CAR_Public/020909.mbx                C L A S S   A C T I O N   R E P O R T E R
  
               Monday, September 9, 2002, Vol. 4, No. 178

                            Headlines

CENTRA SOFTWARE: Plaintiffs Volunteer To Dismiss Securities Suit in NY
EXPEDIA INC.: Asks NY Court To Dismiss Consolidated Securities Suit
EXPEDIA INC.: WA State Court Orders USA Merger Suits Consolidated
FOUNDRY NETWORKS: Hearing For Securities Suit Dismissal Set Oct 2002
FOUNDRY NETWORKS: Asks NY Court To Dismiss Securities Suit in S.D. NY

GEORGIA: School District Requires Teachers To Give "Balanced Education"
IMANAGE INC.: Asks NY Court To Dismiss Consolidated Securities Suit
MARTHA STEWART: Securities Suits' Numbers Continue To Rise In NY
MCAFEE.COM: Asks NY Court To Dismiss Consolidated Securities Fraud Suit
MCAFEE.COM: Faces Several Suits Over Network Associates' Share Offer

McDONALD'S USA: Announces Reduction of Fatty Acids In Its Fried Menu
MENORAH GARDENS: Testimonies Say Top Exec Knew Of Grave Desecrations
NETRATINGS INC.: Asks NY Court To Dismiss Consolidated Securities Suit
NEW FOCUS: Asks NY Court To Dismiss Consolidated Securities Fraud Suit
PALM INC.: Offering Users Full Refund For m130 Color-Display Device

PHILIP SERVICES: Agrees To Settle Suit Over Evacuation in Ashtabula OH
RETEK INC.: Asks NY Court To Dismiss Consolidated Securities Suits
SELECTICA INC.: Asks NY Court To Dismiss Securities Fraud Suit in NY
SELECTICA INC.: Shareholder Derivative Suit Moved To CA Federal Court
SONICWALL INC.: Plaintiffs File Amended Securities Suit in S.D. NY

TOBACCO LITIGATION: Flight Attendant Blames Big Tobacco For Illness
UNITED STATES: Residents Oppose Bringing Noisy Aircraft To Their Area
Z-TEL TECHNOLOGIES: Asks NY Court To Dismiss Securities Suit in S.D. NY

*Jurors Receive New Civil Trial Role, Some Lawyers Challenge The Wisdom

                    New Securities Fraud Cases

AES CORPORATION: Cauley Geller Commences Securities Fraud Suit in IN
BELLSOUTH CORPORATION: Rabin & Peckel Lodges Securities Suit in N.D. GA
DUANE READE: Schiffrin & Barroway Lodges Securities Fraud Suit in NY
DUANE READE: Cauley Geller Commences Securities Fraud Suit in S.D. NY
FIRST HORIZON: Schiffrin & Barroway Lodges Securities Suit in S.D. NY

HEALTHSOUTH CORPORATION: Chitwood & Harley Lodges Securities Suit in AL

                              *********


CENTRA SOFTWARE: Plaintiffs Volunteer To Dismiss Securities Suit in NY
----------------------------------------------------------------------
Plaintiffs in the consolidated securities class action pending against
Centra Software, Inc. in the United States District Court for the
Southern District of New York have volunteered to dismiss the suit.

The suit, which names as defendants the Company, certain of its
officers and directors and the managing underwriters of the Company's
initial public offering, is brought on behalf of the class of persons
who purchased the Company's common stock between February 3, 2000 and
December 6, 2000.

The complaint asserts claims under Sections 11 and 15 of the Securities
Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934.  The complaint alleges that, in connection with the Company's
initial public offering in February 2000, the underwriters received
undisclosed commissions from certain investors in exchange for
allocating shares to them and also agreed to allocate shares to certain
customers in exchange for the agreement of those customers to purchase
additional shares in the after-market at pre-determined prices.

The complaint asserts that the Company's registration statement and
prospectus for the offering were materially false and misleading due to
their failure to disclose these alleged arrangements.

The Company intends to vigorously defend against the allegations, which
it believes lack merit.  The underwriter defendants and the Company
defendants joined in motions to dismiss the suit on July 3 and July 15,
2002 respectively.  Reponses to the motions to dismiss are expected
from plaintiffs, but to date no response has been filed and no action
has been taken by the Court.

On August 6, 2002 plaintiffs offered to voluntarily dismiss the
individuals named in the suit without prejudice.  The individuals named
anticipate accepting this offer in the near term.


EXPEDIA INC.: Asks NY Court To Dismiss Consolidated Securities Suit
-------------------------------------------------------------------
Expedia, Inc. asked the United States District Court for the Southern
District of New York to dismiss the securities class action pending
against it and certain of its officers and directors, and certain
underwriters of the Company's initial public offering (IPO).

The consolidated suit arose from several lawsuits alleging violations
of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b)
and 20 of the Securities Exchange Act of 1934.  The suits alleged that
the Company's prospectus was false or misleading in that it failed to
disclose:

     (1) that the underwriters allegedly were paid excessive
         commissions by certain customers in return for receiving
         shares in the IPO; and

     (2) that certain of the underwriters' customers allegedly agreed
         to purchase additional shares of the Company in the
         aftermarket in return for an allocation of shares in the IPO.

The suits contend that, as a result of those omissions from the
prospectus, the price of the Company's stock was artificially inflated
between November 9, 1999 and December 6, 2000, and that the defendants
are liable for unspecified damages to those persons who purchased stock
during that period.

On August 9, 2001, these actions were consolidated before a single
judge along with cases brought against numerous other issuers and their
underwriters that make similar allegations involving the IPOs of those
issuers.  The consolidation was for purposes of pretrial motions
and discovery only.

On July 15, 2002, the Company and the individual defendants, along with
the other issuers and related officer and director defendants, filed a
joint motion to dismiss based on common issues.  Opposition and reply
papers are yet to be filed.  The Company intends to continue to defend
this matter vigorously.


EXPEDIA INC.: WA State Court Orders USA Merger Suits Consolidated
-----------------------------------------------------------------
The Superior Court of the State of Washington for King County ordered
consolidated eight class actions filed against Expedia, Inc. in June
2002 by plaintiffs purporting to be Company shareholders.

The lawsuits were filed in response to statements made by USA
Interactive regarding its intent to acquire the remaining shares in the
Company by commencing an exchange offer.  Each of the lawsuits alleges
in essence, that the price that USA stated it intended to offer was too
low and that approval of the offer by the Company's board would
constitute a breach of fiduciary duty.

On June 27, 2002, the plaintiffs in each of the eight lawsuits filed
a joint motion to consolidate the cases into one case.  The defendants
did not oppose consolidation.  On July 17, 2002, the court issued an
order consolidating the eight lawsuits.

Under the consolidation order, the plaintiffs would have 10 days to
file a consolidated and amended complaint following the filing of any
document with the Securities & Exchange Commission by USA Interactive
commencing an offer to purchase shares of Expedia which it does not
currently own and/or control.

If the plaintiffs decide to file a consolidated and amended complaint,
they would have 30 days to file an answer or motion to dismiss.


FOUNDRY NETWORKS: Hearing For Securities Suit Dismissal Set Oct 2002
--------------------------------------------------------------------
The United States District Court for the Northern District of
California is set to hear on October 4,2002 the motion to dismiss the
consolidated securities class action pending against Foundry Networks,
Inc. and certain of its officers.

Several suits were commenced following the Company's announcement in
December 2000 of its anticipated financial results for the fourth
quarter ended December 31, 2000.  The suits were later consolidated.

The consolidated suit alleged violations of federal securities laws and
purported to seek damages on behalf of a class of shareholders who
purchased the Company's common stock during the period from September
7, 2000 to December 19, 2000.

In October 2001, the court granted the Company's motion to dismiss the
consolidated suit without prejudice and with leave to amend.  The
plaintiffs later filed a second amended suit, which the Company also
moved to dismiss.  On June 6, 2002, the court granted the Company's
motion to dismiss the second amended complaint without prejudice and
with leave to amend.  On July 8, 2002, attorneys for lead plaintiffs
filed a third amended complaint, which the Company again moved to
dismiss.

The Company labels the suit "without merit" and intends to vigorously
oppose it.


FOUNDRY NETWORKS: Asks NY Court To Dismiss Securities Suit in S.D. NY
---------------------------------------------------------------------
Foundry Networks, Inc. asked the United States District Court for the
Southern District of New York to dismiss the consolidated amended
securities class action filed on behalf of purchasers of the Company's
common stock from September 27, 1999 through December 6, 2000.

The amended complaint names as defendants, the Company, three of its
officers, and investment banking firms that served as underwriters for
the Company's initial public offering in September 1999.  The amended
complaint alleges violations of Sections 11 and 15 of the Securities
Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934,
on the grounds that the prospectus incorporated in the registration
statement for the offering failed to disclose, among other things,
that:

     (1) the underwriters had solicited and received excessive and
         undisclosed commissions from certain investors in exchange for
         which the underwriters allocated to those investors material
         portions of the shares of the Company's stock sold in the
         initial public offering; and

     (2) the underwriters had entered into agreements with customers
         whereby the underwriters agreed to allocate shares of the
         Company's stock sold in the initial public offering to those
         customers in exchange for which the customers agreed to
         purchase additional shares of the Company's stock in the
         aftermarket at pre-determined prices.

Similar allegations have been made in lawsuits relating to more than
300 other initial public offerings conducted in 1999 and 2000.  Those
cases have been consolidated for pretrial purposes before the Honorable
Judge Shira A. Scheindlin.  Motions to dismiss have been filed on
behalf of all named defendants (over 1,000 in total) in the litigation.  
No hearing date has been set as of this time.

The Company and its officers believe the suit is without merit and
management intends to contest them vigorously.  However, these
litigations are in the preliminary stage, and their outcome cannot be
predicted.
   

GEORGIA: School District Requires Teachers To Give "Balanced Education"
-----------------------------------------------------------------------
Parents in the Cobb County school district, Georgia's second-largest
school district, recently had a heated debate, according to a report by
The New York Times.  At a packed school meeting a policy was adopted
requiring teachers to give a "balanced education" about the origin of
life, giving equal weight to evolution and to biblical interpretations
that are collected together as creationism.

The controversy was already on the boil this summer, when the district
attached disclaimers to all its science textbooks, saying that
evolution "is a theory not a fact," and should be "approached with an
open mind, studied carefully and critically considered."

This action did not pass unchallenged.  On Wednesday of last week, a
parent and the Georgia chapter of the American Civil Liberties Union
(ACLU) filed a lawsuit demanding that the disclaimers be removed.  
After the new policy was adopted, the ACLU moved to amend the lawsuit,
asking that the court also reverse the policy so recently adopted by
the Cobb County school district.

Board members supporting the new policy argued that they were not
restricting the teaching of evolution or encouraging the teaching of
creationism.  The policy, they said, was simply a reflection generally
of the district's philosophy of teaching a wide and objective range of
ideas.  Certainly, such a philosophy should be operative in discussing
"disputed views of academic subjects, including the origin of species."

Many parents at the sometimes-angry meeting said the policy was a
backdoor route to teaching religion in the schools.  These parents
"implored" the board members not to adopt the policy, saying it would
dilute the quality of science education and make graduates of the
district, which is north of Atlanta, the laughingstock of college
admission offices.

After the vote adopting the new policy of "balanced education," Gordon
O'Neill, a board member, led his colleagues in a prayer, "Heavenly
Father, we ask that you provide to all of us a clear understanding of
our fellow man and an acceptance of a diversity of thinking.  Amen."

The fight over how to teach the origin of life has erupted here and
there, in unresolved fits of passion ever since John Scopes' 1925
trial for teaching evolution.  The controversy in the Cobb County
school district had been growing for a while.  About 2,000 parents had
signed petitions objecting to the board's purchase of new science
textbooks in the spring, because the books taught evolution.  The
parents asked the schools to give equal time to creationism.

The board members talked informally about the gathering storm, and
several board members asked the district's lawyers to write a policy
that would allow discussion of the theories other than evolution, but
not violate the Constitution.  The board's lawyers looked over the
policy that ultimately would be offered at the board meeting and said
the policy was not unconstitutional because it did not promote or
espouse any religious view as right or wrong.

However, some parents said the disclaimer, the talk of balance and
objectivity, were simply code words for the promotion of creationism.  
"The loud voices of the extremist few have drowned out the voice of the
moderate majority," said Adele Marticke, who has two school-age
children.  Paula Jackson, an elementary school parent, said of the
newly adopted policy, "It is a deception and indoctrination."

Other people opposed the policy because of its words about balance.  
"To deny there is a God," said Russell Brock, for example, who
describes himself as an insurance salesman and minister, "is to stand
on a building and deny there is a building."

The ever-present, ever-waiting "Scopes" controversy erupted in Ohio
recently, with results not as "even-handed" as Cobb County's policy of
balance, and certainly more extensive.  Ohio's state board of education
is considering a science curriculum that would teach "intelligent
design," which accepts some evolutionary notions about how species
develop, but argues that God or a "godlike creator" must have been in
charge of the grand plan.


IMANAGE INC.: Asks NY Court To Dismiss Consolidated Securities Suit
-------------------------------------------------------------------
IManage, Inc. asked the United States District Court for the Southern
District of New York to dismiss the consolidated securities class
action filed against it, certain of its directors and officers and the
underwriters of the Company's initial public offering.

The consolidated complaint, filed on behalf of all persons who
purchased the Company's common stock from November 17, 1999 through
December 6, 2000, alleges liability under Sections 11 and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 on the grounds that the registration statement for
the offering did not disclose that:

     (1) the underwriters had agreed to allow certain customers to
         purchase shares in the offerings in exchange for excess
         commissions paid to the underwriters; and

     (2) the underwriters had arranged for certain customers to
         purchase additional shares in the aftermarket at predetermined
         prices.

The suit is similar to other lawsuits challenging over 300 other public
offerings conducted in 1999 and 2000.  All of these cases have been
consolidated for pretrial purposes before a judge in the Southern
District of New York.

On July 15, 2002, the Company and its related individual defendants (as
well as the other issuers named as defendants) filed a motion to
dismiss the suits.  While the Company believes that the allegations
against its officers/directors and it are without merit and intends to
contest them vigorously, there can be no assurance that this matter
will be resolved without costly litigation or in a manner that is not
adverse to the Company's consolidated financial position, results of
operations or cash flows.


MARTHA STEWART: Securities Suits' Numbers Continue To Rise In NY
----------------------------------------------------------------
Martha Stewart Living Omnimedia, Inc., faces several securities class
actions pending in the United States District Court for the Southern
District of New York on behalf of persons who acquired Company stock on
the open market from June 7, 2002 to August 5, 2002, excluding certain
parties affiliated with the Company.  The suits also name Martha
Stewart as a defendant.

The suits asserts violations of Section 10(b) of the Securities
Exchange Act of 1934, and rules promulgated thereunder, and relates to
Stewart's sale of 3,928 shares of ImClone stock on December 27, 2001.  

The plaintiffs allege that Ms. Stewart, both directly and through
representatives speaking for herself and in her capacity as chief
executive officer of the Company, made statements about the sale that
were materially false and misleading.

The plaintiffs also allege that as a result of these violations, the
market price of the Company stock was inflated during the putative
class period and dropped after the alleged falsity of Ms. Stewart's
statements became public.

The litigation is in its earliest stages, and the Company has not yet
appeared in the action or filed any response to the complaint.  The
Company believes it has substantial defenses to the complaint.


MCAFEE.COM: Asks NY Court To Dismiss Consolidated Securities Fraud Suit
-----------------------------------------------------------------------
McAfee.com Corporation asked the United States District Court for the
Southern District of New York to dismiss the consolidated securities
class action pending against the Company, certain company officers and
directors, and various of the underwriters in the Company's initial
public offering (IPO).

The consolidated amended complaint in the action generally alleges that
various investment bank underwriters engaged in improper and
undisclosed activities related to the allocation of shares in the
Company's IPO.  Plaintiffs bring claims for violation of several
provisions of the federal securities laws against those underwriters,
and also against the Company and certain of its directors and officers,
seeking unspecified damages on behalf of purchasers of the Company's
common stock between December 1, 1999 and December 6, 2000.

Various plaintiffs have filed similar actions asserting virtually
identical allegations against more than 40 investment banks and
300 other companies.  All of these "IPO allocation" securities class
actions currently pending in the Southern District of New York have
been assigned to Judge Shira A. Scheindlin for coordinated pretrial
proceedings.

The Company believes that it has meritorious defenses to the claims
against it and intends to defend itself vigorously.


MCAFEE.COM: Faces Several Suits Over Network Associates' Share Offer
--------------------------------------------------------------------
McAfee.com Corporation faces several class actions filed after Network
Associates, Inc. announced its intention to commence an exchange offer
for the publicly-traded Class A common stock of the Company.

Six lawsuits were filed in Delaware Chancery of Court against the
Company, Network Associates, and certain of the Company's officers and
directors, seeking to enjoin the exchange offer.  These six actions
were later consolidated and a class consisting of certain public
shareholders of the Company was certified.

On April 25, 2002, Network Associates withdrew its exchange offer,
which it then renewed on July 2, 2002.  On July 8, 2002, plaintiffs in
the consolidated Delaware class actions filed a second amended
complaint concerning the renewed exchange offer, which named as
defendants the Company and:

     (1) Network Associates,

     (2) Srivats Sampath,

     (3) George Samenuk and

     (4) Stephen Richards

The second amended complaint purports to assert claims for breach of
fiduciary duty and seeks damages and injunctive relief with respect to
the renewed exchange offer.

On July 17, 2002, plaintiffs filed a motion to enjoin the renewed
exchange offer, which they withdrew before it was to be heard by the
Delaware Court of Chancery.  The Company filed an answer to the second
amended complaint on August 9, 2002, and has also responded to
discovery requests by plaintiffs.

In addition to the actions pending in Delaware, three actions were
filed in California by purported shareholders of the Company
challenging the exchange offer or the renewed exchange offer on
substantially similar grounds as the Delaware actions. Two actions are
pending in Santa Clara Superior Court.  The first action purports to
assert claims for breach of fiduciary duty and seeks injunctive relief
with respect to the initial with-drawn exchange offer, while the second
action asserts the same claims and seeks the same relief with respect
to the renewed exchange offer.

In addition, an action is pending in the United States District Court,
Northern District of California, and purports to assert claims for
breach of fiduciary duty and seeks damages and injunctive relief with
respect to the initial exchange offer.

Neither the Company nor any of the other defendants has responded to
these complaints.  The foregoing actions challenging the exchange
offer or renewed exchange offer are in the preliminary stages
and it is therefore too soon to predict with any certainty their
outcome. However, based upon its current understanding of the
facts, the Company believes that these actions have no merit.


McDONALD'S USA: Announces Reduction of Fatty Acids In Its Fried Menu
--------------------------------------------------------------------
McDonald's USA announced recently a significant reduction of trans
fatty acids (TFAs) in its fried menu with the introduction of improved
cooking oil in all of its 13,000 restaurants, the PRN Newswire reports.

The new oil will reduce French fries' TFA levels by 48 percent, reduce
saturated fat by 16 percent and dramatically increase polyunsaturated
fat by 167 percent.  While the total fat content in the fries remains
unchanged, health experts agree that reducing TFAs and saturates while
increasing polyunsaturates is beneficial to heart health.

Notably, McDonald's French fries already had the lowest TFA and
saturated fat levels, reports PRN, in the national quick service
restaurant (QSR) industry.  Mike Roberts, president of McDonald's USA,
says that "This leadership initiative is all about giving our customers
a wide range of wholesome choices."

The national rollout of the improved cooking oil begins in October and
will be completed by February 2003, according to Mr. Roberts.  The
company plans to use the new oil to prepare McDonald's French fries,
Chicken McNuggets, Filet-O-Fish, Hash Browns and crispy chicken
sandwiches.

Jack M. Greenberg, McDonald's Chairman and Chief Executive Officer,
announced that McDonald's is working towards a worldwide reduction of
TFAs through enhanced cooking oils as available crop supplies, trade
restrictions, country-by-country regulations and customer acceptance
allow.  As an example, the significant reduction of TFAs and saturated
fat will put McDonald's USA in line with McDonald's Europe which
already has attained comparable levels.

Mr. Greenberg said, "As a leader in social responsibility, McDonald's
will continue to be guided by sound science and leading nutrition
experts to do the right thing as we work with our partners around the
world to continue to reduce TFAs."

A number of health professionals applauded the action.  For example,
Dean Ornish, M.D., founder of the Preventive Medicine Research
Institute and Clinical Professor of Medicine at the University of
California, San Francisco said, "From a nutritional standpoint, this is
going to have a major and immediate impact.  McDonald's will be
positively impacting the nutritional value of meals eaten by millions
of consumers every day."

McDonald's and three other of the biggest fast food chains, KFC,
Burger King and Wendy's, recently were targeted by a class action, on
the grounds that they are partly responsible for the nation's obesity
epidemic.  Washington lawyer, Samuel Hirsch, filed the suits in New
York at the end of July.

Lead plaintiff is a New York man who has sued the four major chains,
claiming they contributed to his obesity, heart disease and diabetes.  
The suit, filed on behalf of 56-year-old Caesar Barber of the Bronx in
New York City, estimates that millions of Americans could be included
as members of the injured class.

The lawsuits are asking the court to order the companies to label
individual products with fat, salt, cholesterol and other dietary
content, as well as warn users of possible health effects.

Plaintiff's court documents indicate that the cause of action is
relying on impressive studies.  The Surgeon General's 2001 Report on
Overweight and Obesity, states, among other things, that "if left
unabated, overweight and obesity may soon cause as much preventable
disease as cigarette smoking."


MENORAH GARDENS: Testimonies Say Top Exec Knew Of Grave Desecrations
--------------------------------------------------------------------
A top officer at the world's largest burial provider, SCI, acknowledged
that the company knew in March 1998, of grave crowding and other
problems at two of its cemeteries in South Florida, the Associated
Press reports.

In a videotaped deposition shown in court, Daniel Garrison, a vice
president for Houston-based Service Corporation International (SCI),
said senior officers received internal company memos describing the
problems at Menorah Gardens cemeteries in Palm Beach and Broward
counties.

SCI has been denying any knowledge of grave desecration.  The Palm
Beach cemetery opened in 1976, and SCI bought both cemeteries in 1995.  
A Company spokesman has acknowledged problems, but blamed former
employees and the cemeteries' former owners.

A class action filed by 1,400 families accuses SCI of mismarking
graves, separating couples who paid to be buried together, squeezing
new graves between old, crowded ones, and discarding full coffins in
the woods, among other desecrations.  Employees, who were fired by the
company have confirmed those allegations in earlier testimony, saying
they were told by cemetery managers to make room for more graves.

This week's testimony came at a hearing, one of many, to determine
whether the class is actually large enough to warrant that the families
be allowed to pursue their lawsuit against SCI as a single class
action.  

The testimony, therefore, of what desecrations people actually saw,
will give Broward Circuit Judge J. Leonard Fleet an idea of the extent
of the desecrations, the number of bodies involved, and therefore, the
number of family members involved.  A decision by Judge Fleet is
expected this fall.


NETRATINGS INC.: Asks NY Court To Dismiss Consolidated Securities Suit
----------------------------------------------------------------------
Netratings, Inc. asked the United States District Court for the
Southern District of New York to dismiss the consolidated securities
class action filed on behalf of all persons who purchased the Company's
common stock from December 8, 1999 through December 6, 2000.  The
complaint names as defendants the Company, two of its former officers
or directors and investment banking firms that served as underwriters
for its initial public offering in December 1999.

The amended complaint alleges violations of Section 11 and 15 of the
Securities Act of 1933, and Section 10(b) of the Securities Exchange
Act of 1934, on the grounds that the prospectus incorporated in the
registration statement for the offering failed to disclose, among other
things, that:

     (1) the underwriters had solicited and received excessive and
         undisclosed commissions from certain investors in exchange for
         which the underwriters allocated to those investors material
         portions of the shares of Company stock sold in the initial
         public offering; and

     (2) the underwriters had entered into agreements with customers
         whereby the underwriters agreed to allocate shares of the
         Company's stock sold in the initial public offering to those
         customers in exchange for which the customers agreed to
         purchase additional shares of the Company's stock in the
         aftermarket at pre-determined prices.

The amended complaint also alleges that false analyst reports were
issued following the initial public offering.  No specific damages are
claimed.

The suit is similar to other lawsuits relating to more than 300 other
initial public offerings conducted in 1999 and 2000.  Those cases have
been consolidated for pretrial purposes.  On July 15, 2002, the Company
(as well as the other issuer defendants) filed a motion to dismiss the
complaint.

The Company believes that the claims against it and its officers and
directors are without merit and intends to defend them vigorously.  
Company management currently believes that the resolution of this
matter will not have a material adverse impact on the Company's
financial position.


NEW FOCUS: Asks NY Court To Dismiss Consolidated Securities Fraud Suit
----------------------------------------------------------------------
New Focus, Inc. asked the United States District Court for the Southern
District of New York to dismiss the consolidated securities class
action pending against the Company, seven of its officers and directors
and:

     (1) Credit Suisse First Boston Corporation,

     (2) Chase Securities, Inc.,

     (3) US Bancorp Piper Jaffray, Inc. and

     (4) CIBC World Markets Corp.

The consolidated suit, filed on behalf of purchasers of the Company's
common stock between May 18,2000 and December 6,2002, alleges
violations of:

     (i) Section 11 of the Securities Act of 1933 against all
         defendants related to the Initial Public Offering and the
         Secondary Offering,

    (ii) Section 15 of the Securities Act of 1933 and Section 20(a) of
         the Securities Act of 1934 against the Individual Defendants,

   (iii) Section 10(b) and Rule 10b-5 against the Company, and

    (iv) Section 12(a)(2) of the Securities Act of 1933 and Section
         10(b), and Rule 10b-5 promulgated thereunder, of the
         Securities Act of 1934 against the Underwriter Defendants.

Various plaintiffs have filed similar actions in the same court
asserting virtually identical allegations against more than 400 other
issuers.  These cases have all been assigned to the Hon. Shira A.
Scheindlin for coordination and decisions on pretrial motions,
discovery, and related matters other than trial.

On July 15, 2002, an omnibus motion to dismiss was filed in the
coordinated proceedings by the issuer defendants, of which the Company
and the individual defendants are a part, on common pleadings issues.

The Company believes that it has meritorious defenses to these lawsuits
and will defend the litigation vigorously.  An unfavorable resolution
of these lawsuits could have a material adverse effect on the business,
results of operations or financial condition of the Company.


PALM INC.: Offering Users Full Refund For m130 Color-Display Device
-------------------------------------------------------------------
Palm Inc., in an effort to end a controversy about a flaw in its m130
hand-held computers, said it has begun to offer registered customers a
full refund on the device, according to a report by The Wall Street
Journal.

The offer is a turnabout in strategy for Palm.  In late August, the
hand-held-device maker acknowledged it had overstated the color-display
features of its m130 device.  Palm had advertised the m130 as
supporting 65,000 colors.  The company had to retract that statement
when it discovered the hand-held device actually supports 58,621 color
combinations.

The Company had said it had no plans to offer a refund on the device,
but the mistake quickly prompted a lawsuit seeking class action status,
as well as criticism from some technology observers.

As a result, Palm began to send e-mails out to customers of its m130
devices.  The e-mail contains notice of two offers:  Customers can
download for their device a free version of the videogame SimCity,
which retails for $29.95, or they can opt for a refund of their m130,
which retails for about $250.

The company said the offers are meant to reflect "Palm's commitment to
customer satisfaction."


PHILIP SERVICES: Agrees To Settle Suit Over Evacuation in Ashtabula OH
----------------------------------------------------------------------
Philip Services, Inc. reached an agreement to settle the class action
filed in Ohio State Court (Ashtabula County), alleging injury to 130
named plaintiffs resulting from evacuation due to a fire and shelter-
in-place orders with respect to a sodium filter at an RMI Titanium
Company plant in Ashtabula, Ohio.
     
The plaintiffs alleged negligence on the part of RMI and the Company in
the removal of sodium from the filter on RMI's premises.  Plaintiffs
sought actual and punitive damages and their attorneys applied for
class action status to represent 500 people affected by the evacuation
order and the approximately 4,500 people affected by the shelter-in-
place orders.

RMI demanded indemnification from the Company under the terms of the
contract pursuant to which the work was performed.  The Company has a
significant retained liability before insurance coverage is triggered.

The parties have reached a settlement in principle, which must be
approved by the court after a fairness hearing in order to become
effective.


RETEK INC.: Asks NY Court To Dismiss Consolidated Securities Suits
------------------------------------------------------------------
Retek, Inc. asked the United States District Court for the Southern
District of New York to dismiss the consolidated securities class
action filed against it, certain of its officers and directors and
certain underwriters of its initial public offering.

The suit alleges violations of Sections 11 and 15 of the Securities Act
of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of
1934.  The complaints allege that the prospectus was false or
misleading in that it failed to disclose:

     (1) that the underwriters allegedly were paid excessive
         commissions by certain customers in return for receiving
         shares in the initial public offering; and

     (2) that certain of the underwriters' customers allegedly agreed
         to purchase additional shares of the Company's common stock in
         the aftermarket in return for an allocation of shares in the
         initial public offering.

Plaintiffs contend that, as a result of these omissions from the
prospectus, the price of the Company's common stock was artificially
inflated between November 18, 1999 and December 6, 2000 and that the
defendants are liable for unspecified damages to those persons who
purchased the Company's common stock during that period.

On August 9, 2001, these actions were consolidated for pre-trial
purposes before a single judge along with similar actions involving the
initial public offerings of numerous other issuers.

On February 14, 2002, the parties signed and filed a stipulation
dismissing the consolidated action without prejudice against the
Company and the individual officers and directors, which the court
approved and entered as an order on March 1, 2002.

On April 20, 2002, the plaintiffs filed an amended complaint in which
they elected to proceed with their claims against the Company and the
individual officers and directors only under Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934.

On July 15, 2002, the Company and the individual defendants, along with
the rest of the issuers and related officer and director defendants,
filed a joint motion to dismiss based on common issues.  The Company
intends to defend against these claims vigorously.


SELECTICA INC.: Asks NY Court To Dismiss Securities Fraud Suit in NY
--------------------------------------------------------------------
Selectica, Inc. asked the United States District Court for the Southern
District of New York to dismiss the consolidated securities class
action pending against it, certain of its officers and directors, and
Credit Suisse First Boston Corporation, (CSFB) as the underwriters of
its March 13, 2000 initial public offering (IPO).

The suit alleges that the defendants violated federal securities laws
by making material false and misleading statements in the prospectus
incorporated in our registration statement on Form S-1 filed with the
SEC in March, 2000 in connection with the IPO.

Specifically, the suit alleges, among other things, that CSFB solicited
and received excessive and undisclosed commissions from several
investors in exchange for which CSFB allocated to those investors
material portions of the restricted number of shares of common stock
issued in the Company's IPO.

The complaints further allege that CSFB entered into agreements with
its customers in which it agreed to allocate the common stock sold in
our IPO to certain customers in exchange for which such customers
agreed to purchase additional shares of the Company's common stock in
the after-market at pre-determined prices.

In August 2001, these actions were consolidated before a single judge
along with cases brought against numerous other issuers, their officers
and directors and their underwriters, that make similar allegations
involving the allocation of shares in the IPOs of those issuers.  The
consolidation was for purposes of pretrial motions and discovery only.

On July 15, 2002, the Company and the officer and director defendants,
along with other issuers and their related officer and director
defendants, filed a joint motion to dismiss based on common issues.  
Opposition and reply papers are yet to be filed.

The Company labeled the suit "without merit" and intends to vigorously
oppose the suit.


SELECTICA INC.: Shareholder Derivative Suit Moved To CA Federal Court
---------------------------------------------------------------------
The shareholder derivative action originally filed against Selectica,
Inc. in the Superior Court of California, Santa Clara County has been
moved to the United States District Court for the Northern District of
California.

The suit was initially filed against certain of the Company's officers
and directors, Credit Suisse First Boston Corporation (CSFB), as the
underwriters of the Company's IPO, and against the Company as nominal
defendant.  The action was filed by a shareholder purporting to assert
on behalf of the Company claims for:

     (1) breach of fiduciary duty,

     (2) aiding and abetting and conspiracy,

     (3) negligence,

     (4) unjust enrichment, and

     (5) breach of contract, relating to the pricing of shares in the
         Company's IPO.

On June 6, 2002, the shareholder plaintiff filed an amended complaint
dropping the breach of contract claim against CSFB and adding claims
against CSFB for breach of an agent's duty to its principal and for
violation of the California Unfair Competition Law, based on alleged
violations of certain rules of the National Association of Securities
Dealers.

On July 17, 2002, CSFB removed the action to the United States District
Court for the Northern District of California, with the Company's
consent and the consent of the officer and director defendants.  On
July 25, 2002, the Court entered an order stating that the defendants
shall file their responses to the amended complaint no later than
August 21, 2002.

The Company believes that the allegations against it and its officers
and directors are without merit and intends to contest them vigorously.  
However, the litigation is in its preliminary stages, and the Company
cannot predict its outcome.  


SONICWALL INC.: Plaintiffs File Amended Securities Suit in S.D. NY
------------------------------------------------------------------
Plaintiffs in the securities class actions pending against Sonicwall,
Inc. filed an amended suit in the United States District Court for the
Southern District of New York.  The amended suit names as defendants
the Company, three of its officers and directors, and certain of the
underwriters in the Company's initial public offering in November 1999
and its follow-on offering in March 2000.

The amended complaint seeks damages or rescission for
misrepresentations or omissions in the prospectuses relating to, among
other things, the alleged receipt of excessive and undisclosed
commissions by the underwriters in connection with the allocation of
shares of common stock in the Company's public offerings.

While the Company believes that the claims against it and its officers
and directors are without merit and intends to vigorously defend
against these allegations, the litigation could result in substantial
costs and divert the Company's attention and resources, which could
have a material adverse effect on the Company's business, operating
results, liquidity and financial condition.


TOBACCO LITIGATION: Flight Attendant Blames Big Tobacco For Illness
-------------------------------------------------------------------
A former flight attendant for American Airlines recently asked a jury
to force tobacco companies to pay damages for her sinusitis and other
ailments she blames on secondhand smoke in airline cabins, reports the
Associated Press Newswires.

The trial is an outgrowth of a 1997 class action settlement between
four leading cigarette makers and nonsmoking flight attendants.  The
settlement set up a $300 million foundation to study smoke-related
illnesses.  Provided, as well, for a series of trials in order to
determine the compensatory damages for individual flight attendants.  
No punitive damages are allowed.

The defendants are Philip Morris, RJ Reynolds Tobacco Co., Brown &
Williamson Tobacco Corp. and Lorillard Tobacco Co.

The defendant tobacco companies acknowledge that flight attendant
Suzette Janoff has sinusitis, but blame her illnesses on allergies and
a sinus operation that their physician-witness considered malpractice.  
Three previous trials have ended with a $5.5 million verdict, a
decision favoring tobacco and a mistrial.  About 1,800 other claims are
awaiting trial.

Ms. Janoff's attorneys did not specify an amount, but asked the six-
member jury to calculate actual damages, pain and suffering spread over
55 years:  18 years since she became ill and her remaining 37-year
expectancy.

"She has been exposed to more than 6,500 hours of secondhand smoke in
airline cabins," her attorney Stewart Williams said in closing
arguments.  The tobacco defendants, on the other hand, argued that Ms.
Janoff put herself in danger by returning to work after testifying in
Congress, in 1989, for a ban on smoking on US flights.

The defendants also blamed the airline for refusing to ban smoking for
financial reasons, until Congress approved progressive bans on smoking.  
Additionally, Dr. Frank Kronberg, an ear, nose, throat specialist, who
testifies for tobacco companies, said he has never seen a patient with
sinusitis caused by secondhand smoke, and he did not believe smoke
caused Ms. Janoff's ailments.

Judge Rothenberg finally ruled that the jury should decide whether Ms.
Janoff or American Airlines could be considered negligent and that the
jury should assign percentages of blame among the tobacco companies,
the airline and Janoff herself.  Other juries who have decided
attendants' claims, have not been asked questions of comparative
negligence.

Ms. Janoff, 47, of Scottsdale, Arizona, flew for American from 1983 to
1996, and had sinus surgery in 1993 and 2000.  She said she could not
breathe through her nose for three years before the first operation.  
In-flight smoking was banned on short-haul flights in 1988, and on all
domestic flights in 1990.


UNITED STATES: Residents Oppose Bringing Noisy Aircraft To Their Area
---------------------------------------------------------------------
Officials who were speaking recently in favor of bringing a new
generation of Super Hornet jet fighters to Oceana Naval Air Station,
found themselves facing a vocal crowd, who let them know that they the
residents do not want the noisy aircraft in their backyards, the
Associated Press Newswires reports.

The background behind this noisy gathering is that Virginia Beach and
Chesapeake homeowners in the state of Virginia have sought class action
status to sue the federal government to take measures to lower the
noise from these aircraft.  The residents argue that noise from Navy
jet operations at Oceana in Virginia Beach and Fentress airfield in
Chesapeake has lowered property values and lessened residents' quality
of life.

The hearing was intended to seek the public's views on a draft
environmental impact statement that details the pros and cons of basing
10 squadrons of Super Hornet fighter jets at the Oceana Naval Air
Station.  The crowd delivered some hoots at Rep. Edward Schrock, R-2nd,
when he spoke in favor of the Super Hornets coming to Virginia.

"This is our representative and he is not representing us," a woman in
the audience shouted.

Officials were the first to speak before residents were allowed to
address a Navy panel conducting the information session.  Captain David
Wagner, the Navy judge assigned to the proceedings, attempted to quiet
the crowd.

"I recognize that this is an emotional issue," he said to the unruly
crowd.  "I am asking for some civility in helping me get through this
meeting this evening."


Z-TEL TECHNOLOGIES: Asks NY Court To Dismiss Securities Suit in S.D. NY
-----------------------------------------------------------------------
Z-Tel Technologies, Inc. asked the United States District Court for the
Southern District of New York to dismiss the consolidated securities
class actions pending against it, certain of its current and former
directors and officers and firms engaged in the underwriting (the
"Underwriters") of the Company's initial public offering of stock
(IPO).

The amended suit is based on the allegations that the Company's
registration statement on Form S-1, filed with the Securities and
Exchange Commission (SEC) in connection with the IPO, contained untrue
statements of material fact and omitted to state facts necessary to
make the statements made not misleading by failing to disclose that the
underwriters had received additional, excessive and undisclosed
commissions from, and had entered into unlawful tie-in and other
arrangements with, certain customers to whom they allocated shares in
the IPO.

The plaintiffs in the Amended Complaint assert claims against the
Company and its directors and officers pursuant to Section 11 of the
Securities Act of 1933 and Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated by the SEC thereunder.

The suit further asserts claims against the Company's directors and
officers pursuant to Sections 11 and 15 of the Securities Act of 1933
and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated by the SEC thereunder.

The suit, along with approximately 310 other similar lawsuits filed
against other issuers arising out of initial public offering
allocations, have been assigned to a Judge in the United States
District Court for the Southern District of New York for pretrial
coordination.

On July 15, 2002, the Company and the individual defendants moved to
dismiss all claims.  The Court has not ruled on this motion.  Discovery
is stayed pending the outcome of the motion to dismiss. The Company
intends to vigorously defend against this lawsuit.


*Jurors Receive New Civil Trial Role, Some Lawyers Challenge The Wisdom
-----------------------------------------------------------------------
Among lawyers, there is a split decision on a new state of New Jersey
court rule that will allow jurors to pose questions to witnesses in
civil trials, according to a report by The Newark Star-Ledger.  There
was no such split among the jurors, however.  They unanimously loved
it.  The jurors were part of a pilot program in which they were allowed
to submit written questions to witnesses after their testimony.

The lawyers in favor of the change, which recently went into effect
statewide, say it will help jurors clarify the facts and provide
attorneys with insight into what the jurors are thinking.  Lawyers
opposed say the new rule takes some control away from the attorneys and
could raise suspicions when jurors' questions cannot be answered if
they violate rules of evidence.

"Jurors loved it; it really engaged them," said Jane Castner, assistant
director of civil practices in the state Administrative Office of the
Courts (AOC), referring to the entire 2000 pilot program, which
encompassed 27 civil trials.   Concern that jurors' questions would
interfere with attorneys' presentations or cause long delays in trials
proved unfounded, Ms. Castner said.

Judges in at least 31 states allow jurors to pose questions to
witnesses, according to Thomas Munsterman, director of the Center for
Jury Studies at the National Center for State Courts.  Mr. Munsterman
said he could not provide an exact figure because in many states the
practice is not governed by a court rule, but rather by judges'
discretion.

Studies of juries that were allowed to query witnesses showed that
"they are looking for facts; they are not trying to try the case," said
Mr. Munsterman.  However, in reference to this issue, all is not
sweetness and light.  Brian O'Toole, chairman of the New Jersey Defense
Association, a group of more than 900 New Jersey trial lawyers, said he
fears that when jurors' questions go unanswered because of the rules of
evidence, jurors will unmistakenly jump to the conclusion that one side
or other is trying to hide facts.  "You don't need the blundering of
jurors, who in my opinion foul things up," said Mr. O'Toole.

Under the rules, jurors will not ask questions directly.  After a
witness has testified and has been cross-examined, the judge will ask
whether any of the jurors have questions.  Those who do, must write
them and give them to the judge, who will go over them with with the
lawyers, out of earshot of the jurors, said Ms. Castner. Questions that
fall outside court rules will not be posed.  Judges will decide on a
case-by-case basis whether to allow jury questions in a trial.

Morris County Judge Catherine Langlois, one of 11 Superior Court judges
said she found that jurors, when allowed to ask questions, followed the
trial closely.  Medical malpractice attorney Craig Combs said he could
not see a downside. He views it as a tremendous tool for trial
attorneys, especially in complex cases.

A Montville resident, Stephen Virkler, who had been a juror on a case
in which he was allowed to ask questions, said that through
questioning, he was able to sort out some contradictory testimony and
clarify police department procedures.

Neil Vidmar, a professor at Duke University Law School, said that
provisions that discourage jurors from asking questions, are relying in
part on outdated psychology theories that people can accept information
like a blank slate, he said.  "If we are trying to find truth, then the
jurors should be allowed to ask questions," Professor Vidmar said.

Nationally, reforms that give jurors more leeway are taking place
primarily in the civil courts and not the criminal system, where the
stakes are higher.  In New Jersey, as in most states, juries in
criminal cases cannot ask question or take notes.

Courts around the country have tried a variety of innovations, during
civil trials, from letting jurors take notes to allowing them to begin
deliberations before testimony has concluded.  Judges have let jurors
take written copies of complicated instructions to the jury into the
deliberation room.

However, many lawyers remain skeptical about whether such reforms are
needed, questioning whether the reforms are counterproductive to the
adversarial principles that are the foundation of the court system.

David Bernick, a Chicago lawyer who has served as lead counsel in
several national class actions, sees danger in giving jurors more of a
role. "In our system, you rely on the parties to present the issues,
and they do so.  The parties should be given the opportunity to decide
the contours of their own case," Mr. Bernick said.  "The court has
charge over the law, but the court does not have charge over the
facts."

                    New Securities Fraud Cases

AES CORPORATION: Cauley Geller Commences Securities Fraud Suit in IN
--------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Southern District of
Indiana on behalf of all persons who exchanged shares of IPALCO
Enterprises (formerly NYSE: IPL) common stock for shares of AES Corp.
(NYSE: AES) common stock in the exchange offering conducted by AES
Corp. pursuant to the Registration Statement dated August 16, 2000, as
amended, and pursuant to the Proxy Statement/Prospectus dated September
8, 2000, inclusive.  The suit names as defendants the Company and:

     (1) Dennis Bakke,

     (2) Roger Sant and

     (3) Barry Sharp

The complaint alleges that defendants violated the federal securities
laws by, among other things, materially misrepresenting the Company's
business condition and failing to disclose material facts concerning
the impact of the business decline of its United Kingdom operations.

For more details, contact Jackie Addison, Sue Null or Ellie Baker by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
by E-mail: info@cauleygeller.com or visit the firm's Website:
http://www.cauleygeller.com


BELLSOUTH CORPORATION: Rabin & Peckel Lodges Securities Suit in N.D. GA
-----------------------------------------------------------------------
Rabin & Peckel LLP initiated a securities class action in the United
States District Court for the Northern District of Georgia on behalf of
all persons or entities who purchased or otherwise acquired securities
of BellSouth Corp. (NYSE:BLS) between January 22, 2001 through July 19,
2002, both dates inclusive.  The suit names as defendants the Company
and:

     (1) F. Duane Ackerman,

     (2) W. Patrick Shannon, and

     (3) Ronald M. Dykes

The suit alleges that defendants violated section 10(b) of the
Securities Exchange Act of 1934 and section 12(a)(2) of the Securities
Act of 1933 by issuing a series of materially false and misleading
statements concerning its business and financial condition.

Specifically, the complaint alleges that defendants reported quarter
after quarter of "record" financial results and financial growth
despite a rapidly deteriorating market for telecommunications
companies.  In fact, as the Company was ultimately forced to reveal,
the financial prospects for BellSouth were far from the Company's
representations.

On July 22, 2002, defendants revealed that the Company's earnings had
dropped by an astonishing 67% for the second quarter of 2002, missing
Wall Street estimates.  The Company revealed that weak economic
conditions in Central and Latin America had been, and were continuing
to have a material, adverse impact on the Company's earnings and
profitability.

In response to the Company's devastating July 22, 2002 news, Company
stock plummeted by over 18% to $22 per share.  Company executives,
privy to the truth concerning the Company's financial condition, did
not share in these losses, having sold millions of dollars of BellSouth
stock.

For more details, contact Eric J. Belfi or Sharon Lee by Phone:
800-497-8076 or 212-682-1818 by Fax: 212-682-1892 by E-mail:
email@rabinlaw.com or visit the firm's Website: http://www.rabinlaw.com


DUANE READE: Schiffrin & Barroway Lodges Securities Fraud Suit in NY
--------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Southern District of New York on
behalf of all purchasers of the common stock of Duane Reade, Inc.
(NYSE: DRD) between April 25, 2002 and July 24, 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 on April 25, 2002, the start of the class period, defendants
issued the Company's First Quarter 2002 earnings news release for the
quarter ending March 31, 2002.

The Company reported recorded first quarter sales and earnings results
as follows: net sales increased 12.5% to $305.8 million and net income
was $5.3 million, or $0.22 per diluted share, before a previously
disclosed one-time non-cash charge, compared to net income of $2.6
million, or $0.14 per diluted share, in the prior year period.

With respect to the slight decline in gross profit margin for the
quarter, defendants stated in the news release that it was "primarily
attributable to the temporary dampening of front-end sales in the post
September 11 period and also due to a $0.4 million LIFO provision in
the period."

Additionally, defendants misled the public by presenting a very
positive outlook for the second quarter projecting that the Company
would earn between $0.40 to $0.44 cents per share.

Suddenly, on July 25, 2002, defendants issued a news release announcing
that the Company's second quarter profits had plummeted by more than
half because the Company had failed to disclose previously that:

     (1) in connection with the "$218 convertible notes offering,"
         which was completed in April 2002, had incurred expenses of
         $7.7 million, after tax, which expenses would sharply reduce
         the Company's profits in the second quarter of 2002 and cause
         the Company to report earnings significantly lower than the
         level defendants told the market to expect;

     (2) had sharply lowered prices in their stores commencing in April
         2002 and planned to continue such program throughout the
         second quarter in an effort to increase revenues, knowing that
         this would cause reduced profit margins in the second quarter;

     (3) was experiencing increased "shrink," primarily due to
         increased theft and vendor errors, which would further erode
         profits in the second quarter of 2002;

     (4) was experiencing an increase in sales of generic drugs as a
         percentage of total drug sales, which sales were at lower
         prices than sales of branded equivalents;

     (5) was experiencing a fall-off in higher margin items, including
         cosmetics, snacks, jewelry and toys;

     (6) had embarked on a program, beginning in April 2002 when
         defendants learned that they would receive $9 million in
         business interruption insurance proceeds from the claims
         submitted in the aftermath of September 11, to spend
         approximately $5.0 million in the second quarter on product
         promotions due to lost vendor promotional allowances; and

     (7) had embarked on a program, beginning in April 2002 when
         defendants learned that they would receive $9 million in
         business interruption insurance proceeds from the claims
         submitted in the aftermath of September 11, to open in the
         second quarter five additional stores to the number of new
         stores originally planned to be opened during the second
         quarter which, together with the three additional unplanned
         stores opened in the first quarter of 2002, would cause the
         Company to incur additional costs of $1.5 million, including
         $800,000 in store pre-opening expenses, in the second quarter
         of 2002.

In response to the surprise negative announcement on July 25, 2002, the
price of Company common stock dropped precipitously, falling from a
closing price of $23.55 per share on July 24, 2002 to a closing price
of $14.60 per share on July 25, 2002, a decline of approximately 38%,
on volume of 5.4 million shares traded, compared to average trading
volume of 321,000 shares for the previous five trading days.

For more information, contact Marc A. Topaz or Stuart L. Berman by
Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 by E-mail: info@sbclasslaw.com


DUANE READE: Cauley Geller Commences Securities Fraud Suit in S.D. NY
---------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Southern District of New
York on behalf of purchasers of Duane Reade, Inc. (NYSE: DRD) common
stock during the period between April 25, 2002 and July 24, 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 on April 25, 2002, the start of the class period, defendants
issued the Company First Quarter 2002 earnings news release for the
quarter ending March 31, 2002.

The Company reported recorded first quarter sales and earnings results
as follows: net sales increased 12.5% to $305.8 million and net income
was $5.3 million, or $0.22 per diluted share, before a previously
disclosed one-time non-cash charge, compared to net income of $2.6
million, or $0.14 per diluted share, in the prior year period.

With respect to the slight decline in gross profit margin for the
quarter, defendants stated in the news release that it was "primarily
attributable to the temporary dampening of front-end sales in the post
September 11 period and also due to a $0.4 million LIFO provision in
the period."

Additionally, defendants misled the public by presenting a very
positive outlook for the second quarter projecting that the Company
would earn between $0.40 to $0.44 cents per share.  Suddenly, on July
25, 2002, defendants issued a news release announcing that the
Company's second quarter profits had plummeted by more than half
because the Company had failed to disclose previously that:

     (1) in connection with the "$218 convertible notes offering,"
         which was completed in April 2002, had incurred expenses of
         $7.7 million, after tax, which expenses would sharply reduce
         the Company's profits in the second quarter of 2002 and cause
         the Company to report earnings significantly lower than the
         level defendants told the market to expect;

     (2) had sharply lowered prices in their stores commencing in April
         2002 and planned to continue such program throughout the
         second quarter in an effort to increase revenues, knowing that
         this would cause reduced profit margins in the second quarter;

     (3) was experiencing increased "shrink," primarily due to
         increased theft and vendor errors, which would further erode
         profits in the second quarter of 2002;

     (4) was experiencing an increase in sales of generic drugs as a
         percentage of total drug sales, which sales were at lower
         prices than sales of branded equivalents;

     (5) was experiencing a fall-off in higher margin items, including
         cosmetics, snacks, jewelry and toys;

     (6) had embarked on a program, beginning in April 2002 when
         defendants learned that they would receive $9 million in
         business interruption insurance proceeds from the claims
         submitted in the aftermath of September 11, to spend
         approximately $5.0 million in the second quarter on product
         promotions due to lost vendor promotional allowances; and

     (7) had embarked on a program, beginning in April 2002 when
         defendants learned that they would receive $9 million in
         business interruption insurance proceeds from the claims
         submitted in the aftermath of September 11, to open in the
         second quarter five additional stores to the number of new
         stores originally planned to be opened during the second
         quarter which, together with the three additional unplanned
         stores opened in the first quarter of 2002, would cause Duane
         to incur additional costs of $1.5 million, including $800,000
         in store pre-opening expenses, in the second quarter of 2002.

In response to the surprise negative announcement on July 25, 2002, the
price of the Company's common stock dropped precipitously, falling from
a closing price of $23.55 per share on July 24, 2002 to a closing price
of $14.60 per share on July 25, 2002, a decline of approximately 38%,
on volume of 5.4 million shares traded, compared to average trading
volume of 321,000 shares for the previous five trading days.

For more details, contact Jackie Addison, Sue Null or Ellie Baker by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
by E-mail: info@cauleygeller.com or visit the firm's Website:
http://www.cauleygeller.com


FIRST HORIZON: Schiffrin & Barroway Lodges 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 on
behalf of all purchasers of the common stock of First Horizon
Pharmaceutical Corporation (Nasdaq:FHRX) between April 24, 2002 through
July 2, 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 on April 24, 2002, the Company completed a public offering of
securities, selling 6.5 million shares of common stock at an offering
price of $21.75 per share, pursuant to a Prospectus declared effective
by the SEC on April 18, 2002.

The Company failed to disclose material information in the Prospectus
relating to two products, Tanafed Suspension (a pediatric liquid and
allergy product) and Prenate GT (a prescription prenatal vitamin).  The
Company touted the market for these products highly in its prospectus.

However, the market for these products was severely declining and
defendants had flooded wholesalers with Prenate GT inventory in the
first quarter of 2002 in order to report strong sales prior to the
secondary offering.

Belatedly, defendants disclosed that due to price erosion arising from
generic competition, the Company's products had not been widely
accepted by the market.  In addition, sales growth from the Company's
newly acquired "Sular" drug line had failed to yield strong results,
and a promised redeployment of the Company's sales force similarly
failed to boost the Company's bottom line.

As a result of the Company's misrepresentations, Company investors have
sustained tremendous losses, and stand to lose much more as the
Company's financial condition continues to decline.  On July 2, 2002,
the Company shocked the market by revealing that for the second quarter
of 2002, the Company expected to report revenues of between $25 and $26
million, and earnings per share between $0.00 and $0.02, excluding a
$2.2 million debt write-off.

For the full year, the Company revised its guidance to $0.34 a share, a
far cry from its earlier guidance of $0.56 to $0.57 a share. A July 2,
2002 press release attributed the massive shortfall mainly to "greater
than expected erosion of sales in the second quarter" of Tanafed and
Prenate GT, as well as "distraction" arising out of a sales force
"realignment."

In response to the Company's devastating news concerning the lack of
acceptance of two of the Company's key products, Company stock price
plummeted by an astonishing 81% or by $14.74 to $3.51, on volumes of
16.4 million shares, about 30 times the daily average

For more details, contact the Shareholder Relations Manager by Phone:
888- 299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com


HEALTHSOUTH CORPORATION: Chitwood & Harley Lodges Securities Suit in AL
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Chitwood & Harley initiated a securities class action in the United
States District Court for the Northern District of Alabama on behalf of
all persons who purchased or otherwise acquired the securities of
HealthSouth Corporation (NYSE:HRC) between January 14, 2002 through
August 27, 2002, inclusive.

The lawsuit asserts securities fraud claims under sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, and alleges that the Company failed to disclose
that the Centers for Medicare and Medicaid Services (CMS) had
reclassified certain categories of reimbursements, thereby threatening
the Company's business.

The complaint claims that the Company and its officers, including
defendant Richard Scrushy, CEO and Chairman of the Board of Directors,
made materially misleading statements and omitted to disclose material
adverse information about the Company's operations and prospects during
the class period.

In particular, the Company misled the market concerning expectations
for revenues and earnings by failing to disclose the impact on its
operations of certain Medicaid reimbursement policies.

The complaint alleges that the Company knew throughout the class period
that it was in no position to meet the revenue and earnings guidance it
had given to investors.  Thus, those claims were knowingly or
recklessly made without any reasonable basis.

Meanwhile, during the class period, Company insiders, and in particular
Mr. Scrushy, sold nearly $100 million worth of HealthSouth stock.

According to the complaint, on August 27, 2002, Healthsouth shocked the
market by issuing a press release announcing that the CMS directives
issued on July 1, 2002 relating to reimbursements may result in a $175
million shortfall in EBITDA from previously issued financial guidance
for 2002 and that the Company could not provide further guidance for
2002 and 2003 because of uncertainties posed by the directives. In
response to this disclosure, Healthsouth stock plummeted by over 43%.

For more details, contact Martin D. Chitwood or Nikole M. Davenport by
Phone: 888-873-3999, 404-873-3900 by E-mail: nmd@classlaw.com or visit
the firm's Website: http://www.classlaw.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
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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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