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/raid1/www/Hosts/bankrupt/CAR_Public/030115.mbx C L A S S A C T I O N R E P O R T E R Wednesday, January 15, 2003, Vol. 5, No. 10 Headlines ARIZONA: Compensation For Scottsdale Residents' TCE Lawsuit Delayed BRIDGESTONE/FIRESTONE: Court Upholds Refusal to Certify Explorer Suit CROWN VICTORIAS: Canada's Police Reinforces Cars Due To Accident Hazard GLAXOSMITHKLINE PLC: CA Court Refuses Certification For Paxil Lawsuit GREAT ATLANTIC: NY Court Grants Preliminary Approval to Wage Suit Pact IRAN: 1979 Tehran Hostages Appeal Dismissal of Torture Suit in DC Court KIM SON: Woman Employee Commences Suit Over Bad Working Conditions, Pay GREAT ATLANTIC: Asks NJ Court To Dismiss Consolidated Securities Suit MICROSOFT CORPORATION: Judge Refuses To Allow Appeal to Suit Settlement MICROSOFT CORPORATION: Apple Says $1.1B Settlement Not Strict Enough MONSANTO CO.: Farmer Alleges Seed Dealers' Forgery Led To Legal Battle NEVADA: City, Developers Paying $14M For Faulty Home Construction PALM INC.: Asks NY Court To Dismiss Consolidated Securities Fraud Suit PALM INC.: Trial in Handhelds Consumer Suit To Resume March 2003 in CA PALM INC.: Faces Consumer Lawsuit Over m500, m505 Handhelds in CA Court PALM INC.: Asks MI Court To Dismiss Suit Over Advertising for Handhelds PALM INC.: Consumers Sue Over "Fraudulent" m130 Claims in CA, IL Courts PHILIPS SERVICES: Ontario Court Rejects Appeal Over Class Certification RIBOZYME PHARMACEUTICALS: Hearing For Securities Settlement Set March SILICONE IMPLANTS: Implant Makers Seek FDA Review Of Gel-Filled Devices WORLDCOM INC.: Investors Commence Arbitration Claims V. Citigroup *Proposed SEC Rules Could Turn Corporate Lawyers Into Whistle-Blowers New Securities Fraud Cases BIO-TECHNOLOGY GENERAL: Schiffrin & Barroway Files Investor Suit in NJ CABLE & WIRELESS: Brodsky & Smith Commences Securities Suit in E.D. VA HOTELS.COM: Brodsky & Smith Commences Securities Fraud Suit in N.D. TX HOTELS.COM: Bull & Lifshitz Commences Securities Fraud Suit in N.D. TX LEAP WIRELESS: Wechsler Harwood Commences Securities Fraud Suit in CA LIPPER CONVERTIBLES: Cohen Milstein Launches Securities Suit in S.D. NY RURAL CELLULAR: Milberg Weiss Commences Securities Lawsuit in MN Court RURAL CELLULAR: Cauley Geller Commences Securities Lawsuit in MN Court ********* ARIZONA: Compensation For Scottsdale Residents' TCE Lawsuit Delayed ------------------------------------------------------------------- Compensation for thousands of south Scottsdale residents in a class action suit filed against high tech giant Motorola, Inc. and other companies over trichloroethylene (TCE) contamination will be postponed, due to arbitration delays. The class action, filed in 1992, claims property damages as a result of drinking contaminated city well water. The wells were shut down in 1981 after the TCE was discovered, but years of lawsuits followed against high-tech giant Motorola and other companies over TCE dumping, azcentral.com reports. Darlene Petersen, 73, has lived in the same home near Coronado High School for 44 years, and believes nine longtime neighbors on her street developed various cancers from TCE-contaminated well water. Ms. Petersen is due to receive her check for $325 next spring. Ms. Petersen believes the money due to her from the settlement of a class action suit over poisonous drinking water is minor compensation, azcentral.com reports. Originally, the checks were scheduled to be sent this month, but they have been held up because of arbitration delays. "The money isn't the important thing," Ms. Petersen said. "How about all those people who died because of this? Those companies should be held responsible for monitoring this situation forever." Although the medical community can't decide if there's a link between TCE and cancer, Tony Lucia, an attorney for the plaintiffs, said many medical researchers testified that TCE does hasten the onset of certain types of cancers and is a direct cause of lupus, azcentral.com reports. Mr. Lucia said he's not surprised it has taken so long to settle the suits. There were 80 law firms representing the defense, and five representing the plaintiffs. "There were over 1,000 depositions," Lucia said BRIDGESTONE/FIRESTONE: Court Upholds Refusal to Certify Explorer Suit --------------------------------------------------------------------- The United States Supreme Court upheld an appeals court's ruling rejecting nationwide class certification for the lawsuits filed against Ford Motor Company, and Bridgestone Corporation's Firestone unit, over rollover accidents in 2001 involving the popular Ford Explorer sport utility vehicles, equipped by Firestone tires, Reuters reports. According to an earlier Class Action Reporter story, the suits allege breach of warranty and consumer fraud, and seek compensation for millions of owners of Ford Explorers equipped with any of Firestone since 1990. The suits are different from other suits spawned by the accidents because plaintiffs in the litigation are seeking compensation for the tires and for the diminished resale of their Ford Explorers - not personal injury awards. The Supreme Court declined without comment on the appellate court's ruling, which affects more than 3 million owners of the Explorers made between 1991 and 2001 and the owners of about 60 million Firestone tires. A federal judge in Indianapolis initially allowed two different classes to proceed, one for owners of the Explorers and the other for buyers of the Firestone tires, Reuters states. The appeals court later ruled that a class action would be unmanageable because a number of differing state laws applied and the case involved too many products sold over a long period, with various circumstances involved. Attorneys for the plaintiffs appealed to the Supreme Court. They said the appeals court was wrong in ruling that no class action is proper unless all litigants are covered by the same legal rules. John W. "Don" Barrett, one of the lawyers for the plaintiffs, told Reuters the high court's decision disappointed but did not surprise him because it is very difficult to get the justices to review a case. "Eventually Ford and Firestone are going to have to meet us in a courtroom, which is of course what they are terrified to do, because we are going to beat them," Mr. Barrett said. Months ago, he said, the plaintiffs had set up an alternative plan to bring a national class action in state court. "We have cases filed in several states," he said, "and we're proceeding to have them certified." Ford spokeswoman Kathleen Vokes called the Supreme Court's decision not to hear the case a "victory for consumers." "It confirms that safety decisions should be made by the National Highway Traffic Safety Administration, not trial lawyers," she told Reuters. "No-injury cases should not be heard as class actions, especially in this case, because Ford and Firestone have already replaced million of tires at their own expense." Dan MacDonald, spokesman for Bridgestone's North American subsidiary, told Reuters he was pleased by the high court's action. "Many of these people owned tires that were part of the recall and ended up with a full new set of tires at no cost," he said. "These no-injury claims are frivolous, not appropriate for class status, and would only serve to further clog the courts." CROWN VICTORIAS: Canada's Police Reinforces Cars Due To Accident Hazard ----------------------------------------------------------------------- Several of Canada's largest police forces are hurrying to reinforce gas tanks on their Ford Crown Victoria cruisers after several US officers suffered fiery deaths when the tanks caught fire or exploded, CNews Canada reports. The Ontario Provincial Police have pulled about 100 Crown Victorias off the road to install gas-tank shielding, and the Royal Canadian Mounted Police (RCMP) is also retrofitting its fleet. The Ford Motor Company insists that the cars, which are assembled exclusively in St. Thomas, Ontario are safe. However, the company has also offered to install the fuel-tank shielding, free of charge, after 13 US officers died in fiery crashes in the cars between 1983 and last year, CNews Canada states. Each of the deaths involved a Crown Victoria gas tank catching fire, often after the car was hit in the rear in a high-speed crash. An investigation by the US National Highway Traffic Safety Administration last year found that four people have also died in crashes involving civilian Crown Victoria cars. No injuries or deaths have been reported in Canada so far, but the deaths south of the border have raised red flags here about North America's most popular police vehicle. RCMP spokeswoman Rochelle Patenaude told CNews that all 2,000 Crown Victorias operated by the Mounties are being modified as quickly as parts can be ordered. "We're aware of the incidents in the United States and want to do everything possible to ensure the safety and security of our members," Ms. Patenaude said from Ottawa. "The service is being done at the dealerships. As the parts become available, the appointments are scheduled in with priority." Sgt. Terry Blace, a spokesman for the OPP, said 400 of the force's 500 Crown Victorias have already been upgraded, with work on the rest expected to be completed in the next few weeks, CNews Canada reports. Similar upgrades are underway at the Toronto police force, which has about 700 of the cars, and at the Montreal police service, which operates 104 Crown Victorias. Ford continues to insist that the full-size car is one of the safest vehicles on the road, arguing the problem is not with the car but the way it is used by police forces. Ford spokeswoman Kristen Kinley said in an interview that most of the deaths involving police officers have occurred during rear-end crashes at more than 115 km/h, CNews reports. She added that the risk is compounded when objects stored in the trunk of the cruiser puncture the gas tank during high-speed crashes. "Our research shows that some things that could cause punctures are sharp components," Kinley said from company headquarters in Dearborn, Michigan. "We believe the shielding will make a big difference." GLAXOSMITHKLINE PLC: CA Court Refuses Certification For Paxil Lawsuit --------------------------------------------------------------------- United States District Court in Los Angeles, California Judge Mariana Pfaelzer refused to grant class certification to a lawsuit filed against GlaxoSmithKline Plc (GSK), over the effects of its top-selling anti-depressant drug Paxil Several Paxil users filed the suit against the Company in Los Angeles federal court, alleging the Company deliberately downplayed the severity of withdrawal symptoms from the drug, according to an earlier Class Action Reporter story. In September 2002, Judge Pfaelzer had granted a temporary injunction against ads for the drug, but later allowed the Company to claim that its anti-depressant Paxil is not addictive. Judge Pfaelzer said in her ruling that attorneys for a group of Paxil users failed to present a manageable trial plan. Glaxo, Europe's biggest drug maker, argued that it would be difficult for the court to determine if each member of a large class experienced the alleged withdrawal symptoms, including nausea and dizziness. The company was supported in court by the US Food and Drug Administration, which said it had previously reviewed in-depth Paxil's side effects and concluded that the drug is not habit forming and, as a result, the ads did not mislead, Reuters states. GREAT ATLANTIC: NY Court Grants Preliminary Approval to Wage Suit Pact ---------------------------------------------------------------------- The United States District Court for the Southern District of New York granted preliminary approval to a settlement proposed by Great Atlantic & Pacific Tea Co., Inc. to settle two lawsuits, one a class action, charging it with overtime wage violations. On January 13, 2000, the Attorney General of the State of New York filed an action in New York Supreme Court, County of New York, alleging that the Company and its subsidiary Shopwell, Inc., together with the Company's outside delivery service Chelsea Trucking, Inc., violated New York law by failing to pay minimum and overtime wages to individuals who delivered groceries at one of the Food Emporium's stores in New York City. The complaint sought a determination of violation of law, an unspecified amount of restitution, an injunction and costs. A purported class action was filed on January 13, 2000 in the Southern District of New York against the Company, Shopwell, Inc. and others by Faty Ansoumana and others. The federal court action makes similar minimum wage and overtime pay allegations under both federal and state law and extends the allegations to various stores operated by the Company. On September 18, 2002, the plaintiffs, the Attorney General and the Company entered into a Stipulation and Agreement of Settlement pursuant to which the Company would pay approximately $3 million in full settlement of the actions and would receive releases from the class and the Attorney General, and the actions would be dismissed with prejudice. The proposed settlement remains subject to entry of an order of final approval by the federal court. IRAN: 1979 Tehran Hostages Appeal Dismissal of Torture Suit in DC Court ----------------------------------------------------------------------- Americans who were taken hostage in Tehran, Iran in 1979 appealed the dismissal of a class action they filed against the Islamic Republic of Iran, LexisNexis reports. According to a brief filed in the United States Court of Appeals for the District of Columbia, Congress has created a claim against foreign states for acts of torture and hostage taking. Oral argument before the District of Columbia Circuit U.S. Court of Appeals is scheduled for May 12. "Every other District Court judge to consider the question -- in a dozen reported decisions issued before and after the ruling below -- has concluded that Congress created a claim against foreign states for acts of torture and hostage taking. The subsequent legislation enacted in response to the government's appearance in this case make Congress' intent to do so unmistakably clear," the plaintiffs say in the brief filed January 7. "The text, purpose, and legislative history of the Antiterrorism Act make clear that plaintiffs have a claim against the Iranian defendants. Congress provided the District Court with unequivocal indication of its intent to abrogate the (Algiers) Accords, when, in response to the District Court's comments from the bench, it amended the Antiterrorism Act and explained in its Conference Report that the new subsection 626(c) applied `notwithstanding any other authority,'" they say. Section 626(c) was part of the 2002 Appropriations Act for the departments of Commerce, Justice and State, the judiciary and related agencies, LexisNexis states. On April 18, 2002, US Judge Emmet G. Sullivan of the District of Columbia granted the US government's motion to intervene and denied the plaintiffs' motion to strike the government's motion. The judge also vacated his August 17, 2001, order granting the plaintiffs' motion for a default judgment against Iran and its Ministry of Foreign Affairs and holding them liable. He explained that the order "violated" the express provisions of the Foreign Sovereign Immunities Act. KIM SON: Woman Employee Commences Suit Over Bad Working Conditions, Pay ----------------------------------------------------------------------- Kim Son's downtown restaurant in Houston, Texas faces a class action filed a former employee, who claimed she worked in sweatshop conditions and was not paid minimum or overtime pay, the Houston Chronicle reports. Sara Villatoro, who worked for the Houston chain from August 2001 to July 2002, claims she worked 60 hours a week but received only a flat rate of $260, or $4.33 an hour. Ms. Villatoro claims that other Kim Son employees complained to her that they too were paid a flat rate and no overtime. "I know that when people asked about overtime, the manager of Kim Son got very angry," Villatoro states in an affidavit submitted with her lawsuit filed in federal court Thursday. Tri La, Kim Son's owner, told the Chronicle he had not received a copy of the suit, but he denies its allegations, saying he pays appropriate minimum and overtime wages. Richard Burch, Villatoro's attorney, said former and current Kim Son employees may join the lawsuit if it is granted class-action status. But, he added, some who are undocumented immigrants may be reluctant to come forward, the Chronicle states. The purpose of the Fair Labor Standards Act is two-fold: "First, it ensures people are paid a bare minimum amount of money for each hour worked; and the other purpose is to protect people from overwork by making employers pay time and a half," Mr. Burch said. "Neither one of those goals is being met at Kim Son." GREAT ATLANTIC: Asks NJ Court To Dismiss Consolidated Securities Suit --------------------------------------------------------------------- Great Atlantic & Pacific Tea Co., Inc. asked the United States District Court for the District of New Jersey to dismiss the consolidated securities class action filed against it and certain of its officers and directors. The suit purports to assert claims under Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of 1934 arising out of the Company's accounting practices and certain alleged material misrepresentations and omissions made by the Company concerning its financial results. MICROSOFT CORPORATION: Judge Refuses To Allow Appeal to Suit Settlement ----------------------------------------------------------------------- US District Judge Colleen Kollar-Kotelly denied two computer industry trade groups the chance to appeal Microsoft Corporation's settlement deal with the US Justice Department and nine states. She says they do not have the legal standing to step in and appeal the suit to the US Court of Appeals for the District of Columbia, Reuters reports. The Software and Information Industry Association and the Computer & Communications Industry Association filed, with the judge's permission, friend-of-the-court briefs asking for stricter sanctions against the software giant. However, Judge Kollar-Kotelly said legal precedents did not support the groups' argument that they had a right to intervene in the government case. If they want to pursue the matter further, she said, they could file a private case against the company. "Nothing prevents (the associations) or their membership from pursuing their own antitrust actions against Microsoft," the judge wrote. The settlement already faces an appeal by the state attorneys general of Massachusetts and West Virginia, the final hold-outs from a group of nine states that had tried to obtain more stringent sanctions against Microsoft, Reuters states. Over the states' objections, Judge Kollar- Kotelly approved, with minor adjustments, a settlement crafted by the Justice Department and Microsoft a year earlier. In the deal endorsed by Judge Kollar-Kotelly on November 1, Microsoft agreed to measures that included giving computer makers greater freedom to feature rival software on their machines by allowing them to hide some Microsoft icons on the Windows desktop, Reuters states. The two industry groups that flagged their intention to appeal are longstanding critics of Microsoft and have lobbied for tough government action against the company. MICROSOFT CORPORATION: Apple Says $1.1B Settlement Not Strict Enough -------------------------------------------------------------------- Microsoft Corporation's rival Apple Computer Corporation expressed misgivings over the US$1.1 billion antitrust settlement Microsoft entered with the state of California, saying the settlement doesn't go far enough, maccentral.com reports. Under the settlement, Microsoft agreed to offer vouchers, ranging in amounts ranging from US$4 to $29, to California customers who purchased Microsoft software between February 18, 1995, and December 15, 2001. Two-thirds of the amount not claimed by individuals will be donated to 4,700 of California's neediest schools, according to Brad Smith, Microsoft general counsel, and Eugene Crew, lead counsel for Townsend and Townsend and Crew LLP, the San Francisco firm that brought the suit nearly four years ago. The proposed deal would see one-third of the value of the unclaimed vouchers reverts to Microsoft, which maintains no admission of fault or any violation of the law in the matter. Microsoft's attorneys pointed out that in many class action cases, all unclaimed damages revert to the defendant. The problem that Apple has with the settlement is the way the money given to the schools must be spent and the fact that only two-thirds of the voucher money not claimed by customers actually goes to the schools. "Microsoft has proposed to offer vouchers to their customers as part of a California antitrust settlement. However, history tells us that less than 25 percent of customers redeem these types of vouchers, so to accurately evaluate Microsoft's offer we must focus on the fate of the unclaimed voucher funds," Apple said in a statement given to MacCentral. "Under Microsoft's proposal, one third of these unclaimed funds are taken back by Microsoft and not given to our schools. Another third can be used by schools only to purchase Microsoft software, leaving just the remaining third available for our schools to purchase the products of their choice," the statement continued. Of course, Apple and other technology companies would like as much money as possible made available to the schools to purchase product other than Microsoft's. The education market, once dominated by Apple, has been hotly contested over the last several years, but the Cupertino-based computer maker has seen some major wins recently. Apple counts Henrico County and the State of Maine as two customers that implemented programs based on the company's iBook computer totaling in the tens of millions of dollars, maccentral.com reports. "Apple strongly believes that Microsoft should make the entire pool of unclaimed voucher funds available to our schools to purchase any technology products that best meet their needs," said Apple's statement. "Microsoft should not be allowed to recoup one third of the unclaimed voucher funds and should not be allowed to dictate which technology our schools choose to buy with these funds. Remember -- this is a settlement imposed against Microsoft for breaking the law, and it should not allow them to unfairly compete in education -- one of the few remaining markets where they don't have monopoly power." The settlement still must be presented to the judge, and potential class members must be given the option to not participate -- leaving open an individual's choice to appeal. After the Superior Court gives final approval, which Microsoft's attorneys estimate will happen by early fall, the class members get about four months to submit claims. MONSANTO CO.: Farmer Alleges Seed Dealers' Forgery Led To Legal Battle ---------------------------------------------------------------------- A Southern Illinois farmer discovered he was in trouble with agribusiness - namely, Monsanto, when US marshals showed up at his Metropolis farm and confiscated his soybean seeds, reported the Belleville News-Democrat (IL). That moment began a legal battle in US District Court, in East St. Louis, weighing technology against time-honored farming practices. Issues arose out of the trial testimony, which led the plaintiff to file a class action against the seed dealers. Monsanto obtained an injunction against farmer Eugene Stratemeyer, after it was determined that he had saved Roundup Ready soybeans, a genetically engineered soybean, for the purpose of planting next year. The genetically engineered soybean, which was introduced in 1996, won't die when exposed to Roundup herbicide, thereby allowing farmers to spray the entire field and make soybean farming cheaper and less labor intensive. "I didn't know about this at all. I couldn't replant my own seeds when the marshals showed up on my land and seized my soybeans, said Mr. Stratemeyer. "The first time I became aware of this was right then when I found out about the lawsuit." Under a technology users' agreement farmers are supposed to sign when they purchase the seed - they are prohibited from saving the Roundup seed for replanting or sale to other farmers. However, Mr. Stratemeyer, in a counter-suit, claimed he never signed that kind of agreement. The battle ended when a federal jury found Mr. Stratemeyer had violated such an agreement with Monsanto when he saved and sold Monsanto's soybean seeds. Monsanto sued the prominent Southern Illinois farmer to protect its patent on the technology, Monsanto spokesman Janice Armstrong said, and to ensure that all farmers using Monsanto seeds are playing by the same rules. However, Mr. Stratemeyer contends the contract bans a traditional farming practice of saving seeds from a harvest for replanting the next year. He also believes Monsanto singled him out because of his stature in the community. The jurors awarded Monsanto $16,000 in damages, plus attorneys' fees and costs. Even though the verdict went against Mr. Stratemeyer, his lawyer, Ronald Osman, said it still was a victory because the awarded damages were so much less than Monsanto requested, an amount in excess of $800,000. Testimony during the trial revealed that the seed dealers purveying the Monsanto seed commonly sign the farmers' names to the seed contracts. Whereupon, Mr. Osman filed a class action, also in federal court, in East St. Louis, against the seed dealers for forging farmers' names on the contracts. The suit also maintains that the seed dealers are agents representing the company. Monsanto has denied the seed dealers operate as their agents. The dealers merely distribute the seed, said Monsanto spokeswoman, Janice Armstrong. Mr. Osman, referring to the large discrepancy between the damages requested by Monsanto and the damages awarded by the jurors, said the jurors did not award damages for the period before the lawsuit was filed because of the trial testimony, which revealed the seed dealers were signing the contracts. Mr. Osman also farms in Southern Illinois and says the case is important because it demonstrates the conflict between big corporations and farmers. NEVADA: City, Developers Paying $14M For Faulty Home Construction ----------------------------------------------------------------- Carson City, Nevada, and three developers have agreed to pay $14 million to residents in a subdivision who claimed faulty construction led to drainage problems and mold-related illnesses, the Associated Press Newswires reports. The class action was filed by homeowners of the Mountain Park subdivision in northeast Carson City against Carson City, Stanton Park Development, Millard Realty and Construction Co. and Garretson-Ferguson Construction Co. for homes built in phases between 1992 and 1998. "This is a clear case of disregarding obvious hazards by the developer, and then not disclosing to the home buyers what the developer knew was going to happen," Robert Maddox, lawyer for the homeowners, told the Reno Gazette-Journal. For example, added Mr. Maddox, the residents should have been alerted to groundwater problems that damaged the homes and fostered mold growth. The homeowners claimed that the developers and the city, which had approved the subdivision, were aware of the unsuitable conditions at the project site prior to building the homes. The lawsuit also alleged that Carson City knew of many of the hazards present and should not have approved the development. "We claimed, for example, that they had knowledge that the area was prone to seasonal flooding, and our position was, "Hey, you have been told and you have flat-out ignored it," Mr. Maddox said. The settlement provides for a subdivision repair project, which includes storm drainage for the entire neighborhood, as well as mold removal, lot re-grading and concrete repair for specific homes. Each resident also will receive an additional $10,000 for related miscellaneous repairs to their homes. Fifty-seven residents each will receive an additional $10,000 for health problems caused by hazardous mold that developed as a result of standing water, Mr. Maddox said. PALM INC.: Asks NY Court To Dismiss Consolidated Securities Fraud Suit ---------------------------------------------------------------------- Palm, Inc. asked the United States District Court for the Southern District of New York to dismiss the consolidated securities class action pending against it, several of its officers and certain of the underwriters for its initial public offering. The suit asserts that the prospectus from the Company's March 2, 2000 initial public offering failed to disclose certain alleged actions by the underwriters for the offering. The complaints allege claims against the Company and the officers under Sections 11 and 15 of the Securities Act of 1933, as amended. Certain of the complaints also allege claims under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as amended. Other actions have been filed making similar allegations regarding the initial public offerings of more than 300 other companies. All of these various consolidated cases have been coordinated for pretrial purposes as In re Initial Public Offering Securities Litigation, Civil Action No. 21-MC-92. An amended consolidated complaint was filed in April 2002. The Company and the individual defendants joined the motion to dismiss filed on behalf of all issuers and individual defendants, which was heard on November 1, 2002. The court has yet to issue a ruling on this motion. PALM INC.: Trial in Handhelds Consumer Suit To Resume March 2003 in CA ---------------------------------------------------------------------- Trial in the consumer class action pending against Palm, Inc. and 3Com Corporation will continue March 24, 2003 in the California Superior Court, San Francisco County. The suit alleges breach of warranty and violation of California's s Unfair Competition Law, on behalf of purchasers of Palm III, IIIc, V and Vx handhelds. The suit alleges that certain Palm handhelds may cause damage to PC motherboards by permitting an electrical charge, or "floating voltage" from either the handheld or the cradle to be introduced into the PC via the serial and/or USB port on the PC. The plaintiffs allege that this damage is the result of a design defect in one or more of the following: HotSync software, handheld, cradle and/or the connection cable. The complaint seeks restitution, rescission, damages, an injunction mandating corrective measures to protect against future damage as well as notifying users of potential harm. Discovery is closed. The trial was set to permit the parties to conduct settlement discussions. In connection with Palm's separation from 3Com, pursuant to the terms of the Indemnification and Insurance Matters Agreement between 3Com and Palm, the Company may be required to indemnify and hold 3Com harmless for any damages or losses which may arise out of the litigation. PALM INC.: Faces Consumer Lawsuit Over m500, m505 Handhelds in CA Court ----------------------------------------------------------------------- Palm, Inc. faces a purported consumer class action filed in California Superior Court, San Francisco County, on behalf of purchasers of Palm m500 and m505 handhelds, alleging: (1) the HotSync function in certain Palm handhelds does not perform as advertised and the products are therefore defective; and (2) upon learning of the problem, Palm did not perform proper corrective measures for individual customers as set forth in the product warranty. The complaint alleges the Company's actions are a violation of California's Unfair Competition Law and a breach of express warranty. The complaint seeks alternative relief including an injunction: (i) to have Palm desist from selling and advertising the handhelds; (ii) to recall the defective handhelds, (iii) to restore the units to their advertised functionality, (iv) to pay restitution or disgorgement of the purchase price of the units and/or damages and attorneys' fees. The Company has filed its answer denying the allegations, and the parties are in the early stages of discovery. No trial date has been set. PALM INC.: Asks MI Court To Dismiss Suit Over Advertising for Handhelds ----------------------------------------------------------------------- Palm, Inc. asked the Wayne County Circuit Court in Detroit, Michigan to dismiss a purported consumer class action alleging that certain of the Company's advertisements for its Palm III, V and m100 handheld devices were false or misleading regarding the ability of the device to wirelessly and remotely access e-mails or the Internet without the need for additional hardware or software sold separately. The suit alleges: (1) violations of the Michigan Consumer Protection Act, and (2) breach of express and implied warranties and Michigan common law The suit seeks to recover the purchase price of the device from Palm for themselves and a class of all similarly situated consumers. The court has heard arguments on that motion, and it has advised it will rule on the motion to dismiss before considering the suitability of this lawsuit for class treatment. PALM INC.: Consumers Sue Over "Fraudulent" m130 Claims in CA, IL Courts ----------------------------------------------------------------------- Palm, Inc. faces four similar consumer class actions alleging consumer fraud regarding the Company's representations that its m130 handheld personal digital assistant supported more than 65,000 colors. The suits are filed in: (1) the California Superior Court, Santa Clara County, (2) the California Superior Court, San Diego County, (3) the Illinois Circuit Court, Cook County and (4) Illinois Circuit Court, St. Clair County Certain of the cases also allege breach of express warranty and unfair competition. In general, the cases seek unspecified damages and/or to enjoin the Company from continuing its allegedly misleading advertising. The Company expects other similar actions may be filed. The Company has filed answers denying the allegations in the two former actions. The parties are in the early stages of discovery, and no trial date has been set. PHILIPS SERVICES: Ontario Court Rejects Appeal Over Class Certification ----------------------------------------------------------------------- The Court of Appeal for Ontario has rejected a disgruntled investor's appeal to get a class action suit certified against a group of underwriters and Philip Services Corporation, the Investment Executive states. The suit also names as defendants: (1) Salomon Brothers Canada Inc., (2) Merrill Lynch Canada Inc., (3) CIBC Wood Gundy Securities Inc., (4) Midland Walwyn Capital Inc., (5) Gordon Capital Corporation, (6) RBC Dominion Securities Inc., (7) TD Securities Inc., (8) First Marathon Securities Ltd., and (9) its auditor, Deloitte & Touche. The suit seeks damages for negligent misrepresentation arising out of the purchase of shares in the open market. The investor, Joseph Menegon, allegedly purchased 300 shares of Philip Services on the open market, on November 28, 1997. The firm subsequently became insolvent. In 1998, he claimed damages against the respondents for alleged misrepresentations contained in a prospectus, and the audit opinion of Deloitte & Touche, the Investment Executive reports. Mr. Menegon conceded before the motions judge that he personally did not have a cause of action under the Securities Act since only purchasers who purchase shares offered by the prospectus during the period of distribution, not after, can make a claim. Still, he maintained that he could be the representative for the class of purchasers who had a cause of action. Hence, the motion turned on the viability of the action at common law. Mr. Menegon argued that a duty of care arose as a result of the reasonable foreseeability that purchasers of shares in the secondary market, before and after the public offering under the prospectus, would rely on the document to hold, buy or sell Philip shares. He submitted that the respondents' duty of care should not be delimited at the pleading stage on the basis of policy concerns about limitless liability. The motions judge rejected this argument, the Investment Executive reports. On appeal, Mr. Menegon argued that the motions judge erred. His argument focused entirely on the reasoning of a decision released after the motion was heard in this case. The appeals court upheld the lower court's decision. "In my view, the pleadings in this case fall far short of setting out material facts which could give rise to a duty of care to Menegon on the part of the auditors or the Canadian Underwriters," the court said. It dismissed the appeal with costs. RIBOZYME PHARMACEUTICALS: Hearing For Securities Settlement Set March --------------------------------------------------------------------- The United States District Court for the District of Colorado will commence on March 17,2003 fairness hearing for the settlement proposed by Ribozyme Pharmaceuticals, Inc. relating to the securities class action filed against it on behalf of purchasers of the Company's common stock on November 16 and 17, 1999. The suit alleges that the Company violated certain federal securities laws based upon its having made an allegedly misleading announcement on November 15, 1999, an earlier Class Action Reporter story states. The hearing will be held before the Honorable Marcia S. Krieger, United States District Judge, for the purpose of determining: (1) whether the proposed Settlement of the claims against Defendants in the above-captioned Litigation in return for the creation of a total settlement pool of $3 million should be approved by the Court as fair, reasonable and adequate pursuant to Rule 23 of the Federal Rules of Civil Procedure; (2) whether, thereafter, all claims against all Defendants should be dismissed with prejudice; and (3) whether the proposed Plan of Allocation of the Settlement fund should be approved. Any objections to the Settlement, the Plan of Allocation, or the requests for attorneys' fees must be postmarked no later than February 14, 2003. For more information, contact Ribozyme Pharmaceuticals, Inc., Securities Litigation by Mail: c/o Berdon LLP, P.O. Box 9014, Jericho, NY 11753-8914, by Phone: (800) 766-3330, by Fax: (516) 931- 0810 or visit the Website: http://www.berdonllp.comor contact John F. Walsh, Jennifer H. Hunt of HILL & ROBBINS, P.C. by Mail: 1441 18th Street, Suite 100, Denver, CO 80202 or by Phone: (303) 296-8100. SILICONE IMPLANTS: Implant Makers Seek FDA Review Of Gel-Filled Devices ----------------------------------------------------------------------- For more than a decade, silicone breast implants have been banned in the United States, pulled from the market amid claims that they made women ill. By the mid-1990s, the devices had become a symbol of what many regarded as corporate America's indifference to women's health - with one implant maker, Dow Corning company, eventually filing for bankruptcy protection, the Los Angeles Times reports. Now, silicone implants are poised for a comeback. Longtime implant maker Inamed Inc., formerly known as McGhan, has taken the first step toward returning the gel-filled devices to the market place. On New Year's Eve, the company asked the Food and Drug Administration to allow it to again sell silicone breast implants. A rival firm expects to make a similar request soon and a third company hopes to follow. Manufacturers also are testing a thicker, gumdrop-like gel that doesn't leak. Inamed's filing sets the stage for a new examination of silicone gel. Although some of the debate is expected to echo the original, this time the FDA will be ruling in a markedly changed climate, and will have safety data in hand. At the time the silicone implants were pulled from the market, an estimated one million to two million women had gotten them. No one denies that some implants ruptured, requiring repair or removal, and that some women became ill. "We know there has not been a breast implant manufactured that does not sometimes rupture," said Dr. David W. Feigal, the FDA's top regulator of devices. Even Inamed's patient literature tells women they may need additional surgery at some point to replace or remove the breast implant. However, scores of studies have failed to prove that implants cause the connective tissue diseases, such as rheumatoid arthritis and lupus, which thousands of women claimed in class actions against the manufacturers. In a 1996 book, Dr. Marcia Angell, then executive editor of the New England Journal of Medicine, said that unscrupulous trial lawyers had manipulated the science to convince women -- and an unquestioning media -- that silicone implants were dangerous. Then came a widely publicized report from the prestigious Institute of Medicine. This report, released in 2000, found that women with silicone implants were no more likely to have connective tissue disorders than women without implants. As the furor was calmed by the continuing growth of a sober, well-documented science minimizing the alleged danger from the devices, the number of women seeking the devices grew as well. With this increased interest and desire has come an increasing dissatisfaction with the saline implants. Meanwhile, even as Inamed and Mentor Corp., both headquartered in Santa Barbara, continued to produce saline implants, they were working to improve the durability of the silicone implants, laying the groundwork to ask regulators to reconsider their decision of the ban on silicone implants. The focus of yet-to-be-scheduled hearings before an FDA advisory panel, which could come as soon as this summer, is likely to come down to whether today's silicone are safe enough. Much of the attention will focus on the rate of complications: Implants don't last a lifetime and can cause rupture and infection. Dr. Debra Johnson, a plastic surgeon in Sacramento, said that silicone is not a perfect implant, it feels nice and looks nice, but if it breaks, it is a hassle. Free silicone in the tissues can be nasty to get rid of. Nevertheless, many women gravitate to the more natural look and feel of silicone. It was in January 1992, after multimillion-dollar jury awards and hundreds of lawsuits, that FDA Commissioner David A. Kessler called for a moratorium on the sale of silicone implants, noting that women still had access to saltwater-filled implants. The mushrooming controversy and FDA action had a temporary chilling effect. Demand has since grown dramatically. Dr Feigal, director of the FDA Center for Medical Devices, said regulators will review all prior studies of implant safety. While the Institute of Medicine report did not find any convincing evidence about connective tissue diseases, it did comment quite extensively about the local complications of rupture and infection, Dr Feigal said. Depending on the agency's satisfaction with manufacturers' silicone studies and two years of patient follow-up (90,000 women have gotten the implants through research studies), the FDA could approve the sale of silicone gels next year. It could also require further studies. Many women say they are not satisfied with the safety of silicone implants. It is their testimony that is most likely to echo through the earlier proceedings. It can be hoped that the current research on safety and durability will result in the new purchasers experiencing not only satisfaction but health and well-being; that there will be no replay of the hundreds of lawsuits, and the unhappy sight of women recalling their illnesses and the many accompanying traumas. However, Whether any silicone implant is approved will depend on whether the FDA decides not that they are safe, but that they are safe enough. Dr. Feigal said many people have the misconception that an FDA-approved product is a safe product. In reality, the agency must evaluate risks, see if they outweigh benefits and finally determine whether it is "reasonable to let the consumers decide whether or not they are willing to take those risks." WORLDCOM INC.: Investors Commence Arbitration Claims V. Citigroup ----------------------------------------------------------------- More than 100 small investors initiated arbitration claims against Salomon Smith Barney, Inc.'s parent company Citigroup, Inc. over investment losses resulting from the bankruptcy of WorldCom Inc. and the perceived lack of government action on their behalf, Computerworld reports. The investors filed the claims with the National Association of Securities Dealers (NASD) early this week, asking for the return of the full value of their investment. Among other things, the documents allege that Salomon engaged in fraud by making material misrepresentations of its relationship to WorldCom. The Company failed to disclose to investors the business ties between Salomon and WorldCom, as well as the personal and business relationship between star analyst Jack Grubman and WorldCom founder and former Chief Executive Officer Bernard Ebbers, according to Robert Weiss an attorney from the firm Hooper & Weiss, which is representing the claimants. Asked about the development, Salomon Smith Barney told Computerworld that the company believes the claims are similar to others that have been filed and maintains that the claims made against it are untrue. "While we have yet to see the claims, we expect them to mimic other filings, which we continue to believe are without merit," said Susan Thomson, a spokeswoman for Salomon Smith Barney. The documents filed today, over 1,000 pounds altogether, are just the beginning of what will be a flood of thousands of individual arbitration cases brought against Citigroup and Salomon, Mr. Weiss told Computerworld. The purpose of the arbitration cases is to give small investors a chance to recover more of their original investment than would be possible in traditional class action suits, he added. "In a class action suit, people get pennies on the dollar. In arbitration, it depends on a variety of factors, but the average recovery is much higher," Mr. Weiss told Computerworld. However, it is also hoped that the large number of claims will point out the shortcomings of arbitration as a way to handle widespread malfeasance on the part of financial institutions like Salomon and their brokers, Mr. Weiss said. Like other brokerages, Salomon requires its customers to agree to waive their right to sue, requiring them to use industry-sponsored arbitration to resolve conflicts. "With widespread fraud like this, where you have millions of people who were misled and lost money, arbitration is not a good strategy for the investor class," Mr. Weiss told Computerworld. In addition, arbitration is less advantageous than the courts for those who are making claims, according to Weiss. "Arbitration is a stacked deck. The whole process is administered by an industry trade group," Mr. Weiss added. The high profile filing of thousands of separate arbitration claims, it is hoped, will highlight the problem and help politicize the issue of requiring investors to engage in arbitration. To qualify as a claimant, individuals need to have purchased WorldCom stock through Salomon Smith Barney and relied on research provided by the company, especially by analyst Jack Grubman, Mr. Weiss said. *Proposed SEC Rules Could Turn Corporate Lawyers Into Whistle-Blowers --------------------------------------------------------------------- Despite a high-powered lobbying campaign by corporate lawyers, the Securities and Exchange Commission is moving toward approving a new regulation that some lawyers say would compel them to blow the whistle on clients, The Wall Street Journal reports. A majority of the five commissioners is currently moving toward instituting some form of "noisy withdrawal" requirement, according to people familiar with the matter. That rule would require a lawyer who sees evidence of a client company committing a "material" securities law violation, and is unable to get the company's board to stop it, to quit and inform the SEC that he is quitting for "professional considerations." The proposal, which arose from last year's wave of corporate scandals, has elicited a chorus of criticism from law firms, bar associations and corporate lawyers, who contend it would severely damage the attorney- client relationship. "It paints a target on your client," says Lawrence J. Fox, a Philadelphia securities litigator who has represented lawyers accused of wrongdoing. "It is clearly a dramatic breach of confidentiality. It would make the lawyer into a regulator." Congress ordered the SEC to enact a new professional-conduct rule for lawyers, in last year's Sarbanes-Oxley Act, which called for stricter rules to enforce corporate governance. The most controversial of a long slate of regulations required by the bill is a directive to adopt rules "setting forth minimum standards of professional conduct for attorneys" practicing before the SEC. Those rules, Congress said, should require outside and company lawyers to report "evidence of a material violation" of securities laws by a company "up the ladder" to senior executives or the board. However, when the SEC unveiled its proposed rule in late November, lawyers were taken aback, saying the commission had gone beyond the Congressional mandate by proposing the "noisy withdrawal" requirement. The bar group, said American Bar Association President Alfred P. Carlton Jr., a corporate lawyer from Raleigh, does not object to lawyers being required to report their concern to top corporation officials, but going to the government is another matter. Proponents of the rule with its "noisy withdrawal " requirement, say that concerns about attorney-client privilege are not as important as making sure lawyers try to prevent their clients from defrauding investors. Last year's corporate scandals sparked sharp questions about how the lawyers for Enron and other tainted companies could have allowed the behavior to happen. In December, a Houston federal judge declined to dismiss a class action brought by Enron shareholders against one of its outside law firms, Vinson & Elkins and others. The SEC, as part of its probe of Tyco International Ltd., is also sifting through e-mails from Tyco's outside lawyers that reveal these lawyers knew about some of the alleged wrongdoing at the corporation. The members of the commission are leaning toward supporting such a requirement in some form, people familiar with the matter say. However, because a vote is not expected until late January, the view of commissioners could still change. One alternative under consideration is to require the companies themselves to inform the SEC when an outside lawyer has quit. SEC Commissioner Roel Campos, a Democrat, is among those on the commission in favor of the change. Mr. Campos said the commissioners were on track to approve the final rules called for by Congress by January 26. Mr. Campos said members have not ruled out the possibility of renewing a comment period before taking action on portions not mandated by Congress, such as the "noisy withdrawal" provision. Lawyers had been optimistic that the most controversial part of the initiative would stall. For years, corporate lawyers have strongly resisted government effors to chip away at the confidentiality of the attorney-client relationship. Unlike auditors, lawyers are supposed to be advocates for their clients and to represent them zealously. Turning corporate lawyers into potential whistle-blowers, some lawyers say, could cause clients to withhold information from their lawyers and could make lawyers unwilling to advise clients if they begin growing uncomfortable with their activities. States' legal ethics rules generally require lawyers who "know" their services are being used by a client to commit fraud to quit. Most states give them discretion to make a "noisy withdrawal," but don't require it, according to Susan Koniak, an ethics expert at the Boston University School of Law. Lawyers' professional groups intend to press hard over the next couple of weeks to try to persuade commissioners to back away from instituting any form of forced whistle-blowing. An American Bar Association task force, assembled to lobby the SEC, is attempting to set up a meeting with SEC commissioners or staffers before a final decision is made, according to Baltimore lawyer M. Peter Moser, chairman of the group. The group also is pressing the SEC to make other changes in the proposal. For instance, the rules are meant to apply only to lawyers who practice before the commission, but many lawyers say they are drafted too broadly. Some lawyers say the language of the proposal is not clear enough about what would trigger the obligation for a lawyer to take action. At last count, more than 150 written comments have poured into the SEC from lawyers and law firms, with all but a few urging the SEC to reconsider the requirement, or at least delay instituting it. Two former general counsels of the SEC have urged the commission to reconsider. New York lawyer Edward H. Fleischman, who served as an SEC commissioner from 1986 to 1992, also complained in a written comment to the commission. He said the rules threaten a "Bill of Rights-enshrined value" of lawyers being independent of government agencies and "unburdened by concern over self-protection when engaged in the vindication of clients' rights. Think John Adams and his defense of the Redcoats after the Boston Massacre." New Securities Fraud Cases BIO-TECHNOLOGY GENERAL: Schiffrin & Barroway Files Investor Suit in NJ ---------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the District of New Jersey on behalf of all purchasers of the common stock of Bio-Technology General Corp. (Nasdaq:BTGC) from April 19, 1999 through August 2, 2002, inclusive. The suit alleges that Bio-Technology and certain of its executive officers with violations of federal securities laws. Among other things, plaintiff claims those defendants' material omissions and the dissemination of materially false and misleading statements concerning Bio-Technology's revenue and earnings caused the stock price to become artificially inflated, inflicting damages on investors. The suit alleges that, in order to inflate the price of the stock, defendants caused the Company to falsely report its earnings during 1999, 2000 and 2001 through inappropriate revenue recognition practices, including recognizing revenue where significant uncertainties existed relating to realization of the invoiced amounts. The suit charges that on August 2, 2002, defendants announced that reported financial results for fiscal year 1999, 2000 and 2001 would be restated to eliminate revenue that had been improperly recorded. The Company has now restated its results for each of the years ended December 31, 1999, December 31, 2000 and December 31, 2001. For more details, contact Marc A. Topaz or Stuart L. Berman by Phone: (888) 299-7706 (toll free) or (610) 667-7706 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com CABLE & WIRELESS: Brodsky & Smith Commences Securities Suit in E.D. VA ---------------------------------------------------------------------- The Law offices of Brodsky & Smith, LLC initiated securities class action on behalf of shareholders who acquired Cable & Wireless (NYSE:CWP) securities between August 6, 1999 and December 6, 2002, inclusive, in the United States District Court for the Eastern District of Virginia, against the Company and some of its officers and directors. The action charges that defendants violated the 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 Evan J. Smith or Marc L. Ackerman by Mail: Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by Phone: 877-LEGAL-90 or by E-mail: esmith@brodsky-smith.com or mackerman@brodsky-smith.com HOTELS.COM: Brodsky & Smith Commences Securities Fraud Suit in N.D. TX ---------------------------------------------------------------------- The Law offices of Brodsky & Smith, LLC initiated a securities class action on behalf of shareholders who acquired Hotels.com (Nasdaq:ROOM) securities between October 23, 2002 and January 6, 2003, inclusive, in the United States District Court for the Northern District of Texas, against the Company and certain of its officers and directors. The action charges that defendants violated the 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 Marc L. Ackerman or Evan J. Smith by Mail: Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by Phone: 877-LEGAL-90 or by E-mail: esmith@brodsky-smith.com or mackerman@brodsky-smith.com HOTELS.COM: Bull & Lifshitz Commences Securities Fraud Suit in N.D. TX ---------------------------------------------------------------------- Bull & Lifshitz, LLP initiated a securities class action in the United States District Court for the Northern District of Texas against Hotels.com (Nasdaq:ROOM) on behalf of all purchasers of the securities of Hotels.com, Inc. between October 23, 2002 and January 6, 2003. The complaint charges the Company and some of its directors and officers with violating securities laws which artificially inflated the Company's stock and led to large profits of Company insiders, at the expense of other Hotels.com, Inc. investors. For more details, contact Peter D. Bull or Joshua M. Lifshitz by Phone: (212) 213-6222 or visit the firm's Website: http://www.nyclasslaw.com LEAP WIRELESS: Wechsler Harwood Commences Securities Fraud Suit in CA --------------------------------------------------------------------- Wechsler Harwood LLP initiated a securities class action on behalf of all purchasers of the common stock of Leap Wireless International, Inc. (OTCBB:LWIN) between February 11, 2002 and July 24, 2002, in the United States District Court for the Southern District of California. Leap provides digital wireless services to the mass consumer market under the provider name "Cricket." In addition to the Company, the suit names Manford Leonard, Susan G. Swenson and Harvey P. White, all senior officers and/or directors of the Company during the class period, as defendants. The suit charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing a series of false and misleading statements regarding its business and financial condition during the class period. Specifically, the suit alleges that, at the time the Company announced its financial results for the fiscal year ending on December 31, 2001 (i.e., on February 11, 2002) and throughout the remainder of the class period, defendants concealed the deteriorated value of its wireless license assets by relying upon a fraudulent impairment test of those assets, which resulted in a gross and material overstatement of the value of Leap's assets in the Company's financial statements. The suit also pleads that defendants issued additional false and misleading statements during the class period that caused the value of Leap's common stock to trade at artificially inflated levels during the class period. For more details, contact Ramon Pinon by Mail: 488 Madison Avenue, 8th Floor, New York, New York 10022 by Phone: (877) 935-7400 by E-mail: rpinon@whesq.com or visit the firm's Website: http://www.whesq.com LIPPER CONVERTIBLES: Cohen Milstein Launches Securities Suit in S.D. NY ----------------------------------------------------------------------- Cohen, Milstein, Hausfeld & Toll, PLLC initiated a securities class action in the United States District Court for the Southern District of New York on behalf of its client and other Limited Partners who invested in Lipper Convertibles, L.P. during the period from January 13, 1998 through March 26, 2002. The suit names the following persons as defendants: (1) Lipper Convertibles, LP, (2) Lipper Holdings, LLC, (3) Kenneth Lipper, the Chairman, Chief Executive Officer and President of Lipper Holdings, who was responsible for supervising the day-to-day operations of the Partnership, (4) Abraham Biderman, the Executive Vice-President of Lipper Holdings and the co-manager of the Partnership, who was responsible for managing the day-to-day operations of the Partnership, and (5) Edward Strafaci who was until his sudden and unexpected departure in January 2002, the co-manager of the Partnership and who was responsible for managing the day-to-day operations of the Partnership Lipper Convertibles is a Limited Partnership which was designed to invest and which the General Partner and the other defendants represented was engaging in "convertible arbitrage" by investing "a preponderance of the Partnership's portfolio" in "investment grade securities of substantial public companies with market liquidity." In a letter to the Limited Partners dated February 20, 2002, the General Partner shocked the public, the convertible hedge fund industry and the Limited Partners by revealing that the assets of the Partnership had been substantially overvalued and that the actual value of the assets of the Partnership would be devalued "in the neighborhood of 40%." By March 26, 2002, the General Partner, Lipper Holdings, decided to dissolve the Partnership and sold all the securities held by the Partnership. On October 3, 2002, the General Partner filed an action for dissolution of the Partnership in the Supreme Court of New York, which is ongoing. This suit alleges the defendants artificially inflated the value of the Partnership's assets, profits and performance from 1995 through 2001 by utilizing pricing policies and valuation practices that violated the terms of the Partnership Agreement, the representations in the Offering Memoranda, and generally accepted accounting principles. The suit also alleges the "Independent Inquiry" conducted by the Special Counsel hired to investigate the pricing practices at Lipper, recently concluded that the General Partner's valuations were not "supported by any rational basis." As a result of the defendants' overvaluation, the suit alleges that the Limited Partners suffered damages by paying an inflated value for their investment in the Partnership, overcompensating the General Partner, defendant Lipper Holdings, by paying an incentive compensation fee based on inflated profits and performance, and overcompensating other Limited Partners who withdrew funds from the Partnership during the period of overvaluation. The suit further alleges that the defendants invested Partnership assets in unsuitable investments - risky and illiquid securities - which violated the terms and representations of the Offering Memorandum. As a result of these unsuitable investment of Partnership assets by defendants, the Limited Partners who are members of the Class suffered damages by being invested in risky investments in which they would not have otherwise invested and suffering losses which would not have occurred but for the investment of Partnership assets in unsuitable, risky and illiquid securities. 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 misrepresenting the profits, performance, value of Partnership assets, the risk of investing in the Partnership, the securities in which the Partnership was invested and the overall investment strategy of the Partnership. As the suit alleges, these misrepresentations caused the Plaintiff and other members of the class to purchase interests in the Partnership at artificially inflated prices and/or suffered losses they would not have otherwise suffered. Additionally, the suit asserts claims on behalf of the Partnership against the General Partner, defendant Lipper Holdings, for breaches of fiduciary duty, breaches of the Partnership Agreement and unjust enrichment. For more details, contact Andrew N. Friedman, Robert Smits or R. Joseph Barton by Phone: 888-240-0775 or 202-408-4600 by Fax: 202-408-4699 by E-mail: afriedman@cmht.com, jbarton@cmht.com or rsmits@cmht.com or visit the firm's Website: http://www.cmht.com RURAL CELLULAR: Milberg Weiss Commences Securities Lawsuit in MN Court ---------------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action in the United States District Court for the District of Minnesota on behalf of purchasers of Rural Cellular Corporation (NASDAQ:RCCC) publicly traded securities during the period between May 7, 2001 and Nov. 12, 2002. The complaint charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the class period, defendants caused the Company's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. Then, on November 12, 2002, after the market closed, defendants revealed that the Company's fiscal 2001 through Q2 2002 results had been materially misstated and would have to be restated. Rural Cellular admits it inappropriately recorded transactions included in its FY 2001 through Q2 2002 results, and has restated those results to remove millions in improperly reported income (which illegally decreased the Company's losses) such that its FY 2001 through Q2 2002. It admits its financial statements were not a fair presentation of Rural Cellular's results and were presented in violation of Generally Accepted Accounting Principles and SEC rules. For more details, contact William Lerach by Phone: 800/449-4900 by E- mail: wsl@milberg.com or visit the firm's Website: http://www.milberg.com RURAL CELLULAR: Cauley Geller Commences Securities Lawsuit in MN Court ---------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP initiated a securities class action in the United States District Court for the District of Minnesota on behalf of purchasers of Rural Cellular Corp. (OTC Bulletin Board: RCCC) publicly traded securities during the period between May 7, 2001 and November 12, 2002, inclusive. The complaint charges Rural Cellular and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the class period, defendants caused Rural Cellular's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. Then, on November 12, 2002, after the market closed, defendants revealed that Rural Cellular's fiscal 2001 through Q2 2002 results had been materially misstated and would have to be restated. Rural Cellular has now admitted that it inappropriately recorded transactions included in its FY 2001 through Q2 2002 results, and has restated those results to remove millions in improperly reported income (which illegally decreased the Company's losses) such that its FY 2001 through Q2 2002 financial statements were not a fair presentation of Rural Cellular's results and were presented in violation of Generally Accepted Accounting Principles and SEC rules. For more details, contact Jackie Addison, Heather Gann or Sue Null by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551- 9944 by E-mail: info@cauleygeller.com or visit the firm's Website: http://www.cauleygeller.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 * * *