States District Court for the Southern District of Florida, West Palm Beach, on behalf of all persons and entities who purchased or otherwise acquired the common stock of Eclipsys Corporation (Nasdaq:ECLP) between July 23, 2001 and June 27, 2002, inclusive. The suit names as defendants the Company and: (1) Robert Joseph Colletti, (2) Harvey J. Wilson, and (3) John T. Patton The complaint charges the defendants 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. According to the suit, throughout the class period, defendants issued highly positive statements regarding the Company's acquisition of new contracts for its information technology, in an effort to create the impression that the Company's revenues were growing and the Company was well positioned to generate strong profitability. In making these announcements, defendants knew or recklessly ignored that the Company was experiencing a decline in demand for its information technology and that it had failed to sufficiently increase it expenditures for research and development, costs necessary to correct operational problems at the platform-level of its technology. This fraudulent course of conduct allowed Company insiders, including the named defendants, to sell over 388,500 shares of Company stock and pocket in excess of $9.69 million while privy to material adverse facts regarding the Company's true financial status. On June 27, 2002, defendants issued a press release announcing that results for the second quarter of 2002 would fall short from the Company's previous guidance. Instead of reporting a profit of $0.12 a share, as investors were led to believe, the Company announced it would report a net loss in the range of $0.07 to $0.10 per share. In response, the trading price of Company stock plunged nearly 50%, trading at slightly over $6 per share. For more details, contact Deborah R. Gross or Susan Gross by Mail: 1515 Locust Street, Second Floor, Philadelphia, PA 19102 by Phone: 866-561-3600 or 215-561-3600 by E-mail: susang@bernardmgross.com or debbie@bernardmgross.com or visit the firm's Website: http://www.bernardmgross.com INSIGHT ENTERPRISES: Schiffrin & Barroway Lodges Securities Suit in AZ ---------------------------------------------------------------------- The Law Firm of Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the District of Arizona on behalf of all purchasers of the common stock 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 issuing false and misleading statements concerning its business and financial condition. Specifically, 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 its 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 Marc A. Topaz or Stuart L. Berman by Phone: 888-299-7706 (toll free) or 610-667-7706 or by E-mail: info@sbclasslaw.com JOHNSON & JOHNSON: Weiss & Yourman Launches Securities Suit in NJ ----------------------------------------------------------------- Weiss & Yourman initiated a securities class action against Johnson & Johnson (NYSE:JNJ), and certain of its officers and directors in the United States District Court for the District of New Jersey, on behalf of purchasers of Johnson & Johnson securities, between April 16, 2002 and July 18, 2002. The complaint charges the defendant with violations of the Securities Exchange Act of 1934. The complaint alleges that defendant issued false and misleading statements which artificially inflated the stock. For more details, contact Mark D. Smilow, James E. Tullman, and/or David C. Katz by Phone: The French Building, 551 Fifth Avenue, Suite 1600, New York NY 10176 by Phone: 888-593-4771 or 212-682-3025 or by E- mail: info@wynyc.com MERCK & CO.: Spector Roseman Commences Securities Fraud Suit in NJ ------------------------------------------------------------------ Spector, Roseman & Kodroff, PC initiated a securities class action in the United States District Court for the New Jersey on behalf of purchasers of the stock Merck & Company, Inc., (NYSE:MRK) securities during the period from July 1, 1999 through and including June 21, 2002. The complaint alleges that the Company and certain of its officers and directors violated the federal securities laws. The complaint alleges, among other things, that during the class period defendants overstated Merck's revenues. The Company's operations are comprised of two reportable segments: Merck Pharmaceutical and Merck's wholly owned subsidiary, Merck-Medco Managed Care, LLC. 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, in violation of Generally Accepted Accounting Principles (GAAP). During the class period, Merck-Medco's revenues have made up over 50% of Merck's total revenues. Merck-Medco revenues are purportedly derived from the filling and managing prescriptions and health management programs. Consumers who are members of pharmacy benefits plans and purchase prescriptions must make a co-payment directly to the pharmacy. To artificially boost Merck-Medco's apparent sales, defendants included consumer co-payments for prescription drugs in its revenues, contrary to the revenue recognition practices of two of Merck-Medco's biggest competitors and in violation of GAAP. As a result, Merck-Medco and Merck overstated the companies' total economic activity, making it look more successful than it was in reality. According to a June 21, 2002 article in The Wall Street Journal, neither company bills for the co-payments, gets billed for them, or otherwise comes into contact with them. The Wall Street Journal reported that Merck has not disclosed the actual co-payments charged and estimated that Merck and Merck- Medco may have artificially inflated their 2001 revenues by as much as $4.6 billion. As a result of defendants' false and misleading statements, investors were damaged by purchasing Merck's common stock at artificially inflated levels during the class period. For more details, contact Robert M. Roseman by Phone: 888-844-5862 by E-mail: classaction@srk-law.com or visit the firm's Website: http://www.spectorandroseman.com MERRILL LYNCH: Finkelstein Thompson Files Securities Suit in N.D. CA -------------------------------------------------------------------- Finkelstein, Thompson & Loughran initiated a securities class action lawsuit against Merrill Lynch & Co., Inc. and the former head of its Internet group, Henry Blodget, on behalf of purchasers of eToys, Inc. (PNK: ETYSQ.PK) securities between June 27, 1999 and March 7, 2001, inclusive. The suit, filed in the United States District Court for the Northern District of California, alleges that Merrill Lynch and its well-known Internet stock analyst Henry Blodget violated the federal securities laws by knowingly issuing false and misleading analyst reports regarding eToys during the class period. Based on e-mails and other internal Merrill Lynch communications, which were made public as a result of the investigation conducted by the New York State Attorney General, the suit alleges that defendants failed to disclose a significant conflict of interest between their investment banking and research departments. Specifically, the suit alleges that Henry Blodget and other Merrill Lynch analysts issued very favorable analyst reports regarding eToys to the public when they allegedly knew that the positive recommendations were unwarranted and false. The suit further alleges that, unbeknownst to the investing public, Merrill Lynch's buy recommendations and price targets for these companies were driven by its efforts to attract lucrative investment banking business rather than by the companies' fundamental merits. For more details, contact Adam T. Savett or Conor R. Crowley by Phone: 202-337-8000 by E-mail: ats@ftllaw.com or crc@ftllaw.com or visit the firm's Website: http://www.ftllaw.com NICOR INC.: Spector Roseman Commences Securities Fraud Suit in N.D. IL ---------------------------------------------------------------------- Spector, Roseman & Kodroff, PC initiated a securities class action in the United States District Court for the Northern District of Illinois against defendant Nicor, Inc. (NYSE:GAS) on behalf of purchasers of the Company's stock during the period from January 24, 2002 and July 18, 2002, inclusive. The complaint charges the Company and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that during the class period, defendants reported false financial results and made false statements about Company finances, business and prospects, including the Company's handling of its gas cost performance-based rate (PBR) program and that the Company manipulated its results through the PBR program in order to inflate the Company's operating performance, causing the Company's stock to trade at artificially inflated levels. The Company has now admitted that its revenue and earnings for at least the 1stQ 2002 were materially overstated and will have to be restated. For more details, contact Robert M. Roseman by Phone: 888-844-5862 by E-mail: classaction@srk-law.com or visit the firm's Website: http://www.srk-law.com. XCEL ENERGY: Spector Roseman Commences Securities Suit in MN Court ------------------------------------------------------------------ Spector, Roseman & Kodroff, PC 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) company stock from January 31,2001 to July 26,2002, inclusive. The suit also names as defendants: (1) James J. Howard, (2) Wayne H. Brunetti and (3) Edward J. Mcintyre The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 31, 2001 and July 26, 2002, thereby artificially inflating the price of Company securities. Throughout the class period, as alleged in the complaint, 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: (i) that the Company had engaged in "round-trip" energy trades that provided no economic benefit for the Company; (ii) that Xcel'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, Xcel would lose access to $800 million in credit; (iv) that the Company lacked the necessary internal controls to adequately monitor the trading of its power; and (v) that as a result, the value of the Company's revenues and financial results were materially overstated at all relevant times. 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 next day, defendants 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 Xcel itself under the "cross-collateral default" provisions Xcel and NRG had entered into with lenders. On July 26, 2002, Xcel 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 Xcel 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 Robert M. Roseman by Phone: 888-844-5862 by E-mail: classaction@srk-law.com or visit the firm's Website: http://www.srk-law.com. XCEL ENERGY: Bernstein Liebhard Commences Securities Suit in MN Court --------------------------------------------------------------------- Bernstein Liebhard & Lifshitz, LLP initiated a securities class action lawsuit in the United States District Court for the District of Minnesota on behalf of all persons who purchased or acquired Xcel Energy, Inc. (NYSE: XEL) securities between January 31, 2001 and July 26, 2002. The complaint alleges that the Company and certain of its officers and directors 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. Throughout the class period, as alleged in the complaint, Defendants issued numerous statements and filed quarterly and annual reports with the Securities & Exchange Commission (SEC) that 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 Complaint, 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 Xcel'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, Xcel 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. On July 25, 2002, the Company issued a press release announcing its financial results for the second quarter 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 next day, defendants 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 Xcel itself under the "cross-collateral default" provisions Xcel and NRG had entered into with lenders. On July 26, 2002, Xcel stock closed at $7.55 per share, a more than 36% one-day decline, on extremely heavy trading volume. Subsequently, on July 28, 2002, Defendants disclosed that Xcel 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 Ms. Linda Flood by Mail: 10 East 40th Street, New York, New York 10016 by Phone: 800-217-1522 or 212-779-1414 or by E-mail: XEL@bernlieb.com. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2002. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *