/raid1/www/Hosts/bankrupt/CAR_Public/020913.mbx
C L A S S A C T I O N R E P O R T E R
Friday, September 13, 2002, Vol. 4, No. 182
Headlines
ALLIED CAPITAL: Faces Numerous Similar Securities Suits in New York
ARKANSAS: Suit Pushes For Treatment of Mentally Ill Within 72 Hours
CATHOLIC CHURCH: Providence Diocese Settles Thirty Six Sex Abuse Suits
DUPONT COMPANY: Allowed To Settle Lawsuits Over Generic Competition
EVERGOOD PRODUCTS: CA Court Stays Three Suits Over KAVA Health Drink
EVERGOOD PRODUCTS: Faces Five Suits Over Androstenedione in Five States
FIRST UNION: NY Supreme Court Hears Arguments For Dismissal of Suit
HECLA MINING: ID Court To Hear Motions For Environmental Suit Dismissal
IRVINE SENSORS: Plaintiffs File Consolidated Securities Suit in C.D. CA
LOUISVILLE GAS: Employees File Lawsuit For Discrimination in W.D. KY
MCDONALD'S CORP.: Teens Sue Over Inaccurate Info, Enticing Marketing
OFFICEMAX INC.: Settles Overtime Wage Lawsuit for $7.1 Million
QUALITY SYSTEMS: Trial in Securities Suit Set For March 2003 in CA
QUESTAR GAS: Class Certification Hearing in Royalties Suit Commence
SHRIMP INDUSTRY: States Plan "Dumping" Suits Against 16 Countries
TERRORIST ATTACK: Residents Seek Closure By Suing bin Laden, al-Qaida
TELAXIS COMMUNICATIONS: Asks NY Court To Dismiss Securities Fraud Suit
UNITED STATES: Black Farmers State Protest v. Agriculture Dept In AR
UNITED STATES: Agriculture Offers To Help Minority Farmers With Loans
VALHI INC.: Faces Suits Protesting Tremont Corporation Merger in DE
Asbestos Alert
ASBESTOS ALERT: Defendant Companies Try to Stop Looming Trial
AMEREN CORPORATION: Faces 76 Asbestos-Related Claims in Illinois Court
CONGOLEUM CORP.: Faces Ten Thousand Pending Asbestos-Related Claims
DANA CORP.: Faces 111T Pending Asbestos Related Claims as of June 2002
ENTRYX CORP.: Number of Asbestos Claims Increases to 685 Claims in 2001
GENERAL MOTORS: States It Spent $10M Resolving Asbestos Related Claims
New Securities Fraud Cases
AOL TIME: Robbins Umeda Commences Securities Fraud Suit in S.D. NY
AOL TIME: Kaplan Fox Commences Securities Fraud Suit in S.D. New York
CITIGROUP INC.: Kaplan Fox Commences Securities Fraud Suit in S.D. NY
CONCORD EFS: Charles Piven Commences Securities Fraud Suit in W.D. TN
FLEMING COMPANIES: Emerson Firm Commences Securities Suit in E.D. TX
FLEMING COMPANIES: Cauley Geller Commences Securities Suit in E.D. TX
HOUSEHOLD INTERNATIONAL: Kaplan Fox Files Securities Suit in N.D. IL
HPL TECHNOLOGIES: Kaplan Fox Commences Securities Fraud Suit in N.D. CA
MORGAN STANLEY: Wechsler Harwood Commences Securities Suit in S.D. NY
SALOMON SMITH: Stull Stull Commences Securities Fraud Suit in S.D. NY
SALOMON SMITH: Lovell Stewart Commences Securities Suit in S.D. NY
XCEL ENERGY: Kaplan Fox Commences Securities Fraud Suit in MN Court
*********
ALLIED CAPITAL: Faces Numerous Similar Securities Suits in New York
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Allied Capital Corporation faces several securities class actions filed
in the United States District Court for the Southern District of New
York against the Company, certain of its directors and officers and its
former independent auditors, Arthur Andersen LLP, with respect to
alleged violations of the securities laws.
The suits essentially duplicate one another, pleading essentially the
same allegations. The complaints filed in the lawsuits allege
violations of Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder.
The suits specifically allege, among other things, that the Company
misstated the value of certain portfolio investments in its financial
statements, which allegedly resulted in the purchase of its common
stock by purported class members at artificially inflated prices.
Several of the complaints also allege state law claims for common law
fraud.
The Company believes that each of the lawsuits is without merit. While
the Company does not expect these matters to materially affect its
financial condition or results of operations, there can be no assurance
of any particular outcome.
ARKANSAS: Suit Pushes For Treatment of Mentally Ill Within 72 Hours
-------------------------------------------------------------------
Plaintiffs who successfully challenged Arkansas' treatment of mentally
ill crime suspects recommended that the state be required to evaluate
such suspects within 72 hours of their arrest, the Associated Press
Newswires reports.
US District Judge Stephen Reasoner has ruled that the state's treatment
of mentally ill crime suspects is unconstitutional. This was the
contention of the American Civil Liberties in the class action filed by
the American Civil Liberties Union, when they charged in their
complaint that the state allowed mentally ill inmates to languish in
local jails for months without treatment despite court-ordered
evaluations.
Judge Reasoner next scheduled a hearing to discuss remedies and invited
the parties to submit their briefs. It was at this hearing, held
Tuesday of this week, that the ACLU made its recommendation that the
mentally ill crime suspects be evaluated within 72 hours. The ACLU
also proposed that that the court give the state six months to comply
with their stated remedies, and that the court consider appointing a
monitor if the state does not show compliance.
CATHOLIC CHURCH: Providence Diocese Settles Thirty Six Sex Abuse Suits
----------------------------------------------------------------------
The Roman Catholic Diocese of Providence said today that it had reached
a $13.5 million settlement with 36 people who say members of the clergy
molested them as youngsters, The New York Times reports. The
settlement covers all but two of the 38 men and women who accused 11
priests and a nun of abusing them.
"This is a day long sought that brings to an end the difficult and
often contentious process of litigation that has been painful for most
concerned," Bishop Robert E. Mulvee said in a statement. "I hope that
this action will be helpful to the victims of abuse and bring them in
some way closer to closure and reconciliation with their God, their
church, their families and themselves."
The diocese said it would seek internal and external financing to cover
the cost of the settlement. Earlier this year, lawyers for the
plaintiffs asked the diocese for $15 million immediately and $8 million
over four years to settle the cases. The diocese's finance council
rejected that proposal.
For nearly a decade, the diocese has refused to turn over documents in
the case, citing First Amendment rights to religious freedom. The
Rhode Island courts upheld the church's position until July, when a
Superior Court justice ruled that the First Amendment could not be
construed as a blanket shield.
In his ruling, Justice Robert D. Krause pointed to the American
bishops' acknowledgment at their June conference in Dallas that the
church and its flocks had been hurt by a culture of secrecy. "The
church hierarchy became publicly embroiled in a nationwide disclosure
of matters relating to priests who sexually assault children," Justice
Krause wrote. "Insistence upon disclosure emanated not only from those
not associated with the church, but indeed from bishops within the
church as well."
Lawyers for people who say priests sexually abused them called the
ruling a watershed in one of the longest and hardest-fought lawsuits of
its kind.
Rhode Island is numerically the most Roman Catholic state in the
nation, with 624,000 Catholics out of of population of about one
million people. It has more than 400 priests. The diocese has $97
million in assets, its December financial statement shows. However, a
state law allows the bishop to hold an unlimited amount of land tax-
free in his name, with virtually no reporting requirements.
DUPONT COMPANY: Allowed To Settle Lawsuits Over Generic Competition
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A federal judge has approved the DuPont Company's $44.5 million
settlement of consumer lawsuits that contended the Company tried to
block generic competition to its blood-thinning drug, Coumadin,
according to a recent report by The New York Times.
Considering the "risks of litigation," the settlement "appears to be
quite reasonable," Judge Sue Robinson of United States District Court
wrote in an 87-page opinion. About two million consumers who said they
paid too much for Coumadin are eligible to make claims, she further
said.
More than a dozen lawsuits, which were later consolidated, accused the
Company of violating antitrust laws. The Company sold its drug unit
last October to Bristol-Myers Squibb.
The cases were filed starting in 1997, after the Food and Drug
Administration approved an application by Barr Laboratories to sell a
generic version of Coumadin. Barr said that the Company had waged a
campaign of disinformation, questioning the safety of the product.
EVERGOOD PRODUCTS: CA Court Stays Three Suits Over KAVA Health Drink
--------------------------------------------------------------------
The Superior Court of the State of California, County of Los Angeles
stayed the three separate class actions pending against Evergood
Products, Inc. regarding its health drink called KAVA. The court
stayed the action pending action by the United States Food and Drug
Administration (FDA).
These actions have been certified as a class action. General demurrers
have been filed as well as a motion seeking dismissal of the action.
It is impossible to currently predict the outcome of these actions,
however, based upon currently available information and considering its
various claims and defenses, in the opinion of management, the outcome
of these actions should not have a material adverse effect on the
Company.
EVERGOOD PRODUCTS: Faces Five Suits Over Androstenedione in Five States
-----------------------------------------------------------------------
Evergood Products Corporation faces five separate class actions pending
in the States of California, Florida, Illinois, New York and
Pennsylvania, seeking damages in connection with the marketing and sale
of androstenedione, among other products.
Each suit alleges an inability to substantiate the claims made with
regard to the marketing attendant to the sale of such products. The
complaint also alleges that the products do not contain warnings as to
adverse health consequences. Preliminary discovery was served along
with a number of the complaints.
No answers need be interposed to the complaints as yet. No responses
to the discovery requests need be made as yet. In the opinion of
management, at this time, the outcome of these actions should not have
a material adverse effect on the Company.
FIRST UNION: NY Supreme Court Hears Arguments For Dismissal of Suit
-------------------------------------------------------------------
The Supreme Court of New York in New York County heard oral arguments
for the motion to dismiss the class actions filed against First Union
Real Estate Equity and Mortgage Investments, on behalf of holders of
the Trust's convertible preferred shares.
Among the allegations made by the plaintiff is that the proposed
transaction with Gotham Golf Corp. was approved by the Trust's Board of
Trustees in violation of fiduciary duties owed to the holders of the
Trust's convertible preferred shares.
The suit seeks, among other things, unspecified damages, an injunction
of the proposed transaction and the court's certification of the
lawsuit as a class action. Named as defendants in the lawsuit were the
Trust, its five trustees and Gotham Partners, LP.
On June 6, 2002, the defendants filed with the court motions to dismiss
the lawsuit. A ruling on the motions to dismiss may not be issued for
several weeks or longer following the oral argument. The Trust regards
the lawsuit as being without merit and will vigorously defend against
the asserted claims. The Trust does not believe that the suit will
preclude or materially delay the completion of the proposed
transaction.
HECLA MINING: ID Court To Hear Motions For Environmental Suit Dismissal
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The Idaho District Court, County of Kootenai is set to hear the motions
for dismissal of the class action against Hecla Mining Corporation, and
other mining companies in September 2002.
The suit was commenced in January 2002 demanding that the Companies
finance medical monitoring to identify and treat health problems
allegedly caused by their mining and smelting activities, which
poisoned the region's water and soil with lead and other heavy metals,
an earlier Class Action Reporter story states.
The suit seeks certification of three plaintiff classes of Coeur
d'Alene Basin residents and current and former property owners to
pursue three types of relief:
(1) various medical monitoring programs,
(2) a real property remediation and restoration programs, and
(3) damages for diminution in property value, plus other damages
and costs.
The Company believes the suit is subject to challenge on a number of
bases and intends to vigorously defend itself in this litigation. On
April 23, 2002, the Company filed a motion with the court to dismiss
the claims for relief relating to the medical monitoring programs and
the remediation and restoration programs.
IRVINE SENSORS: Plaintiffs File Consolidated Securities Suit in C.D. CA
-----------------------------------------------------------------------
Plaintiffs in the securities class actions pending against Irvine
Sensor Corporation filed an amended consolidated suit in the United
States District Court for the Central District of California.
Several suits were commenced in February 2002 against the Company,
certain of its current and former officers and directors, and an
officer and director of its former subsidiary Silicon Film
Technologies, Inc. The suits were later ordered consolidated.
The amended complaint alleges that defendants made false and misleading
statements about the prospects of Silicon Film during the period
January 6, 2000 to September 15, 2001, inclusive. The amended
complaint asserts claims for violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Securities and Exchange
Commission Rule 10b-5, and seeks damages of an unspecified amount.
There has been no discovery to date and no trial has yet been
scheduled. The Company believes that it has meritorious defenses to
these actions and intends to defend them vigorously. Failure by the
Company to obtain a favorable resolution of the claims set forth in the
actions could have a material adverse effect on the Company's business,
results of operations and financial condition.
LOUISVILLE GAS: Employees File Lawsuit For Discrimination in W.D. KY
--------------------------------------------------------------------
Louisville Gas & Energy Corporation faces several class actions filed
by 30 employees or former employees, claiming past and current
instances of employment discrimination. The suits have been removed to
the United States District Court for the Western District of Kentucky.
The suits demand various forms of declarative, injunctive and class
action relief, as well as a claim of US$150 million in monetary
damages. Certain plaintiffs' claims have completed a process of
preliminary administrative review before the US Equal Employment
Opportunity Commission, which has, to date, declined to proceed on any
of the claims reviewed.
The Company denies all the allegations in the suits and intends to
vigorously defend itself. Management does not anticipate that the
outcome will have a material impact on the Company's operations or
financial condition.
MCDONALD'S CORP.: Teens Sue Over Inaccurate Info, Enticing Marketing
--------------------------------------------------------------------
Three teenagers in New York City have filed a class action against
McDonald's Corp., saying the fast food chain's food caused them to gain
as much as 200 pounds and develop serious health problems including
heart disease and diabetes.
The teenagers, whose ages range between 13 and 19, say in their court
papers that McDonald's inaccurately posted nutritional information and
deceptively advertised its products. They also say the restaurant
chain used marketing practices such as toy and value meal promotions to
entice its patrons to eat the food.
"We feel that the advertising strategies (of quick-service chains)
target young children," said Samuel Hirsch, the attorney representing
the teenagers. "Toy promotions and Happy Meals are a lethal
combination."
Mr. Hirsch said that his clients ate at McDonald's-California almost
every day for at least five years. One teenager, who is 5-feet-9-
inches tall, now weighs 270 pounds, another who is 5-feet-3-inches tall
now weighs 200 pounds.
The parents of the teenagers, either unemployed or on disability, filed
the lawsuit on behalf of their children. The lawsuit seeks
undetermined compensatory damages.
The teenagers' lawsuit charges that McDonald's franchises are
negligently selling products "that are high in fat, salt, sugar and
cholesterol content which numerous studies have shown cause obesity,
diabetes, coronary heart disease, high blood pressure, strokes,
elevated cholesterol intake, related cancers and/or other detrimental
and adverse health effects and/or diseases."
Company spokesman Walt Riker said, in a written statement, that the
suit was "nothing more than a frivolous lawsuit." He also said, "Its
claims are ridiculous. Common sense tells you it makes no sense." Mr.
Riker said that McDonald's menu features choice and variety with lots
of options for consumers. He pointed to McDonald's as a leader in the
industry, who is constantly trying to improve the health content of the
food served in its restaurants. For example, McDonald's announced last
week it would introduce a new cooking oil that has lower levels of
trans-fatty acids, which have been linked to raising "bad" cholesterol
levels.
The latest lawsuit, filed in the New York Supreme Court, comes a month
after a New York City man, who has been eating fast food since the
1950s, sued the country's four leading fast-food chains, blaming the
restaurants' fatty fare for his health problems.
In July, Caesar Barber, 56, filed a suit, also with the Supreme Court
of New York, against McDonald's, Burger King Corp., KFC Corp. and
Wendy's International, blaming the chains for making him and others
overweight and raising his risk of illness related to being overweight.
Mr. Barber is being represented by Mr. Hirsch.
Mr. Barber, says in his lawsuit, that he is a 5-foot-10-inch, 272-pound
maintenance worker, who had heart attacks in 1996 and 1999, and has
diabetes, high blood pressure and high cholesterol.
OFFICEMAX INC.: Settles Overtime Wage Lawsuit for $7.1 Million
--------------------------------------------------------------
OfficeMax Inc. (OMX) paid $7.1 million in cash to settle a California
lawsuit regarding overtime, according to a Form 10-Q filed recently
with the Securities and Exchange Commission, reported Dow Jones
Business News.
The company, an office supply retailer, did not provide further
information about the lawsuit or settlement in its filing. The Company
said its domestic segment had set up a $10 million reserve to provide
for the expected settlement of a class action in California over
overtime wages and classification of exempt employees, as well as other
legal matters.
QUALITY SYSTEMS: Trial in Securities Suit Set For March 2003 in CA
------------------------------------------------------------------
Trial in the consolidated securities class action pending against
Quality Systems, Inc. is set for March 24,2003 in the Superior Court of
the State of California for the County of Orange. The suit names as
defendants the Company and:
(1) Sheldon Razin,
(2) Robert J. Beck,
(3) Gregory S. Flynn,
(4) Abe C. LaLande,
(5) Donn Neufeld,
(6) Irma G. Carmona,
(7) John A. Bowers,
(8) Graeme H. Frehner, and
(9) Gordon L. Setran
The suit, filed on behalf of purchasers of the Company's Common Stock
between June 26, 1995 and July 3, 1996, alleges that the Company, and
as well as other defendants not affiliated with the Company, violated
California Corporations Code Sections 25400 and 25500, California Civil
Code Sections 1709 and 1710, and California Business and Professions
Code Sections 17200 et. seq.
The defendants allegedly issued positive statements about the Company
that allegedly were knowingly false, in part, in order to assist the
Company and the individual defendants in selling common stock at an
inflated price in the Company's March 5, 1996 public offering and at
other points during the class period.
The Company and the other named defendants successfully demurred to the
plaintiffs' claim under California Civil Code Sections 1709 and 1710,
and that claim, which served as the only basis for plaintiffs' request
for punitive damages, has been dismissed from both actions.
In January 1999, the court denied plaintiffs' motion to certify the
class representative and class legal counsel. Plaintiffs appealed that
decision as to class legal counsel. In February 2000, the Fourth
District Court of Appeals affirmed the order disqualifying the class
legal counsel. The Court of Appeals later issued its Remittur
certifying its decision as final.
In May 2000, plaintiffs associated in additional class legal counsel,
and moved for approval by the court. Upon defendants' objection, the
court denied plaintiffs' motion, and ordered plaintiffs to retain new
class counsel. At the end of November 2000, the plaintiffs retained
new class counsel who substituted in for plaintiffs' previous class
counsel. The Company and the other named defendants did not oppose
plaintiffs' motion for approval of the new class counsel. On January
24, 2001, the court granted the motion to certify class legal counsel.
On March 27, 2001, the court approved a notice of class certification
to be mailed to shareholders who are potential class members. Between
April 9, 2001 and May 9, 2001, class notice was mailed to potential
class members.
Merits-related discovery in the action, which had been stayed pending
the appointment of class counsel, is now ongoing. In March 2002,
defendant Graeme H. Frehner and certain other defendants not affiliated
with the Company were dismissed from the action with prejudice by
stipulated order. The parties are scheduled to appear in court for the
next status conference on October 22, 2002. Trial in the action has
been set for March 24, 2003.
In management's opinion the outcome of this case is uncertain, and
therefore no accrual has been made to the financial statements.
QUESTAR GAS: Class Certification Hearing in Royalties Suit Commence
-------------------------------------------------------------------
Hearings for the certification of the nationwide class action pending
aagainst Questar Gas Corporation have commenced in the United States
District Court for the District of Kansas. The suit names as
defendants the Company, 147 other gas and energy traders, including
Company subsidiaries:
(1) Questar Energy Trading Company (QET),
(2) Questar Gas Management Company (QGM),
(3) Wexpro Company, and
(4) Questar Pipeline Company
The suit alleges systematic mismeasurement of natural gas volumes from
private and state lands and resulting underpayment of royalties. This
case was originally filed in the Kansas district court in September of
1999, but was removed to federal district court and consolidated with
several similar cases mentioned above in Wyoming's federal district
court. It was subsequently transferred back to Kansas. The plaintiffs
have not set forth specific dollar amounts in damages.
The defendants filed motions to dismiss and those motions were argued
on November 29, 2001. The court has not issued any rulings. In
addition, certain defendants, including the Questar defendants, have
filed motions to dismiss the pending action for lack of personal
jurisdiction, oral arguments on these motions were held on August 29,
2002. Class certification briefing will begin on September 3, 2002.
SHRIMP INDUSTRY: States Plan "Dumping" Suits Against 16 Countries
-----------------------------------------------------------------
Shrimpers and officials from eight states agreed to work on plans for
possible lawsuits against up to 16 countries accused of selling shrimp
at below-market prices, Associated Press Newswires reports. Shrimpers
are considering suing China, Vietnam, Thailand and several Central and
South American countries for allegedly dumping shrimp in the United
States and thereby damaging the domestic shrimp industry.
Industry representatives from Alabama, Florida, Texas, South Carolina,
North Carolina, Georgia, Mississippi and Louisiana attended a recent
meeting in suburban New Orleans, as did governmental officials from
several of the states.
The group decided to form a steering committee that will meet within
two weeks and announce a decision on whether to hire lawyers and
proceed with the lawsuits. Shrimping representatives have said they
expect to spend about $1 million for preliminary work on the lawsuits.
Successful lawsuits could result in new tariffs on imported shrimp and
could be the first step toward import quotas.
TERRORIST ATTACK: Residents Seek Closure By Suing bin Laden, al-Qaida
---------------------------------------------------------------------
Salt Lake City Attorney Donald Winder felt helpless as he watched his
eighth-grade son struggle to deal with twin tragedies, the September 11
tragedy and the kidnapping of a classmate and close friend, reports The
Salt Lake Tribune.
However, he decided to do something. He agreed to help sue Osama bin
Laden in a proposed class action filed earlier this year to recoup $280
billion for the families of the 3,010 victims of September 11.
"I'm mad," said Mr. Winder, whose law firm joined nine other firms
nationwide in the wrongful-death lawsuit. "I am a lawyer, so I thought
the best thing I can do is to sue somebody."
Salt Lake City attorney Richard Burbidge, whose firm also joined in the
suit, said that making bin Laden and his terrorist network pay is
simply the right thing to do. "This lawsuit is victim-driven," said
Mr. Burbidge. "We are trying to help the widows who asked, 'Isn't
there something we can do to them?'"
The lawsuit, filed February 19, seeks punitive damages, Mr. Winder
said. "The families of the victims deserve punitive damages for the
senseless deaths of their loved ones," he said.
Through June, the two Salt Lake City law firms, Burbidge & Mitchell
and Winder & Haslam, have donated more than 400 staff hours to the
lawsuit. The case is filed in US District Court in Washington, DC, and
the lead law firm is Mellon, Webster & Shelley of Doylestown, PA.
The lawsuit names 41 plaintiffs, plus 13 victims, who chose not to be
identified. If the lawsuit is granted class action status, the suit
states, all "spouses, children, parents or siblings of any individual
who died at the World Trade Center, the Pentagon or airliner crash in
Shanksville, PA, excluding the terrorists or their families, would be
eligible for any recovered money."
Besides bin Laden, the suit names 22 defendants, including the Taliban,
the al-Qaida terror network, Iran, Iraq, Hezbollah and Saddam Hussein.
The suit also cites 500 unidentified terrorists.
The suit contends bin Laden is responsible financially, and that he
personally directed the "intentional and willful mass murder of
thousands of innocent men, women and children. The end result of those
activities was the murder of all decedents on September 11, 2001."
TELAXIS COMMUNICATIONS: Asks NY Court To Dismiss Securities Fraud Suit
----------------------------------------------------------------------
Telaxis Communications Corporation asked the United States District
Court for the Southern District of New York to dismiss the consolidated
amended securities class action pending against it, one or more of the
underwriters in its initial public offering and certain of its officers
and directors.
On April 19, 2002, the plaintiffs filed a single consolidated amended
complaint which supersedes the individual complaints originally filed.
The amended complaint alleges, among other things, violations of the
registration and antifraud provisions of the federal securities laws
due to alleged statements in and omissions from the Company's initial
public offering registration statement concerning the underwriters'
alleged activities in connection with the underwriting of the Company's
shares to the public.
The suit against the Company has been assigned along with approximately
1,000 other lawsuits making substantially similar allegations against
approximately 300 other publicly-traded companies and their public
offering underwriters to a single federal judge in the US District
Court for the Southern District of New York for consolidated pre-trial
purposes.
On July 15, 2002, the Company, together with the other issuers named as
defendants in these coordinated proceedings, filed a collective motion
to dismiss the consolidated amended complaints on various legal grounds
common to all or most of the issuer defendants. This motion is
currently pending.
The Company and its officers and directors deny any liability and
intend to vigorously defend the allegations against them. While the
outcome of the potential claims and legal actions against the Company
cannot be forecast with certainty, the Company believes that such
matters should not result in any liability which would have a material
adverse effect on its business.
UNITED STATES: Black Farmers State Protest v. Agriculture Dept In AR
--------------------------------------------------------------------
About fifty black farmers gathered in front of an Arkansas federal
building to say that discrimination in loan practices persists three
years after a class action settlement, Associated Press Newswires
reports.
Some farmers whose lawsuit claims were turned down have complained that
their appeals have been held up for months, and others have contended
that the US Department of Agriculture (USDA) has treated them poorly.
"The lawsuit (settlement) is a joke and it should never have been
allowed," said Thomas Burrell, president of the Black Farmers and
Agriculturalists Association. "It was defective and flawed and replete
with examples of what would deny black farmers relief."
The federal government in 1999 settled a lawsuit over claims that USDA
systematically discriminated against blacks applying for loans and
subsidy programs. USDA admitted that discrimination had occurred. The
settlement was supposed to pay farmers $50,000 each and forgive their
farm loans from 1983 to 1998 as compensation for the years of
discrimination. An estimated $2.2 billion was expected to be paid and
forgiven.
Of the 2,358 claims accepted for consideration, the government approved
60 percent and paid about $615 million, according to USDA figures in
July. Although the Farm Services Administration office in Star City
was locked, Fernando Burkett, executive director of the Arkansas
chapter of the association, said the group would continue its protest
beyond Monday. "We want to keep on applying pressure and keep on
fighting and telling these guys we are not going to leave," said Mr.
Burkette.
UNITED STATES: Agriculture Offers To Help Minority Farmers With Loans
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The Agriculture Department opened a new office Tuesday to help minority
farmers with their loans, but black farmers say the move fails to
address their complaints that the agency discriminates against them,
the Associated Press Newswires reports.
"This new office is just one of many examples of how this department is
strengthening programs to serve these constituents," said Agriculture
Secretary Ann Veneman.
The new office operates under the Department's Farm Service Agency and
provides minority farmers with a toll-free telephone number to call if
they have questions about their loan applications. The Department is
shuffling money in its budget to fund the office.
Secretary Veneman heard black farmers' complaints at a closed-door
meeting July 12 in Washington. That meeting came after farmers staged
a sit-in at the Department's office in Brownsville, Tennessee, earlier
in the month.
Gary Grant, president of the Black Farmers & Agriculturalists
Association, groaned when he learned of the announcement, and said that
the agency is pulling a political stunt to appear as though it is
addressing black farmers' complaints. This action "does not do
anything but create another level of bureaucracy," said Mr. Grant of
the new office.
Black farmers have criticized the agency for failing to replace loan
officers who denied them loans because of their race. It is an ongoing
conflict that began in 1997, when thousands of black farmers filed a
class action against the agency, alleging discrimination. The agency
admitted discrimination and settled the lawsuit under the Clinton
administration.
Under the terms of the settlement the department agreed to pay $50,000
in each of the cases in which discrimination occurred. However, some
farmers have not received payments, and some appeals were denied,
prompting continued protests.
Mr. Grant said the Agriculture Department foreclosed on farmers who are
awaiting decisions on their cases. Black farmers just want to receive
their payments under the settlement and to see the loan officers who
discriminated against them replaced, said Mr. Grant.
Alisa Harrison, a spokeswoman for the Agriculture Department, said that
opening the office is part of a larger effort to help black farmers and
other minorities. "What it does," Ms. Harrison said, "is provide
farmers all across the country with a headquarters to call.Certainly
the offices at the state level and farm services are there to help U.S.
farmers, but if a farmer wants to talk with someone at headquarters
level, they will have a specific staff member to speak to."
The agency's effort is weak, said John Boyd, who led the Black Farmers'
Association in the protest in front of the Department's Washington
headquarters in August. Mr. Boyd said the new office is just a
political ploy. "This is to get the pressure off President Bush and to
say that they are doing something. It is really an empty shell," he
said.
VALHI INC.: Faces Suits Protesting Tremont Corporation Merger in DE
-------------------------------------------------------------------
Valhi, Inc. faces three separate class actions filed in late July 2002
in the Court of Chancery of the State of Delaware, New Castle County,
against it, Tremont Corporation and members of Tremont's board of
directors.
The suits generally allege, among other things, that the terms of the
proposed merger of the Company and Tremont are unfair, and that
defendants have violated their fiduciary duties. The complaints seek,
among other things, an order enjoining consummation of the proposed
merger and the award of unspecified damages, including attorney's fees
and other costs.
The Company believes that the complaints are without merit, and intends
to defend against the actions vigorously.
Asbestos Alert
ASBESTOS ALERT: Defendant Companies Try to Stop Looming Trial
--------------------------------------------------------------
Companies defending against asbestos claims asked the U.S. Supreme
Court to halt a consolidated trial involving as many as 8,000
plaintiffs and 250 defendant companies, the Los Angeles Times reports.
Jury selection is set to begin in Charleston, West Virginia, on Sept.
23 if the Supreme Court chooses not to step into the giant liability
claim that one judge described as the "asbestos Gettysburg," the
newspaper said.
With thousands of injury claims filed against hundreds of companies
each year at an accelerating pace, the litigation has bankrupted more
than 50 companies, the newspaper said.
At least 575,000 asbestos claims have been filed since the 1980s and
experts believe the total economic cost from the litigation could be as
high as $200 billion, more than the cost created by Hurricane Andrew,
all the Superfund clean-up sites combined or the Sept. 11 terrorist
attacks, the newspaper said.
AMEREN CORPORATION: Faces 76 Asbestos-Related Claims in Illinois Court
----------------------------------------------------------------------
Ameren Corp., which distributes electricity to 1.5 million customers
and natural gas to 300,000 in Missouri and Illinois, reports that it
has been named defendant, along with its main operating units Central
Illinois Public Service Co. (AmerenCIPS) and Union Electric Co., in 76
asbestos-related lawsuits, of which 62 remained pending.
Ten of the cases have been settled, and four have been dismissed. The
lawsuits were mostly filed in the Circuit Court of Madison County,
Illinois.
The company says it received notice of the first lawsuit in March 2001
with notice of the others occurring in the fourth quarter of 2001 and
the first quarter of 2002. The number of total defendants named in each
case is large, with more than 40 parties named in all but four of the
lawsuits.
The claims allege injury from asbestos exposure during plaintiffs'
activities at the companies' electric generating plants (in the case of
AmerenCIPS, its former plants which are now owned by Generating
Company).
In each lawsuit, the plaintiff seeks unspecified damages in excess of
$50,000, which, the company says, typically would be shared among the
defendants.
The company says it believes that the final disposition of the cases
will not have material adverse effect on its financial position,
results of operations or liquidity.
COMPANY PROFILE
Ameren Corporation (NYSE: AEE)
1901 Chouteau Ave.
St. Louis, MO 63103
Phone: 314-621-3222
Fax: 314-554-3801
Web site: http://www.ameren.com
Employees : 7,447
Revenue : $4,505,867,000
Net Income (Loss) : $468,545,000
Assets : $10,400,575,000
Liabilities : $3,977,706,000
No. of Asbestos Claims Pending : 62
(For the year ended December 31, 2001)
Business Description: Ameren Corp. sells energy in the US Midwest.
Through its utility subsidiaries, Ameren distributes electricity to 1.5
million customers and natural gas to 300,000 in Missouri and Illinois.
The company has a generating capacity of nearly 13,000 MW, about 60% of
which is coal-fired. The firm's AmerenEnergy markets and trades power
and provides energy-related services. Other operations include meter
reading systems and services and energy construction and management
services. Ameren has agreed to purchase Illinois utility CILCORP from
independent power producer AES.
CONGOLEUM CORP.: Faces Ten Thousand Pending Asbestos-Related Claims
-------------------------------------------------------------------
Congoleum Corp., maker of sheet and tile flooring for residential and
commercial use, reports that it is one of defendants in about 10,994
pending claims (including workers' compensation cases) involving about
32,885 individuals alleging personal injury or death from exposure to
asbestos or asbestos-containing products.
The total indemnity costs incurred to settle claims during the six
months ending June 30, 2002 and 12 months ending December 31, 2001 were
$1 million and $1.1 million, respectively. The amounts were paid by the
company's insurance carriers, as were the related defense costs.
Costs per claim vary depending on the nature of the alleged exposure
and the jurisdiction where the claim was litigated. As of June 30,
2002, the company has incurred asbestos-related claims of $12.6
million, to resolve claims of over 33,700 claimants.
The average indemnity cost per resolved claimant is $374. Over 99
percent of claims have settled, on average, for amounts less than $105
per claimant.
Nearly all claims allege that various diseases were caused by exposure
to asbestos-containing products, including sheet vinyl and resilient
tile manufactured by the company (or, in the workers' compensation
cases, exposure to asbestos in the course of employment with the
company).
The company discontinued the manufacture of asbestos-containing sheet
vinyl products in 1983 and asbestos-containing tile products in 1974.
The company has determined that its range of probable and estimable
undiscounted losses for asbestos-related claims through the year 2049
is between $53.3 million and $195.6 million before considering
insurance recoveries.
During the period that Congoleum produced asbestos-containing products,
it purchased primary and excess insurance policies providing in excess
of $1 billion coverage for bodily injury asbestos claims.
To date, substantially all claims and defense costs have been paid
through primary insurance coverage. At June 30, 2002, the company had
approximately $500,000 in remaining primary insurance coverage for
bodily injury asbestos claims.
Once all primary coverage is exhausted, the company expects defense and
indemnity costs to be covered by its excess insurance policies.
However, it is likely that it will share in these costs.
The first layer of excess insurance policies provides for $135 million
in coverage. Of this layer, approximately 25 percent to 33 percent was
underwritten by carriers who are presently insolvent.
The company anticipates paying some or all of the portion of costs for
resolving asbestos-related claims that are allocable to insolvent
carriers, and that it may, in turn, be able to recover a portion of
such payments from the estates or insurance guaranty funds responsible
for the obligations of these carriers.
Congoleum has filed suit against certain of its insurance carriers
comprising its first layer of excess insurance, state guaranty funds
representing insolvent carriers, and its insurance brokers and has
begun settlement negotiations with several of them. The company has
determined that about $45.2 million at December 31, 2001 and $43.9
million at June 30, 2002 of the estimated $53.3 million gross liability
is probable of recovery.
This insurance receivable has been recorded in other long-term assets
as of December 31, 2001 and June 30, 2002:
June 30, 2002 Dec 31, 2001
------------- ------------
Insurance for asbestos-related
liabilities $43,884,000 $45,163,000
Asbestos-related liabilities $53,003,000 $53,003,000
COMPANY PROFILE
Congoleum Corp. (AMEX: CGM)
3500 Quakerbridge Rd.
Mercerville, NJ 08619-0127
Phone: 609-584-3000
Fax: 609-584-3522
Toll Free: 800-934-3567
Web site: http://www.congoleum.com
Employees : 1,036
Revenue : $223,250,000
Net Income (Loss) : $1,640,000
Assets : $229,883,000
Liabilities : $204,830,000
No. of Asbestos Claims Pending : 10,994
Estimated Asbestos Liabilities : $53,003,000*
Estimated Insurance Recoveries : $43,884,000*
(For the year ended December 31, 2001)
(*As of June 30, 2002)
Business Description: The company makes sheet and tile flooring for
residential and commercial use. Products include resilient sheet
flooring (often called linoleum or vinyl flooring), do-it-yourself
vinyl tile, laminate flooring, and commercial flooring. Its Evermore
Premium laminate product line resembles wood floors in appearance yet
is designed to resist staining, burns, and fading. Congoleum markets
through a network of about 22 distributors in the United States and
Canada, as well as directly to major home-products retailers.
DANA CORP.: Faces 111T Pending Asbestos Related Claims as of June 2002
----------------------------------------------------------------------
Auto parts maker Dana Corp. reports that it has 111,000 asbestos-
related liability claims outstanding at June 30, 2002, including
roughly 22,000 that were settled pending payment. That compares to
about 73,000 such claims outstanding in the same period last year,
including 32,000 that were settled pending payment.
The company attributes the increase to the discontinuance in February
2001 of the Center for Claims Resolution, which had been administering
the company's asbestos-related claims for several years.
With the CCR dissolved, claimants are now bringing claims against most,
if not all, former CCR members individually. Previously, many members
of the CCR were not named individually in claims because the settlement
amounts were typically the same regardless of how many members were
named.
Also, the company has opted to fight claims which previously might have
been settled.
The company says it has agreements with insurance carriers for payment
of defense and indemnity costs for pending and future claims.
At June 30, 2002, it had accrued $113 million for contingent asbestos-
related product liability costs and recorded $98 million as an asset
for probable recoveries from insurers.
COMPANY PROFILE
Dana Corp. (NYSE: DCN)
4500 Dorr St., PO Box 1000
Toledo, OH 43697
Phone: 419-535-4500
Fax: 419-535-4643
Toll Free: 800-472-8810
Web site: http://www.dana.com
Employees : 70,000
Revenue : $10,469,000,000
Net Income (Loss) : ($298,000,000)
Assets : $10,207,000,000
Liabilities : $8,249,000,000
No. of Asbestos Claims Pending : 111,000*
Estimated Insurance Recoveries : $98,000,000*
(For the year ended December 31, 2001)
(*As of June 30, 2002)
Business Description: Dana Corp. manufactures the parts carmakers use
to piece together new vehicles. Its core products include axles,
brakes, and driveshafts, as well as engine, filtration, fluid-system,
sealing, and structural products. The company also makes replacement
parts for the automotive aftermarket. Dana operates manufacturing,
assembly, and distribution facilities in more than 30 countries,
although the Americas account for 80 percent of its sales.
ENTRYX CORP.: Number of Asbestos Claims Increases to 685 Claims in 2001
-----------------------------------------------------------------------
The number of asbestos-related claims initiated against Entrx Corp.
have increased from 254 in 1999, 527 in 2000 to 685 in 2001. The
company says the sympathies of juries, the aggressiveness of the
plaintiff's bar, and the declining defendant base as a result of
business failures, has also led to a trend of larger payments and
settlements per claim.
There are currently in excess of 700 of such claims pending. The
Company in the past has believed that it has adequate insurance to
cover these claims. However, the terms of such insurance policies are
complex and the coverage for many types of claims is limited.
If the current trend of the increasing claim occurrence and amounts is
not significantly reversed, it will likely have a material adverse
effect on the financial condition and business of the company in the
future, it says.
Because of its insurance coverage, the company does not anticipate any
adverse effect on its financial condition to develop for at least the
next three to five years. Beyond that, however, the effect of those
claims is uncertain.
Prior to 1975, the company was engaged in the sale and installation of
asbestos-related insulation materials and has been the subject of
numerous claims of personal injury allegedly related to asbestos
exposure. Many of these claims are now being brought by the children
and close relatives of persons who have died, allegedly as a result of
the direct or indirect exposure to asbestos.
COMPANY PROFILE
Entrx Corp. (Nasdaq (SC): ENTX)
800 Nicollet Mall, Ste. 2690
Minneapolis, MN 55402
Phone: 612-333-0614
Fax: 612-338-7332
Employees : 99
Revenue : $18,007,921
Net Income (Loss) : $5,575,708
Assets : $17,791,909
Liabilities : $4,100,307
No. of Asbestos Claims Pending : 700
(For the year ended December 31, 2001)
Business Description: Formerly Metalclad, Entrx Corp. provides
insulation and asbestos abatement services. Operating mainly on the US
West Coast, it installs insulation on pipes, ducts, furnaces, boilers,
and other industrial equipment. It also maintains and removes
insulation and makes specialty insulation products. Wayne Mills, the
company's largest shareholder, has taken over as president and CEO.
After acquiring Surg II, which formerly made and marketed medical
products, the company decided to change its name to Entrx.
GENERAL MOTORS: States It Spent $10M Resolving Asbestos Related Claims
----------------------------------------------------------------------
General Motors Corp., the world's leading maker of cars and trucks,
reports that it spent $10 million in 2001 to resolve asbestos tort
claims asserted by railroad workers. It expects the amount to grow in
coming years because of the number of claims, the many years it can
take to resolve any given claim, and the increasing rate at which
claims are being filed.
However, the company maintains its belief of a strong statutory and
judicial precedent supporting federal preemption of the asbestos tort
claims. Such preemption would mean that federal law entirely eliminates
the possibility that such individuals could bring tort claims against
GM.
GM has used asbestos in locomotive brakes and in the insulation used in
some locomotives. It has also used encapsulated asbestos in car brake
linings, known as asbestos containing friction products.
GM believes that the use of asbestos in these products was appropriate
and that there is a significant body of scientific data demonstrating
that these asbestos containing friction products are safe and do not
create an increased risk of asbestos related disease.
As with other companies that have used products containing asbestos,
there has been an increase in the number of claims against GM related
to allegations concerning the use of friction products in recent years.
A growing number of auto mechanics are filing suit seeking recovery as
a result of exposure to asbestos used in brake components.
In addition, a relatively small number of claims are brought by
contractors who are seeking recovery based on exposure to asbestos
containing products while working on premises owned by GM.
The company says while it has resolved many of these cases over the
years and continues to do so to avoid defense costs and possible
exposure to runaway verdicts, it believes that the vast majority of the
claims are without merit.
GM and the other domestic automobile manufacturers sought to have the
asbestos brake claims against them transferred and consolidated with
asbestos brake litigation in the Delaware bankruptcy court where the
Federal Mogul bankruptcy is pending.
The bankruptcy court in Delaware declined to consolidate the automobile
manufacturers' cases, and the Court of Appeals affirmed that decision.
The manufacturers are attempting to have that decision reviewed by the
U.S. Supreme Court.
COMPANY PROFILE
General Motors Corp. (NYSE: GM)
300 Renaissance Center
Detroit, MI 48265-3000
Phone: 313-556-5000
Fax: 248-874-2760
Web site: http://www.gm.com
Employees : 365,000
Revenue : $177,260,000,000
Net Income (Loss) : $601,000,000
Assets : $323,969,000,000
Liabilities : $303,516,000,000
No. of Asbestos Claims Pending : Unknown
(For the year ended December 31, 2001)
Business Description: General Motors is the world's No. maker of cars
and trucks, with brands such as Buick, Cadillac, Chevrolet, GMC,
Pontiac, Saab, Saturn, and Oldsmobile (which is being discontinued). GM
also produces cars through its Holden, Opel, and Vauxhall units. Non-
automotive operations include Hughes Electronics (DIRECTV - which it is
selling), Allison Transmission (heavy-duty automatic transmissions),
and GM Locomotive (locomotives, diesel engines).
New Securities Fraud Cases
AOL TIME: Robbins Umeda Commences Securities Fraud Suit in S.D. NY
------------------------------------------------------------------
Robbins Umeda & Fink, LLP initiated a securities class action on behalf
of the former shareholders of Time Warner, Inc. who received shares of
AOL Time Warner, Inc. (NYSE:AOL), pursuant to the merger of Time Warner
with and into AOL Time Warner, on or about January 11, 2001.
Defendants named in this action are the former officers and directors
of America Online, Inc., many of whom are now officers and directors of
AOL Time.
The suit alleges that defendants breached their fiduciary duties by
issuing a series of material misrepresentations and misleading
statements relating to AOL's financial condition and business prospects
prior to and at the time of the Merger which were made to induce Time
Warner shareholders to vote in favor of the combination.
Prior to the effective date of the Merger, defendants were well aware
that any admission by AOL that its ad revenues were being adversely
affected by the financial crisis of its dot-com customers would
jeopardize the pending Merger.
Thus, rather than admit that the failure of its dot-com customers was
already having a material adverse affect on AOL's ad revenues, prior to
the Merger, AOL sought to create the illusion that it was maintaining
its high rate of growth in advertising and commerce revenue, by
engaging in a series of unconventional and fiscally suspect deals in
late-2000 and early 2001, the purpose of which were to artificially
boost revenues and earnings.
For more details, contact Jeffrey P. Fink by Mail: 1010 Second Ave.,
Suite 2360, San Diego, CA 92101 by Phone: 800-350-6003 or by E-mail:
fink@ruflaw.com
AOL TIME: Kaplan Fox Commences Securities Fraud Suit in S.D. New York
---------------------------------------------------------------------
Kaplan Fox & Kilsheimer LLP initiated a securities class action against
AOL Time Warner, Inc. (NYSE: AOL), certain of its officers and
directors and Ernest & Young, LLP in the United States District Court
for the Southern District of New York.
This suit is brought on behalf of all persons or entities who
purchased, converted, exchanged or otherwise acquired the securities of
America Online (AOL) between July 19, 1999 and January 10, 2001 and all
persons who purchased, converted, exchanged or otherwise acquired the
securities of AOL Time Warner, Inc. between January 11, 2001 and July
17, 2002, inclusive.
The complaint alleges that AOL Time Warner and certain of its officers
and directors violated the federal securities laws. The complaint
alleges, among other things, that during the class period defendants
made material misrepresentations and/or omitted to state material facts
relating to AOL's online advertising revenues.
The complaint further alleges that, AOL and AOL Time Warner booked
revenue form one-time payments received from online advertising clients
as advertising revenue in order to artificially inflate their revenues
derived from online advertising.
The complaint also alleges that Ernst & Young, LLP violated the federal
securities laws by certifying AOL Time Warner's financial statements as
incorporated in AOL Time Warner's Annual Report for its fiscal year
2001 filed with the SEC on March 25, 2002 even though it knew (or
recklessly failed to discover) that AOL had counted in revenue sums
received in connection with selling online advertising for online
auction site eBay.
When the truth was revealed regarding AOL in an article in The
Washington Post on July 18, 2002, AOL Time Warner stock dropped to as
low as $11.75, down from its class period high of $58.51. As a result
of defendants' false and misleading statements, investors were damaged,
by purchasing AOL and AOL Time Warner securities at artificially
inflated levels during the class period.
For more details, contact Frederic S. Fox by Mail: 805 Third Avenue,
22nd Floor, New York, NY 10022 by E-Mail: mail@kaplanfox.com or visit
the firm's Website: http://www.kaplanfox.com
CITIGROUP INC.: Kaplan Fox Commences Securities Fraud Suit in S.D. NY
---------------------------------------------------------------------
Kaplan Fox & Kilsheimer LLP initiated a securities class action against
Citigroup, Inc. and its Chairman and CEO, Sanford I. Weill, (NYSE: C),
in the United States District Court for the Southern District of New
York. This suit is brought on behalf of all persons or entities who
purchased or otherwise acquired the Company's common stock between July
24, 1999 and July 22, 2002, inclusive.
The complaint alleges that the Company and Sanford I. Weill violated
the federal securities laws. Specifically, the complaint alleges, that
during the class period defendants failed to disclose material facts
concerning the Company's relationship with Enron Corp. The Company
never disclosed that it was structuring financing deals for Enron so
that Enron could falsify its financial statements and defraud its
investors.
After Enron's collapse, the Company continued to misrepresent its
potential Enron- related exposure by failing to disclose the true
extent of its potential legal liability arising out of its finance
transactions with Enron.
As a result of defendants' failure to disclose the true nature of the
Company's relationship with Enron, Company stock price was artificially
inflated during the class period trading as high as $57. Upon news
that the Senate Committee found evidence that the Company was involved
in Enron's collapse, the stock fell to $27 on trading of 121 million
shares.
For more details, contact Frederic S. Fox, Hae Sung Nam by Mail: 805
Third Avenue, 22nd Floor, New York, NY 10022 by Phone: 800-290-1952 or
212-687-1980 by Fax: 212-687-7714 by E-mail: mail@kaplanfox.com or
visit the firm's Website: http://www.kaplanfox.com
CONCORD EFS: Charles Piven Commences Securities Fraud Suit in W.D. TN
---------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired Concord EFS, Inc.
(Nasdaq:CEFT) securities between October 30, 2001 and September 4,
2002, inclusive, in the United States District Court for the Western
District of Tennessee, against the Company and certain of its officers
and directors.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
FLEMING COMPANIES: Emerson Firm Commences Securities Suit in E.D. TX
--------------------------------------------------------------------
The Emerson Firm initiated a securities class action on behalf of
purchasers of Fleming Companies, Inc. (NYSE:FLM) common stock during
the period between February 27, 2002 and July 30, 2002, inclusive.
The action is pending before the Honorable John T. Ward in the United
States District Court for the Eastern District of Texas, Texarkana
Division, against the Company and:
(1) Mark Hansen (CEO, Chairman),
(2) Neal J. Rider (CFO) and
(3) Thomas G. Dahlen (Executive FP, President of retail
operations)
The complaint alleges violations of Sections 10(b) and 20(a), of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Specifically, the suit alleges that beginning in early 2002, the
defendants issued numerous positive statements regarding the Company's
"price-impact" retail supermarket division.
These statements were made despite the fact that the defendants knew,
or recklessly disregarded, that the performance of the Company's
"price-impact" retail supermarket division was, in the words of the
defendants, "disappointing."
These statements falsely portrayed the Company's business prospects and
artificially inflated and maintained the price of the company's common
stock. The defendants capitalized on their false and misleading
statements by:
(i) lowering the interest rate and extending the maturity on $250
million of Fleming's debt;
(ii) raising over $155 million through the June 13, 2002 sale of 8
million shares of Fleming common stock at $19.40 per share;
(iii) raising an additional $200 million through the June 13, 2002
sale of Fleming Notes due 2010; and
(iv) using the proceeds of the June 13, 2002 securities sales to
complete the purchase of Core-Mark International, Inc. and
Head Distributing for $330 million in cash -- acquisitions
described by the defendants as "key" to Fleming's
implementation of its strategic transformation into an
efficient, national, multi-tier supply chain for consumer
packaged goods.
Then, approximately six weeks after defendants sold $355 million worth
of Company securities, the Company announced after the close of trading
on July 30, 2002 in an abrupt departure to the repeated and positive
statements made by the defendants during the class period, that its
"price-impact" retail supermarket division was not only performing
poorly, but performing so poorly that the Company was considering
abandoning this line of business entirely.
The price of the Company's common stock dramatically declined on this
announcement, falling from $15.21 on July 30, 2002 to $13.75 on July
31, 2002, on huge trading volume of 3.9 million shares, and continued
to decline over the next two heavy trading days to a 52-week low of
$10.76 on August 2, 2002.
Since then, the price of Fleming common stock has never recovered, and
currently trades well below the $19.40 price at which Fleming sold 8
million shares to unsuspecting investors on June 13, 2002.
For more details, contact Ms. Tanya Autry by Mail: P.O. Box 25336,
Little Rock, AR 72221-5336 by Phone: 1-800-663-9817 by E-mail:
tanya.autry@worldnet.att.net
FLEMING COMPANIES: Cauley Geller Commences Securities Suit in E.D. TX
---------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
on behalf of purchasers of Fleming Companies, Inc. (NYSE:FLM) common
stock during the period between February 27, 2002 and July 30, 2002,
inclusive. The action is pending in the United States District Court
for the Eastern District of Texas, Texarkana Division, against
defendants the Company and:
(1) Mark Hansen (CEO, Chairman),
(2) Neal J. Rider (CFO) and
(3) Thomas G. Dahlen (Executive FP, President of retail
operations)
The complaint alleges violations of Sections 10(b) and 20(a), of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Specifically, the suit alleges that beginning in early 2002, the
defendants issued numerous positive statements regarding the Company's
"price-impact" retail supermarket division.
These statements were made despite the fact that the defendants knew,
or recklessly disregarded, that the performance of the Company's
"price-impact" retail supermarket division was, in the words of the
defendants, "disappointing."
These statements falsely portrayed Fleming's business prospects and
artificially inflated and maintained the price of Fleming common stock.
The defendants capitalized on their false and misleading statements by:
(i) lowering the interest rate and extending the maturity on $250
million of Fleming's debt;
(ii) raising over $155 million through the June 13, 2002 sale of 8
million shares of Fleming common stock at $19.40 per share;
(iii) raising an additional $200 million through the June 13, 2002
sale of Fleming Notes due 2010; and
(iv) using the proceeds of the June 13, 2002 securities sales to
complete the purchase of Core-Mark International, Inc. and
Head Distributing for $330 million in cash - acquisitions
described by the defendants as "key" to Fleming's
implementation of its strategic transformation into an
efficient, national, multi-tier supply chain for consumer
packaged goods.
Then, approximately six weeks after defendants sold $355 million worth
of Fleming securities, Fleming announced after the close of trading on
July 30, 2002 in an abrupt departure to the repeated and positive
statements made by the defendants during the Class Period, that its
"price-impact" retail supermarket division was not only performing
poorly, but performing so poorly that Fleming was considering
abandoning this line of business entirely.
The price of Fleming common stock dramatically declined on this
announcement, falling from $15.21 on July 30, 2002 to $13.75 on July
31, 2002, on huge trading volume of 3.9 million shares, and continued
to decline over the next two heavy trading days to a 52-week low of
$10.76 on August 2, 2002.
Since then, the price of Fleming common stock has never recovered, and
currently trades well below the $19.40 price at which Fleming sold 8
million shares to unsuspecting investors on June 13, 2002.
For more details, contact Jackie Addison or Sue Null by Mail: P.O. Box
25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944 or visit the
firm's Website: http://www.cauleygeller.com
HOUSEHOLD INTERNATIONAL: Kaplan Fox Files Securities Suit in N.D. IL
--------------------------------------------------------------------
Kaplan Fox & Kilsheimer LLP initiated a securities class action against
Household International, Inc. (NYSE: HI), certain of its officers and
directors, and Arthur Andersen, LLP, in the United States District
Court for the Northern District of Illinois. This suit is brought on
behalf of all persons and entities who purchased or otherwise acquired
Company securities between October 23, 1997 and August 14, 2002,
inclusive.
The complaint alleges that defendants violated the federal securities
laws by issuing a series of materially false and misleading statements
regarding the Company's business, operations and future prospects.
The class period begins on October 23, 1997 the date on which the
Company announced its third-quarter 1997 results, and ends on August
14, 2002, the day Household International announced it would restate
its prior eight years financials, because it had overstated its net
income by $386 million during that period.
Specifically, the Company said it would revise the way it had accounted
for its MasterCard/Visa co-branding and affinity card relationships, as
well as a credit-card marketing agreement with a third party.
As a result of the defendants' false and misleading statements, Company
securities traded at artificially high levels during the class period.
For more details, contact Kaplan Fox & Kilsheimer LLP by Mail: 805
Third Avenue, 22nd Floor, New York, NY 10022 by E-mail:
mail@kaplanfox.com or visit the firm's Website:
http://www.kaplanfox.com
HPL TECHNOLOGIES: Kaplan Fox Commences Securities Fraud Suit in N.D. CA
-----------------------------------------------------------------------
Kaplan Fox & Kilsheimer LLP initiated a securities class action against
HPL Technologies, Inc. (NASDAQ: HPLA) and certain of its officers and
directors, in the United States District Court for the Northern
District of California. This suit is brought on behalf of all persons
and entities who purchased or otherwise acquired Company securities
between July 31, 2001 and July 18, 2002, inclusive.
The complaint alleges that the Company and certain of its officers and
directors violated the federal securities laws by issuing false and
misleading statements, including false financial statements, during the
class period.
On July 31, 2001, the Company became a public company through an IPO of
6 million shares at $11.00 per share, raising proceeds of $69.1
million. The IPO was accomplished pursuant to a Prospectus and
Registration Statement filed with the SEC. Those documents provided
the details of the Company's revenue recognition policy, which
purported to be in conformance with SEC guidelines for software revenue
recognition.
In each of the Company's four subsequent quarterly reports (its first,
second, third, and fourth quarter reports of its fiscal year ended
March 31, 2002), it reported increasing net sales and income, and made
positive statements attributing its increasing revenues to the ongoing
need for its software.
As a result of the Company's false financials and false and misleading
statements, its stock traded as high as $17.85 per share during the
class period. During this period, defendants sold 85,500 shares of
their individual shares. Also during the class period, the Company
acquired three companies using its stock as consideration.
On July 19, 2002, the Company announced that it was looking into
"financial and accounting irregularities involving revenue reported
during prior periods." The Company stated, in part, "the Company
believes that a material amount of revenue was improperly recognized
during one or more earlier periods in connection with sales to an
international distributor."
As a result of Defendants' false and misleading statements Company
stock plunged 72%, to as low as $4 per share, before trading was
halted. Trading in the stock has not resumed.
For more details, contact Frederic S. Fox, Jonathan K. Levine, Donald
R. Hall by Mail: 805 Third Avenue, 22nd Floor, New York, NY 10022 by
Phone: 800-290-1952 or 212-687-1980 by Fax: 212-687-7714 or by E-mail:
mail@kaplanfox.com
MORGAN STANLEY: Wechsler Harwood Commences Securities Suit in S.D. NY
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Wechsler Harwood LLP initiated a securities class action on behalf of
all persons who purchased any of all four classes of shares of Morgan
Stanley Dean Witter Technology Fund (Nasdaq:TEKAX) from the public
offering for the Fund on September 25, 2000 through July 31, 2002,
inclusive against Morgan Stanley Dean Witter & Co. ("MSDW"), Morgan
Stanley Dean Witter Technology Fund and others.
The suit alleges violations of Sections 11, 12 and 15 of the Securities
Act of 1933 and of Section 10(b) and Rule 10b-5 promulgated thereunder
of the Securities Exchange Act of 1934. The Morgan Stanley Dean Witter
Technology Fund recently changed its name to the Morgan Stanley
Technology Fund.
The defendants were:
(1) the underwriters for the common stock of certain of the
companies in the Technology Fund's portfolio;
(2) the investment bankers and corporate finance specialists for
certain of the companies whose securities are in the Fund's
portfolio;
(3) seeking to obtain additional investment banking business from
these present and former clients and from other companies
whose shares also were/are in the Fund's portfolio;
(4) the issuers of the shares in the Fund;
(5) preparing and publicly disseminating research reports and
recommendations on many of the companies whose shares were in
the Fund's portfolio; and
(6) the broker for certain members of the class
This action arises as a result of the issuance by the defendants of
shares in the Fund, and concerns material misstatements and omissions
by defendants in the Prospectus, relating to defendants' conflicts of
interest, which include but are not limited to the following:
(i) defendants failed to disclose and omitted material information
that MSDW had investment banking relationships with, including
having brought public, certain of the companies whose
securities were part of the Fund's portfolio. Defendants
disclosed neither this general fact nor the identities of the
particular companies with which it had investment banking
relationships;
(ii) defendants failed to disclose and omitted material information
concerning that MSDW was continuing to seek investment banking
relationships with many of the companies whose securities were
part of the Fund's portfolio; and
(iii) defendants failed to disclose and omitted material information
concerning that a material part of the total compensation paid
to MSDW research analysts was based upon obtaining investment
banking business for MSDW and not upon the accuracy of their
research about a given company.
Hence, MSDW and its affiliated companies, including the Fund,
recommended investments in and/or invested in companies in order to
enhance MSDW's opportunity to obtain investment banking business from
those companies (without regard to whether they were good investments
for the investors including plaintiffs and the Class).
For more details, contact Ramon Pi¤on IV by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: 877-935-7400 by E-mail:
rpinoniv@whhf.com or visit the firm's Website: http://www.whhf.com
SALOMON SMITH: Stull Stull Commences Securities Fraud Suit in S.D. NY
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Stull Stull & Brody LLP initiated a securities class action in the
United States District Court for the Southern District of New York, on
behalf of purchasers of the common stock of AT&T Corp. (NYSE:T) between
November 29, 1999 and August 22, 2002, inclusive, or of the AT&T
Wireless tracking stock (NYSE:AWE) from its inception until August 22,
2002, against defendants:
(1) Salomon Smith Barney, Inc.,
(2) its star telecommunication research analyst, Jack Grubman,
(3) Salomon's parent company Citigroup, Inc. and
(4) Citigroup CEO Sanford Weill
This action arises as a result of the issuance by the defendants of an
analyst report which recommended the purchase of AT&T common stock
without regard to the factual basis and without disclosing its
conflicts of interest.
When issuing the analyst report, Salomon and Mr. Grubman failed to
disclose significant, material conflicts of interest, including that,
in an explicit or implicit quid pro quo, Salomon was granted a
lucrative role in the April 2000 issuance of an AT&T Wireless tracking
stock, after Mr. Grubman, at AT&T's request, passed to Mr. Grubman by
Mr. Weill, raised his recommendation of AT&T in November 1999 from
"neutral" to "buy."
For more details, contact Tzivia Brody by Mail: 6 East 45th Street, New
York NY 10017 by Phone: 1-800-337-4983 by Fax: 212-490-2022 by E-mail:
SSBNY@aol.com
SALOMON SMITH: Lovell Stewart Commences Securities Suit in S.D. NY
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Lovell Stewart Halebian LLP filed a securities class action on
September 10, 2002 on behalf of all persons who purchased, converted,
exchanged or otherwise acquired the common stock of AT&T Corp. (NYSE:T)
and/or AT&T Wireless Group tracking stock (NYSE:AWE) between November
29, 1999 and August 22, 2002.
The lawsuit asserts claims under Section 11 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 and seeks to
recover damages.
The action is pending in the U.S. District Court for the Southern
District of New York, alleging that during the class period Salomon
Smith Barney, Inc., Citigroup Inc., Sanford I. Weill, Citigroup's CEO,
and Jack Grubman, Salomon Smith Barney's lead telecommunications
analyst made misrepresentations and/or omissions of material fact,
including failing to disclose that Salomon and Mr. Grubman had
significant, material conflicts of interest, including an explicit or
implicit agreement under which Salomon was granted a lucrative role in
the April 2000 issuance of AT&T Wireless Group tracking stock after Mr.
Grubman raised his recommendation on AT&T in November 1999 from
"neutral" to "buy", and that defendant Grubman issued his "buy"
recommendation on AT&T in order to obtain investment banking business
for Salomon.
The complaint further alleges that Salomon was engaged in a pattern and
practice of basing its analyst reports for companies in the
telecommunications sector not on the underlying business merits of the
issuers of stocks, but on Salomon's prospective ability to obtain
investment banking fees, including underwriting discounts and
commissions, from such issuers.
The complaint alleges that the foregoing harmed investors by causing
the market price of AT&T common stock and AT&T Wireless Group tracking
stock to be artificially inflated during the class period.
For more details, contact Christopher Lovell or Christopher J. Gray by
Phone: 212-608-1900 by E-mail: classaction@lovellstewart.com or visit
the firm's Website: http://www.lovellstewart.com
XCEL ENERGY: Kaplan Fox Commences Securities Fraud Suit in MN Court
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Kaplan Fox & Kilsheimer LLP initiated a securities class action against
Xcel Energy, Inc. (NYSE: XEL) and certain of its officers and
directors, in the United States District Court for the District of
Minnesota, on behalf of all persons and entities who purchased or
otherwise acquired Company securities between January 31, 2001 and July
26, 2002, inclusive.
The complaint alleges that the Company and certain of its officers and
directors violated the federal securities laws by issuing a series of
materially false and misleading statements regarding the Company's
financial performance and the financial performance of NRG, the
Company's majority-owned subsidiary.
The complaint further alleges that during the class period defendants
failed to disclose that the Company participated in so called "round-
trip" transactions which lacked economic substance, had the effect of
artificially inflating the Company's reported financial results, and
also exposed the Company to massive legal liability.
As a result of defendants' failure to disclose the Company's improper
"round-trip" transactions, Company stock price was artificially
inflated during the class period, trading as high as $31.00. On July
29, 2002, Company stock fell to $5.66 on trading of more than 17
million shares.
For more details, contact Frederic S. Fox, Joel B Strauss, Donald R.
Hall by Mail: 805 Third Avenue, 22nd Floor, New York, NY 10022
by Phone: 800-290-1952 or 212-687-1980 by Fax: 212-687-7714 by E-mail:
mail@kaplanfox.com
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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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Copyright 2002. All rights reserved. ISSN 1525-2272.
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