/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/021216.mbx C L A S S A C T I O N R E P O R T E R Monday, December 16, 2002, Vol. 4, No. 247 Headlines AAMES FINANCIAL: CA Court To Consider Certification For Consumer Suit APRIA HEALTHCARE: Plaintiffs Appeal Dismissal of Securities Fraud Suit BENCHMARK ELECTRONICS: TX Court Dismisses Consolidated Securities Suit COMPUWARE CORPORATION: Investors Lodge Securities Fraud Suit in E.D. MI CREDIT CARD: Judge Releases Sealed Documents in Antitrust Case ESCALON MEDICAL: NY Court Grants Approval to $500,000 Suit Settlement HEALTHCARE RECOVERIES: IL Court Dismisses Suit For Unlawful Subrogation LEGATO SYSTEMS: Seeks Dismissal of Consolidated Securities Suit in NY MBNA CORPORATION: Appeals Court Upholds $8.7M Consumer Suit Settlement NANOPHASE TECHNOLOGIES: IL Court Refuses To Dismiss Securities Lawsuit ORKIN EXTERMINATING: Appeals FL Court's Certification of Consumer Suit PCS NITROGEN: LA Court Grants Certification To Lawsuit For Settlement POLYMEDICA CORPORATION: MA Court Refuses To Reconsider Dismissal Ruling PTEK HOLDINGS: GA Court Grants Approval To Securities Suit Settlement PTEK HOLDINGS: Files Motion For Summary Judgment in NY Securities Suit SONICBLUE INC.: Agrees To Settle Securities Related Lawsuits in CA, DE SONICBLUE INC.: Briefings on Certification Completed by Yearend in IN ST. PAUL: Labels "Without Merit" Securities Fraud Lawsuits in CA Court THQ INC.: Trial in Amended Securities Lawsuit Set April 2003 in C.D. CA TREMONT CORPORATION: DE Court Orders Suits V. Valhi Merger Consolidated TROVER SOLUTIONS: Working With Plaintiffs To Settle FL Consumer Lawsuit TROVER SOLUTIONS: Plaintiffs File Amended Petition in TX State Court TROVER SOLUTIONS: TX Court Refuses To Alter Dismissal of ERISA Lawsuit TROVER SOLUTIONS: Court Reverses Dismissal of FDCPA Claims in LA Suit UNIVERSITY OF MISSOURI: Suit Winner Says Educating Schools is the Key WESTPOINT STEVENS: Faces Two Slave Reparation Suits in NY, CA Courts New Securities Fraud Cases CHARLES SCHWAB: Weiss & Yourman Investigates Securities Fraud Charges LEAP WIRELESS: Abbey Gardy Commences Securities Fraud Suit in S.D. CA LEAP WIRELESS: Charles Piven Commences Securities Fraud Suit in S.D. CA SEACHANGE INTERNATIONAL: Schiffrin & Barroway Files Investor Suit in MA SEARS ROEBUCK: Much Shelist Commences Securities Fraud Suit in N.D. IL ********* AAMES FINANCIAL: CA Court To Consider Certification For Consumer Suit --------------------------------------------------------------------- The Los Angeles County Superior Court will consider this month motions for class certification of a class action filed against Aames Financial Corporation and certain of its subsidiaries, on behalf of all California residents who applied for or obtained loans from the Company during the preceding four years. Plaintiffs allege various state law claims premised upon their contention that the Company routinely "upcharges" third party fees and under-discloses annual percentage rates. The suit asserts claims based upon the payment of a yield spread premium to their broker, and contends that such yield spread premium payments constitute kickbacks and/or illegal referrals under California law and/or that the Company failed to properly disclose the nature of a yield spread premium. The Company has answered the amended complaint, again asserting various affirmative defenses. No trial date has been set. The Company cannot predict the outcome of these matters, but believes the suit is without merit. APRIA HEALTHCARE: Plaintiffs Appeal Dismissal of Securities Fraud Suit ---------------------------------------------------------------------- Plaintiffs in the securities class action against Apria Healthcare Group, Inc. appealed the United States District Court for the Central District of California, Southern Division's dismissal of the suit. The suit, which also names the Company's Chief Executive Philip L. Carter, alleges that the defendants made false and/or misleading public statements by not announcing until July 16, 2001 the potential damages asserted by the investigations conducted by the US Attorney's office in Los Angeles and the US Department of Health and Human Services. These investigations concern the documentation supporting the Company's billing for services provided to patients whose healthcare costs are paid by Medicare and other federal programs. The Company filed a motion for dismissal, which the court granted with leave to amend on June 14, 2002. Plaintiff elected not to amend its complaint, but filed a notice of appeal on July 15, 2002. The appeal was dismissed as premature. On October 10, 2002, the court entered a judgment in favor of the defendants and dismissed the action with prejudice. The Company believes that it has meritorious defenses to the plaintiff's claims. In the opinion of the Company's management, the ultimate disposition of this class action will not have a material adverse effect on the Company's results of operations or financial condition. BENCHMARK ELECTRONICS: TX Court Dismisses Consolidated Securities Suit ---------------------------------------------------------------------- The United States District Court in Houston, Texas dismissed the consolidated securities class action pending against Benchmark Electronics, Inc., relating to its October 1999 announcements that its third quarter 1999 earnings announcement would be delayed and that its earnings for the third quarter 1999 were below the level of the same periods during 1998 and were below expectations. The suit, which names the Company and two of its officers and directors as defendants, alleges violations of the federal securities laws. The suit seeks to recover unspecified damages. The Company denied the allegations in the lawsuits, however, and further denied that such allegations provide a basis for recovery of damages as it believed that it made all required disclosures on a timely basis. COMPUWARE CORPORATION: Investors Lodge Securities Fraud Suit in E.D. MI ----------------------------------------------------------------------- Compuware Corporation faces two securities class actions filed in the United States District Court in the Eastern District of Michigan, on behalf of purchasers of the Company's common stock from January 1, 1999 to April 3, 2002. The suit names as defendants the Company and: (1) Joseph A. Nathan, (2) Henry A. Jallos and (3) Laura L. Fournier The plaintiffs in both cases allege that the Company failed to disclose under the securities laws its problems with the misappropriation of its software source code by IBM, and that its material omissions and the dissemination of materially false and misleading statements concerning the Company's deteriorating relationship with IBM. The plaintiffs in both cases request that the court award them money damages and expenses of litigation, including reasonable attorney fees. The Company strongly disagrees with the allegations. At this time, the Company's legal counsel is preparing a responsive pleading to each lawsuit. CREDIT CARD: Judge Releases Sealed Documents in Antitrust Case -------------------------------------------------------------- In another legal setback to Visa USA and MasterCard International in their ongoing antitrust battle with merchants, a federal judge last month released thousands of pages of documents that retailers claim are evidence that the card associations violated antitrust law. Both companies have denied the charges. This comes after a US Supreme Court in June declined to review an appellate court decision that certified the case as a class action. In April, the associations asked the High Court to review the October 2001 ruling by the US Second Circuit Court of Appeals for the Second Circuit to uphold the grant of class certification in the lawsuit. The decision by the Supreme Court allowed the class certification to stand. The case is scheduled for trial April 28,2003 in New York. The retailers' lawsuit, filed in October 1996 on behalf of Wal-Mart (WMT), Sears (S), Safeway (SWY), The Limited (LTD), Circuit City, three major retail trade associations and 13 other large and small retailers, alleges that Visa and MasterCard's "honor all cards" policy forces them to accept the associations' off-line debit cards at monopoly prices and crushes competitors in that market. In the retailers' case, the plaintiffs are seeking financial damages, which under the trebled damages allowed under antitrust law could reach well into the tens of billions of dollars. Indeed, some reports have placed the potential damages at between $39 billion and $100 billion. In early November, the Wall Street Journal successfully argued a motion to release documents relating to the case because of the public's right to know. The documents were released in US District Court in Brooklyn, New York. The release of thousands of sealed documents in the VisaCheck/MasterMoney antitrust litigation is a significant development that clearly shows that Visa and MasterCard's conduct has violated US antitrust law, the plaintiff's lead counsel, Lloyd Constantine, asserted on November 14. "The only substantial dispute now is what relief the court is likely to ultimately award against Visa and MasterCard," he said. Constantine is a principle in the New York firm of Constantine & Partners. "These documents are compelling evidence of how Visa and MasterCard violated U.S. antitrust law by attempting to monopolize the debit transaction market and forcing merchants, through tying of products, to accept offline debit transactions," he continued. Constantine criticized offline debit transactions as being slower, less safe and costing merchants and their customers much more than online PIN debit, cash or checks. "The merchants are seeking damages to compensate them for being forced to accept more than $1 trillion in slow, fraud-prone, inferior offline signature debit transactions at anti-competitively high and fixed prices during the last decade," Constantine said. "This is an important case because it will change the debit card business and the retail industry for the better. When the merchants win this case, consumers will have the full opportunity to benefit from faster, safer, cheaper online PIN debit transactions that allow them cash- back privileges." Visa and MasterCard were quick to point out that the documents released last month confirm their view of the case and its merits. "The release by a federal judge of certain documents in the long-running litigation between Master Card and retailers in the United States confirms that the merchants' suit against MasterCard's honor all cards policy and its debit program is without merit," Noah Hanft, general counsel, MasterCard International, said Nov. 14. "The case is nothing short of an attack on the American consumer's ability to choose from the broadest possible range of payment services. The merchants seek to restrict consumers' choices, and to shift their costs of doing business to consumers." "Because they have no valid antitrust claim, the plaintiffs' strategy relies on distorting the case record," Mr. Hanft continued. "Plaintiffs claim, for example, that MasterCard and Visa have tried to prevent merchants from distinguishing between credit cards and debit cards, and they have therefore been unable to prompt consumers to use their PIN when paying with a debit card. In reality, during the same week that Wal-Mart authorized their counsel to file a complaint making that allegation, Wal-Mart was training its cashiers, instructing them that they can readily distinguish credit from debit, and prompt for PIN. Continuing its well-known history of discovery abuses in litigation, Wal-Mart initially claimed to have 'lost' this video, as part of its blatant effort to conceal evidence. Likewise, an internal Payless document confirms that debit cards and credit cards are easy for merchants to distinguish, and testimony of a Sears executive admits that these cards are 'readily distinguishable'." Visa USA also weighed in on the matter. "As this case gets closer to trial, Visa looks forward to addressing the issues that will determine who will decide how to pay at the check out counter -- Visa believes the consumer should have that choice, while merchants led by Wal-Mart want to take that choice away," Visa USA said in a statement. "This case strikes at the heart of the Visa system, challenging what the Visa flag means," the company said. "Right now, consumers know that when they choose to pay with any valid Visa card, their card will be accepted wherever they see the Visa logo -- that's a commitment that Visa and merchants have made to consumers for over 30 years. Visa believes consumers benefit when merchants keep their agreement to honor all Visa cards. Our Honor All Cards commitment enables Visa members to provide consumers with all kinds of payment options. Unfortunately, merchants led by Wal-Mart want to break their agreement -- they want to pick and choose among the people who carry Visa cards, to say yes to some and no to others. We take our commitment to consumers seriously, and intend to defend consumer choice in the courtroom." With respect to the Supreme Court's decision not to review the decision that classified the case as a class action, Visa and MasterCard had argued that reviewing the case would have given the Court the opportunity to clarify the standards under which classes are certified. The High Court, however, passed on that opportunity. The card associations expressed disappointment with the decision. "We are disappointed that the Supreme Court has decided not to consider our case at this time, and specifically whether the case should proceed as a class. Of course, we respect the Court's decision and now take up this and other matters at the direction of presiding Judge Gleeson," Kelly Presta, vice president, Visa U.S.A., said in a statement at the time. "MasterCard is disappointed by the U.S. Supreme Court's decision not to review the Second Circuit Court of Appeal's decision upholding a grant of class certification in the antitrust lawsuit brought against MasterCard and Visa by a group of U.S. merchants," Noah J. Hanft, general counsel, MasterCard International, MasterCard International, said in a statement. "By not taking this opportunity to clarify the confusing standards for class certification that exist among district and appellate courts today, the Supreme Court may be opening the doors to increasing class action abuse." Later that month, United States District Court Judge John Gleeson June 25 announced that he had set April 28, 2003, as the trial date in Brooklyn, New York, for the VisaCheck/MasterMoney antitrust litigation. Constantine & Partners announced September 12 that work had begun to mail 7,657,888 notices to the merchants who are class members in the antitrust suit against Visa U.S.A. and MasterCard International. The certified class consists of all persons and business entities that have accepted Visa and/or MasterCard credit cards and therefore have been required to accept Visa and/or MasterCard off-line signature debit transactions from October 25, 1992 to the present. An average of 760,000 notices are being mailed daily between September 9 and September 19, 2002, to members of the class. Class notice also will appear in major national publications September 12 through October 14, 2002. The retailers' lawsuit is one of two antitrust cases Visa and MasterCard have had to defend that address market competition and association rules. The other lawsuit was brought in 1998 by the U.S. Department of Justice (DOJ) and challenged "duality" -- the joint control of Visa and MasterCard by the same group of banks. The parties are appealing a ruling in that case that ends the associations' so- called "exclusionary rules." Specifically, DOJ expressed concerns about Visa and MasterCard rules that allow member banks to issue each other's debit or credit cards, but which barred those banks from doing business with other networks such as American Express and Discover. In October 2001, the court ruled that Visa USA and MasterCard International must abolish so-called "exclusionary rules" that have kept American Express Co. and Discover out of member financial institutions, but they will be allowed to continue their dual government policies. That matter is now under appeal. Judge Barbara Jones made the ruling in an action. The order specifically addresses two operating rules - Visa's By-law 2.10(e) and MasterCard's Competitive Programs Policy (CPP). "As an initial matter, there is no reason to believe that abolishing the exclusionary rules would be disruptive to the governance of the associations," Jones wrote in the 160-page opinion. On May 15, 2002, the card associations asked the US Court of Appeals for the Second Circuit to reverse the section of federal district court Judge Jones' decision requiring the associations to repeal the rules that prohibit members of their associations from issuing cards on the proprietary networks of American Express and Discover. ESCALON MEDICAL: NY Court Grants Approval to $500,000 Suit Settlement --------------------------------------------------------------------- The United States District Court for the Southern District of New York granted final approval to a settlement proposed by Escalon Medical Corporation to settle a securities class action filed against its predecessor, Intelligent Surgical Lasers, Inc. The suit, filed on behalf of all purchasers of the Company's stock from November 17, 1993, to and including September 21, 1994, alleges that the Company, together with certain of its officers and directors, David Blech and D. Blech & Co., Inc. issued a false and misleading prospectus in November 1993 in violation of Sections 11, 12 and 15 of the Securities Act of 1933. The complaint also asserts claims under section 10(b) of the Securities Exchange Act of 1934 and common law. The Company moved for the dismissal of the suit, but the court denied this motion. The Company then filed an answer to the complaint denying all allegations of wrongdoing and asserting various affirmative defenses. In an effort to curtail its legal expenses related to this litigation, while continuing to deny any wrongdoing, the Company reached an agreement to settle this action on its behalf and on the behalf of its former and present officers and directors, for $500,000. HEALTHCARE RECOVERIES: IL Court Dismisses Suit For Unlawful Subrogation ----------------------------------------------------------------------- The Circuit Court of the Sixth Judicial Circuit, Champaign County, Illinois dismissed the class action pending against Healthcare Recoveries, Inc. and other health care providers. The complaint asserts that the Company, as subrogation agent for PersonalCare Health Management, made fraudulent misrepresentations in the course of unlawfully pursuing subrogation and reimbursement claims. The complaint seeks recovery from the Company for compensatory damages, punitive damages and costs. The Company disputed the plaintiff's claims and filed a motion to dismiss the action. On October 2, 2002, the court granted each of the defendants' motions and dismissed the plaintiff's action entirely. Plaintiff have filed a timely appeal. LEGATO SYSTEMS: Seeks Dismissal of Consolidated Securities Suit in NY --------------------------------------------------------------------- Legato Systems, Inc. asked the United States District Court for the Southern District of New York to dismiss the consolidated securities class action pending against OTG Software, Inc., which it acquired in May 2002. The suit names as defendants OTG, officers of OTG who signed the registration statement in connection with OTG's initial public offering, and the managing underwriters of the initial public offering as defendants. The complaint alleges that OTG's initial public offering registration statement and final prospectus contained material misrepresentations and/or omissions, related in part to additional, excessive and undisclosed commissions allegedly received by the underwriters from investors to whom the underwriters allegedly improperly allocated shares of the public offering. The suit is being heard along with other similar actions brought against approximately 300 other issuers, issuers' officers and underwriters in the Southern District of New York. On July 19, 2002, the defendants filed a motion to dismiss the complaint. The Company believes that it is not possible at the current time to estimate the amount of a probable loss, if any, that might result from this matter. MBNA CORPORATION: Appeals Court Upholds $8.7M Consumer Suit Settlement ---------------------------------------------------------------------- The United States Third Circuit Court of Appeals affirmed the approval of the US$8.7 million settlement of the class action pending against MBNA Corporation, MBNA America Bank, N.A. and certain of its officers and its subsidiary MBNA Marketing Systems, Inc. The suit, filed in the United States District Court for the District of Delaware, alleges that the Bank's advertising of its cash promotional annual percentage rate program was fraudulent and deceptive. The plaintiff seeks unspecified damages including actual, treble and punitive damages and attorneys' fees for: (1) an alleged breach of contract, (2) violation of the Delaware Deceptive Trade Practices Act and (3) violation of the Federal Racketeer Influenced and Corrupt Organizations Act In February 1998, a class was certified by the court. In September 2000, the court gave preliminary approval to a settlement of this suit for approximately $8.7 million. In August 2001, the court entered an order approving a settlement payout, including fees and costs, of approximately $5.1 million. Various members of the class who had filed objections to the proposed settlement appealed the order approving the settlement to the Third Circuit Court of Appeals. NANOPHASE TECHNOLOGIES: IL Court Refuses To Dismiss Securities Lawsuit ---------------------------------------------------------------------- The United States District Court for the Northern District of Illinois refused to dismiss the consolidated securities class actions filed against Nanophase Technologies, Inc. and: (1) Joseph Cross, President and CEO, (2) Daniel Bilicki, vice president of sales and marketing, (3) Jess Jankowski, acting chief financial officer and (4) Gina Kritchevsky, chief technology officer The suit alleged that defendants violated the federal Securities Exchange Act of 1934 by making supposedly fraudulent material misstatements of fact and omitting to state material facts necessary to prevent other statements from being misleading in connection with the Company's public disclosures, including certain press releases, concerning the Company's dealings with Celox, a British customer. The complaint further alleged that the action should be maintained as a plaintiff class action on behalf of certain persons who purchased shares of the Company's common stock from April 5, 2001 through October 24, 2001. The suit further alleged that the defendants are liable under the federal Securities Exchange Act of 1934 for making supposedly fraudulent material misstatements and omissions of fact in connection with the Company's press releases, publicly-filed reports and other public disclosures concerning the Company's relationship with Celox and the Company's purportedly improper booking, and later reversal, of revenue from a one-time sale to that customer. Defendants moved to dismiss the amended complaint in April 2002. On October 9, 2002, the court denied defendants' motion, finding that plaintiff's 40-page amended complaint asserted sufficient allegations to permit the case to proceed. Although the Company believes that the allegations of the amended complaint are without merit, it is not feasible to predict at this time the ultimate outcome of this litigation or whether its resolution could have a material adverse effect on the Company's results of operations or financial condition. ORKIN EXTERMINATING: Appeals FL Court's Certification of Consumer Suit ---------------------------------------------------------------------- Orkin Exterminating Company, Inc. appealed a Florida state court's ruling granting class certification to the fraud suit with the Florida Second District Court of Appeals. The suit was filed on behalf of Florida customers who paid for the Company's standard termite extermination contract but were allegedly unable to avail of the Company's services, an earlier Class Action Reporter story states. The suit alleges the Company charged customers for the termite program but never provided re-inspection or re-treatment services. Company employees allegedly forged customers' signatures saying the services had been provided. The suit further states that customers were lured by false advertising and company promises, only to suffer damages when their homes became infested. The plaintiffs seeking monetary damages in excess of $15,000 for each named plaintiff and injunctive relief for alleged breach of contract, fraud and various violations of Florida state law. The court certified the suit in early April 2002. The Company believes this case to be without merit. At this time, the final outcome of the litigation cannot be determined. However, it is the opinion of management that the ultimate resolution of this action will not have a material adverse effect on the Company's financial position, results of operations or liquidity. PCS NITROGEN: LA Court Grants Certification To Lawsuit For Settlement --------------------------------------------------------------------- Eighteenth Judicial District Judge James Best certified the lawsuit against PCS Nitrogen as a class action for settlement purposes, The Baton Rouge Advocate reports. The certification will allow the settlement of $4.5 million to be disbursed, in 2003, to the injured plaintiffs who have filed claims for such injuries sustained when a chemical release occurred at the PCS Nitrogen facility in Geismar, on March 2, 1999. The money will be allocated based on the severity of the claim and the closeness of the plaintiff to the release site. Plaintiffs' attorney Donna Grodner said that Judge Best will grant final approval of the settlement if it is properly presented to him at the hearing scheduled on June 30, 2003. The Company pleaded guilty in September to violating the federal Clean Air Act and agreed to pay $1.75 million in fines and make $9.3 million in improvements and repairs to its Geismar plant. The plant makes fertilizer, among other items. The Company also agreed to plead guilty in state courts in Iberville and Ascension parishes to charges of making illegal air emissions and agreed to pay a total of $250,000 in fines. POLYMEDICA CORPORATION: MA Court Refuses To Reconsider Dismissal Ruling ----------------------------------------------------------------------- The Massachusetts Superior Court for Middlesex County refused to reconsider its denial of Polymedica Corporation's motion to dismiss the consolidated shareholder derivative lawsuit filed against its directors. The suit alleges that the directors and officers breached their fiduciary duties by, among other things, failing to exercise reasonable care in the oversight of corporate affairs and management with respect to the operations of Liberty Medical Supply, Inc. and by acquiescing in alleged misconduct by Liberty. The defendants filed a motion to dismiss the consolidated complaint on January 31, 2002. Plaintiffs filed an opposition to the motion on March 22, 2002 and defendants filed a reply memorandum on April 19, 2002. The court heard arguments on the motion to dismiss on April 30, 2002 and entered an order denying the motion to dismiss on July 16, 2002. On August 8, 2002, defendants filed a motion for reconsideration of the order denying defendants' motion to dismiss, or, in the alternative, to report the case to the Appeals Court and stay the proceeding. After hearing oral argument, the court issued an order on September 16, 2002 in which it refused to reconsider its decision, but reported the case to the Appeals Court and granted defendants' motion to stay the action. The directors and defendants believe they have meritorious defenses to the claims made in the consolidated complaint. However, they are presently unable to express an opinion as to the likely outcome of this litigation. PTEK HOLDINGS: GA Court Grants Approval To Securities Suit Settlement --------------------------------------------------------------------- The United States District Court for the Northern District of Georgia granted final approval to the settlement of the consolidated securities class action pending against PTek Holdings, Inc. and certain of its officers and directors. Plaintiffs seek to represent a class of individuals, including a subclass of former Voice-Tel Enterprises, Inc. (Voice-Tel), franchisees and a subclass of former Xpedite Systems, Inc. (Xpedite) shareholders, who purchased or otherwise acquired the Company's common stock from as early as February 11, 1997 through June 10, 1998. Plaintiffs allege the Company admitted it had experienced difficulty in achieving its anticipated revenue and earnings from voice messaging services due to difficulties in consolidating and integrating its sales function. Plaintiffs allege, among other things, violation of Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12 and 15 of the Securities Act of 1933. The Company filed a motion to dismiss this complaint. In December 1999, the court issued an order that dismissed the claims under Sections 10(b) and 20 of the Exchange Act without prejudice, and dismissed the claims under Section 12(a)(1) of the Securities Act with prejudice. The effect of this order was to dismiss from this lawsuit all open-market purchases by the plaintiffs. The plaintiffs filed an amended complaint on February 29, 2000. The defendants filed a motion to dismiss on April 14, 2000, which was granted in part and denied in part on December 8, 2000. On January 22, 2002, the court ordered the parties to mediate. The parties did so on February 8-9, 2002. Following the mediation, the parties reached a proposed settlement of all claims, which the court approved. Under the terms of the settlement, during the third quarter of 2002 the Company contributed 601,997 shares of the Company's common stock, and the insurance carriers contributed approximately $17.7 million in cash, for a total settlement amount of $20.75 million, exclusive of interest. The claims settled include: (1) all claims by the open market purchasers under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934; (2) all claims by the Xpedite subclass under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933; and, (3) all claims by the Voice-Tel subclass under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 12(a)(2) and 15 of the Securities Act of 1933 PTEK HOLDINGS: Files Motion For Summary Judgment in NY Securities Suit ---------------------------------------------------------------------- PTek Holdings, Inc. filed a motion for summary judgment and a motion in time to exclude testimony for the plaintiffs' expert in a securities class action pending against it and certain of its officers and directors in the United States District Court for the Southern District of New York. Plaintiffs are shareholders of Xpedite who acquired common stock of the Company as a result of the merger between the Company and Xpedite in February 1998. Plaintiffs' allegations are based on the representations and warranties made by the Company in the prospectus and the registration statement related to: (1) the merger, (2) the merger agreement and other documents incorporated by reference, (3) the Company's acquisitions of Voice-Tel and VoiceCom Systems, (4) the Company's roll-out of Orchestrate, (5) the Company's relationship with customers Amway Corporation and DigiTEC, 2000, and (6) the Company's 800-based calling card service Plaintiffs allege causes of action against the Company for breach of contract, against all defendants for negligent misrepresentation, violations of Sections 11 and 12(a)(2) of the Securities Act of 1933 and against the individual defendants for violation of Section 15 of the Securities Act. Plaintiffs seek undisclosed damages together with pre- and post-judgment interest, recission or recissory damages as to violation of Section 12(a)(2) of the Securities Act, punitive damages, costs and attorneys' fees. The defendants' motion to transfer venue to Georgia has been granted. The defendants' motion to dismiss has been granted in part and denied in part. On January 22, 2002, the court ordered the parties to mediate, which the parties did on February 8, 2002. The two motions are pending before the court. SONICBLUE INC.: Agrees To Settle Securities Related Lawsuits in CA, DE ---------------------------------------------------------------------- SONICblue, Inc. agreed to settle several securities class actions and derivative suits pending in California and Delaware courts on behalf of an alleged class of persons who purchased the Company's shares of common stock at various times between April 18, 1996, and November 3, 1997. The suits named as defendants the Company, certain of its officers and former officers, certain directors of the Company, and Deloitte & Touche, its former auditors, and asserted that they violated federal and state securities laws by misrepresenting and failing to disclose certain information about the Company's business. In addition, certain stockholders filed derivative actions in the state courts of California and Delaware seeking recovery on behalf of the Company, alleging, among other things, breach of fiduciary duties by such individual defendants. The plaintiffs in the derivative action in Delaware took no steps to pursue their case. The derivative cases in California State court were consolidated, and plaintiffs filed a consolidated amended complaint. The court entered a stipulated order in those derivative cases suspending court proceedings and coordinating discovery in them with discovery in the class actions in California State courts. In late 2001, the derivative plaintiffs gave notice terminating that stay, and the parties stipulated that a second amended consolidated complaint might be filed in April 2002. On plaintiffs' motion, the federal court dismissed the federal class actions without prejudice. The class actions in California State court were consolidated, and plaintiffs filed a consolidated amended complaint. The Company answered that complaint and discovery proceeded. In January 2001, four of the insurance carriers which issued directors and officers insurance to the Company filed suit against all parties named as defendants in the securities litigation, claiming that the carriers have no obligation to provide coverage under the California Insurance Code. In May 2001, the court entered an order staying the insurance action pending resolution of the securities litigation. In February 2002, the California Superior Court for Santa Clara County entered its preliminary approval of an agreement to settle the consolidated state court class action. Under the terms of the settlement, the Company will contribute 2,401,501 of its shares of common stock and Deloitte & Touche will contribute up to $250,000 in full settlement of all claims. In April 2002, the Superior Court granted final approval to that settlement, dismissing the case. In May 2002, the Superior Court also approved the settlement of the related California derivative litigation. The derivative settlement calls for the defendants to contribute to the settlement their respective benefits under certain directors and officers insurance policies in an amount of approximately $4.6 million which, net of attorneys' fees and litigation costs, would be paid to the Company, which payments have been made. The total net cost of these settlements to the Company, net of insurance, is expected to approximate $8.6 million. In addition the Company settled the claim of a purchaser of the Company's common stock in 1996 and 1997, by payment of $100,000 and 300,000 shares of the Company's common stock, the net cost of which was recorded in the quarter ended March 31, 2002. The judgments in the class action and the derivative litigation are both final, and the insurance litigation has been dismissed. SONICBLUE INC.: Briefings on Certification Completed by Yearend in IN --------------------------------------------------------------------- Briefings on the class certification motion for the lawsuit filed against SONICblue, Inc. in the Circuit Court of Monroe County, Indiana are expected to be completed by late 2002 or early 2003. Robert C. Price commenced the suit in February 2000 against the Company and Diamond Multimedia alleging violations of the California Business and Professions Code section 17200 and the California Song-Beverly Act, which covers consumer warranties. The lawsuit alleges that certain of the Company's Rio 300 MP3 player retail boxes, which were discontinued in approximately 1999, are misleading because the boxes indicate that computer software included in the package allows the purchaser to convert audio tracks on CDs to the MP3 audio format, but the software included with the product permitted only 50 conversions. The Company denied the plaintiff's allegations. Status conferences were conducted on July 26, 2000, January 10, 2001, and April 17, 2002,and discovery has commenced. No class has been certified, but the briefing on the plaintiff's motion for class certification is expected to be completed by Winter 2002, with a hearing on class certification issues to be scheduled thereafter. The Company intends to contest the certification of the purported class, and dispute the lawsuit's allegations. ST. PAUL: Labels "Without Merit" Securities Fraud Lawsuits in CA Court ---------------------------------------------------------------------- St. Paul Companies faces several securities class actions filed on behalf of purchasers of its securities between November 5, 2001 and July 9, 2002, inclusive, in the United States District Court in California. The suits, which also names as defendants against Chief Executive Officer J.S. Fishman and Chief Financial Officer Thomas A. Bradley, uniformly allege that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the class period thereby artificially inflating the price of Company securities. The suit alleges that during the class period, defendants failed to make adequate disclosures or take adequate reserves concerning litigation filed in 1993 in California state court known as Western MacArthur Co. et al. v. United States Fidelity & Guaranty Co., et al, Case No. 721595-7 (consolidated with Case No. 828101-2, Superior Court of California, Alameda County), an earlier Class Action Reporter story states. The Company views these lawsuits as without merit, but cannot, at present, give any assurance that the court will issue a judgment in their favor. THQ INC.: Trial in Amended Securities Lawsuit Set April 2003 in C.D. CA ----------------------------------------------------------------------- Trial in the amended securities class action against THQ, Inc. and certain of its officers and directors is set for April 1, 2003 in the United States District Court for the Central District of California. The amended complaint alleges that defendants violated Rule 10b-5 and Section 20(a) of the Securities Exchange Act of 1934, including allegations that defendants: (1) manipulated the Company's stock price; (2) distributed false and misleading information concerning revenue recognition, forecasts and earnings estimates; (3) selectively disclosed material information; and (4) engaged in insider trading The plaintiffs are purported investors who purchased shares of the Company's common stock from October 26, 1999 through May 24, 2000. Defendants have filed an answer denying all of the material allegations of the third amended complaint and asserting legal and factual defenses. Factual discovery has been completed, and the defendants have filed a motion seeking summary judgment. Plaintiffs have not yet filed a response to the summary judgment motion. The hearing is scheduled on February 10, 2003. In the pending summary judgment motion, the Company and all of the individual defendants have taken the position that this lawsuit is without merit. At this stage, however, the Company cannot predict the likely outcome of this motion or of the litigation. TREMONT CORPORATION: DE Court Orders Suits V. Valhi Merger Consolidated ----------------------------------------------------------------------- The Court of Chancery of the State of Delaware, New Castle County ordered consolidated the securities class actions pending against Tremont Corporation, relating to its proposed merger with Valhi, Inc. The suits also name as defendants Valhi and members of the Company's board of directors. The suits generally allege, among other things, that the terms of the proposed merger 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, and understands that the other defendants believe, that the complaint is without merit. TROVER SOLUTIONS: Working With Plaintiffs To Settle FL Consumer Lawsuit ----------------------------------------------------------------------- Trover Solutions, Inc. is negotiating to settle the consolidated class action pending against them in the United States District Court for the Southern District of Florida. The suit, brought by William Conte and Aaron Gideon, individually and on behalf of all others similarly situated, assert that the Company's subrogation recovery efforts on behalf of its clients violate a number of state and federal laws, including the Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act. The suit also seeks a declaratory judgment that the Company, as the subrogation agent for various healthcare payors, is not entitled to assert and recover upon subrogation or reimbursement liens it asserts on settlements obtained from third party tortfeasors when the settlement is in an amount less than the amount required to fully compensate (or "make whole") the injured party for all elements of damage caused by the tortfeasor. Plaintiffs purport to represent a class consisting of all participants or beneficiaries of Employee Retirement Income Securities Act (ERISA) plans nationwide whose net recovery of damages through judgments, settlements or otherwise against liable third parties has been reduced or potentially reduced by the Company's alleged assertion and/or recovery of unlawful subrogation/reimbursement rights of its clients. In November 1999, the Company filed a motion to dismiss the suit. In June 2001, the court issued a decision dismissing plaintiffs' common law claims for fraud and unjust enrichment as well as plaintiffs' claims under the federal Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act. The court did not, however, dismiss the remaining count of the suit, (Count I), which seeks a declaratory judgment and damages under ERISA based on the Company's alleged violation of the "make whole" rule. The Company then filed an answer with respect to Count I of the suit. Plaintiffs' motion to certify a nationwide class, which the Company opposed, was submitted to the court in September 2000. In a report dated March 20, 2002, the Chief Magistrate Judge recommended denial of the motion to certify a class. On June 5, 2002, the court entered an order adopting the Chief Magistrate Judge's report and recommendation in its entirety and denying class certification. Plaintiffs' time to seek leave to file an interlocutory appeal from that ruling has expired. In October 2002, the Company and the two named plaintiffs reached an agreement in principle to settle all claims in the lawsuit under terms that would not require any payment by the Company and would not impact the Company's operations in any respect. The parties are currently working to formalize the agreement in writing, but have not yet executed a final binding settlement agreement. TROVER SOLUTIONS: Plaintiffs File Amended Petition in TX State Court -------------------------------------------------------------------- Plaintiffs in the class action filed against Trover Solutions, filed an amended suit in the District Court for the 150th Judicial District, Bexar County, Texas. The original class action petition was filed in October 1999 against the Company and one of the Company's clients. The plaintiff asserts that the Company's subrogation recovery efforts on behalf of its client Prudential Health Care Plan, Inc. violated a number of common law duties, as well as the Texas Insurance Code and the Texas Business and Commerce Code. The petition alleges that the Company, as the subrogation agent for Prudential, made fraudulent misrepresentations in the course of unlawfully pursuing subrogation and reimbursement claims that plaintiffs assert are unenforceable because: (1) prepaid medical service plans may not exercise rights of subrogation and reimbursement; (2) the subrogation and reimbursement claims asserted by the Company are not supported by contract documents that provide enforceable recovery rights and/or do not adequately describe the recovery rights; and (3) the sums recovered pursuant to such claims unlawfully exceed the amount Prudential paid for medical goods and services The Company was served with the petition in November 1999, and has answered, denying all allegations. The court has not yet addressed the question of whether to certify the putative class. After the defendants filed a motion for summary judgment in January 2002, the plaintiff moved the court to delay consideration of the motion until plaintiff could complete additional discovery. The plaintiff's motion to delay consideration was granted and discovery is in progress. On October 25, 2002, the plaintiff filed an amended petition naming one additional plaintiff as a purported class representative. The amended petition does not add any new claims. The Company is reviewing the amended petition and has not yet filed a formal response. TROVER SOLUTIONS: TX Court Refuses To Alter Dismissal of ERISA Lawsuit ---------------------------------------------------------------------- The United States District Court for the Western District of Texas, San Antonio Division dismissed plaintiffs' motion to alter the court's decision dismissing all but one of the claims in the class action filed against Trover Solutions, Inc. The suit was commenced in December 1999 against the Company and one of the Company's clients, asserting claims on behalf of members of Employee Retirement Income Security Act (ERISA) governed health plans and alleged that the Company's subrogation recovery efforts on behalf of its client Prudential violated: (1) a number of common law duties, and (2) certain ERISA plan documents, (3) the Racketeer Influenced and Corrupt Organizations Act (RICO), (4) the federal Fair Debt Collection Practices Act, (5) the Texas Insurance Code and (6) the Texas Business and Commerce Code The suit alleged that the Company, as the subrogation agent for Prudential, made fraudulent misrepresentations in the course of unlawfully pursuing subrogation and reimbursement claims that plaintiffs assert are unenforceable because: (i) prepaid medical service plans may not exercise rights of subrogation and reimbursement, (ii) the subrogation and reimbursement claims asserted by the Company are not supported by contract documents that provide enforceable recovery rights and/or do not adequately describe the recovery rights; and (iii) the sums recovered pursuant to such claims unlawfully exceed the amount Prudential paid for medical goods and services. The suit further alleged that the Company unlawfully pursued subrogation and reimbursement claims by: (a) failing to pay pro rata attorney's fees to attorneys who represented purported class members with respect to tort claims underlying the subrogation and reimbursement claims; and (b) recovering subrogation and reimbursement claims from purported class members who have not been fully compensated for their injuries. In January 2000, the defendants filed a motion to dismiss the suit. In response to the defendants' motion, in February 2001, the court rendered its opinion and entered an order dismissing all of the plaintiff's claims with the exception of the plaintiff's claim for attorney fees, which remains pending before the court for disposition. In March 2001, the Company filed an answer to the suit denying all of the plaintiff's allegations. Also in March 2001, the plaintiff filed a motion to alter or amend the court's ruling on the motion to dismiss. On July 15, 2002, the court denied plaintiff's ’s motion to alter or amend the court's ruling on the motion to dismiss. The court has not addressed the issue of class certification. TROVER SOLUTIONS: Court Reverses Dismissal of FDCPA Claims in LA Suit --------------------------------------------------------------------- The United States Eighth Circuit Court of Appeals reversed a lower court's dismissal of the Fair Debt Collections Processing Act (FDCPA) claims in a class action filed against Trover Solutions, Inc. In March 2001, a suit was filed against the Company in the United States District Court for the Eastern District of Louisiana, asserting that the Company's subrogation recovery efforts on behalf of its clients violate: (1) certain Louisiana state laws, (2) the federal Fair Debt Collection Practices Act and (3) the Louisiana Unfair Trade Practices Act The suit alleges that the Company intentionally and negligently interfered with the plaintiff's and the putative class members' rights to settle certain personal injury claims. The suit further alleges that the Company unlawfully pursued subrogation and reimbursement claims that plaintiff asserts are unenforceable because the clauses in the Company's clients' coverage documents that create such recovery rights are rendered null and void by Louisiana statutes that generally prohibit coordination of benefits with individually underwritten insurance coverages. Plaintiff purports to represent a class consisting of all persons covered under group health policies that were issued or delivered in the State of Louisiana and who received any communication from the Company attempting to enforce any clauses that allegedly were rendered null and void by Louisiana law. In July 2001, the court granted a motion for summary judgment filed by the Company as concerned the plaintiff's FDCPA claim, dismissing those claims with prejudice. The court denied the Company's motion for summary judgment, without prejudice to the right of the Company to reassert its motion, with respect to the plaintiff's state law claims. The court ordered that the parties submit memoranda addressing whether the court still had subject matter jurisdiction, given dismissal of the federal claim. In August 2001, the court ruled that it lacked subject matter jurisdiction, thus dismissing the remaining claims, without prejudice. Plaintiff filed an appeal to the United States Fifth Circuit Court of Appeals. On November 1, 2002, the appeals court rendered its opinion reversing the dismissal of the FDCPA claims. The court also affirmed the trial court's determination that diversity jurisdiction did not exist in the case. The court remanded the case to the federal district court for further proceedings. The time in which the Company may seek rehearing or further appeal has not expired, and the Company is now reviewing the opinion. The Company disputes the plaintiff's allegations regarding the applicability of the FDCPA. UNIVERSITY OF MISSOURI: Suit Winner Says Educating Schools is the Key --------------------------------------------------------------------- Robert Herman said he would rather educate government agencies than collect $500 million from the University of Missouri, after winning a class action over illegal tuition charges to resident undergraduates, Associated Press Newswires reports. Mr. Herman, an attorney, said he does not want to bankrupt the University, but he does want to warn other government agencies that they are not above the law. "There should be some remedy," he said. "Otherwise we are giving the signal to other government agencies: Take it (illegally obtained funds) if you can get it and you will get away with it." Since Friday's decision by St. Louis County Circuit Judge Kenneth M. Romines, Mr. Herman said he has been looking at other ways to hold the school accountable. Meanwhile, university lawyers are reviewing their own options, including a possible appeal. The judge did not award damages as yet to thousands of students who attended classes in Columbia, Rolla, Kansas City and St. Louis between 1986 and last year. A full refund could cost up to $500 million, the university estimated. Mr. Herman said damages of $500 million plus interest would be unreasonable. Mr. Herman also observed that the judge has a lot of discretion to fashion an equitable remedy. Mr. Herman said that issuing vouchers to students for several years is one possible remedy. The vouchers would help current students pay their tuition. Alumni could donate the vouchers to the university for a tax credit or use them for their own children. However, Mr. Herman said that vouchers were but the beginning, not the end, of a search for equitable remedies. Circuit Judge Romines found against the university's Board of Curators, saying the university violated state law for 15 years by charging tuition to in-state undergraduate students throughout the system. The ruling, and Mr. Herman's class action, filed on behalf of three students, are based on an obscure law passed 63 years ago. It says that qualified youths living in Missouri, and over the age of 16, shall not be charged tuition for undergraduate programs. Last year, however, the Legislature passed, and Governor Robert Holden signed, a law allowing the university system to charge and collect "tuition and other fees." WESTPOINT STEVENS: Faces Two Slave Reparation Suits in NY, CA Courts -------------------------------------------------------------------- Westpoint Stevens, Inc. was named as a defendant in two separate class actions seeking reparation for the historic enslavement of African Americans in the United States: (1) Eddlee Bankhead vs. Lloyd's of London, et al, in the United States District Court for the Southern District of New York, (2) Timothy Hurdle and Chester Hurdle vs. FleetBoston Financial Corporation, et al, initially filed in the California Superior Court for San Francisco County, but has since been removed to the United States District Court California Northern District (San Francisco) The factual basis for both suits is the claim that the defendants profited from the slave labor of the plaintiff classes' ancestors prior to 1865 and, specifically, that Pepperell Manufacturing, predecessor to the Company, utilized cotton from southern planters who in turn purchased finished product to clothe their slaves. The California suit alleges that such practices amount to an "unfair business practice" in violation of the California Business and Professional Code. The purported class includes all descendants of African American slaves. The relief sought includes: (i) an accounting, (ii) the appointment of an independent historical commission, (iii) imposition of a constructive trust, (iv) restitution of the value of slave labor and defendants' unjust enrichment, (v) disgorgement of illicit profits and (vi) compensatory and punitive damages The Company has not yet been served in either action but believes that the suits are without merit. New Securities Fraud Cases CHARLES SCHWAB: Weiss & Yourman Investigates Securities Fraud Charges --------------------------------------------------------------------- Weiss & Yourman is investigating Charles Schwab & Company in connection with a pending class action suit against the brokerage house, which alleges that the Company knew or should have known about system-wide problems which led to the overcharging of commissions, loss of interest paid, charging of unwarranted interest, and over-withholding of equity. If, while trading with Charles Schwab, including on schwab.com. They are now seeking people/customers of the Company who were: (1) were charged full broker commissions rather than the web discounted commission for the automatic execution of options purchased via schwab.com; (2) presented automatic execution of options spread which resulted in a box position rather than the trades being flattened out; (3) single order for the purchase or sale of stock, or the automatic execution of options, was split into two or more trades by Schwab, and multiple commissions were charged for the order; (4) Account option requirements were erroneously calculated, resulting in an over-withholding of equity from the account, a loss of interest on such equity, and/or opportunity costs as a result of the withheld equity; (5) Market orders for the purchase or sale of stock or options, placed via schwab.com , took an excessive amount of time to execute, resulting in purchases being made at far higher prices than at the time the order was placed, and/or sales being made at far lower prices than at the time the order was placed. For more information, contact Behram V. Parekh by Phone: 800-437-7918 by E-mail: schwabinfo@wyca.com or visit the firm's Website: http://www.wyca.com LEAP WIRELESS: Abbey Gardy Commences Securities Fraud Suit in S.D. CA --------------------------------------------------------------------- Abbey Gardy, LLP initiated a securities class action in the United States District Court for the Southern District of California on behalf of all persons or entities who purchased securities of Leap Wireless International, Inc. (OTCBB:LWIN) between February 11, 2002 and July 24, 2002, inclusive. The suit names as defendants the Company and: (1) Harvey P. White, Chairman and Chief Executive Officer, (2) Susan G. Swenson, President, Chief Operating Officer and director, (3) Manford Leonard, Vice President and Controller and (4) Jill E. Barad, Accounting Officer and director The suit alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the class period thereby artificially inflating the price of Company securities. Specifically, the suit alleges that in starting on February 11, 2002, the day after the Company publicly announced its financial results for its fiscal year ending December 31, 2002, defendants concealed the deteriorated value of its wireless license assets by undertaking a fraudulent impairment test of those assets which grossly overstated the value of the Company's wireless license assets in its financial statements. The suit also alleges defendants were motivated by the need to preserve the image of the Company as a viable wireless company with valuable assets, sufficient to persuade lenders, investors and vendors to provide capital, loans and equipment to the Company. Defendants issued materially false and misleading statements on February 11, 2002, April 24, 2002 and May 2, 2002. On July 24, 2002, the last day of the class period, the Company announced its financial results for its second quarter of 2002 and admitted for the first time that circumstances existed throughout the year were adversely affecting the Company. On this news the market price of Leap shares fell from a class period high of $10.00 to below $1.00 and are presently trading at less that $.40 per share. For more details, contact Nancy Kaboolian by Phone: (800) 889-3701 or by E-mail: Nkaboolian@abbeygardy.com LEAP WIRELESS: Charles Piven Commences Securities Fraud Suit in S.D. CA ----------------------------------------------------------------------- The Law Offices Of Charles J. Piven, PA initiated a securities class action on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of Leap Wireless International, Inc. (OTCBB:LWIN) between February 11, 2002 and July 24, 2002, inclusive. The case is pending in the United States District Court for the Southern District of California, against the Company and: (1) Harvey P. White, Chairman and Chief Executive Officer, (2) Susan G. Swenson, President, Chief Operating Officer and director, (3) Manford Leonard, Vice President and Controller and (4) Jill E. Barad, Accounting Officer and director. 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 SEACHANGE INTERNATIONAL: Schiffrin & Barroway Files Investor Suit in MA ----------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the District of Massachusetts on behalf of all purchasers of the common stock of SeaChange International, Inc. (Nasdaq: SEAC) in or traceable to the offering conducted by the Company on or about January 29, 2002. The complaint charges the Company and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that, at all relevant times, the Company purported to be a leading developer, manufacturer and marketer of video storage systems which purportedly automate the management and distribution of video streams, such as movies and other feature presentations and advertisements. The suit further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that the Company was unable to compete effectively in its market and that the Company's products were dependent on technology, developed and patented by a key competitor, as to which the Company did not have proprietary rights. For more details, contact Marc A. Topaz or Stuart L. Berman by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com/cgi/signup.cgi SEARS ROEBUCK: Much Shelist Commences Securities Fraud Suit in N.D. IL ---------------------------------------------------------------------- Much Shelist Freed Denenberg Ament & Rubinstein PC initiated a securities class action on behalf of purchasers of Sears, Roebuck & Co. (NYSE:S) publicly traded securities between January 17, 2002 and October 17, 2002, inclusive, in the United States District Court for the Northern District of Illinois, Eastern Division. According to the complaint, defendants, throughout the class period, represented that the Company was growing its earnings strongly, driven by its Credit and Financial Products segment and that it would achieve earnings growth of 22% in 2002 over 2001. In addition, in each of its press releases and SEC reports filed during the class period, the Company reported its provisions for uncollectible accounts and in its 2001 annual report represented that such reserves were "adequate." These, and other statements detailed in the complaint, were allegedly false and misleading because, according to the complaint, they did not disclose that the Company's risk for uncollectible accounts had increased materially throughout the class period and, in addition, that the Company was under-reserving for its uncollectible accounts which inflated its earnings and balance sheet. On October 17, 2002, the company reported in a press release that it will grow its 2002 earnings by 15%, rather than the 22% it reaffirmed as recently as ten days previously, because of a "$222 million increase in the domestic provision for uncollectible accounts." In addition, according to the press release, earnings for the third quarter were 26% less than the previous year. In reaction to the press release, the price of Sears common stock plummeted, falling 32%, from an October 16 close of $33.95 per share to close at $23.15 per share on October 17, on extremely heavy trading volume. For more details, contact Carol V. Gilden by Phone: (800) 470-6824 or by E-mail: investorhelp@muchshelist.com ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2002. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *