/raid1/www/Hosts/bankrupt/CAR_Public/030421.mbx
C L A S S A C T I O N R E P O R T E R
Monday, April 21, 2003, Vol. 5, No. 77
Headlines
DUPONT: EPA Will Study Safety Of Chemical Used To Make Teflon Products
EACCELERATION CORPORATION: WA Consumers Sue Over Internet Advertising
FIDELITY HOLDINGS: NY Court Approves Securities Fraud Suit Settlement
HARDBOARD SIDING: CA Court Begins Notice Program in Weyerhauser Lawsuit
INDIAN FUNDS: Senate Urges Swift Resolution, Warns of Mediation Process
INTERNAP NETWORK: NY Court Dismisses in Part Securities Fraud Lawsuit
INTERNAP NETWORK: Named as Defendant in CSFB Securities Suit in S.D. FL
INTERNET CAPITAL: NY Court Denies Motion To Dismiss Securities Lawsuit
KATY INDUSTRIES: Plaintiffs Withdraw Class Charges in Suit in E.D. TX
LEAP WIRELESS: CA Court Consolidates Suits for Securities Violations
LEAP WIRELESS: Named as Defendant in NY Shareholder Derivative Lawsuit
LOUDEYE CORPORATION: NY Court Refuses To Dismiss Securities Fraud Suit
MARYLAND: Judge Rejects University Students' Contract Violation Claim
MOTOROLA INC.: New Jersey Appointed Lead Plaintiff in Securities Suit
NEXT LEVEL: NY Court Refuses to Dismiss Consolidated Securities Lawsuit
NEXT LEVEL: Reaches Agreement To Settle DE Lawsuits V. Motorola Offer
NEXT LEVEL: Directors Face Stockholder Fraud Lawsuit in CA State Court
NIKU CORPORATION: NY Court Dismisses in Part Securities Fraud Lawsuit
OPUS360 CORPORATION: Reaches Agreement To Settle NY Securities Lawsuit
PARAGON FINANCIAL: NY Court Dismisses in Part Securities Fraud Lawsuit
POWERCERV CORPORATION: FL Court Dismisses Consolidated Securities Suit
TERAFORCE TECHNOLOGY: Appeal of Denial of Suit Certification Refused
TOBACCO LITIGATION: Judge Byron Halves Appeal Amount For Philip Morris
TOWNE SERVICES: Reaches MOU To Settle Securities Fraud Suit in GA Court
TURBODYNE TECHNOLOGIES: CA Court Approves Securities Lawsuit Settlement
WESTMINSTER CAPITAL: DE Court Hears Arguments For Securities Settlement
New Securities Fraud Cases
CERNER CORPORATION: Goodking Labaton Lodges Securities Suit in W.D. MO
CIT GROUP: Weiss & Yourman Lodges Securities Fraud Lawsuit in S.D. NY
KING PHARMACEUTICALS: Wechsler Harwood Files Securities Suit in E.D. TN
MICROTUNE INC.: Goodkind Labaton Lodges Securities Lawsuit in E.D. TX
*********
DUPONT: EPA Will Study Safety Of Chemical Used To Make Teflon Products
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The United States Environmental Protection Agency (EPA) announced that
its review of the chemical used by DuPont to make Teflon will be the
most extensive in the federal agency's 33-year history, the Associated
Press reports. The environmental regulators are questioning, among
other things, the research on which DuPont relies to prove that the
unregulated chemical is safe.
The agency will be conducting an investigation of the health risks
involved for DuPont employees in the handling of the chemical C-8,
officially known as ammonium perfluorooctanoate, as well as the risks
involved for residents who reside in the vicinity of the company's
Washington Works facility on the Ohio River near Parkersburg, West
Virginia. Court records show that since DuPont began using C-8, in
1951, the company has been releasing waste containing the chemical into
the air and the river. At least 30,000 households are served by
utilities whose water contained C-8.
In a recently issued preliminary report, the EPA questioned whether
DuPont's voluntary exposure limits are adequate to protect, for
example, pregnant women. The EPA also said in the same report that it
would investigate claims by the Washington-based Environmental Working
Group that DuPont did not report observations of birth defects in
employees. DuPont has said that it did not violate any disclosure
rules; that C-8 has never been linked conclusively to any observed
birth defects.
The Wilmington-based company is a defendant in a class action, filed in
Wood County, West Virginia on behalf of residents whose drinking water
was found to be contaminated with C-8. Industry studies have linked C-
8 to a variety of health problems, including cancer and liver damage in
rats, but the regulators have said they don't know whether those
findings are relevant to humans.
"Simply put, we don't know," said Stephen Johnson, assistant
administrator of EPA's Office of Prevention, Pesticides and Toxic
Substances. "To say there is or isn't a health risk, on the agency's
behalf, is premature."
DuPont has begun to dispose of C-8 along the Delaware River as part of
its effort to control the pollution problem in the Ohio River, where it
has been dumping C-8. The company ships C-8 contaminated wastewater by
train from West Virginia to Deepwater, New Jersey, and from there into
the Delaware. DuPont officials say disposing of C-8 in Delaware waters
poses no environmental risk.
DuPont stands by C-8, without reservations. Much is at stake for
DuPont. DuPont officials have said there is no "safe, technically
sound and environmentally protective way" to make Teflon without C-8.
The company is ridding itself of many older chemical commodities -- for
example, nylon -- as it tries to increase business for fabrics made
from genetically engineered crops and plastics for TV displays, thinner
than anything now available. However, most of those products are years
from making a profit. Teflon is among the products that help finance
that transition.
In recent decades, DuPont has had to abandon some of its most
profitable products because of health and environmental concerns.
Among them are chlorofluorocarbon refrigerants and lead compounds for
high-octane gasoline. More recently, it ceased production of Benlate
fungicide, and has paid more than $1.7 billion to plaintiffs in
lawsuits over Benlate.
Teflon is for DuPont a ticket to the future with new products that are
not subject, hopefully, to attack for either health or environmental
reasons. In a November deposition, company executive Richard J.
Angiullo said products made using C-8 accounted for $200 million in
after-tax profits in year 2000.
EACCELERATION CORPORATION: WA Consumers Sue Over Internet Advertising
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Eacceleration Corporation faces a consumer class action filed in the
Superior Court, State of Washington, County of Kitsap relating to its
practice of using advertising banners for its products on the Internet.
The suit also names as defendants:
(1) Acceleration Software International,
(2) Clinton L. Ballard,
(3) Diana Ballard, and
(4) John Does A-L
The complaint alleges that the Company engaged in deceptive business
practices and fraud and is liable for public and private nuisance. The
complaint seeks damages of $500 per class member, which may include all
users of the Internet, or such other amount as the court deems
appropriate, as well as attorney's fees and costs.
The Company believes that this lawsuit is frivolous and without merit
and. Accordingly, the Company believe that this lawsuit will not have
a material adverse effect on its financial condition, results of
operations or cash flows; however, because the litigation process is
inherently uncertain, it is possible that resolution of this, or any
future litigation, may adversely affect the Company.
FIDELITY HOLDINGS: NY Court Approves Securities Fraud Suit Settlement
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The United States District Court for the Eastern District of New York
granted approval to the settlement of a securities class action filed
against Fidelity Holdings, Inc. on behalf of all persons who acquired
shares of the Company's common stock between June 24, 1999 and April
17, 2000. Named as defendants along with the Company were:
(1) Doron Cohen,
(2) Richard L. Feinstein and
(3) Bruce Bendell
The suit alleged, among other things, that plaintiffs and other members
of the putative class were damaged when they acquired shares of the
Company's common stock because defendants allegedly issued materially
false and misleading statements and failed to disclose material
information which purportedly cause such stock to trade at artificially
inflated prices during the class period.
The complaint alleged violations of Sections 10(b) and 20(a) of the
1934 Exchange Act, as amended and Rule 10b-5 promulgated thereunder.
The allegedly misstated and omitted information concerned primarily the
prospects for the Company's technology business. The complaint sought,
among other things, damages in an unspecified amount. In September
2001, the Company moved to dismiss the complaint for failure to state a
claim upon which relief can be granted and for failure to plead with
the legally required factual particularity.
In October 2001, the Company reached an agreement with lead plaintiffs
to settle this action for $4.45 million, subject to the consent thereto
of our insurance company and court approval.
HARDBOARD SIDING: CA Court Begins Notice Program in Weyerhauser Lawsuit
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A court-ordered supplemental notice program has begun in the court-
approved settlement involving Weyerhaeuser brand hardboard siding. The
notices, which are in addition to notices that appeared three years
ago, inform those who own or previously owned properties with the
siding that if they have qualified claims for siding damage, the first
deadline for claim forms is approaching.
Before approving the settlement in December of 2000, the Superior Court
of California, County of San Francisco issued notices that appeared
nationally in magazines, as well as in newspapers and on radio
stations. At that time, the Court's notice plan also called for
supplemental notice in the third year after approval of the settlement.
The claims deadline is December 22, 2003 for siding installed between
January 1, 1981 and December 31, 1987.
Notices will appear in more than 100 newspapers in several "Key States"
defined in the Court's notice program: California, Colorado, Oregon,
Washington, Idaho, Texas, Arizona, Wisconsin, Nebraska, Minnesota, and
Louisiana.
The settlement established a claims process to pay money for valid
claims for certain damage to siding, including thickness swell, surface
welting, buckling, sponginess, physical degradation, surface welting,
delamination, edge checking, wax bleed, and raised or popped fibers.
Siding damage caused by improper building design or installation is
excluded. There is a compensation formula to determine how much money,
if any, claimants are entitled to receive.
The settlement includes current and former owners of structures in the
United States on which Weyerhaeuser brand hardboard siding was
installed from January 1, 1981 through December 31, 1999. The December
22, 2003 deadline is only for siding that was installed up until
December 31, 1987. The settlement provided that the later the siding
was installed, the more time people have to file a claim. Those with
siding installed between 1988 and 1993 have until 2006 to file a claim.
Those with siding installed between 1994 and 1999 have until 2009.
For more details, write to: Weyerhaeuser Hardboard Siding Class Action
Settlement, Independent Claims Administrator, P.O. Box 9443, Garden
City, NY 11530-9443 or visit the Website: http://www.weyerclaims.com.
INDIAN FUNDS: Senate Urges Swift Resolution, Warns of Mediation Process
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The co-chairmen of the Senate Indian Affairs Committee wrote the
parties in the Indian trust fund class action against the United States
Department of Interior, urging them to settle their differences
promptly in the case, the Indian County reports.
The long-running suit was filed on behalf of about 30,000 American
Indians, seeking to recover billions of dollars in royalties allegedly
owed to them by the American government. For years, officials have
conceded that the program established to administer the funds in the
trust and the funds coming into the trust is in a state of chaos.
There is actually no definitive accounting of how much is in the fund
and how much has been squandered, lost, even stolen, an earlier Class
Action Reporter story states.
The lawsuit is presided over by Judge Royce C. Lamberth, of the D.C.
District Court, who has ordered the Secretary of the Interior Gale
Norton to produce a plan for the on-going management of the funds as
well as an accounting of what has happened in the past and how much
money is in the fund and how much is missing. Judge Lamberth, as has
happened during other presidential administrations, has held in
contempt those Interior Secretaries who failed to produce the plans and
accountings he has ordered. This includes the present Secretary Gale
Norton, who has appealed the order holding her in contempt.
The letter was sent to plaintiff attorneys John Echohawk, Keith Harper
and Dennis Gingold and to Secretary Norton, and her lead attorney,
warning that Congress would mandate a mediation process if the
plaintiffs fail to reach an agreement. The letter is signed by Sen.
Ben Nighthorse Campbell, R-Colo., the committee co-chair, along with
ranking minority member Daniel K. Inouye, D-Hawaii.
The senators tersely reviewed the public struggle to reform trust funds
accounting over the past 20 years, Indian County states. They take
ominous note of its growing toll on the national treasury, echoing the
tempest of discontent raised by other lawmakers on this issue within
the past month. Tribal leaders too have complained that the trust fix
is having the effect of a diversion of funds from other Native
programs. The senatorial letter also cites a disaster in staff morale
at Interior and the BIA, ultimately impairing the delivery of services
to Indians.
INTERNAP NETWORK: NY Court Dismisses in Part Securities Fraud Lawsuit
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The United States District Court for the Southern District of New York
dismissed in part the consolidated securities class action filed
against Internap Network Services Corporation, certain of its officers
and directors and the underwriters of the Company's initial public
offerings (IPO).
The complaint, as amended, alleges that the defendants violated Section
11 of the Securities Act of 1933 based on allegations that the relevant
registration statement and prospectus failed to disclose material facts
regarding the compensation to be received by, and the stock allocation
practices of, the IPO underwriters. The complaint also contains a
claim for violation of section 10(b) of the Securities Exchange Act of
1934 based on allegations that this omission constituted a deceit on
investors. The plaintiffs seek unspecified monetary damages and other
relief.
The suit is similar to hundreds of lawsuits filed against approximately
300 issuers of public stock. The suit has been consolidated with these
suits for coordination under the caption In re Initial Public Offering
Securities Litigation, Case No. 91 MC 92.
In October 2002, the parties agreed to toll the statute of limitations
with respect to the issuer defendants, including the Company, and with
respect to their officers and directors until September 30, 2003 and on
the basis of this agreement, the officers and directors of the Company
were dismissed from the lawsuit without prejudice. In February 2003,
the Court issued a decision denying the motion to dismiss the section
11 claims against substantially all of the issuer defendants, including
the Company, and denying the motion to dismiss the section 10(b) claims
against such issuer defendants, including the Company.
The Company believes that this lawsuit is without merit.
INTERNAP NETWORK: Named as Defendant in CSFB Securities Suit in S.D. FL
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Internap Network Services Corporation, one of its current directors (in
his former capacity as an executive officer of the Company) and one
former executive officer were named as one of the issuer defendants in
a securities class action filed in the United States District Court for
the Southern District of Florida, captioned Liu v. Credit Suisse First
Boston Corporation, (CSFB), et al., Case No. 03-20459.
In the complaint, the plaintiffs allege that CSFB knowingly conspired
with dozens of issuers, including the Company, to conduct initial
public offerings based on misinformation about the issuers' future
prospects and the proper pricing of their shares, in violation of the
anti-fraud provisions of section 10(b) of the Securities Exchange Act
of 1934. The plaintiffs seek unspecified monetary damages and other
relief.
Neither the Company nor the named individuals have yet been served with
the complaint. The Company believes that this lawsuit is without
merit.
INTERNET CAPITAL: NY Court Denies Motion To Dismiss Securities Lawsuit
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The United States District Court for the Southern District of New York
refused to dismiss a consolidated securities class action filed against
the Internet Capital Group, Inc., certain of the Company's present
directors, certain of its former directors, certain of its present and
former officers and its underwriters.
The suit generally alleges violations of Sections 11 and 12 of the
Securities Act of 1933 and Rule 10b-5 promulgated under the Securities
Exchange Act of 1934, based on, among other things, the dissemination
of statements allegedly containing material misstatements and/or
omissions concerning the commissions received by the underwriters of
the initial public offering and follow-on public offering of the
Company as well as failure to disclose the existence of purported
agreements by the underwriters with some of the purchasers in these
offerings to buy additional shares of the Company's stock subsequently
in the open market at pre-determined prices above the initial offering
prices. The plaintiffs seek for themselves and the alleged class
members an award of damages and litigation costs and expenses.
The claims in the suit have been consolidated for pre-trial purposes
(together with other issuers and underwriters) before one judge in the
Southern District of New York federal court. In April 2002, a
consolidated, amended complaint was filed against these defendants
which generally alleges the same violations and also refers to alleged
misstatements or omissions that relate to the recommendations regarding
the Company's stock by analysts employed by the underwriters.
In June and July 2002, defendants, including the Company defendants,
filed motions to dismiss plaintiffs' complaints on numerous grounds.
The Company's motion was denied in its entirety in a lengthy opinion by
the court dated February 19, 2003. The Company will hereafter be
required to answer the complaint and participate in the discovery
process.
KATY INDUSTRIES: Plaintiffs Withdraw Class Charges in Suit in E.D. TX
---------------------------------------------------------------------
Plaintiffs in the amended class action filed against Katy Industries,
Inc. in the United States District Court for the Eastern District of
Texas, Marshall Division withdrew his class action charges.
The first suit was initially filed in the same court, on behalf of
"landowners and persons who reside and/or work in" an identified
geographical area surrounding the W.J. Smith facility in Denison,
Texas. The lawsuit purported to allege claims under state law for
negligence, trespass, nuisance and assault and battery. It sought
damages for personal injury and property damage, as well as punitive
damages. The named defendants were the Company and:
(1) Union Pacific Corporation,
(2) Union Pacific Railroad Company, and
(3) W.J. Smith
On June 10, 2002, the Company and W.J. Smith filed a motion to dismiss
the case for lack of federal jurisdiction, or in the alternative, to
transfer the case to the Sherman Division of the Eastern District of
Texas. In response, plaintiffs filed a motion for leave to amend the
complaint to add a federal claim under RCRA. On July 30, 2002, the
court dismissed plaintiffs' lawsuit in its entirety.
The plaintiffs then filed a new lawsuit against the same defendants, in
the same court, alleging class claims under the federal Comprehensive
Environmental Liability and Compensation Act (CERCLA) and state law
negligence, trespass, nuisance, assault and battery and unjust
enrichment theories.
The Company and W.J. Smith have filed a motion to dismiss the lawsuit
or, in the alternative, to transfer venue to the Sherman Division. In
response, plaintiffs filed a motion for leave to amend the complaint.
The court granted plaintiffs' motion to amend and denied Katy and W. J.
Smith's motion to dismiss or transfer venue.
Plaintiff's counsel has informed legal counsel for the Company that he
is no longer seeking class-wide relief for personal injury claims.
Plaintiff's counsel has therefore prepared and circulated a draft
amended complaint clarifying that this lawsuit is not a personal injury
class action. A determination of ultimate liability with respect to
this matter is not estimable at this time.
LEAP WIRELESS: CA Court Consolidates Suits for Securities Violations
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The United States District Court for the Southern District of
California consolidated the nine securities class actions filed against
Leap Wireless International, Inc. and:
(1) Harvey P. White, Chairman and Chief Executive Officer,
(2) Susan G. Swenson, President, Chief Operating Officer and
director, and
(3) Manford Leonard, Vice President and Controller
The suit, filed on behalf of all persons who purchased or otherwise
acquired the Company's common stock from February 11, 2002 through July
24, 2002, alleges that the 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 the Company's common stock.
Plaintiffs allege that defendants concealed the deteriorated value of
the Company's wireless licenses by relying upon a fraudulent impairment
test of those assets, which resulted in a gross and material
overstatement of the value of the Company's assets in its financial
statements. The actions seek an unspecified amount of damages, plus
costs and expenses related to bringing the actions.
On March 14, 2003, the court also entered plaintiffs' stipulation and
order for the appointment of lead plaintiffs and approval of lead
plaintiffs' selection of lead counsel. No class has yet been certified
in these actions.
The Company believes that it has strong defenses to the claims raised
by these lawsuits. However, if the Company does not prevail, the
amounts involved could have a material adverse effect on its
consolidated financial position or results of operations.
LEAP WIRELESS: Named as Defendant in NY Shareholder Derivative Lawsuit
----------------------------------------------------------------------
Leap Wireless International, Inc. was named as a nominal defendant in a
shareholder derivative lawsuit filed in the Supreme Court of the State
of New York. The suit also names as defendants:
(1) Morgan Stanley & Co., Inc.,
(2) Donaldson Lufkin Jenrette Securities Corporation,
(3) Bear Stearns & Co., Inc.,
(4) ABN AMRO Incorporated and
(5) Credit Suisse First Boston Corporation.
The defendants were the initial purchasers in the private placement of
the Company's debt securities on February 23, 2000. The complaint
alleges that the sales were disguised brokerage transactions and that
the investment banking firms charged excessive brokerage fees in
violation of New York General Obligations Law Section 5-531, which
limits the fees payable to loan brokers. The complaint seeks
compensatory damages, costs and fees in connection with bringing suit,
and other remedies.
The Company believes the allegations are without merit. The Company is
often involved in various claims arising in the course of business,
seeking monetary damages and other relief. The amount of the
liability, if any, from such claims cannot be determined with
certainty. However, in the opinion of the Company's management, the
ultimate liability for such claims will not have a material adverse
effect on its consolidated financial position, results of operations or
cash flows.
LOUDEYE CORPORATION: NY Court Refuses To Dismiss Securities Fraud Suit
----------------------------------------------------------------------
The United States District Court for the Southern District of New York
refused to dismiss the consolidated securities class action filed
against Loudeye Corporation and certain of its former officers and
directors, as well as against certain underwriters who handled its
March 15, 2000 initial public offering of common stock.
The suit, filed on behalf of a class of persons who purchased the
Company's common stock during the time period beginning on March 15,
2000 and ending on December 6, 2000. The suit alleges violations of
the Securities Act of 1933 and the Securities Exchange Act of 1934,
primarily based on the allegation that there was undisclosed
compensation received by the Company's underwriters in connection with
its initial public offering and the allegation that the underwriters
entered into undisclosed arrangements with some investors that were
designed to distort and/or inflate the market price for the Company's
common stock in the aftermarket following the initial public offering.
The allegations set forth in these complaints are substantially similar
to those made in class actions filed against over 300 other companies
that issued securities within the past four years. These actions have
all been consolidated before the same judge for pretrial purposes. No
specific amount of damages has been claimed.
The individual defendants and the Company have demanded to be
indemnified by the underwriter defendants pursuant to the underwriting
agreement entered into at the time of the initial public offering.
Presently, all claims against the former officers have been withdrawn
without prejudice.
The Company, along with the many other issuer defendants, moved to
dismiss the claims in the complaint. By decision dated February 19,
2003, the court denied the Company's motion. The Company believes that
it has meritorious defenses to the claims made in the foregoing
complaint. However, there can be no assurance that the Company will be
successful on its defenses or in its assertion of indemnification, and
an adverse resolution of the lawsuit could have a material adverse
affect on its financial position and results of operation in the period
in which the lawsuit is resolved.
MARYLAND: Judge Rejects University Students' Contract Violation Claim
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A Maryland judge recently rejected the students' claim that a mid-year
tuition increase by the University System of Maryland violated an
agreement between students and their colleges, Associated Press
Newswires reports. The students have said that they intend to appeal.
The class action by seven students argued that the five percent tuition
increase, approved January 23, breached a contract between the students
and their colleges. Their lawsuit said that after giving one price for
the 2002-2003 school year in the fall, the System broke the agreement
by raising the tuition for the spring semester just as it was
beginning, and after many students had paid their bills.
If the increases had been struck down by the court, the university,
which was struggling with $67 million in budget cuts, would have had to
find an additional $13 million to make up the revenue the System was
trying to derive from the springtime-imposed tuition surcharges, which
ranged from $76 to $704 per student.
Baltimore Circuit Court Judge Stuart R. Berger found that the tuition
rates listed on bills and registration packets in the fall did not
constitute a formal contract, as the lawsuit contends. Even if the
tuition rates given on university literature could be considered an
implicit contract, Judge Berger said, that feature was not enough to
overcome the immunity that the university system, like most state
agencies, enjoys against many legal actions. Only a formal, written
contract, signed by both parties, would be sufficient to end that
privilege, Judge Berger reasoned.
"I am compelled by the significant hardship imposed on the students by
this unplanned increase, but as a matter of law" their claim fails,
said Judge Berger.
The decision left the students feeling vulnerable. "They can raise
tuition whenever they want," said a University of Maryland law student
who is enrolled in one of the colleges receiving a higher tuition raise
of $557; "even the day of graduation." One law student joked that if
his tuition bill is not a contract, he simply would not pay it.
MOTOROLA INC.: New Jersey Appointed Lead Plaintiff in Securities Suit
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The Honorable Gerard E. Lynch, a United States District Court Judge for
the Southern District of New York, has appointed the State of New
Jersey the lead plaintiff in a consolidated securities fraud class
action pending before him, on behalf investors who purchased Motorola
(NYSE: MOT) securities during the period February 3, 2000 through May
14, 2001.
The court further appointed Wolf Popper LLP and Lite DePalma Greenberg
& Rivas, LLP as co-lead counsel for New Jersey and the plaintiff class.
Lester L. Levy, the Chairman of Wolf Popper's Executive Committee,
stated that "we are pleased that the Court recognized the
qualifications of the State of New Jersey to prosecute this action on
behalf of all investors."
For more information, contact Robert C. Finkel by Mail: 845 Third
Avenue, New York, NY 10022 by Phone: 212-451-9620 or 877-370-7703 (toll
free) by Fax: 212-486-2093 or 877-370-7704 (toll free) by E-mail:
irrep@wolfpopper.com or visit the firm's Website:
http://www.wolfpopper.com
NEXT LEVEL: NY Court Refuses to Dismiss Consolidated Securities Lawsuit
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The United States District Court for the Southern District of New York
refused to dismiss the consolidated securities class action filed
against Next Level Communications, Inc., certain of its current or
former officers and directors and the underwriters involved in the
Company's initial public offering (IPO).
The suit was filed on behalf of a purported class of purchasers of the
Company's common stock from the time of its IPO (November 9, 1999)
through December 6, 2000. The central allegation in this action is
that the underwriters in the IPO solicited and received undisclosed
commissions from, and entered into undisclosed arrangements with,
certain investors who purchased Company stock in the IPO and the after-
market. The complaint also alleges that the Company defendants
violated the federal securities laws by failing to disclose in the IPO
prospectus that the underwriters had engaged in these allegedly
undisclosed arrangements.
More than 300 issuers have been named in similar lawsuits, in the same
court. In July 2002, an omnibus motion to dismiss all complaints
against issuers and individual defendants affiliated with issuers
(including the Company defendants) was filed by the entire group of
issuer defendants in these similar actions. In October 2002, the Next
Level individual defendants named in this action were dismissed without
prejudice.
On February 19, 2003, the court in this action issued its decision on
the omnibus motion to dismiss. This decision denied the motion to
dismiss the Section 10(b) claim as to Next Level (and numerous other
issuer defendants), and denied the motion to dismiss the Section 11
claim as to Next Level and virtually all of the other issuer-
defendants.
The Company believes it has meritorious defenses against this suit. As
a result of this belief, no liability for this suit has been recorded
in the accompanying financial statements. However, the Company could
be forced to incur significant expenses in the litigation, and in the
event there is an adverse outcome, its business could be harmed.
NEXT LEVEL: Reaches Agreement To Settle DE Lawsuits V. Motorola Offer
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Next Level Communications and Motorola, Inc. reached agreements to
settle several class actions filed in Delaware relating to Motorola's
offer to acquire Company stock.
On January 14, 2003, alleged stockholders of Next Level filed four
separate class actions in the Court of Chancery of the State of
Delaware, in and for New Castle County, against Motorola, the Company
and the Company's various directors.
Each of these actions was brought as a putative class action on behalf
of all holders of Company shares other than the defendants and persons
related to or affiliated with the defendants. The complaints in the
four actions generally allege that:
(1) Motorola, Next Level and the individual Next Level directors
breached their fiduciary duties as a result of the Motorola
Offer;
(2) The Motorola Offer price is inadequate; and
(3) Motorola is engaging in unfair self-dealing, not acting in
good faith towards Next Level's minority stockholders and that
the Motorola Offer is a product of the conflict of interest
between Motorola and Next Level's minority stockholders.
The lawsuits seek, among other things, to recover unspecified damages
and costs and to enjoin or rescind the transactions contemplated by the
Motorola Offer.
On February 4, 2003, alleged stockholders of Next Level filed an
amended complaint in the Court of Chancery of the State of Delaware, in
and for New Castle County, against Motorola, Next Level and various
directors of Next Level. The amendment dismisses the members of the
Independent Committee as defendants, and, in addition to the
allegations to the original complaint, generally alleges that:
(i) Motorola has engaged in disclosure violations in its
Schedule TO;
(ii) the Motorola Offer is coercive in light of Motorola's position
on financing for Next Level;
(iii) the Motorola Offer price is inadequate for additional reasons
specified in the complaint; and
(iv) Motorola, Next Level and the individual Next Level directors
breached their fiduciary duties as a result of the Motorola
Offer by refusing to allow the Board to adopt a stockholder
rights plan.
On February 6, 2003, the four class actions originally filed on January
13 or 14, 2003 in the Court of Chancery of the State of
Delaware, in and for New Castle County, against Motorola, Next Level
and various directors of Next Level were consolidated.
On March 14, 2003, Barry Feldman, for himself and on behalf of a
putative class of Next Level stockholders, filed a complaint in the
Delaware Court of Chancery in and for New Castle County, against:
(a) Walter C. Clay,
(b) Alex Good,
(c) Craig Kornblau,
(d) John McCartney,
(e) Richard D. Severns and
(f) Paul Latchford
The complaint seeks to certify a class of Next Level stockholders and
alleges the stockholders were harmed by the defendants' conduct in
adopting the retention agreements with the defendants.
On March 24, 2003, Motorola and Next Level reached agreements in
principle, subject to court approval, with the class action plaintiffs
to settle the suits.
NEXT LEVEL: Directors Face Stockholder Fraud Lawsuit in CA State Court
----------------------------------------------------------------------
Next Level Communications, Inc. and various Company directors faces a
class action filed in the California Superior Court, Sonoma County.
The action alleges, among other claims, that:
(1) the Company's directors breached their fiduciary duty of care
by failing to properly value Next Level;
(2) Next Level's directors would personally benefit from the
success of the Motorola Offer and, thus, their approval would
constitute self-dealing;
(3) Next Level's directors have superior information about the
Motorola Offer which enables them to profit disproportionately
from it;
(4) Next Level's directors should engage in arm's length
negotiations as to the terms of the Motorola Offer; and
(5) Next Level's directors should disclose such superior
information to Next Level's stockholders.
Plaintiff seeks declaratory relief, an injunction against the
consummation of the Motorola Offer, rescission of any resultant
transaction and an injunction requiring Next Level's directors to
obtain a transaction that is in the best interests of Next Level's
stockholders.
NIKU CORPORATION: NY Court Dismisses in Part Securities Fraud Lawsuit
---------------------------------------------------------------------
The United States District Court for the Southern District of New York
dismissed in part the consolidated securities class action filed
against Niku Corporation, certain of its officers and directors and the
managing underwriters of its initial public offering (IPO):
(1) Goldman, Sachs and Co.,
(2) Dain Rauscher Wessels,
(3) US Bancorp Piper Jaffray and
(4) Thomas Weisel Partners
The suit alleges, among other things, that the registration statement
and prospectus filed with the Securities and Exchange Commission for
purposes of the IPO were false and misleading because they failed to
disclose that the managing underwriters, allegedly:
(i) solicited and received commissions from certain investors in
exchange for allocating to them shares of Company stock in
connection with the IPO; and
(ii) entered into agreements with their customers to allocate such
stock to those customers in exchange for the customers
agreeing to purchase additional shares of the Company in the
aftermarket at pre-determined prices.
In August 2001 the court ordered that the suit, along with hundreds of
IPO allocation cases against other issuers and underwriters, be
transferred to one judge for coordinated pre-trial proceedings. In
July 2002, omnibus motions to dismiss the complaints based on common
legal issues were filed on behalf of all issuers and underwriters. By
order dated October 8, 2002, the court dismissed the Company's officers
and directors from the case without prejudice.
In an opinion issued on February 19, 2003, the court granted in part
and denied in part the motions to dismiss. The complaints against the
Company were not dismissed as a matter of law. These cases remain at a
preliminary stage and no discovery proceedings have taken place in
relation to the issuers. The Company believes that the claims asserted
against it are without merit and intends to defend vigorously against
them.
OPUS360 CORPORATION: Reaches Agreement To Settle NY Securities Lawsuit
----------------------------------------------------------------------
Opus360 Corporation reached an agreement to settle the consolidated
securities class action pending against it, ten of its current and
former officers, the underwriters of the Company's initial public
offering (IPO) and two shareholders who sold stock in a secondary
offering concurrent with the IPO.
The suit, filed on behalf of all persons who acquired securities of the
Company between April 7, 2000 and March 20, 2001, alleged that, among
other things, the plaintiff and members of the proposed class were
damaged when they acquired securities of the Company because false and
misleading information and material omissions in the registration
statement relating to the IPO and the secondary offering caused the
prices of the Company's securities to be inflated artificially. It
asserted violations of Section 11, 12(a)(2), and 15 of the Securities
Act of 1933. Damages in unspecified amounts and certain rescission
rights were sought.
In October 2001, the Company and all other defendants filed motions to
dismiss the amended complaint. By Opinion and Order dated October 2,
2002, the court granted all of the motions and dismissed the amended
complaint, but granted plaintiffs leave to serve a second consolidated
amended class action complaint.
On October 30, 2002, plaintiffs served their second amended complaint,
which contains allegations similar to those in the amended complaint.
The defendants, including the Company, moved to dismiss the second
amended complaint on December 31, 2002. Briefing on defendants' motion
to dismiss the second amended complaint is scheduled for completion by
April 25, 2003.
In the interim, the parties have reached an agreement in principle to
settle all claims asserted and that could have been asserted in this
litigation. Under the terms of the proposed settlement, which is still
subject to further documentation and court approval, most of the
settlement proceeds would be paid by the insurance carrier pursuant to
the Company's D&O coverage, and the Company would pay an immaterial
amount.
PARAGON FINANCIAL: NY Court Dismisses in Part Securities Fraud Lawsuit
----------------------------------------------------------------------
The United States District Court for the Southern District of New York
dismissed in part the securities class action filed against Paragon
Financial Corporation and:
(1) David M. Beirne,
(2) Michael Mortiz,
(3) William J. Razzouk and
(4) Christos M. Cotsakos and
(5) former Chief Financial Officer Steve Valenzuela
The purported class action alleges violation of Sections 11 and 15 of
the Securities Acts of 1933 and Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The essence of the complaint is that the defendants issued and sold the
Company's common stock pursuant to a registration statement for its
October 7, 1999 initial public offering (IPO) without disclosing to
investors that certain underwriters in the offering had solicited and
received excessive and undisclosed commissions from certain investors.
The complaint also alleges that the registration statement failed to
disclose that the underwriters allocated Company shares in the IPO to
customers in exchange for the customers' promises to purchase
additional shares in the aftermarket at pre-determined prices above the
IPO price, thereby maintaining, distorting and/or inflating the market
price for the shares in the aftermarket. The action seeks damages in
an unspecified amount.
The action is coordinated with approximately three hundred other nearly
identical actions filed against other companies. On July 15, 2002, the
Company moved to dismiss all claims against it and the individual
defendants. On February 19, 2003, the court denied the motion to
dismiss the complaint against the Company. The court dismissed the
Section 10(b) claim against the individual defendants, but denied the
motion to dismiss the Section 11 claim and the Section 15 and 20(a)
control person claims.
At this time, the Company does not believe this matter will have a
material impact on its financial position, operations or liquidity.
POWERCERV CORPORATION: FL Court Dismisses Consolidated Securities Suit
----------------------------------------------------------------------
The United States District Court for the Middle District of Florida
dismissed with prejudice the class action filed against Powercerv
Corporation, after the parties in the suit reached a agreement to
settle it. The suit also names as defendants:
(1) Harold R. Ross,
(2) Gerald R. Wicker,
(3) Marc J. Fratello,
(4) Roy E. Crippen III,
(5) Donald B. Hebb, Jr.,
(6) Thomas S. Roberts,
(7) Alex Brown & Sons, Inc.,
(8) Robertson, Stephens & Company,
(9) ABS Capital Partners LP,
(10) Summit Investors II LP, and
(11) Summit Ventures III LP
The complaint purports to be a class action on behalf of those persons
who purchased shares of the Company's common stock from March 1, 1996
(the date of the Company's initial public offering of its common stock
through July 24, 1996). The complaint alleges, among other things,
that the defendants violated the Securities Act of 1933 and the
Securities Exchange Act of 1934 in connection with the Company's IPO
and in its subsequent securities filings, press releases and other
public statements. The parties have agreed to a court-approved
settlement.
TERAFORCE TECHNOLOGY: Appeal of Denial of Suit Certification Refused
--------------------------------------------------------------------
The United States Fifth Circuit Court of Appeals refused to hear an
appeal of a lower court's denial of class certification for a lawsuit
filed against Teraforce Technology Corporation on behalf of all persons
and entities who purchased the Company's common stock during the period
between February 24, 1998 and November 17, 1998. The named defendants
include the Company and certain former and present officers and
directors of the Company.
The suit, initially filed in the United States District Court for the
Northern District of Texas, alleges that the defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder by making false and misleading
statements concerning the Company's reported financial results during
the period, primarily relating to revenue recognition, asset impairment
and capitalization issues. The plaintiffs seek monetary damages,
interest, costs and expenses.
In March 2001, the Company's motion to dismiss the case was denied. In
December 2002, the court denied the plaintiffs' motion for class
certification. The plaintiffs appealed this ruling to the 5th Circuit
Court of Appeals.
Certain motions are now pending before Texas federal court to determine
the extent of individual plaintiffs' claims in this matter.
TOBACCO LITIGATION: Judge Byron Halves Appeal Amount For Philip Morris
----------------------------------------------------------------------
Illinois Judge Nicholas Byron of the state's Circuit Court in Madison
County, cut in half the amount that Philip Morris must post while it
appeals a recent court judgment, rendered by Judge Byron, in the case
of Sharon Price and Michael Fruth v. Philip Morris USA Inc.
Judge Byron's $10.1 billion judgment said that Philip Morris USA
violated the provisions of Illinois' Consumer Fraud Act, when it
described Cambridge Lights and Marlboro Lights as having "lowered tar
and nicotine" content, which, among other statements, had the effect of
deceiving 1.1 million Illinois smokers into believing that the "lights"
were safer than the more full-flavored regular cigarettes, according to
court documents filed in the Circuit Court, supplemented by a report in
The New York Times and earlier issues of the Class Action Reporter.
Philip Morris had faced the prospect of having to put up a $12 billion
bond; but the company told Judge Byron that posting such a bond would
send it into bankruptcy, as well as making it impossible to make the
$2.6 billion annual payment to the 46 states, due April 15, under the
Master Settlement Agreement entered into by the states and the major
tobacco companies.
Judge Byron negotiated with the attorneys for plaintiffs and defendants
behind closed doors, as the search went on, seeking what Judge Byron
called a "consensual" solution, which finally emerged, by which the
company could secure its appeal by making cash payments over the next
year totaling $800 million, and by pledging an existent $6 billion note
between parent company Altria Group Inc., and Philip Morris, plus the
interest payments on the note, which amounts to an additional $420
million a year.
According to the Appeal Bond, Philip Morris USA is bound to the
Plaintiff Class, in the case of Sharon Price v. Philip Morris Inc., in
the sum of:
(1) $6,000,000,000, represented "by that certain $6 billion Term
Note, dated April 2, 2002," entered into between Altria Group
Inc. and Philip Morris USA Inc.;
(2) Beginning with the interest due on October 1, 2003, all
interest payments due under the Note ($420 million per year,
payable semiannually each April 1 and October 1);
(3) $800,000,000, represented by four equal deposits of
$200,000,000 to be made on September 30, 2003; December 31,
2003; March 31, 2004; and June 30, 2004, and
(4) Interest accruing on items "2" and "3."
Company lawyer William Ohlemeyer said Philip Morris created the note to
satisfy bond requirements arising out of a judgment against it in a
Florida court. Rather than keeping that $6 billion in cash, Philip
Morris had lent the money to Altria through an interest-bearing note.
Essentially, Judge Byron accepted the note as security rather than
requiring the company to post a bond. If Philip Morris were to succeed
in overturning the verdict, said Mr. Ohlemeyer, the note and interest
would be returned, with the exception of an administrative fee paid to
Madison County.
The Order granting Philip Morris' request for reduction of the Appeal
Bond and Stay of Judgment requires the company to deposit the Note into
an escrow account, which shall be under the court's jurisdiction,
although the parties may select the escrow agent. All interest
payments on the note ($420 million per year) are to be deposited with
the Clerk of the Court in a financial institution agreeable to the
parties, except that the Clerk of the Court is to retain an
administrative fee equivalent to 20 percent of the interest generated
on the interest payments. No portion of the fee is to be paid to the
Plaintiff Class or their counsel. No portion of the fee is to be
refundable to Philip Morris at the conclusion of all judicial review of
the judgment.
On the dates designated in the Appeal Bond (as indicated above), the
four installments of $200,000,000 is to be paid to the Clerk of the
Court, aggregating the required $800,000,000 cash, to be maintained,
together with interest, in a financial institution agreeable to the
parties. An administrative fee equivalent to 20 percent of the
interest generated by these monies is to retained by the Clerk of the
Court.
Further, the order granting Philip Morris's request for reduction of
the appeal bond states that the company is to pay all federal, state
and local taxes arising from payments made into the Escrow Account.
Philip Morris also agreed that it would not seek appeal-bond
legislation in Illinois.
Plaintiffs' attorney, Stephen Tillery, of the law firm Korein Tillery,
said he would appeal the court's decision to cut plaintiffs' appeal
bond.
"We think it (Judge Byron's ruling on the appeal bond) is important
because it gives Philip Morris the certainty it needs to pursue its
appeal," said the company's general counsel and vice president William
S. Ohlemeyer. Philip Morris said it was pleased with the ruling and
that now it would be able to make its scheduled payments to the 46
states under the Master Settlement Agreement.
Everyone breathed a joint sigh of relief, as Philip Morris had
previously threatened to seek the protection of a Chapter 11 bankruptcy
and warned as well of the possible non-payment of its share of
the annual payment to the states under the terms of the 1998 tobacco
settlement. Contemplation of that result sent most of the states into
visions of budgetary chaos, "hooked" as they have become on tobacco
settlement money.
Judge Brody's decision lifted Altria's stock and the bonds of its
subsidiaries Kraft Foods and Philip Morris. The shares of the
company's parent, Altria Group, Inc. had fallen in value and credit
agencies had downgraded the ratings of bonds issued by Altria, Philip
Morris and Altria's other subsidiaries, like Kraft Foods during the
crisis period. However, according to the New York Times, all three
groups are not close to recovering their recent losses.
Martin Feldman, a tobacco industry analyst with Merrill Lynch, said
that yesterday's decision removed the "immediate cloud " hanging over
Philip Morris. "The most significant aspect of the reduced bond is
that it removes the specter" of a Chapter 11 filing, Mr. Feldman said.
Mr. Feldman added that other cigarette makers could soon face claims
similar to the one that yielded the huge judgment against Philip
Morris: "It is a temporary reprieve," he said.
Mr. Ohlemeyer said that Philip Morris planned to drop the use of terms
like "lower tar" from the "light" cigarette packages. He insisted,
however, that the move was not connected to the Illinois case.
TOWNE SERVICES: Reaches MOU To Settle Securities Fraud Suit in GA Court
-----------------------------------------------------------------------
Towne Services, Inc. reached a memorandum of understanding to settle
the securities class action filed against it, two of its former
officers and a current officer in the United States District Court of
Georgia, Atlanta Division.
The suit alleged, among other things, that the Company should have
disclosed in the prospectus used for its secondary public offering in
June 1999 that it allegedly experienced serious problems with its
network infrastructure and processing facilities during the move of its
corporate headquarters in June 1999, and that these problems allegedly
led to a higher than usual number of customers terminating their
contracts during the second quarter. The Complaint seeks an
unspecified amount of damages.
The Company and its officers answered, denying liability. The parties
reached a tentative settlement, which is subject to certain conditions
including court approval, and which is memorialized in a Memorandum of
Understanding signed January 17, 2003. Counsel for plaintiffs agreed
to dismiss all claims and release all defendants for a negotiated
settlement amount which will be funded by the Company's directors and
officers insurance carrier and Towne. The settlement funds were placed
in escrow on February 21, 2003.
Counsel for defendants estimate it will take a minimum of six months
for the court to approve the suit settlement. The parties also
continue to pursue the question as to whether the carrier will also pay
the cost of defense, including the attorney's fees incurred by the
Company, as provided by the underlying insurance policy.
TURBODYNE TECHNOLOGIES: CA Court Approves Securities Lawsuit Settlement
-----------------------------------------------------------------------
The United States District Court for the Central District of California
granted final approval to a settlement of a consolidated securities
class action filed against Turbodyne Technologies, and certain of its
officers and directors on behalf of individuals claiming that they
purchased shares of the Company's common stock during the period from
March 1, 1997 through January 22, 1999.
The plaintiffs alleged that the Company made misstatements that caused
the price of its common stock to be artificially inflated during the
class period. These actions were tendered to the Company's insurance
carriers who appointed counsel to represent the Company.
The parties later reached a settlement agreement that has resulted in
the final disposition of these legal proceedings and approved by the
insurance companies involved. The Company signed a stipulation of
settlement with the legal counsel for the plaintiffs that sets forth
the terms and conditions of this settlement.
The judgment of the court has been entered and the statutory 30-day
period for appealing from the judgment has expired without any appeal
having been filed. Accordingly, the settlement agreement has now been
finalized. The agreed terms of settlement provide for a stipulated
judgment against the Company in the amount of $7.9 million. The
plaintiff's case against the Company and its co-defendants has been
dismissed. The settlement is binding on all class members, with the
exception of two shareholders representing 14,100 shares who requested
to be excluded.
WESTMINSTER CAPITAL: DE Court Hears Arguments For Securities Settlement
-----------------------------------------------------------------------
The Delaware Court of Chancery for New Castle County heard arguments
for the settlement of a class action filed against Westminster Capital
Corporation and each member of its board of directors.
The lawsuit was filed in response to the Company's Offer to purchase
any and all outstanding shares of its common stock at a price of $2.80
per share. The plaintiff brought this action individually and as a
purported class action on behalf of all Company shareholders.
The complaint, as subsequently amended, alleged that the Company and
the members of the Company's board of directors breached their
fiduciary duties to the Company shareholders. Specifically the
complaint alleged:
(1) Westminster's shareholders were denied the opportunity to make
a fully informed judgment on a major corporate transaction in
which they had to select among their options to hold or tender
their stock;
(2) the Offer was structured in such a way that it was coercive;
and
(3) the Offer benefited the fiduciaries at the expense of
Westminster's public shareholders.
The complaint sought, among other things, preliminary and permanent
injunctive relief prohibiting the Corporation from proceeding and
implementing the Offer and, if the Offer was completed, an order
rescinding the Offer and awarding damages to the purported class. On
May 8, 2002, the Delaware Court of Chancery denied the motion for
expedited proceedings filed by the plaintiff and refused to schedule a
hearing on the plaintiff's motion for a preliminary injunction, which
sought to enjoin the Company's Offer. The Offer was closed without
resolving the lawsuit.
Although the Company and its directors denied and continue to deny any
allegations of wrongdoing, the Company continued to engage in
settlement discussions with the plaintiff following completion of the
Offer.
On January 7, 2003, a Stipulation of Settlement was filed with the
court. To date the court has not ruled on the settlement. The
settlement, if approved, would provide as follows:
(i) Westminster would pay each shareholder that tendered common
stock in the Offer an additional $0.20 per share (less a pro
rata share of attorneys' fees);
(ii) Westminster would purchase the common stock owned by
Barry Blank, which is represented to be approximately 349,300
shares, for $3.00 per share (less a pro rata share of
attorneys' fees); and
(iii) William Belzberg, Hyman Belzberg, Greggory Belzberg and Keenan
Behrle would contribute their shares of common stock to a
newly formed company which would then own in excess of 90% of
Westminster's outstanding common stock and the new company
would then merge with and into Westminster, and each of the
shareholders of Westminster (other than the new company) would
be entitled to receive $3.00 per share for their shares of
common stock (less a pro rata share of attorneys' fees) and
the shareholders of the new company (i.e. the Continuing
Shareholders) would receive shares of stock of Westminster.
Upon completion of the merger, Westminster would be privately held by
the Continuing Shareholders. If any of Westminster's shareholders
entitled to receive cash for their shares in the merger object to the
price, they may exercise appraisal rights as provided under the
Delaware General Corporation Law.
New Securities Fraud Cases
CERNER CORPORATION: Goodking Labaton Lodges Securities Suit in W.D. MO
----------------------------------------------------------------------
Goodkind Labaton Rudoff & Sucharow LLP initiated a securities class
action, pursuant to Section 21D(a)(3)(A)(i) of the Securities Exchange
Act of 1934, in the United States District Court for the Western
District of Missouri, on behalf of all open market purchasers of the
common stock of the Cerner Corporation (NASDAQ:CERN) during the period
October 16, 2002 through April 2, 2003, inclusive. The named
defendants are the Company and:
(1) Neal L. Pattersen,
(2) Earl H. Devanny,
(3) Clifford W. Illig and
(4) Glenn P. Tobin
The complaint charges Defendants with violations of Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10(b)-5 promulgated
thereunder and Section 20(a) of the Exchange Act of 1934.
Cerner provides computer related products and services to the
healthcare industry. The complaint alleges that during the class
period, defendants made false and misleading statements concerning the
anticipated financial performance of the Company which caused the
Company's stock to trade at artificially high prices.
Specifically, the complaint alleges that between October 16, 2002
through April 2, 2003, inclusive, defendants issued press releases and
filed documents with the Securities and Exchange Commission, that
claimed the Company had a competitive advantage over its rivals,
projected sales of $880 million for 2003, projected strong sales of the
Company's 'Millennium Software' and raised the Company's 2003 projected
revenues and earnings.
The complaint also alleges that during the class period, one defendant
took advantage of the Company's artificially inflated stock price to
sell Company stock worth approximately $2 million.
On April 3, 2003, Cerner shocked investors by announcing it expected
its first quarter 2003 revenue and earnings results to be below
expectations. The Company also reported that it expected new business
bookings for the first quarter 2003 to be between $145 and $150
million, compared to the $200 million estimate provided at the
beginning of the quarter. Defendants also revealed that as a result of
lower business bookings, earnings per share results were expected to be
between $0.13 and $0.15, compared to analyst estimates of $0.38. The
same day, April 3, 2003, Defendants hosted a conference call with
analysts at which, Mr. Pattersen reportedly stated that it was the
competitive environment that had led the Company to lower its quarterly
earnings forecast and that negative environment would last for the next
18 months. Following the release of the negative information, the price
of Cerner's common stock fell dramatically, from $32.09 to $17.63 (45%)
on very heavy trading.
For more details, contact Henry J. Young by Mail: 100 Park Avenue, 12th
Floor, New York, New York 10017-5563 by Phone: (212) 907-0700 by E-
mail: hyoung@glrslaw.com or visit the firm's Website:
http://www.glrslaw.com
CIT GROUP: Weiss & Yourman Lodges Securities Fraud Lawsuit in S.D. NY
---------------------------------------------------------------------
Weiss & Yourman initiated a securities class action against CIT Group,
Inc. (NYSE:CIT) and its officers was commenced in the United States
District Court for the Southern District of New York on behalf of
shareholders who purchased in or traceable to the initial public
offering of the Company's common stock on or about July 1, 2002.
The complaint charges defendants with violations of the Securities Act
of 1933. It alleges that defendants issued a prospectus in connection
with the IPO which contained false and misleading statements.
For more details, contact Joseph H. Weiss, David C. Katz, or James E.
Tullman by Mail: The French Building, 551 Fifth Avenue, Suite 1600 New
York, NY 10176 by Phone: (888) 593-4771 or (212) 682-3025, or by e-
mail: info@wynyc.com
KING PHARMACEUTICALS: Wechsler Harwood Files Securities Suit in E.D. TN
-----------------------------------------------------------------------
Wechsler Harwood LLP initiated a securities class action in the United
States District Court for the Eastern District of Tennessee,
Northeastern Division at Greeneville, on behalf of purchasers of King
Pharmaceuticals (NYSE:KG) publicly traded securities during the period
between February 16, 2000 and March 10, 2003, inclusive.
The complaint alleges that defendants violated sections 10(b) and 20(a)
of the Securities & Exchange Act of 1934 by issuing materially false
and misleading statements during the class period and violated sections
11 and 15 of the Securities Act of 1933 by issuing a materially false
and misleading Registration Statement and Prospectus in connection with
the Company's acquisition of Jones Pharma, Inc.
The complaint also alleges that defendants issued statements regarding
the Company's financial performance and future prospects and the strong
demand for its branded pharmaceutical products, notably Altace and
Levoxyl. Additionally, the Company failed to disclose that certain of
its rebate and pricing practices subjected it to heightened
governmental scrutiny.
As alleged in the Complaint, these statements were each materially
false and misleading when made as they misrepresented and/or omitted
the following adverse facts which then existed and disclosure of which
was necessary to make the statements made not false and/or misleading,
including:
(1) that the Company's rebate practices and "best price" lists
subjected it to heightened regulatory scrutiny as governmental
agencies increased their activity in this area;
(2) that the Company had understated the level of generic
competition for Levoxyl; and
(3) that the Company had engaged in questionable sales to VitaRx
and Prison Health Services during 1999 and 2000.
On March 11, 2003, King Pharmaceuticals was subject to an SEC
investigation for, among other things:
(i) the sales of its products to VitaRx and Prison Health Services
during 1999 and 2000;
(ii) its "bestprice" lists;
(iii) all documents related to the pricing of its pharmaceutical
products to any governmental Medicaid agency during 1999; and
(iv) the accrual and payment of rebates on Altace from 2000 to the
present.
In response to this announcement, the price of King Pharmaceuticals'
common stock declined precipitously, falling from $15.90 per share to
$12.17 per share.
For more details, contact Craig Lowther by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022 by Phone: (877) 935-7400 by E-mail:
clowther@whesq.com
MICROTUNE INC.: Goodkind Labaton Lodges Securities Lawsuit in E.D. TX
---------------------------------------------------------------------
Goodkind Labaton Rudoff & Sucharow LLP initiated a securities class
action, pursuant to Section 21D(a)(3)(A)(i) of the Securities Exchange
Act of 1934, in the United States District Court for the Eastern
District Of Texas, on behalf of all open market purchasers of the
common stock of Microtune, Inc. (NASDAQ: TUNE) during the period April
22, 2002 through February 20, 2003, inclusive. The named defendants
are the Company and:
(1) Douglas Bartek,
(2) Everett Rogers and
(3) Nancy Richardson
The complaint charges Defendants with violations of Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10(b)-5 promulgated
thereunder and Section 20(a) of the Exchange Act of 1934.
Microtune is a manufacturer, designer and marketer of radio related
products such as tuners, amplifiers, transceivers and short-range
wireless radios. The complaint alleges that during the period April
22, 2002 through February 20, 2003, defendants issued false and
misleading statements concerning the Company's financial results that
artificially inflated the price of the Company's common stock.
Specifically, the complaint alleges that Microtune filed financial
reports with the Securities and Exchange Commission and issued press
releases which overstated the Company's earnings and revenues.
On February 20, 2003, Microtune announced it had hired legal counsel to
assist in an investigation of the Company's accounts in relation to
five customers and that the Company was investigating the grant of
credit to certain customers and the accounting of $11.6 million of
deferred revenue. On March 31, 2003, Microtune announced it would not
be filing its annual report for 2002 because of its investigation.
For more details, contact Henry J. Young by Mail: 100 Park Avenue, 12th
Floor, New York, New York 10017-5563 by Phone: (212) 907-0700 or by E-
mail: hyoung@glrslaw.com or visit the firm's Website:
http://www.glrslaw.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 2003. All rights reserved. ISSN 1525-2272.
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