/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/020926.mbx C L A S S A C T I O N R E P O R T E R Thursday, September 26, 2002, Vol. 4, No. 191 Headlines ARIZONA: Judge's Ruling Moves Taxpayers Closer To Refunds BIOPURE CORPORATION: Plaintiffs Have Until October 7 to File Appeal CARDIZEM LITIGATION: Court Preliminarily OKs Aventis, Andrx Settlement FIREPOND INC.: Mounting Vigorous Defense Against Securities Suit in NY HAYES LEMMERZ: Bankruptcy Court Soon To Hear Relief From Stay Motion KMART CORPORATION: Officers, Auditor Named in Michigan Securities Suit KMART CORPORATION: Faces Suit for Breach of Fiduciary Duty Under ERISA KMART CORPORATION: California Suits Stayed Pending Bankruptcy Procedure LOUISVILLE CITY: Property Owners May Seek Tax Refunds by Court Action NOVELL INC.: Plaintiffs Appeal Dismissal of Utah Securities Fraud Suit NOVELL INC.: Unit Moves for Dismissal of Securities Suit in S.D. NY NOVELL INC.: Dismissal of $300 Million Antitrust Suit in Utah Appealed PB PIPE LITIGATION: New Homeowners May Qualify for Free Replacement ROYALTY CLAIMS: High Court Says Gas Royalty Claimants Can Sue Anywhere SCHOLASTIC CORPORATION: Settles Suit, Estimates $1.9 MM Charge in Q1 SYPRIS SOLUTIONS: Lawsuit Over Coker Plant Explosion Remains Undecided TAKE-TWO INTERACTIVE: Court Okays $7.5 MM Settlement of Securities Suit TRANSUNION: Lauds Court For Favorable Ruling on Potential Class Suit UNITED STATES: Black Farmers Speak At Congressional Black Caucus WHEREHOUSE ENTERTAINMENT: Sued in L.A. for Non-payment of Overtime Work * Expert Says REIT Stocks 'Tool' for Reducing 401k Fiduciary Risk * Hong Kong's Securities Czar Wants Adoption of U.S.-type Class Action New Securities Fraud Cases CUTTER & BUCK: Charles Piven Commences Securities Fraud Suit in W.D. WA DUANE READE: Charles Piven Commences Securities Fraud Suit in S.D. NY HEALTHSOUTH CORPORATION: Lovell Stewart Initiates Suit in N.D. Alabama HOUSEHOLD INTERNATIONAL: Charles Piven Files Securities Suit in N.D. IL INTERPUBLIC GROUP: Charles Piven Files Securities Fraud Suit in S.D. NY IPALCO: Hagens Berman Commences Securities Fraud Suit in Indianapolis METRIS COMPANIES: Charles Piven Commences Securities Fraud Suit in MN MSC INDUSTRIAL: Charles Piven Commences Securities Fraud Suit in E.D NY ********* ARIZONA: Judge's Ruling Moves Taxpayers Closer To Refunds --------------------------------------------------------- Tax Court Judge Paul Katz's recent decision moved some taxpayers one step loser to getting the tax refunds owed to them because the state improperly taxed some corporate dividends in the late 1980s, the Associated Press Newswires reported recently. Judge Katz gave preliminary approval to a settlement that will split the better part of $350 million among hundreds of thousands of taxpayers. More terms of the settlement are available than earlier. "I believe that this settlement is the result of good negotiations, and it is fair to members of the class," Judge Katz said. He scheduled a December 16 hearing to decide whether he will give the settlement his final approval. Attorneys have said about 675,000 taxpayer may be eligible for refunds because of the case, which resulted in a groundbreaking Arizona Supreme Court ruling that taxpayers could band together in class-action lawsuits to press tax claims. Class attorney Randall Wilkins said the settlement will benefit a wide range of taxpayers, particularly those who could not normally have paid a lawyer or a CPA to process a claim for them. "This is the first time that the average person can achieve this type of relief," Mr. Wilkins said. The case involved income taxes ruled to have been collected illegally from thousands of taxpayers for some corporate dividends in 1986-89. The state agreed it should not have taxed non-Arizona companies' dividends at one rate, while giving more favorable treatment to dividends paid by in-state companies. The state will calculate the money owed to plaintiffs, using a standard formula applied to dividend income listed in tax documents. The state will figure that approximately half the dividends were taxed correctly and half were not in order to calculate the refunds. This will save the state from manually processing individual tax returns, which would have otherwise taken more than a decade, attorneys have said. Most claimants will not have to file claim forms, because they will be identified using tax records. Potential recipients will be notified by mail of the case's existence and the proposed settlement. Unless they opt out of the settlement, they will receive a check for the refund by mail. Notices of the lawsuit and the proposed settlement will be published in November. And the first two payment installments will be issued no later than August 2004. It still remains to be seen how much the lawyers for the class will receive. BIOPURE CORPORATION: Plaintiffs Have Until October 7 to File Appeal ------------------------------------------------------------------- Biopure Corporation and its former Chairman and Chief Executive Officer were named as defendants in a purported class action (resulting from the consolidation of five actions, the first of which was filed on February 5, 2002) in the U.S. District Court for the District of Massachusetts by alleged purchasers of Biopure's common stock and subsequently amended. The complaints claimed that Biopure violated the federal securities laws by publicly disseminating materially false and misleading statements regarding the anticipated time of a biologic license application Biopure expected to make to the U.S. Food and Drug Administration and that Biopure failed to disclose materially adverse information regarding the data Biopure gathered in the Phase III clinical trials in support of its FDA application, resulting in the artificial inflation of Biopure's common stock price during the purported class period of May 8, 2001 through March 21, 2002. By Memorandum And Order dated September 4, 2002, the Court granted defendants' motion to dismiss in its entirety, dismissing all of plaintiffs' claims with prejudice. The deadline to appeal is October 7, 2002. CARDIZEM LITIGATION: Court Preliminarily OKs Aventis, Andrx Settlement ---------------------------------------------------------------------- Andrx Corporation (Nasdaq:ADRX) announced Tuesday that the United States District Court for the Eastern District of Michigan has preliminarily approved the settlement which Aventis Pharmaceuticals, Inc. and Andrx entered into with the direct purchaser class of plaintiffs in the Cardizem CD antitrust litigation. The settlement requires a total payment of $110 million by Aventis and Andrx to this class, and the split between these two parties remains confidential. Andrx's portion of that settlement is a part of the $60 million charge previously announced by Andrx and taken in the second quarter of 2002. Though Andrx will continue to attempt to settle the remaining claims on reasonable terms, the Company is committed to vigorously litigating any of the cases that cannot be settled on that basis. Andrx Corporation is a specialty pharmaceutical company engaged in the commercialization of oral controlled-release generic and brand pharmaceuticals utilizing its proprietary drug delivery technologies. Andrx also distributes generic pharmaceutical products manufactured by third parties. For more information, contact Andrx Corporation, Fort Lauderdale through its Investor Relations: Gale A. Blackburn by Phone: 954-217-4344 or by e-mail: gblackburn@andrx.com. You may also contact Scott Lodin by Phone: 954-585-1751 or by e-mail: slodin@andrx.com FIREPOND INC.: Mounting Vigorous Defense Against Securities Suit in NY ---------------------------------------------------------------------- Beginning in August 2001, a number of securities class action complaints were filed in the Southern District of New York seeking an unspecified amount of damages on behalf of an alleged class of persons who purchased shares of FirePond, Inc.'s common stock between the date of their initial public offering and December 6, 2000. The complaints name as defendants Firepond and certain of its directors and officers, and FleetBoston Robertson Stephens and other parties as underwriters of our initial public offering. The plaintiffs allege, among other things, that the Company's prospectus, incorporated in the Registration Statement on Form S-1 filed with the Securities and Exchange Commission was materially false and misleading because it failed to disclose that the investment banks which underwrote Firepond's initial public offering of securities received undisclosed and excessive brokerage commissions, and required investors to agree to buy shares of the company's securities after the initial public offering was completed at predetermined prices as a precondition to obtaining initial public offering allocations. The plaintiffs further allege that these actions artificially inflated the price of the Company's common stock after the initial public offering. "While the Company believes the claims against them are without merit and intend to defend the actions vigorously, the litigation is in the preliminary stage, and the Company cannot predict the outcome with certainty," a Securities and Exchange Commission report said. FirePond provides enterprise software that is used to manage customer interactions across a variety of sales channels. Its SalesPerformer software includes tools for sales force automation, customer profiling, order configuration, and needs analysis, and can be implemented across direct, indirect, and Web-based sales channels. According to a Hoovers.com dossier, the company also offers software (eServicePerformer) for managing online customer service operations. Firepond's customers come from industries such as financial services, telecommunications, and manufacturing. Entities affiliated with General Atlantic Partners own 45% of the company. HAYES LEMMERZ: Bankruptcy Court Soon To Hear Relief From Stay Motion -------------------------------------------------------------------- On May 3, 2002, a group of purported purchasers of the bonds of HAYES LEMMERZ INTERNATIONAL, INC. commenced a putative class action lawsuit against thirteen present or former directors and officers of the Company (but not the Company) and KPMG LLP, the Company's independent auditor, in the United States District Court for the Eastern District of Michigan. The complaint seeks damages for an alleged class of persons who purchased Company bonds between June 3, 1999 and September 5, 2001 and claim to have been injured because they relied on the Company's allegedly materially false and misleading financial statements. On June 27, 2002, the plaintiffs filed an amended class action complaint adding CIBC World Markets Corp. and Credit Suisse First Boston Corporation, underwriters for certain bonds issued by the Company, as defendants. Additionally, before the date the Company commenced its Chapter 11 Bankruptcy case, four other putative class actions were filed in the United States District Court for the Eastern District of Michigan against the Company and certain of its directors and officers, on behalf of a class of purchasers of Company common stock from June 3, 1999 to December 13, 2001, based on similar allegations of securities fraud. On May 10, 2002, the plaintiffs filed a consolidated and amended class action complaint seeking damages against the Company's present and former officers and directors (but not the Company) and KPMG. On June 13, 2002, the Company filed an adversary complaint and motion for a preliminary injunction in the Bankruptcy Court requesting the Court to stay the class action litigation commenced by the bond purchasers and equity purchasers. Additionally, on July 25, 2002, the Company filed with the Bankruptcy Court a motion to lift the automatic stay in the Chapter 11 Filings to allow the insurance company that provides officer and director liability insurance to the Company to pay the defense costs of the Company's present and former officers and directors in such litigation. The Bankruptcy Court currently is scheduled to hear these matters at a hearing scheduled for September 30, 2002. KMART CORPORATION: Officers, Auditor Named in Michigan Securities Suit ---------------------------------------------------------------------- Since February 21, 2002, five separate purported class actions have been filed on behalf of purchasers of Kmart common stock between May 17, 2001 and January 22, 2002, inclusive, naming Charles Conaway as CEO and Chairman of the Board of Kmart as the sole defendant. The complaints filed in the United States District Court for the Eastern District of Michigan allege that Mr. Conaway made material misstatements or omissions during the alleged class period that inflated the trading prices of Kmart's common stock and seek, among other things, damages under Section 10b-5 of the Securities and Exchange Act of 1934. Kmart is not a defendant. On August 15, 2002, an amended consolidated complaint was filed that enlarged the class of persons on whose behalf the action was brought to include purchasers of Kmart securities between March 13, 2001 and May 15, 2002, and added Jeffrey N. Boyer, Mark S. Schwartz, Matthew F. Hilzinger, Martin E. Welch III and PricewaterhouseCoopers LLP as defendants. KMART CORPORATION: Faces Suit for Breach of Fiduciary Duty Under ERISA ---------------------------------------------------------------------- On March 18, 2002, a purported class action was filed in the United States District Court for the Eastern District of Michigan on behalf of participants or beneficiaries of the Kmart Corporation Retirement Savings Plan against various officers and directors of Kmart alleging breach of fiduciary duty under ERISA for excessive investment in company stock; failure to provide complete and accurate information about Kmart common stock and failure to provide accurate information regarding our financial condition. Class action allegations are also made for current and former employees who participate in the Kmart Corporation Retirement Savings Plan. "Kmart is not a defendant," the company stressed in its latest Securities and Exchange Commission disclosure. KMART CORPORATION: California Suits Stayed Pending Bankruptcy Procedure ----------------------------------------------------------------------- Kmart is a defendant in six putative class actions and one multi- plaintiff case pending in California, all relating to its classification of assistant managers and various other employees as "exempt" employees under the federal Fair Labor Standards Act and the California Labor Code and its alleged failure to pay overtime wages as required by these laws. These seven wage-and-hour cases were all filed during 2001 and are currently pending in the U.S. District Court for the Eastern District of California (Henderson v. Kmart), the U.S. District Court for the Central District of California (Gulley v. Kmart, the multi-plaintiff case, which was originally brought in state court) and the Superior Courts of the State of California for the Counties of Alameda, Los Angeles and Riverside (Panossian v. Kmart, Wallace v. Kmart, Pierce v. Kmart, Hancock v. Kmart, Pryor v. Kmart). "If all of these cases were determined adversely to Kmart, the resulting damages would have a material adverse impact on our results of operations and financial condition," the company said its recent SEC disclosure. "However, there have been no class certifications, all of the cases are stayed as a result of Kmart's bankruptcy and, based on our initial investigations, we believe that we have numerous defenses to each of these claims." LOUISVILLE CITY: Property Owners May Seek Tax Refunds by Court Action --------------------------------------------------------------------- A group of Louisville property owners may seek a refund of property taxes paid for 1998 and 1999, without going through the Kentucky Board of Tax Appeals, the Court of Appeals recently ruled, according to the Associated Press Newswires. The decision by the appellate court does not determine whether the taxpayers may seek refunds on behalf of all property owners in the city. Eric P. Light and Connie Light sued the city, alleging it did not follow proper precautions when it set property tax rates for the two years of 1998 and 1999. They asked for refunds of the difference between what they paid and what they maintain they should have paid. The protested amounts were not included in the court's ruling. The city had argued that protests of property taxes must go to the board of tax appeals. The recently released unanimous ruling from a three-judge panel of the court said city property taxes are not covered by the state board of appeals. The tax appeal board has jurisdiction over tax matters arising from "any agency of state or county government," according to the ruling written by Judge Paul Gudgel. The court said the city of Louisville is not included in that scheme; it creates its own tax bills. Therefore, said the court, the Lights may go to court directly to seek their refunds because they already asked the city for refunds and were turned down. And even though the city has said the lawsuit should not be able to qualify as a class action, that is an issue, wrote Judge Gudgel, that the Jefferson County Circuit Court will have to determine. NOVELL INC.: Plaintiffs Appeal Dismissal of Utah Securities Fraud Suit ---------------------------------------------------------------------- In February 1998, a suit was filed in the U.S. District Court, District of Utah, against Novell and certain of its officers and directors, alleging violation of federal securities laws by concealing the true nature of Novell's financial condition and seeking unspecified damages. The lawsuit was brought as a purported class action on behalf of purchasers of Novell common stock from November 1, 1996 through April 22, 1997. After a first dismissal and a subsequent amendment to the complaint, the Federal District Judge dismissed the amended complaint with prejudice for failure to state a claim. The plaintiffs have filed a Notice of Appeal to the Tenth Circuit Court of Appeals and Novell intends to vigorously defend to uphold the Federal District Court's ruling. "While there can be no assurance as to the ultimate disposition of the lawsuit, Novell does not believe that the resolution of this litigation will have a material adverse effect on its financial position, results of operations, or cash flows," a Securities and Exchange Commission report of the company said. NOVELL INC.: Unit Moves for Dismissal of Securities Suit in S.D. NY ------------------------------------------------------------------- SilverStream, a unit of Novell, Inc., and several of its former officers and directors, as well as the underwriters who handled SilverStream's public offerings, are named as defendants in several class action complaints that have been filed on behalf of certain of former stockholders of SilverStream who purchased securities between August 16, 1999 and December 6, 2000. These complaints allege violations of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. In particular, they allege, among other things, that there was undisclosed compensation received by the underwriters of SilverStream's initial and secondary public offerings. The plaintiffs are seeking monetary damages, statutory compensation and other relief that may be deemed appropriate by the court. The plaintiffs have brought similar actions against a large number of other issuers and underwriters, making similar allegations. A Consolidated Amended Complaint was filed, in the U.S. District Court, Southern District of New York, on April 19, 2002. All issuers, including SilverStream, filed a Motion to Dismiss on July 15, 2002. "Novell believes that SilverStream and the individual defendants have meritorious defenses to the claims made in the complaints and intends to contest the lawsuits vigorously," said the company's latest Securities and Exchange Commission disclosure. NOVELL INC.: Dismissal of $300 Million Antitrust Suit in Utah Appealed ---------------------------------------------------------------------- In January 1995, Lantec, Inc. filed a suit against Novell in the U.S. District Court, the District of Utah, for alleged antitrust violations arising from Novell's acquisition of the GroupWise technology. The plaintiffs were seeking to demonstrate damages of $300 million. On April 19, 2001, the judge ruled in favor of Novell and dismissed the entire complaint. The plaintiff filed a Notice of Appeal to the Tenth Circuit Court of Appeals and Novell intends to vigorously defend to uphold the Federal District Court's ruling. "While there can be no assurance as to the ultimate disposition of the lawsuit, Novell does not believe that the resolution of this litigation will have a material adverse effect on its financial position, results of operations, or cash flows," the company said in its latest Securities and Exchange Commission report. PB PIPE LITIGATION: New Homeowners May Qualify for Free Replacement ------------------------------------------------------------------- Homeowners with polybutylene (PB) plumbing inside their homes or outside used for yard service lines may qualify for a free replacement of their plumbing system. If they bought their house, mobile home, or multi-family structure after September 12, 1999, this may be the first time they are eligible to participate this program. The first step for those who purchased residential property since September 12, 1999 is to inspect the structure's plumbing. PB systems are distinguished by flexible, gray plastic pipes joined by plastic or metal insert fittings held in place by small aluminum or copper bands, a little wider than a man's wedding band. Inside a home, these may be found in the attic, crawl space or water heater closet, often beneath insulation materials. Outside a home, blue, gray or black piping at the water meter or pipe entry site may indicate the presence of a PB yard service line. Under the terms of a class action settlement between consumers and PB pipe manufacturers and raw material suppliers reached seven years ago, systems that qualify for replacement must have been installed between January 1, 1978 and July 31, 1995. Homeowners, especially those who bought their homes within the past 36 months and find that their properties have PB plumbing that has leaked or that leaks in the future should call the Consumer Plumbing Recovery Center (CPRC) toll-free at 1-800-392-7591 or visit http://www.pbpipe.com. The Web site features all information needed to file a claim, including a Claims Eligibility Form making it a simple process. "Homeowners with leaking PB pipe should call the CPRC or access the Web site as soon as possible. Consumers have found the plumbing replacement process quite simple and easy," explained Tim Taylor, General Manager of the Center. "We are eager to inform them about the relief they are eligible to receive and to help them through the plumbing replacement process." PB pipe was installed in millions of residential properties in the U.S. beginning in the late 1970s, but it was never used for drains, waste or vent piping, yard sprinkler systems, irrigation systems, fire sprinkler systems, sewer lines, faucets or fixtures. PB pipe should also not be confused with PVC or CPVC products that are rigid and white or off- white plastic. The CPRC website includes photos of the PB pipes and fittings that qualify for replacement. A homeowner who has polybutylene (PB) plumbing but does not wish to participate in the benefits of the replacement program may be excluded from obtaining relief under this settlement by signing and returning an exclusion request form by December 31, 2002. The toll free number and the Web site have information on how to do this and also have the official Notice of Class Action and Settlement. Since the conclusion of the class action suit in the Chancery Court for Obion County, Union City, Tennessee, in November 1995, the CPRC has received more than a million and a half inquiries and more than 600,000 consumers have filed claims. In the past seven years, the Center has spent over $500 million re-plumbing more than 300,000 affected houses, mobile homes, multi-unit structures, and yard lines in a program that, despite its national scope and large number of qualified claimants, is hassle-free. "The CPRC provides extensive support to qualifying claimants to ensure that eligibility is established quickly and that the plumbing replacement takes place with minimum disruption," said Mr. Taylor. "We evaluate the claim and check the basic information. We then send an inspector for a site visit to qualify the home and determine the extent of the work. If you qualify, you can select your own plumber or use one of the plumbers recommended by the CPRC. Our goal is to make the process quick and painless." ROYALTY CLAIMS: High Court Says Gas Royalty Claimants Can Sue Anywhere ---------------------------------------------------------------------- Wyoming district courts have no geographical limit on claims filed for oil and gas royalties, the state Supreme Court ruled in a class-action lawsuit covering claims in Lincoln and other counties in the state, reported the Associated Press Newswires. The unanimous opinion released last weekend said that the Legislature intended that cases filed under the Wyoming Royalty Payment Act may be brought in any county where one of the wells in question is located. "This reading of the statute is more reasonable than the alternative -- that multiple suits involving the same issues and between the same parties must be brought in all the counties where the well [in question] is located," said the opinion written by Justice Barton Voigt. The opinion came in a civil case out of Lincoln County. A number of royalty owners are seeking additional royalties from BP America Production Co. and Marathon Oil. The oil companies had argued that state law allows claims to be brought only in the district court for the county where the oil well is located. SCHOLASTIC CORPORATION: Settles Suit, Estimates $1.9 MM Charge in Q1 -------------------------------------------------------------------- Scholastic Corporation (NasdaqNM: SCHL), announced Tuesday that it has agreed in principle to settle the shareholder class action entitled In re Scholastic Corporation Securities Litigation, 97 Civ. 2447 (JFK). Scholastic will record a non-recurring pre-tax charge of $1.9 million in the quarter ended August 31, 2002 to reflect the 25% of the $7.5 million settlement that will not be paid by the Company's insurers. On an after-tax basis, the charge is equal to approximately $l.2 million or $0.03 per share. The settlement, which is subject to court approval, covers those who purchased the Company's common stock between December 10, 1996 and February 20, 1997. SYPRIS SOLUTIONS: Lawsuit Over Coker Plant Explosion Remains Undecided ---------------------------------------------------------------------- Sypris Technologies, a subsidiary of Sypris Solutions, Inc., is a co- defendant in two lawsuits arising out of an explosion at a coker plant owned by Exxon Mobil Corporation located in Baton Rouge, Louisiana. In each of these lawsuits, it is alleged that a carbon steel pipe elbow that Sypris Technologies manufactured was improperly installed and the failure of which caused the explosion. One of the actions was brought by Exxon Mobil in 1994 in state district court in Louisiana and claims damages for destruction of the plant, which Exxon Mobil estimates exceed one hundred million dollars. Sypris Technologies is a co-defendant in this action with the fabricator who built the pipeline into which the elbow was incorporated and with the general contractor for the plant. The second action is a class action suit also filed in 1994 in federal court in Louisiana on behalf of the residents living around the plant and claims unspecified damages. Sypris Technologies is a co-defendant in this action with Exxon Mobil, the contractor and the fabricator. In both actions, the Company maintains that the carbon steel pipe elbow at issue was appropriately marked as carbon steel and was improperly installed, without Sypris Technologies' knowledge, by the fabricator and general contractor in circumstances that required the use of a chromium steel elbow. Although the Company believes these defenses to be meritorious, there can be no assurance that the Company will not be found liable for some or all of the alleged damages. If the Company was to be found liable and the damages exceeded available insurance coverage, the impact could materially and adversely affect the Company's financial condition and results of operations. TAKE-TWO INTERACTIVE: Court Okays $7.5 MM Settlement of Securities Suit ----------------------------------------------------------------------- Since December 2001, thirteen purported class action lawsuits have been filed in the United States District Court for the Southern District of New York against Take-Two Interactive Software, Inc. and certain of its current and former officers and directors. The actions were consolidated in one lawsuit, Gershon Bassman v. Take-Two Interactive Software, Inc., in April 2002. The consolidated complaint includes claims under Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under Section 10 (b), and generally alleges that defendants issued false and misleading public filings, press releases and other statements regarding the Company's financial condition during a class period commencing on February 24, 2001 through December 17, 2001 in a scheme to artificially inflate the value of the Company's common stock. In June 2002, the Company entered into a definitive agreement with the plaintiffs to settle the consolidated class action lawsuits for $7.5 million in cash. During the three months ended April 30, 2002, the Company recorded $1.46 million of class action settlement costs, which represents the settlement of $7.5 million and related legal fees, net of $6.14 million of insurance proceeds. The settlement amount is included in accounts payable at July 31, 2002. The insurance proceeds are included in prepaid expenses and other current assets at July 31, 2002. In July 2002, the United States District Court granted preliminary approval of the settlement agreement. TRANSUNION: Lauds Court For Favorable Ruling on Potential Class Suit -------------------------------------------------------------------- TransUnion, a leading global information solutions company, on Tuesday praised the Federal Court of the Northern District of Illinois' favorable ruling relating to potential class action lawsuits that were based on the company's previous dispute with the Federal Trade Commission (FTC) about target marketing lists. A U.S. Supreme Court ruling against TransUnion in June created unwarranted concern about the financial impact that class action lawsuits could have on TransUnion. The Federal Court recently ruled in favor of TransUnion's request that certain claims in the federal lawsuits should not be allowed to proceed as class actions. "We are pleased with the ruling," said Harry Gambill, president of TransUnion. "The ruling affirms that there is already an existing regulatory framework that governs our business and protects consumers." According to the 43-page decision, the court recognized that the statutory framework created by Congress and enforced by the FTC "is superior to a class action for statutory damages by tens of millions of consumer who claim no actual economic loss." In addition, the opinion stated that consumers "continue to be protected by the FTC's enforcement of the statute and regulations." TransUnion is a leading global information solutions company that customers trust as a business intelligence partner and commerce facilitator. TransUnion offers accurate and reliable financial data through a broad range of products and services that enable customers to manage risk and capitalize on market opportunities. The company uses leading-edge technology coupled with extensive analytical capabilities to prevent fraud and facilitate credit transactions between businesses and consumers across multiple industries and channels, including the Internet. Founded in 1968, Chicago-based TransUnion employs 3,600 associates that support clients in 24 countries. For more information, contact TransUnion through Clark Walter by Phone: 312/985-3734 or by e-mail: cwalter@transunion.com UNITED STATES: Black Farmers Speak At Congressional Black Caucus ---------------------------------------------------------------- The air was filled with invective aimed at USDA when black farmer leaders and lawyers stated their grievances at a forum recently held in Washington, and sponsored by the Congressional Black Caucus, according to a report by the Richmond Times-Dispatch. Stephen S. Hill, a lawyer for Hispanic farmers who are suing the Agriculture Department for millions of dollars and lasting changes in the way USDA operates, also spoke at the forum and promised "bombshells to come" from friendly witnesses familiar with USDA operations. Critical written statements by two former high-ranking USDA officials already have been filed in the Hispanic farmers' lawsuit: One is a statement from Rosalind D. Gray, named in July 1998, to head the Office of Civil Rights, who questioned USDA's will to reform itself. She said that "systemic exclusion of minority farmers remains the standard operating procedure" at the Farm Service Agency (FSA). The FSA is a USDA branch, organized in 1994, to handle farm loans, conservation and farm commodity programs. Its programs are delivered through a far-flung field office system overseen by predominantly white- and male-elected county committees. "This system of control by a few white farmers over federal farm dollars moving into the counties has been used to perpetuate and expand the farms of many county committee members and their families, at the expense of disfavored minority farmers," Ms. Gray said, echoing some of the black farmers' harshest allegations. A second statement was filed, as well, in the Hispanic farmers' lawsuit. Dallas R. Smith, who retired in 1999, from the post of deputy undersecretary, said discrimination in USDA loan programs was "an open secret, but very difficult to combat." These charges, from black and Hispanic farmers, arise in a climate of despair, different from the hopeful atmosphere accompanying the settlement approved by a federal judge on April 14, 1999. The settlement was believed to punctuate with a "happy ending" the black farmers' class-action lawsuit against the USDA. Perhaps, the seed of the unhappiness that has attended the settlement was planted at its inception, when a settlement was approved which did not order operational changes at USDA. Under the settlement, almost 13,000 farmers have won payments of more than $629 million under the simpler and quicker of two claim routes provided. Claims by about 8,500 farmers were turned down. Failure by tens of thousands of black farmers to win any compensation under the settlement, whether their claims were rejected or were ruled ineligible for filing late, has stirred wide disappointment and finger- pointing. A bid by unhappy black farmers to vacate the settlement was rejected in court recently. These figures do not give the entire view of the settlement, however. The settlement addressed the claims made by the black farmers that USDA systematically discriminated against the black farmers applying for loans and subsidy programs. USDA admitted the discrimination. The settlement was supposed to pay black farmers $50,000 dollars 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. WHEREHOUSE ENTERTAINMENT: Sued in L.A. for Non-payment of Overtime Work ----------------------------------------------------------------------- In January 2001, Wherehouse Entertainment, Inc. was sued in the Los Angeles Superior Court by a former store manager, claiming alleged failure to pay overtime wages to herself and all similarly situated salaried store employees. The complaint does not specify any amount of the claims, either individually or on behalf of the class. Thereafter, the complaint was amended to add three additional named plaintiffs. The amended complaint seeks relief on behalf of both store managers and assistant managers going back to 1997. The company's motions to strike the class action allegations have been denied. In October 2001, a second class-action suit was filed with respect to store managers and assistant managers by different named plaintiffs and different lawyers. It also seeks overtime pay and, in addition, asserts claims for meal break and rest break penalties. The plaintiffs in the two suits have filed a consolidated complaint. A limited amount of discovery has been conducted to date. "While the company believes it has meritorious defenses against the suits, the ultimate resolution of the matter, could result in a loss in excess of the amount accrued during the second quarter of Fiscal 2003," the company said in its latest Securities and Exchange Commission disclosure. * Expert Says REIT Stocks 'Tool' for Reducing 401k Fiduciary Risk ----------------------------------------------------------------- REITs' low correlation with other stocks and bonds makes them "a potentially powerful tool" for the 401(k) plan fiduciary in selecting investment options, according to a newly-published article by noted Employment Retirement Income Security Act (ERISA) attorney Evan Miller. ERISA, the 1974 federal law that guides private-sector pension plan management, requires fiduciaries - persons with the authority to make decisions regarding a plan's assets - to invest prudently and to diversify the investments of a pension plan so as to lessen the risk of large losses. Writing in the Fall 2002 issue of The Journal of Pension Planning and Compliance, Mr. Miller notes that the global bear market has caused a spate of recent ERISA class action litigation brought by 401(k) participants challenging the appropriateness of specific 401(k) investments. As these 401(k) plan class actions proceed, it is Mr. Miller's view that courts should apply modern portfolio theory concepts - especially principals of covariance - to scrutinize 401(k) plan fiduciary conduct. In this regard, if an employer is faced with significant losses in a 401(k) investment option, its legal position would be strengthened if it can argue that the plan chose all investment options, including the challenged one, based upon a process that relied on the concepts of low correlation and diversification among all asset classes, and that the plan clearly informed participants of the importance of low correlation and diversification benefits of the various investment choices. "This is where REIT security investing can play a significant role in boosting fiduciary prudence," he writes. Mr. Miller's article, "Real Estate Stocks, Correlation and the ERISA Prudence Rule," observes that "the low correlative impact of REITs vis- a-vis other publicly traded equity and debt, without the 'lumpy' features of traditional real estate, makes it a particularly attractive asset class for defined benefit and 401(k) plans." REITs also have advantages over other types of less traditional 401(k) investments, such as high yield bonds, international bond funds and hedge funds, in Mr. Miller's view. "Real estate is an investment that is far easier to understand and exists in every 401(k) participant's hometown," he writes. "REITs provide easy, low cost access to the diversification benefits of real estate and thus have significant practical and economic advantages over many of these other portfolio diversifiers." "From a legal perspective, (REITs') inclusion in pension portfolios or 401(k) plan option sets should significantly bolster the fiduciary's prudence position," Mr. Miller observes. "Mr. Miller's article has great significance to all defined contribution plan sponsors and providers," remarked Michael R. Grupe, NAREIT's Senior Vice President of Research and Investment Affairs. "Because of the low correlation of REIT stock returns with the returns to other equities and bonds, the inclusion of REITs can help to reduce a fiduciary's legal exposure that a 401(k) plan's investments are either too volatile or too risky. This is valuable guidance that should be embraced by every 401(k) plan manager." Mr. Miller is a partner in the Washington, D.C. office of Hogan & Hartson, L.L.P., where he specializes in counseling and litigation matters involving the conduct of ERISA-regulated fiduciaries. In 1998, he was named by The National Law Journal as one of the top 40 benefits lawyers in the United States. Published quarterly, The Journal of Pension Planning and Compliance is a leading source for in-depth coverage of pension compliance and design issues. The National Association of Real Estate Investment Trusts(R) (NAREIT) is the national trade association for REITs and publicly traded real estate companies. Members are real estate investment trusts (REITs) and other businesses that own, operate and finance income-producing real estate, as well as those firms and individuals who advise, study and service those businesses. For more information, contact the National Association of Real Estate Investment Trusts through Jay Hyde or Rob Valero by Phone: 202-739-9400 or 1-800-3NAREIT or visit the group's Web sites: http://www.nareit.com and http://www.investinreits.com * Hong Kong's Securities Czar Wants Adoption of U.S.-type Class Action ---------------------------------------------------------------------- Securities and Futures Commission Chairman Andrew Sheng has decided tough rules are needed to tackle the problems of corporate governance, as well as a system by which small shareholders might undertake action against bad management; namely, some form of the U.S. class-action system, the South China Morning Post reported recently. Speaking recently to some 300 market practitioners, Mr. Sheng said in respect of corporate transactions, that there was a "middle ground" in between the regimes of the two local regulators -- the Securities and Futures Commission and the Hong Kong Exchanges and Clearing. In his speech, Mr. Sheng also pointed to another weakness of Hong Kong's corporate governance system -- the absence of a United States- style class-action contingency fee system. Such a system could allow small shareholders to jointly undertake direct legal action against bad management with relatively low cost. Given the lack of such a system, "litigation is expensive in Hong Kong ... so it is not surprising that shareholders call for the regulators to intervene in disputed transactions," Mr. Sheng said. Mr. Sheng indicated that in order to deal effectively with the transactions that appear unfair, there will have to be changes in the rules. He told the gathered market practitioners that his views today were different from those expressed in his public remarks some four months ago. He indicated that the government has more information about the extent of corporate malfeasance than had been the case four months ago. Mr. Sheng indicated that the SFC was investigating a number of instances of bad transactions and was working on the possibility of developing a derivative action power under the Companies Ordinance. Unlike a class-action lawsuit, a derivative action allows a shareholder to take legal action on behalf of the company in question rather than himself. Such legal action is based on the rights derived from a shareholder's position or relationship to the company, and recovery would be for the company, not for himself. New Securities Fraud Cases CUTTER & BUNK: Charles Piven Commences Securities Fraud Suit in W.D. WA ----------------------------------------------------------------------- The Law Offices Of Charles J. Piven, P.A. filed on Tuesday a securities class action on behalf of shareholders who acquired Cutter & Buck, Inc. (Nasdaq:CBUKE) securities between June 23, 2000 and August 12, 2002, inclusive. The case is pending in the United States District Court for the Western District of Washington, against defendants Cutter & Buck 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 information, contact the Law Offices of Charles J. Piven by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202 by e-mail: hoffman@pivenlaw.com or by Phone: 410-986-0036 DUANE READE: Charles Piven Commences Securities Fraud Suit in S.D. NY --------------------------------------------------------------------- Law Offices Of Charles J. Piven, P.A. filed Tuesday a securities class action on behalf of shareholders who acquired Duane Reade, Inc. (NYSE:DRD) securities between April 25, 2002 and July 24, 2002, inclusive. The case is pending in the United States District Court for the Southern District of New York, against defendants Duane Reade, Inc. and Anthony J. Cuti. 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. No class has yet been certified in this action. For more details, contact the Law Offices of Charles J. Piven, P.A. by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202 by e-mail: hoffman@pivenlaw.com or by Phone: 410-986-0036 HEALTHSOUTH CORPORATION: Lovell Stewart Initiates Suit in N.D. Alabama ---------------------------------------------------------------------- The law firm of Lovell Stewart Halebian LLP filed Tuesday a class action lawsuit on behalf of all persons who purchased, converted, exchanged or otherwise acquired the common stock of HealthSouth Corp. (NYSE:HRC) between January 14, 2002 and August 26, 2002, inclusive. The lawsuit asserts claims under 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, Gerstle v. HealthSouth Corp., et al., is pending in the U.S. District Court for the Northern District of Alabama, Southern Division (1729 Fifth Avenue, North Birmingham, Alabama) and has been assigned to the Hon. William M. Acker, Jr., U.S. District Judge. According to the complaint, defendants made misstatements of material facts and omitted to state material facts in their public statements and elsewhere, including failing to disclose: (i) that imminent Centers for Medicare and Medicaid Services (CMS) directives would cause HealthSouth to lose millions of dollars in revenue and earnings going forward; (ii) that HealthSouth's operations would have to be substantially reorganized because of the CMS directives, at great expense to HealthSouth; and (iii) that because of the foregoing developments, the defendants' repeated reassurances that HealthSouth's fundamentals were strong and that it would meet its earnings targets for 2002 were lacking in any reasonable basis. The complaint alleges that after defendants disclosed that HealthSouth's 2002 earnings before interest, taxes, depreciation and amortization would be lower than previously projected by approximately $175 million on August 27, 2002 and discontinued and disavowed the earnings guidance that they had previously given to the market for 2002 and 2003, HealthSouth's share price plummeted by more than 43 percent to close at $6.71. For more details, contact Lovell Stewart Halebian LLP through John Halebian or Christopher J. Gray by Mail: 500 Fifth Avenue New York, New York 10110 by Phone: 212-608-1900 or by e-mail: classaction@lshllp.com HOUSEHOLD INTERNATIONAL: Charles Piven Files Securities Suit in N.D. IL ----------------------------------------------------------------------- Law Offices Of Charles J. Piven, P.A. announced Tuesday that a securities class action has been commenced on behalf of shareholders who acquired Household International, Inc. (NYSE:HI) securities between October 23, 1997 and August 14, 2002, inclusive. The case is pending in the United States District Court for the Northern District of Illinois, against defendants Household International, Inc. 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. No class has yet been certified in the above action. For more information, contact the Law Offices Of Charles J. Piven, P.A. by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202 by e-mail: hoffman@pivenlaw.com or by Phone: 410-986-0036 INTERPUBLIC GROUP: Charles Piven Files Securities Fraud Suit in S.D. NY ----------------------------------------------------------------------- Law Offices Of Charles J. Piven, P.A. announced Tuesday that a securities class action has been commenced on behalf of shareholders who acquired The Interpublic Group of Companies, Inc. (NYSE:IPG) securities between October 28, 1997 and August 13, 2002, inclusive. The case is pending in the United States District Court for the Southern District of New York, against defendants The Interpublic Group of Companies, Inc., John J. Dooner, Jr., H. Greier, Sean F. Orr, Frederick Molz, Eugene P. Beard, Richard P. Sneeder, Jr., David I. C. Weatherseed and Joseph M. Studley. 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. No class has yet been certified in the above action. For more information, contact the Law Offices Of Charles J. Piven, P.A. by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202 by e-mail: hoffman@pivenlaw.com or by Phone: 410-986-0036 IPALCO: Hagens Berman Commences Securities Fraud Suit in Indianapolis --------------------------------------------------------------------- Hagens Berman filed Tuesday a securities class action on behalf of IPALCO shareholders against the company's officers stemming from the utilities purchase by AES Corporation (NYSE:AES). The suit contends that IPALCO insiders misled investors about the financial condition of the energy company AES Corporation and the volatile nature of its stock, a sale that has led to IPALCO investors losing hundreds of millions of dollars. "We intend to show that while IPALCO company executives were publicly touting the sale to AES, they had information that painted a much different picture which they never disclosed," said attorney Steve Berman, the attorney representing the plaintiffs. "On one hand, the company was flaunting the deal as a boon to shareholders while the insiders were dumping IPALCO stock. The defendants include Bush administration Budget Director Mitch Daniels, who served on the IPALCO board. Filed in U.S. District Court in Indianapolis, the proposed class-action names Chairman, President, and CEO John Hodowal along with 22 IPALCO officers and board members as defendants. Mr. Berman asserts that AES originally offered to acquire the utility for $25 a share in cash, an offer it later retracted without explanation and replaced with a stock-swap scheme. According to him, the switch raises questions about the board's motives. "It appears that the board of IPALCO was single-mindedly focused on closing the deal with AES, regardless of the terms or risk," Mr. Berman added. According to the suit, the former IPALCO executives pocketed more than $46 million in stock sales and other compensation packages, agreements that would pay out only if the transaction was completed. Mr. Hodowal alone received nearly $16 million. "We intend to prove that the board knew that AES was a sinking ship, but knew they would be handsomely rewarded for their acquiescence," Mr. Berman said. "That wasn't the case, though, for the thousands of investors whose life-savings went down with that sinking ship." Almost immediately after the March 27, 2001, closing date of the acquisition, AES's stock began a free-fall. Fueled by an announcement of poor financial results in late September 2001, the stock dropped 50 percent in one day. Shares of AES traded at $49.60 the day the IPALCO merger was completed in March 2001 and trade at $2.72 per share as of Sept. 23, 2002. Filed on behalf of four IPALCO investors, the suit seeks to represent all IPALCO investors who held IPALCO stock as of Sept. 8, 2000. The suit claims that the defendants violated various sections of the Securities Act, and seeks compensatory damages for class members. For more details, contact Steve Berman by Phone: 206-623-7292 or by e- mail: steve@hagens-berman.com. You may also contact Firmani & Associates through Mark Firmani by Phone: 206-443-9357 or by e-mail: mark@firmani.com METRIS COMPANIES: Charles Piven Commences Securities Fraud Suit in MN --------------------------------------------------------------------- Law Offices Of Charles J. Piven, P.A. filed Tuesday a securities class action on behalf of shareholders who acquired Metris Companies, Inc. (NYSE:MXT) securities between November 5, 2001 through July 17, 2002, inclusive. The case is pending in the United States District Court for the District of Minnesota, against defendant Metris 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. No class has yet been certified in the above action. For more details, contact the Law Offices Of Charles J. Piven, P.A. by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202 by e-mail: hoffman@pivenlaw.com or by Phone: 410-986-0036 MSC INDUSTRIAL: Charles Piven Commences Securities Fraud Suit in E.D NY ----------------------------------------------------------------------- Law Offices Of Charles J. Piven, P.A. announced Tuesday that a securities class action has been commenced on behalf of shareholders who acquired MSC Industrial Direct Co., Inc. (NYSE:MSM) securities between January 11, 1999 and August 5, 2002, inclusive. The case is pending in the United States District Court for the Eastern District of New York against defendants MSC Industrial, Mitchell Jacobson, Sidney Jacobson, Shelley M. Boxer, Charles Boehlke, David Sandler and James Schroeder. 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. No class has yet been certified in the above action. For additional information, contact the Law Offices Of Charles J. Piven, P.A. by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202 by e-mail: hoffman@pivenlaw.com or by Phone: 410-986-0036 ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2002. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. 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