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/raid1/www/Hosts/bankrupt/CAR_Public/030512.mbx C L A S S A C T I O N R E P O R T E R Monday, May 12, 2003, Vol. 5, No. 92 Headlines AMEN WARDY: Recalls 2,400 Multipurpose Lighters for Fire Hazard APARTHEID LITIGATION: Mining Company Urged To Settle $7B Suit BABY'S DREAM: Recalls 4,600 Convertible Cribs for Injury Hazard BROOKLYN IMPORTS: Recalls Uneviscerated Fish For Botulism Hazard CALIFORNIA: Resident Sues Over Excessive Noise on 210 Freeway CALIFORNIA: AG Lockyer Reaches Settlement With Paint Companies CHEVRONTEXACO: US Lawyers Take Lawsuit For Ecuadoreans Back Home COPPER MOUNTAIN: NY Court Rejects Dismissal for Securities Suit CRACKER BARREL: Appeal on Employee Lawsuit Certification Refused CREDIT CARDS: NY Appeals Court Asked To Overturn Antitrust Order HOMELITE CONSUMER: Starts Recall of Chainsaws For Injury Hazard IDAHO POWER: Named As Defendant in OR Consumer Energy Fraud Suit IDAHO POWER: WA Court Grants More Time To Respond to Energy Suit MICROSOFT CORPORATION: Consumer Fraud Suit Launched in CA Court MULTIDATA SYSTEMS: FDA Inks Pact over Radiation Therapy Devices NEW MEXICO: Hobbs City PD Sued Over Alleged Anti-Hispanic Bias OVERTURE SERVICES: NY Court Dismisses in Part Securities Lawsuit PRINCIPAL FINANCIAL: Plaintiffs File Writ of Certiorari Petition TERRORIST ATTACK: Court Dismisses Suit V. Fund, Special Master TITLE COMPANIES: Title Firms Face Antitrust Suits in CA Court TOBACCO LITIGATION: Imperial Tobacco Faces Lights Suit in Canada UNITED STATES: Group Says US Veterans Exposed To More Radiation WAL-MART STORES: Recalls 64,000 Fabric Lanterns For Fire Hazard WASHINGTON: Court Asks Attorney To Rewrite Environmental Lawsuit XTO ENERGY: OK Court Approves Settlement of Gas Royalties Suit *Is Big Tobacco Heading Toward Another Round Of Trouble? New Securities Fraud Cases ELECTRO SCIENTIFIC: Marc Henzel Commences Securities Suit in OR FLEMING COMPANIES: Marc Henzel Launches Securities Lawsuit in TX GAINSCO INC.: Marc Henzel Launches Securities Lawsuit in S.D. FL REGENERON PHARMACEUTICALS: Marc Henzel Launches Stock Suit in NY SYMBOL TECHNOLOGIES: Stull Stull Commences Securities Suit in NY ********* AMEN WARDY: Recalls 2,400 Multipurpose Lighters for Fire Hazard --------------------------------------------------------------- Amen Wardy Home is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling 2,400 Multi- purpose lighters shaped like matchsticks. The lighters lack child-resistant mechanisms that meet federal safety standards. Young children could operate these lighters, which poses a fire hazard. No injuries have yet been reported. The lighters are refillable, gas-fueled lighters shaped like a wooden match. The lighters have a brushed, silver-colored metal finish with a black plastic slide lever that is moved to ignite the lighter. The end of the lighter is painted red to resemble the head of a match. The lighters were available in both 7-inch- and 14-inch-long sizes. The lighters were sold in a clear plastic sleeve and do not have any labeling on either the lighter or package. The Amen Wardy Home store in Caesar's Palace, at Las Vegas, Nevada, and the firm's Web site sold these lighters from July 2002 through January 2003 for between $10 and $20. For more information, contact the Company by Mail: Amen Wardy Home ATTN: Lisa Toy 4230 S. Decatur Blvd., Suite A, Las Vegas, NV 89103 by Phone: (877) 349-5330 between 8 a.m. and 5 p.m. PT or by E-mail: info@amenwardy.com. APARTHEID LITIGATION: Mining Company Urged To Settle $7B Suit ------------------------------------------------------------- South African mining company Gold Fields was approached to meet Anglican Archbishop of Cape Town Njongonkulu Ndungane to try to resolve the claims brought against it for alleged prejudice during the apartheid years, the Business Report News states. The Company faces a $7 billion class action filed by US lawyer Ed Fagan and South African attorney John Ngcebetsha. The company is the latest in the series of international companies being sued for compensation for apartheid victims. The suits followed the release of South Africa's Truth and Reconciliation Commission report. The suit seeks compensation for more than 500 former employees who were exposed to "dangerous working conditions leading to uranium contamination." Other mining companies might be also dragged into the suit, as uranium is a byproduct of the gold- mining process in South Africa. The archbishop was said to be approaching all the mining companies named in the apartheid suits, which have total possible claims of $15 billion against them, to try to resolve the matter before it reached the courts, the Business Report News asserts. The Company, which has a secondary listing in New York, said it had not received notice that the case had been filed in New York. Willie Jacobsz, the senior vice-president corporate affairs, told the Business Report News that while Gold Fields Limited denied any liability for the claim intimated against the company, it would treat the approach made to it by the archbishop with respect and be in contact with him to exchange views. BABY'S DREAM: Recalls 4,600 Convertible Cribs for Injury Hazard --------------------------------------------------------------- Baby's Dream Furniture, Inc. is cooperating with the United States Consumer Product Safety Commission (CPSC) by voluntarily recalling about 4,600 wooden convertible cribs manufactured from January to August 2001 to repair hinges on the drop gate. The three hinges along the fold-down drop gate can crack or break and allow babies to have their fingers pinched. The Company has received 38 reports of broken or cracked hinges, but there have been no injuries reported. The recalled cribs were sold under either the Baby's Dream Furniture label or the National Baby Furniture label in five different models. The five models included in the recall are "Always Crib," "Crib 4 Life," "Legendary Crib," "Set 4 Life," and "Crib-2-College." The wooden cribs are honey, amber or cherry in color. The model names and the date of manufacture appear on a label on the lower inside of the frame. "Made in USA" is also printed on the label. Juvenile furniture and retail stores nationwide sold these cribs for between $300 and $400. In addition, an unknown number of Baby's Dream cribs made between 1996 and 2002 may have drop gate trigger latches that are not correctly aligned to fit securely into the strike plate on the crib post. A misaligned latch where the latch trigger does not lock securely can allow the drop gate to open if a child leans on it, and the child could fall out. Baby's Dream and CPSC have received two reports of injuries to children when the latches did not hold. Injuries included one report of a child whose head was bruised after falling onto the floor when the drop gate latch failed and one report of a crushed finger when the rail unexpectedly moved inward when the parent leaned into the crib. There were five additional reports of children falling out of cribs who received no injury. For more details, contact the Company by Mail: P.O. Box 579, Buena Vista, GA 31803-0579 by Phone: (800) TEL CRIB (835-2742) between 7:30 am and 5 pm ET or visit the firm's Website: http://www.babysdream.com BROOKLYN IMPORTS: Recalls Uneviscerated Fish For Botulism Hazard ---------------------------------------------------------------- Brooklyn Imports, Inc. is recalling 100 kilos (225-lb.) barrels of uneviscerated processed fish. The product, PSP Brand/ Round salted herring, was discovered by NYS Dept of Agriculture & Markets Food Inspectors during a routine inspection at a retail market in Brooklyn, New York. This product may be contaminated with Clostridium Botulinum spores, which can cause botulism, a serious and potentially fatal food-borne illness. The sale of this type of fish is prohibited under New York State Agriculture and Markets regulations because Clostridium Botulinum spores are more likely to be concentrated in the viscera than any other portion of the fish. Uneviscerated processed fish has been linked to outbreaks of botulism poisoning. Symptoms of Botulism include blurred or double vision, general weakness, poor reflexes, difficulty swallowing and respiratory paralysis. PSP Brand/ ROUND SALTED HERRING, is packaged in 100 kilos (225- 1b.) barrels. The recalled product was sold in NY, IL, MI, NJ, PA and CT. Consumers who have PSP Brand/ ROUND SALTED HERRINGS are advised not to eat it. No illnesses have been reported to date. For more details, contact the Company by Phone: (718) 384-0555. CALIFORNIA: Resident Sues Over Excessive Noise on 210 Freeway ------------------------------------------------------------- The City of Rancho Cucamonga, California faces a class action filed by a resident, seeking compensation for noise generated by the 210 Freeway. The suit also names as defendants Caltrans and the San Bernardino Associated Governments. "A lot of people are in the same boat, so we've filed this as a class action that can include anyone within a mile of the freeway extension," plaintiff's attorney Mark Milstein told the Inland Valley Daily Bulletin. "The noise levels faced by some of these homes is tremendous, and we intend to get these people compensated." Homeowners across the Inland Valley are expected to join the suit. "This will cover people that live from La Verne to Fontana," plaintiff's attorney Lee Jackson told the Bulletin. "Rancho Cucamonga is singled out only because it issued an inaccurate disclosure statement to residents." Only the San Bernardino Associated Governments has denied a claim filed by the plaintiffs, who will now file a lawsuit against that agency, the Bulletin stated. Rancho Cucamonga and Caltrans have yet to respond to claims filed by the plaintiffs, and representatives for both Rancho and Caltrans said that they were unaware of the complaint. CALIFORNIA: AG Lockyer Reaches Settlement With Paint Companies -------------------------------------------------------------- California Attorney General Bill Lockyer announced settlements with two Los Angeles-area apartment owners and managers that requires them to remove lead-based paint hazards from their buildings, and fund programs to assess and prevent lead poisoning in children. "Tens of thousands of California children have blood lead levels above the threshold set by experts to determine when treatment is needed," Mr. Lockyer said. "That number has dropped substantially in recent years, and we have made great progress in reducing lead pollution. But we must do more. There is no safe level of lead exposure, and there is no higher priority than protecting the health and safety of our children. That's why this settlement is so important." The settlements resolve lawsuits filed by Mr. Lockyer in Los Angeles County Superior Court against SK Management Company (SK), and Westside Rehab Corporation and its affiliates (Westside). The court must approve the settlements before they become final. The California settlements cover about 1,843 apartment units owned by Westside and its affiliates, and some 1,380 managed by SK. The affected units all are in Los Angeles-area apartment buildings constructed before 1978, when lead-based paint was banned. The state's lawsuits allege the two companies violated a Los Angeles County ordinance that prohibits lead-based paint hazards on the exterior or interior of any building inhabited or frequented by children. Lead poisoning of children can cause brain damage, kidney damage, impaired growth, hearing loss and other health problems. The complaints also allege SK and Westside failed to comply with the federal Residential Lead-Based Paint Hazard Reduction Act of 1992. The federal law requires landlords to inform renters of lead-based paint dangers in their units. In separate complaints, the US Department of Housing and Urban Development (HUD) and US Environmental Protection Agency (EPA) allege SK and Westside violated the 1992 federal statute. Federal prosecutors today also announced settlements of those lawsuits, which were filed in federal court in Los Angeles. The federal settlement with Westside covers 1,446 units outside California, as well as the Los Angeles-area units. The California settlements require SK and Westside to remove lead- based paint, and abate lead-based paint hazards, in the affected units. The removal and abatement must be performed in accordance with consent decrees filed by the federal government in its cases. Within 60 days of the court's approval of the consent decree, SK must submit to HUD an abatement plan for specific units. The abatement plan must be completed within six months of HUD's approval. However, if children under six reside in a unit, cleanup must be finished within 60 days of HUD's approval. Additionally, SK must abate lead-based paint hazards before pregnant women or children under six move into a unit. Westside must remove lead-based paint from one-third of its units annually for three years. The firm must give priority to units which house children under six. Within 14 months of court approval of the consent decree, Westside must identify lead- based paint hazards in the affected units. It must take steps to eliminate hazards within 30 days after identifying them. SK officials say they have complied with the cleanup provisions of the consent decree, while Westside executives say they have finished most of the required abatement. The California settlements require each defendant to fund a "Child Health Improvement Project (CHIP)." The CHIP provision in the SK settlement requires the firm to pay $25,000 to Cedars- Sinai Medical Center to fund such services as blood lead screenings, clinical consultations, medical surveillance, provision of risk information and educational outreach. Westside must pay $35,000 to the Environmental Research Center at Martin Luther King Jr./Charles R. Drew Medical Center to fund similar activities, as well as hazard abatement. The federal settlements also require SK and Westside to comply with the 1992 federal disclosure law. Specifically, within 10 days of court approval of the consent decree, the firms must provide tenants: (1) all known information about lead-based paint hazards or lead-based paint (2) information about documents related to lead-based paint hazards or lead-based paint (3) an EPA-approved lead hazard information pamphlet and (4) a lead warning statement Additionally, the defendants will pay a combined $40,000 in civil penalties to the state and federal government. Lead-based paint was banned in 1978. But older housing, such as the SK and Westside apartments, still have lead-based interior and exterior paint. An October 2002 study found that 38 million housing units nationwide had lead-based paint. Of those, 2.42 million were multi-family units, such as apartments. CHEVRONTEXACO: US Lawyers Take Lawsuit For Ecuadoreans Back Home ---------------------------------------------------------------- A decade after unsuccessfully filing in the United States courts, American lawyers representing poor Ecuadoreans who claim their rainforest homeland was destroyed by ChevronTexaco, returned to Ecuador, the Associated Press Newswires reports. The lawyers said they are seeking to have California-based ChevronTexaco ordered by the courts to clean up the pollution that they allege has poisoned the drinking water and rivers in a large area around Lago Agria, in the Ecuadorean Amazon. Cristobal Bonifaz, born in Ecuador and now an American environmental lawyer practicing in Amherst, Massachusetts, said the cleanup -- which would include installation of new technology to prevent further dumping -- and medical monitoring costs for the 30,000 Ecuadoreans involved could exceed $1 billion. Mr. Bonifaz said the lawsuit would be filed on behalf of 88 Ecuadorean lead plaintiffs, in a small courthouse in the jungle town of Lago Agria, 115 miles northeast of the capital of Quito. The Ecuadorean plaintiffs allege that from 1964 to 1992, the oil company dumped 68.4 billion liters of drilling by-products into open pits and waterways. Drinking, bathing and cooking with contaminated water damaged the health, culture and livelihood of five indigenous tribes and 30,000 people, plaintiffs allege. "These are not just random spills. This is the result of a decision made by Texaco to install a type of drilling process that would lead to systematic dumping of toxins," said Steven Donziger, one of plaintiffs' lawyers. Chevron Texaco does not deny the dumping, but the company's officials point out that Ecuador's national oil company set the policy for the venture and that the drilling met all of the country's environmental requirements. Ecuador's laws allowed the oil drillers to dump the wastewater, rather than making Chevron Texaco use the more expensive process, mandated in the United States, of re-injecting the oil-contaminated water back into the well. Today, Ecuador has a "Superfund" law, enacted in 1999, said Mr. Bonifaz. US lawyers worked with Ecuadorean legislators to draft a law similar to the US Superfund law of 1980, which requires polluters in the United States to pay for cleanups even if a site was sold or is no longer operating. The case is being closely watched by public-interest lawyers and multinational corporations. Legal experts say it could be a groundbreaking case, establishing a new way for environmental activists to force multinational corporations to pay for what activists say is environmental devastation, according to a report by The Wall Street Journal Europe (WSJ Europe). US-based multinational corporations often try to get cases tried in developing countries, a tactic that can kill the case entirely, because most American plaintiffs lawyers have neither the money nor the expertise to sue in the Third World courts. Later, if the corporations happen to lose, they often argue that the overseas legal process was flawed, or that their US headquarters should not be held responsible for the errors of a subsidiary in the developing world, the WSJ Europe reports. Foreign courts also have had problems making the US multinational companies obey their decisions. For all these reasons, and more, environmental activists generally prefer to bring cases in developed-world courts: the courts are more independent, there is a corps of public-interest plaintiffs' lawyers to draw on, and the cases draw more public attention, which in its turn puts pressure on the companies to settle. US courts are particularly attractive because of rules that require both sides to share information and make it relatively easy to bring class actions on behalf of a large group of people. However, although the US courts sent the instant case home to Ecuador, plaintiffs' lawyers and some legal scholars see some encouraging signs. This time, this case, something is different. While the US Court of Appeals for the Second Circuit agreed with ChevronTexaco's motion to send the case to Ecuador, the appeals court added an important component: The judges warned ChevronTexaco that the US courts would step back in if the company tried to avoid a judgment imposed by the Ecuadorean court, the WSJ Europe reports. Chris Jochnick, a New York lawyer who founded the Center for Economic and Social Rights, said that if this approach - oversight by the US courts of a foreign case - "puts pressure on the Ecuadorean court system to perform, that might be the best resolution. There are thousands of these cases, and there are only so many the US courts can handle." So, it may be that legal history will be made in Lago Agria, portal to the Amazon rainforest. What is not clear is how the Ecuadorean courts will respond to the lawsuit; oil is crucial to the country's economy, and the government of President Lucio Gutierrez is seeking foreign investment. However, the plaintiffs' lawyers said some things have changed in Ecuadorean politics in the past ten years. They said the local tribes that have borne the brunt of the alleged contamination have been gaining steadily in political clout. Mr. Gutierrez had key backing from indigenous groups, both when he led a 2000 coup and when his supporters won elections two years later. This political clout showed up during the legal pilgrimage of plaintiffs' lawsuit in the United States. At one point in the earlier US legal proceedings over these same allegations, the Ecuadorean government even changed sides. Right after the suit was filed, a decade ago, Ecuador submitted a brief asking the judge to dismiss the plaintiffs' claims. After control of the government changed hands, Ecuador intervened on the side of the plaintiffs, saying it wanted "to protect the interests of the indigenous citizens of the Ecuadorean Amazon who were seriously affected by the environmental contamination." At the moment, a spokesman for the Ecuadorean embassy in Washington has said that the government has not taken a position on the lawsuit. However, he added, "it is very clear that the people in the region have health problems and have suffered for more than 10 years. More work is needed to repair the area." COPPER MOUNTAIN: NY Court Rejects Dismissal for Securities Suit --------------------------------------------------------------- The United States District Court for the Southern District of New York refused to dismiss the consolidated securities class action filed against Copper Mountain Networks, Inc., certain of its officers and directors, and the underwriters of its initial public offering (IPO). In the complaint, the plaintiffs allege that the Company, certain of its officers and directors and the underwriters of its initial public offering (IPO) violated the federal securities laws because the Company's IPO registration statement and prospectus contained untrue statements of material fact or omitted material facts regarding the compensation to be received by, and the stock allocation practices of, the IPO underwriters. The plaintiffs seek unspecified monetary damages and other relief. Similar complaints were filed in the same court against hundreds of other public companies that conducted IPOs of their common stock since the mid-1990s. The suits, including the one against the Company, were consolidated for pretrial purposes before United States Judge Shira Scheindlin of the Southern District of New York. Judge Scheindlin held an initial case management conference on September 7, 2001, at which time she ordered, among other things, that the time for all defendants to respond to any complaint be postponed until further order of the court. Thus, the Company has not been required to answer the complaint, and no discovery has been served on the Company. In accordance with Judge Scheindlin's orders at further status conferences in March and April, the appointed lead plaintiffs' counsel filed amended, consolidated complaints in the IPO Lawsuits on April 19, 2002. Defendants then filed a global motion to dismiss the IPO Lawsuits on July 15, 2002, as to which the Court does not expect to issue a decision until early 2003. On October 9, 2002, the Court entered an order dismissing the Company's named officers and directors from the IPO Lawsuits without prejudice, pursuant to an agreement tolling the statute of limitations with respect to these officers and directors until September 30, 2003. On July 15, 2002, the Company joined in a global motion to dismiss filed by all issuers in the IPO Lawsuits. The Court decided the motion on February 19, 2003. As to the Company, the Court denied the motion to dismiss the claims against the Company brought pursuant to Section 11 of the Securities Act of 1933 and Section 10(b) of the Exchange Act of 1934. The Company believes that this litigation is without merit. CRACKER BARREL: Appeal on Employee Lawsuit Certification Refused ---------------------------------------------------------------- The United States 11th Circuit Court of Appeals refused to hear the appeal of the denial of class certification for a lawsuit filed against Cracker Barrel Old Country Store, on behalf of its employees, the Tennesseean reports. The suit charges the Lebanon-based Company with discrimination, on behalf of a group of African-American employees who alleged they were being channeled into lesser-paying, back-of-restaurant positions, given infrequent reviews and pay increases, and had to endure demeaning conditions. The Company denied these charges. Later, a lower court refused to certify the suit, a decision which the plaintiffs appealed. The decision means that plaintiffs will not be granted class- action status in the discrimination case and can bring their claims against the restaurant chain only on an individual basis, the Tennessean states. "Now it's basically 13 individual named plaintiffs and we expect to have a litigated resolution to all of this by the end of the calendar year," Company spokeswoman Julie Davis said. She said the Company would not settle with any of the individuals with remaining claims in the case. "We know there is no merit to this, and we expect that we'll be filing for summary judgment and either the judge will grant that or we'll litigate each case and we expect a positive outcome to that," she asserted. Cracker Barrel still faces a separate discrimination lawsuit filed by about three-dozen African-American customers. Plaintiffs in that case were denied class-action status in October, the Tennesseean relates. CREDIT CARDS: NY Appeals Court Asked To Overturn Antitrust Order ---------------------------------------------------------------- Credit card giants Visa and Mastercard asked the United States Second Circuit Court of Appeals to overturn a ruling allowing American Express and other companies more access to the US market for credit cards, the Associated Press reports. The United States District Court in New York issued the ruling in 2001, ordering the two firms to drop rules that prohibit their member banks from also issuing American Express cards. The firms said that the judge had ruled with the interests of American Express in mind - not the interest of all consumers, the people antitrust law was written to protect. "That is the classic mistake that the district court made in this case," MasterCard lawyer Kenneth Gallo said, according to AP. The United States Justice Department, however, told AP that the companies had abused their market power - and only came up with the restrictive bank rules when they realized American Express was a threat to their businesses. No decision is expected in the matter for months, and any ruling by the appeals court could be appealed to the US Supreme Court. HOMELITE CONSUMER: Starts Recall of Chainsaws For Injury Hazard --------------------------------------------------------------- Homelite Consumer Products, Inc. is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling 6,900 chainsaws. These saws can operate while the engine is at the "idle" setting, posing a risk of serious lacerations to the operator and bystanders. No injuries have yet been reported. These Homelite brand chainsaws have model number UT10946 and manufacture dates of 11-02 (November 2002) or 12-02 (December 2002). The model numbers and manufacture dates are printed on the lower corners of a black data label located on back side of the chainsaw's engine housing, opposite the on/off trigger. They have a red housing with black trim and are sold in a rectangular black plastic case. Home and hardware stores nationwide sold these chainsaws from December 2002 through February 2003 for about $200. For more details, contact the Company by Phone: (800) 776-5191 between 8 am and 5 pm ET Monday through Friday or visit the firm's web site: http://www.homelite.com. IDAHO POWER: Named As Defendant in OR Consumer Energy Fraud Suit ---------------------------------------------------------------- Idaho Power Corporation was named a defendant in a class action initially filed in the Circuit Court of the State of Oregon for the County of Multnomah, against various entities. The case was removed by another defendant, Reliant Energy, to the United States District Court, District of Oregon on February 4, 2003. The complaint seeks class action status on behalf of all persons and businesses residing in Oregon who were purchasers of electrical and/or natural gas energy from any period beginning in January 2000 to the present. The complaint alleges claims under the Oregon Unfair Trade Practices Act, ORS 646.605, et seq. in addition to claims of fraud by concealment, negligence and for an accounting. The complaint asserts that the defendants, including the Company, engaged in, among other things, unfair and deceptive acts, in violation of the FPA, by: (1) withholding the supply of energy; (2) misrepresenting the amount of its energy supplies; (3) exercising improper control over the energy markets; and (4) manipulating the price of energy markets resulting in energy rates being charged to Oregon energy consumers that were unjust, unreasonable and unlawful The plaintiff seeks certification of a class action, equitable and injunctive relief, an accounting, attorneys' fees and costs. The action was removed to federal court, and on March 11, 2003, IPC, along with other defendants, filed a motion with the Multi- District Litigation (MDL) seeking to transfer the case to be consolidated with similar actions before the Judge who is presiding over similar cases. A stipulation has been submitted to the Court for an extension of time to respond to the complaint, until 30 days after the MDL panel rules. The Company intends to vigorously defend against this lawsuit and believes this matter will not have a material adverse effect on its consolidated financial position, results of operations or cash flows. IDAHO POWER: WA Court Grants More Time To Respond to Energy Suit ---------------------------------------------------------------- The United States District Court for the Western District of Washington in Seattle granted the Idaho Power Corporation more time to respond to the class action filed on behalf of all persons and businesses residing in Washington who were purchasers of electrical and/or natural gas energy from any period beginning in January 2000 to the present. The complaint alleges claims under the Washington Consumer Protection Act, RCW 19.86, as well as common law claims of fraud by concealment, negligence and for an accounting. The complaint asserts that the defendants, including the Company, engaged in, among other things, unfair and deceptive acts, in violation of the Federal Power Act, by: (1) withholding the supply of energy; (2) misrepresenting the amount of its energy supplies; (3) exercising improper control over the energy markets; and (4) manipulating the price of energy markets resulting in energy rates being unjust, unreasonable and unlawful The plaintiff seeks certification of a class action, equitable and injunctive relief, an accounting, treble damages, attorneys' fees and costs. On February 3, 2003, another defendant, Reliant Energy, Inc., moved to transfer the case to the Judge who is presiding over Multiple District Litigation (MDL) No. 1405. The MDL rejected this request because that Judge, as a Washington resident, is a member of the class. On March 11, 2003, the Company, along with other defendants, filed a motion with the MDL seeking to transfer the case to be consolidated with similar actions before the judge who is presiding over the California Attorney General Action, and other similar cases. On March 21, 2003 the court granted IPC's motion for an extension of time to respond to the complaint until 30 days after the MDL panel rules. The Company intends to vigorously defend against this lawsuit and believes this matter will not have a material adverse effect on its consolidated financial position, results of operations or cash flows. MICROSOFT CORPORATION: Consumer Fraud Suit Launched in CA Court --------------------------------------------------------------- Microsoft Corporation and retailer Best Buy faces a class action filed by a Los Angeles resident in the Los Angeles Superior Cout, alleging that the two firms scammed customers through a promotion in which customers at Best Buy, who paid for purchases with credit or debit cards, were given free compact discs that allowed them to try Microsoft's online service, MSN. Plaintiff Samuel Kim said he unwittingly became a victim of the scam after making a purchase at a Best Buy store in Los Angeles with his debit card. At checkout, a store employee scanned Mr. Kim's debit card and, without any explanation to him, scanned a trial MSN compact disc and placed it in his shopping bag, the lawsuit said, according to a Business Day report. The employee said it was to keep track of the inventory. However, Best Buy apparently sent Mr. Kim's debit card information to Microsoft, which activated an MSN service account in his name without telling him, the lawsuit said. Mr. Kim said he did not use the compact disc but discovered after receiving his bank statement that Microsoft had deducted a monthly service charge from his account, the suit said. He has not been unable to get a full refund from either company, his attorney Anthony Lee of San Francisco told Business Day. "We haven't yet received the complaint and therefore have no comment," a Microsoft spokesman told Business Day. Best Buy officials were not immediately available for comment. MULTIDATA SYSTEMS: FDA Inks Pact over Radiation Therapy Devices --------------------------------------------------------------- The United States Food and Drug Administration (FDA) entered into a consent decree of injunction with Multidata Systems International Corporation to stop them from manufacturing and distributing radiation therapy medical devices. Multidata Systems International, headquartered in St. Louis, Missouri, primarily manufactures devices used to treat cancer. The Company's radiation treatment planning software reportedly contributed to 28 patients receiving excessive amounts of radiation at a medical facility in Panama City, Panama, in 2001. Several patients died. The Company failed to conform to current good manufacturing practice and design standards and also failed to file prompt reports with the FDA after it became aware that its products may have caused or contributed to death or serious injury. "Multidata Systems has a nine year history of violations and failure to correct them," said FDA Commissioner Mark B. McClellan, M.D., Ph.D. "Despite repeated warnings, the company continued to manufacture its medical devices in a way which put the public health at risk. This cannot be tolerated." Dr. McClellan has made the reduction of preventable medical errors one of the highest priorities of the FDA. FDA inspected the Company several times between April 1993 and September 2001 and found extensive and persistent deficiencies in the firm's manufacturing practices during each inspection. The firm did not respond to warnings, and FDA observed the same violations recurring from one inspection to the next. During the most recent inspection, FDA found that the Company failed to: (1) establish, maintain and follow procedures to control the design of the radiation treatment planning software to ensure the specifications were met; (2) establish and follow procedures for taking preventive and corrective action; (3) establish and follow procedures for investigating all complaints; (4) adhere to other standard good manufacturing practices, and; (5) identify the root cause of software code problems when brought to its attention Multidata initiated a recall of its radiation treatment planning software on September 7, 2001, but did not complete the recall until earlier this year. The consent decree was filed in the United States District Court for the Eastern District of Missouri. It enjoins Multidata from marketing its radiation therapy medical devices until it satisfies FDA that it has corrected its problems. The consent decree will not take effect until signed by the judge and entered by the court. NEW MEXICO: Hobbs City PD Sued Over Alleged Anti-Hispanic Bias -------------------------------------------------------------- City of Hobbs police, in New Mexico, have been called back to court for the sixth time since 1999, over allegations of brutality and abuse. In the first five instances, the lawyers were representing African Americans who made similar allegations; but, in this sixth instance, the lawyers are in court on behalf of Hispanics who allege abuse and brutality by the Hobbs police, the Associated Press Newswires reports. The American Civil Liberties Union's state director, Peter Simonson, has called the Hobbs police force "unrepentant" about civil rights violations. However, Police Chief Donnie Smith has said the department's track record is getting better for all Hobbs residents, including minorities. The latest lawsuit against the Hobbs Police Department was filed April 24, after Hispanic families came to attorney Daniel Yohalem and Richard Rosenstock, who had filed earlier cases of abuse against the police department on behalf of African Americans. "This action alleges 'police-state' type practices by . the city of Hobbs and the individual officers, calculated to harass, intimidate and otherwise oppress the plaintiffs," the lawsuit's complaint begins. Mr. Yohalem said, in Santa Fe, that the April 24 case grew out of a parking lot altercation among some young men, including one Cesar Muro. Police detained several of his relatives for hours, searched their homes and later seized some tools and electronics they found in the trunk of a car belonging to Luis Ruiz, one of the plaintiffs. The Ruiz car was being driven by Mr. Ruiz's son, Joel, the night of the altercation. In a recent interview, the plaintiffs' lawyers said people were detained without cause, their homes searched, property seized and in some cases never returned, or damaged. Plaintiffs include members of the Muro family, members of the Guillen family, as well as Isaac Rodriguez, and Luis Ruiz Sr. Defendants include the city of Hobbs and 18 police officers. The American Civil Liberties Union (ACLU) was involved in two lawsuits in 1999, brought on behalf of African Americans; one, a class action, involved a black woman whose home was searched while her children were present; the second, was a lawsuit which stemmed from an altercation at a high school football game, where police were accused of overreacting. The ACLU helped work out, eventually, from these two cases, a consent decree with the city of Hobbs and its police department. Peter Simonson, state director of the ACLU, has said that the police have failed to adhere to their side of the agreement, and the ACLU petitioned in February, for a finding of contempt under the terms of the consent decree. The petition is pending, said attorney Daniel Yohalem. In an interview, in Albuquerque, Mr. Simonson, speaking of holding the Hobbs Police Department in contempt for its non- compliance with the consent decree, said, "The police department is absolutely unrepentant with respect to the allegations that were made under our original complaint. Clearly, they have ignored the basic requirements under the consent decree. I think, over all, it shows a dismissive attitude toward the community's civil rights and basic questions of social justice, particularly as they apply to minority groups." The complaint of the April 24 case includes a litany of charges of abuse, brutality and violence, such as the trashing of homes searched, the ripping out of the seat of a car, the seizure of all items in the trunk of the Ruiz car, even though the warrant did not specify items in the Ruiz car trunk, the wholesale arrest of the Muro family, the epileptic seizure of Jose Muro, who suffered an epileptic fit when police refused to let a friend go back into the house for Mr. Muro's medication. Other lawsuits against Hobbs and the police included cases alleging: a warrantless search of a home in 1997, and an unrelated arrest of a 15-year-old girl, led off in handcuffs after she told her 12-year-old brother he did not have to answer police questions. There was also the case of Michael Collopy, appointed special judge to handle juvenile charges stemming from the football stadium altercation. Judge Collopy sued the city when police alleged his relatives had been suspects in alleged police investigations and therefore the judge was compromised by conflicts of interest. "That was false," said Mr. Yohalem of the police allegations against Mr. Collopy and his relatives. When asked whether, in all these cases of alleged abuse and violence, police were carrying out policy or acting on their own, Mr. Yohalem said that he and Mr. Rosenstock have not been provided enough information to answer that question. However, Mr. Yohalem said, "Whoever does have power down there is not choosing to rein them in." OVERTURE SERVICES: NY Court Dismisses in Part Securities Lawsuit ---------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed in part the consolidated securities class action filed against Overture Services, Inc., underwriters involved in its initial public offering, and certain of its current and former officers and directors. Plaintiffs allege, among other things, violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 involving undisclosed compensation to the underwriters, and improper practices by the underwriters, and seek unspecified damages. Similar complaints were filed in the same court against numerous public companies that conducted initial public offerings of their common stock since the mid-1990s. All of these lawsuits were consolidated for pretrial purposes before Judge Shira Scheindlin. On April 19, 2002, plaintiffs filed an amended complaint, alleging Rule 10b-5 claims of fraud. On July 15, 2002, the issuers filed an omnibus motion to dismiss for failure to comply with applicable pleading standards. On October, 8, 2002, the Court entered an Order of Dismissal as to all of the individual defendants in the Overture IPO litigation, without prejudice. On February 19, 2003, the court denied the motion to dismiss the Rule 10b-5 claims against Overture. The Company continues to deny the allegations against it, believes that it has meritorious defenses to the amended complaint, and intends to contest the allegations vigorously. PRINCIPAL FINANCIAL: Plaintiffs File Writ of Certiorari Petition ---------------------------------------------------------------- Plaintiffs in the class action filed against Principal Mutual Holding Company filed a petition for the writ of certiorari relating to the suit's dismissal in the United States Supreme Court. The suit was commenced in September 2001 in the United States District Court for the Northern District of Illinois, seeking damages and other relief on behalf of policyholders based on allegations that the plan of conversion of the Company from a mutual insurance holding company into a stock company violates the United States Constitution. In April 2002, the court granted the Company's motion to dismiss and ordered the lawsuit be dismissed in its entirety. On April 17, 2002, a judgment was entered to that effect. The plaintiffs filed an appeal on May 15, 2002, with the 7th Circuit Court of Appeals. On November 22, 2002, the appeals court affirmed the district court's decision. The plaintiffs then filed a Petition for a Writ of Certiorari on April 21, 2003, requesting the United States Supreme Court to review the decision of the appeals court. While the outcome of any pending or future litigation cannot be predicted, management does not believe that any pending litigation will have a material adverse effect on its business, financial position or results of operations. TERRORIST ATTACK: Court Dismisses Suit V. Fund, Special Master -------------------------------------------------------------- New York Federal Judge Alvin K. Hellerstein upheld the government's compensation fund for victims of the September 11 terrorist attack, dismissing allegations that compensations were decided in an unfair and arbitrary way, the Associated Press reports. Judge Hellerstein reviewed the regulations surrounding the fund and the policies of the fund's special master, Kenneth Feinberg, and pronounced them "lawful and valid." He dismissed three suits filed by several families of September 11 victims who were eligible to file claims with the fund but had not yet done so. The suit charges Mr. Feinberg with using illegal formulas to compute the monetary awards. The suit further states that Mr. Feinberg has "alienated and disenfranchised the very constituency he was appointed to serve," an earlier Class Action Reporter story states. The suit further asserts that the fund violates state law - and shortchanges applicants - by using after-tax earnings to calculate awards. The compensation offered to families would be greater if the awards were instead based on pretax earnings, as New York law requires for wrongful death awards, according to the lawsuit. The complaint also alleges that the fund discriminates against unmarried victims and has illegally limited the size of the awards that some high-income families can receive, the Associated Press earlier reported. The fund's regulations warn that payouts of more than $3 million would "rarely be appropriate in light of individual needs and resources." TITLE COMPANIES: Title Firms Face Antitrust Suits in CA Court ------------------------------------------------------------- Eight leading title companies face two class actions filed in Los Angeles Superior Court in California, charging them with price fixing during the recent refinancing boom, the Orange County Register reports. The suits name as defendants: (1) Fidelity National Title Co., (2) First American Title Co., (3) Chicago Title Co., (4) California Title Co., (5) Commonwealth Land Title Co., (6) Lawyers Title Co., (7) Old Republic Title Co. and (8) First California Title Co. The suits allege the defendants violated antitrust laws by talking about and setting the price for title insurance in California, a charge the companies deny. "These suits are wholly without merit, and we will vigorously defend these cases," said Peter Sadowski, executive vice president and general counsel for Santa Barbara-based Fidelity National Title Co., one of the defendants in both suits, the Orange County Register states. First American Title Co., based in Santa Ana, also is a defendant in both suits. Its attorneys have reviewed the lawsuits and believe the cases are without merit and will be resolved quickly, company spokeswoman Jo Bandy told the Register. TOBACCO LITIGATION: Imperial Tobacco Faces Lights Suit in Canada ---------------------------------------------------------------- Canadian cigarette firm Imperial Tobacco faces a class action filed in Vancouver Court, alleging it deceived customers by saying "light" or "mild" cigarettes are less harmful than regular brands, the Agence France Presse reports. The suit was the very first of its kind in Canada, lawyer for the plaintiffs David Klein said. A similar suit was filed against Philip Morris USA. It ended with the New York court ordering the tobacco giant to pay $10.7 billion dollars in damages. Philip Morris later appealed the decision, which it said might prompt it to file for bankruptcy and default on payments for a settlement with 46 states forged in 1998. The New York court later reduced the appeals bond to half. "The courts exist to protect the public and to punish corporate misconduct. Our clients' goals in filing this class action are to support Health Canada's efforts and to hold Imperial Tobacco accountable for its actions," Mr. Klein said in a statement. Two years ago, Canada's health minister called on tobacco manufacturers to remove the words 'light' or 'mild' from cigarette packets, but so far there has been no response, AFP reports. UNITED STATES: Group Says US Veterans Exposed To More Radiation --------------------------------------------------------------- The National Research Council revealed in a report that United States veterans who took part in aboveground nuclear weapons tests a half-century ago were exposed to more radiation than government agencies believed, but not in amounts that would qualify many more for compensation, the Associated Press reports. From 1945 to 1962, the government conducted about 200 atmospheric nuclear-weapons tests, often with military personnel observing from shipboard or in trenches or buildings some distance from the blast. Many soldiers were exposed to radiation from fallout rather than directly from the blast. Veterans with any of 21 types of cancer are already automatically granted compensation. To determine payments for them, the government used "dose estimates." "The veterans have legitimate complaints about their radiation dose reconstructions," John E. Till, chairman of the National Research Council committee that prepared the report told AP. He continued that updating the estimates might make a difference in some cases but the committee does not believe it would significantly affect the number of awards made. He also asserted that if the program proceeds, improvements must be made and Congress and the Defense Department need to take a hard look at if and how it should go forward. "The program itself is based on some good science," Mr. Till told AP, but quality assurance has been very weak and the department has done a poor job of communicating with the affected veterans. Joe Violante, national legislative director of Disabled American Veterans, told AP his group has serious concerns about trying to use estimates to determine if illness is service connected. He favors assuming that a disease that may be connected to radiation is service-related in the case of atomic-exposed veterans. The money spent on making exposure estimates could have been better spent helping affected veterans, he said. WAL-MART STORES: Recalls 64,000 Fabric Lanterns For Fire Hazard --------------------------------------------------------------- Wal-Mart Stores, Inc. is cooperating with the United States Consumer Product Safety Commission (CPSC) by voluntarily recalling 64,000 fabric lanterns. The fabric is not flame retardant and can be ignited by the lantern's votive candle, posing a fire hazard. No injuries have yet been reported. The cylinder-shaped lanterns are 7 1/2-inches high and 6-inches wide. Beige fabric with red and green floral designs covers the lanterns. Wal-Mart stores nationwide sold the lanterns from December 2002 through March 2003 for about $7. For more details, contact the Company by Phone: (800) 562-9974 between 7 a.m. and 9 p.m. CT Monday through Friday or visit the firm's Website: http://www.walmartstores.com. WASHINGTON: Court Asks Attorney To Rewrite Environmental Lawsuit ---------------------------------------------------------------- Federal Judge John Luster of Kootenai County District Court ordered the revision of a lawsuit filed in January 2002, on behalf of about 100,000 people living in the Coeur d'Alene River Basin and possibly into the Spokane River Basin. The suit names as defendants: (1) Asarco Inc., (2) Coeur d'Alene Mines Corporation, (3) Government Gulch Mining Co., (4) Hecla Mining Co., (5) Sunshine Mining Co., (6) Sunshine Precious Metals Inc. and (7) Union Pacific Railroad Co. Prominent class action lawyer Steve Berman filed the suit, which seeks compensation for the people whose property values have declined as a result of mining contamination. The plaintiffs also want mining companies to pay for medical monitoring to identify and treat health problems caused by the release of lead and other heavy metals. Judge John Luster asked Mr. Berman to rewrite the suit, saying it is not specific about allegations against each defendant and the damages sought. It is the second time Judge Luster has ruled the complaint is inconsistent with Idaho rules. "The complaint again is not in an appropriate form," Judge Luster said. "I could dismiss it in its entirety." Mr. Berman said the amended complaint seeks medical monitoring as a form of damages rather than as a cause of action, but Judge Luster disagreed. "The amended complaint is a thinly disguised attempt to gain admissions," he said. XTO ENERGY: OK Court Approves Settlement of Gas Royalties Suit -------------------------------------------------------------- The District Court of Dewey County, Oklahoma granted approval to the settlement proposed by XTO Energy, Inc. to settle a class action filed by royalty owners of natural gas wells in Oklahoma. The plaintiffs allege that since 1991, the Company has underpaid royalty owners as a result of reducing royalties for improper charges for production, marketing, gathering, processing and transportation costs and selling natural gas through affiliated companies at prices less favorable than those paid by third parties. The parties have entered into a settlement agreement under which the trust's portion of the settlement will be approximately $850,000, or 2.1 cents per unit. This amount reflects the trust's 80% share of the settlement relating to production from the underlying properties for periods since December 1, 1998. Assuming that no appeal is filed, and based on the Company's anticipated settlement payment date of July 2003, this amount will reduce the trust's August 2003 distribution, which is paid to unitholders in September. The effect of the settlement on future distributions for other months will not be significant. *Is Big Tobacco Heading Toward Another Round Of Trouble? ------------------------------------------------------- The tobacco industry -- that is, the big tobacco companies -- appears, according to the analysts, to be under an almost constant legal attack, according to a report appearing in the Financial Times. Philip Morris USA perhaps helped the image of legal attack and economic collapse to connect in the minds of appraisers of the tobacco scene, when the company raised last month, for the first time, the threat of bankruptcy in the Big Tobacco industry. As the watchers of this latest battle probably still recall, an Illinois judge in Madison County, Judge Nicholas Byron, awarded $10.1 billion in damages against Philip Morris in a new kind of class action. The suit alleged Philip Morris had deceived smokers into thinking "light" or low-tar cigarettes were safer than regular ones. Before the company filed its appeal, Judge Byron ordered it to post a $12 billion bond to demonstrate that it would be able to pay the damages if an appeal failed. Then followed a period of determined professions by Philip Morris that it might have to seek the protection of a Chapter 11 bankruptcy, plus an outcry combined with some pressure on the Illinois court, from the 46 states, warned by Philip Morris that it might not be able to make the required installment payments under the 1998 Master Settlement Agreement. The majority of these states had "hooked" their yearly budgets to the infusions of tobacco money, a "peculiar" alliance given the fact the 1998 Master Settlement Agreement MSA) arose out of a class action in which the states sought damages for health care costs they had paid for the care of people suffering from ills attributed to tobacco. Judge Byron, in the midst of all these possible woes, eventually negotiated with Philip Morris down to a $7 billion figure for the appeal bond. The episode further undermined faith in a sector of the economy until recently seen as a "safe haven" by investors fleeing from technology and telecommunications stocks. Tobacco analyst Bonnie Herzog, at Salomon Smith Barney, says investors used to accept the legal risk of investing in tobacco companies because of their dependable earnings growth. However, not anymore, said Ms. Herzog. "We have dealt with litigation (in the tobacco industry) for a number of years, but we always had the business fundamentals to fall back on. Today, those are questionable," Ms. Herzog said. The analysts are less concerned about tobacco companies outside the United States, where the threat of litigation is lower. The origin of the US industry's woes can be traced back to the MSA of 1998, when in order to settle lawsuits brought by the states over the costs of caring for sick smokers, the big manufacturers agreed to pay $246 billion to the 50 states over 25 years and to accept curbs on advertising. Four of the states settled individually; 46 settled in the course of a class action. The MSA left another legacy for cigarette makers, one which became the source of litigation. As part of the MSA, the companies were ordered to make public thousands of pages of damaging internal documents. These show how the companies strove to cover up smoking's harmful effects. The documents fuelled a wave of litigation, including from individual smokers who held the big producers responsible for their illnesses, to the class action brought by smokers claiming tobacco companies deceived them about the safety of "light" cigarettes. Since the MSA, the industry has lost nine cases brought by individuals, compared with losing only three before the MSA. The most recent loss, in a case brought by 64- year-old Betty Bullock in California, resulted in an initial punitive damages award of $28 billion, which the judge later reduced to $28 million. The "light" cases, say some experts, may pose a bigger threat. Two more have been certified as class action in Florida and Massachusetts, and RJ Reynolds also faces a similar case to that lost by Philip Morris. "These are pretty straightforward cases to prove," said Richard Daynard, chair of the Northeastern University School of Law's tobacco products liability project, which has spearheaded tobacco lawsuits. "The legal environment for the tobacco industry is probably worse than ever," said Professor Daynard. William Ohlemeyer, vice president and associate general counsel of Philip Morris USA, disagrees with the doom and gloom legal prophecies. Mr. Ohlemeyer argued that a recent US Supreme Court award decision setting limits on punitive damages awards may help the industry. "The headlines notwithstanding, I think the risk is static if not reduced," said Mr. Ohlemeyer. "The litigation environment has not been one in which new and uncertain risks have arisen over the past six months." The market's perception of the risks surrounding tobacco, however, has increased. The credit-rating agencies, which cut the credit ratings of Altria, Philip Morris's parent company, to only three notches above junk in the midst of the Illinois case, have left them there. Another area in which investors are aware of peril in the tobacco industry relates to the instability of its price structure and the tumbling of earnings. After ratcheting up their prices in recent years to cover the costs of the $246 billion 1998 legal settlement (the MSA) with the state governments, as well as large increases in excise taxes, the big four manufacturers -- Philip Morris, RJ Reynolds, Brown & Williamson and Loews Group's Lorillard -- are losing market share to the discount brands, and they are cutting prices. Profits are decreasing as a result. Philip Morris last month reported first-quarter operating income down 40 percent. At RJR and Brown and Williamson, profits halved. A decade ago, the threat came from within: the discount brands, such as Philip Morris's Basic and RJR's Doral, largely were made by the big manufacturers themselves, and the big four still controlled close to 100 percent of the market. This time, the big four are fighting a new breed of "deep discount" cigarettes from small manufacturers and importers that scarcely existed five years ago. Deep discount brands such as Bronco, Roger and USA Gold, now control about 10 percent of the market. For the cigarette giants, used to measuring changes in market share in tenths of a percentage point, that is a seismic shift. "I have not seen anything like it in my lifetime," said Jack Maxwell, an industry consultant for 40 years who prepares market share statistics for big manufacturers. "The industry's price structure is under attack." Louis Camilleri, Altria's chairman, said that price increases necessitated by the MSA also caused volumes to decline. Therefore, the big cigarette makers had to raise prices further to compensate. Mr. Camilleri added that the real reason for the growth of the deep discounters was that many had remained outside the MSA and so they have enjoyed a considerable cost advantage. "Clearly, we created the possibility of people undercutting us; and, regrettably, what we had not factored in was the manufacturers (the deep discounters) undercutting us by not paying what they are supposed to be paying." All companies selling cigarettes in the United States are supposed to either join the MSA or pay a similar amount per cigarette into escrow accounts administered by the states in order to cover any future legal liabilities. The states, however, have been slow to enforce the requirements, thus leaving the discounters unimpeded by the legal liabilities the big four must face; and, therefore, more able to institute the deep discounts, which the big four must face as a reality in the market. The MSA costs are a constant for many years, and other than continue to fight cases as they come up, there is little the big producers can do to defuse the legal threat. They must look at these costs and then calculate how can they combat the discounters and rebuild their margins. Some answers are that the states are stepping up action to ensure small manufacturers comply with the MSA: 24 states have now passed enforcement legislation, and RJ Reynolds expects 40 to have done so by year's end. That will remove some of the small manufacturers' cost advantage. The second hope is that an improvement in the economy should reduce the states' budget deficits and obviate the need for further excise tax increases. Philip Morris is now lobbying hard for the tobacco industry to be regulated by the US Food and Drug Administration. That could impose compliance costs on the industry that smaller manufacturers would find more difficult to swallow. Philip Morris also is preparing to unveil later this year a "reduced risk" cigarette that would be safer to smoke. If that is a success, it could win back smokers and put further pressure on the cut-price manufacturers. That kind of innovation may help the big manufacturers' efforts to neutralize the cut-price threat from their discounted rivals. However, the analysts say the tobacco makers may also have to accept that they have lost much of their ability to differentiate themselves through clever marketing, at which Philip Morris, for example, long excelled. Under the MSA, the big four agreed to stop advertising on radio, television and billboards and in most magazines. That means price may continue to be the important, the primary, weapon. New Securities Fraud Cases ELECTRO SCIENTIFIC: Marc Henzel Commences Securities Suit in OR --------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the District of Oregon on behalf of all purchasers of the common stock of Electro Scientific Industries, Inc. (NasdaqNM: ESIO) from September 17, 2002 through March 30, 2003, inclusive. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between September 17, 2002 and March 20, 2003, thereby artificially inflating the price of Electro Scientific securities. The complaint alleges that these statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (1) that the Company had reported artificially inflated financial results for the quarters ended August 31, 2002 and November 30, 2002; (2) that the Company was improperly accounting for sales, thereby overstating its sales figures and, in addition thereto, was understating the cost of sales, in violation of Generally Accepted Accounting Principles (GAAP) and its own revenue recognition policies; (3) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (4) as a result of the foregoing, it was not true that the Company's financial statements published during the Class Period contained ``all adjustments ... necessary for a fair presentation'' of the Company's financial position. On March 20, 2003, after the close of the market, Electro Scientific issued a press release announcing that it would be restating its financial statements for the first and second fiscal quarters. In response to this announcement, the price of Electro Scientific common stock dropped precipitously falling from $15.17 per share to $12.51 per share. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 FLEMING COMPANIES: Marc Henzel Launches Securities Lawsuit in TX ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Eastern District of Texas on behalf of purchasers of Fleming Companies, Inc. (NYSE: FLM) securities in connection with Fleming's June 17, 2002 public offering. The complaint charges Fleming's officers, directors and its underwriters and auditors with violations of the Securities Act of 1933. Fleming was the largest U.S. distributor of consumer package goods in the wholesale grocery industry, where it operated a network of "multi-tier" distribution centers throughout the United States and western Canada. The complaint alleges that in connection with the Offering, Fleming issued 9.2 million shares of common stock at $19.40 per share and $200 million in Notes. The Fleming Securities were sold pursuant to a Registration Statement and Prospectus, as amended, which contained false and misleading statements of material fact and omitted to state material facts necessary in order to make the statements made therein not misleading. The Registration Statement materially misstated the Company's financial results of operation by, among other things, including financial statements that misrepresented and/or omitted the true facts, including: (1) That Fleming was taking unauthorized deductions on invoices received from vendors which reduced recognition of expenses associated with the cost of goods sold and understated accounts payable; (2) That Fleming had lengthened the amortization period for long-term assets by increasing the capitalization rate for interest costs and by lowering the allowance for credit losses, in violation of GAAP. The Registration Statement also represented that Fleming's retail operations were profitable at a time when the Company was, in fact, losing money on its retail business and was in the process of divesting itself of those operations. As a result of these misrepresentations, the Fleming Securities were inflated in connection with the Offering, and plaintiff and other persons who purchased the Fleming Securities in the Offering paid inflated prices and were damaged thereby. On July 30, 2002, less than two months after defendants sold more than $378 million worth of the Fleming Securities to the public, Fleming issued a release announcing that, contrary to the prior positive statements contained in the Registration Statement, defendants were in fact evaluating strategic alternatives for dealing with the Company's money-losing retail operations. Recently, Fleming filed for protection under the Bankruptcy Code. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 GAINSCO INC.: Marc Henzel Launches Securities Lawsuit in S.D. FL ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Southern District of Florida, on behalf of purchasers of Gainsco, Inc. (OTC Bulletin Board: GNAC) publicly traded securities during the period between November 17, 1999 and February 7, 2002, inclusive. The complaint alleges that during the class period, defendants issued false and misleading statements to the marketplace that artificially inflated the price of Gainsco's shares. Specifically, on November 17, 1999, Gainsco, an insurance holding company, announced that it would acquire Tri-State, Ltd.'s privately-owned insurance operation which specialized in nonstandard passenger automobile insurance. According to CEO Anderson, the Tri-State acquisition marked the Company's expansion of its passenger auto insurance business that began with Gainsco's earlier purchase of Miami-based Lalande Group. Mr. Anderson also told the public that the Company would integrate Tri- State's business with Lalande Group's underwriting and claims systems "to maximize service and cost efficiency." The transaction was expected to be "minimally accretive to earnings in 2000." The Company's second-quarter Form 10-Q, filed in August 2000, stated that Gainsco had paid $1.15 million to Tri-State's former owners "based on a conversion goal and specific profitability targets," and falsely lulled the investment community into believing that Tri-State was profitable, when in fact it was not. Gainsco continued to issue highly positive statements throughout 2000 and 2001 and assured the public that it was resolved to "maintain a strong, disciplined balance sheet." On August 9, 2001, however, the Company announced that it was selling the agency operations of Tri-State and would take a $5.1 million write off from its original $6.0 million investment in Tri-State. This, however, was only a partial disclosure of Tri- State's problems and led investors to believe the worst was behind the Company. On August 14, 2001, the Company announced that it would sell Tri- State to its president, Herb Hill, for $900,000. On February 7, 2002, the end of the class period, Gainsco announced that it would "discontinue writing commercial lines insurance business due to adverse claims development and unprofitable results." Gainsco's stock declined substantially on the news. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 REGENERON PHARMACEUTICALS: Marc Henzel Launches Stock Suit in NY ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of purchasers of the securities of Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) between March 28, 2000 and March 30, 2003, inclusive, against the Company and: (1) Leonard S. Schleifer (President and CEO), (2) George D. Yancopoulos (Chief Scientific Officer), (3) Hans-Peter Guler (VP of Clinical Studies), (4) Neil Stahl (VP) and (5) Murray A. Goldberg (CFO) The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between March 28, 2000 and March 30, 2003. Regeneron is a biopharmaceutical company that discovers, develops and intends to commercialize therapeutic drugs for the treatment of serious medical conditions. During the class period, Regeneron initiated Phase II clinical trials for its diet drug AXOKINE for use in obese patients. The complaint alleges that the Defendants claimed that AXOKINE would help patients lose weight better than a placebo over a year. However, more than two-thirds of the 1,467 patients on the medicine in the clinical trials developed antibodies to it after three months, which made the medicine less effective. Patients taking AXOKINE, including those who developed antibodies, lost an average 6.2 pounds, compared with 2.6 pounds for those on a placebo, which the Company admits is similar to results dieters get with already available pills. Before results were released, defendants had led the public to believe that AXOKINE would have more than $500 million in annual sales. On March 31, 2003, Regeneron admitted AXOKINE lost effectiveness in about 70% of patients in a study. On this news, the biotechnology company's shares plunged 57%, a market cap loss of more than $500 million. However, even defendants' admission was false, as, in fact, defendants manipulated the results of the study. In truth, 73.5% of the patients developed antibodies to the drug. As a result of the defendants' false statements, Regeneron's stock price traded at inflated levels during the class period, increasing to as high as $40 on December 18, 2000, whereby the Company and its top officers and directors sold more than $430 million worth of their own securities. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182. SYMBOL TECHNOLOGIES: Stull Stull Commences Securities Suit in NY ---------------------------------------------------------------- Stull Stull & Brody initiated a securities class action in the United States District Court for the Eastern District of New York, on behalf of all persons and entities that acquired securities of Symbol Technologies, Inc. (NYSE: SBL) in exchange for securities of Telxon Corporation on or about November 30, 2000 pursuant to the merger of Telxon and Symbol against Symbol and nine of Symbol's current and former directors and officers: (1) Tomo Razmilovic, (2) Kenneth V. Jaeggi, (3) Robert W. Korkuc, (4) Jerome Swartz, (5) Harvey P. Mallement, (6) George Bugliarello, (7) Leo A. Guthart, (8) Charles B. Wang, and (9) James H. Simons The complaint asserts that Defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act. Plaintiff alleges in essence that the financial statements of Symbol as of September 30, 2000, that were contained in the Registration Statement and Joint Proxy/Prospectus for the merger of Telxon and Symbol, were materially false and misleading and not in conformity with Generally Accepted Accounting Principles (GAAP). On April 18, 2002, Symbol disclosed that the Securities and Exchange Commission was conducting a formal inquiry into Symbol's fiscal year 2000 and 2001 financial statements. On August 13, 2002, Symbol announced that it might be required to restate its financial results for all of 2000 and 2001. Subsequently, on February 13, 2003, the Company announced that the scope of its accounting problems was far greater than previously disclosed going back to 1999. In a press release, Symbol stated "that it may have to restate its revenue and income" for the years 1999 through 2002. In particular, Symbol indicated, among other things, that there would be a net reduction in revenue and income for fiscal years 1999 and 2000. It was reported on March 13, 2002 that Symbol would have to restate revenue and income for 1999 and 2000 by as much as $140 million a year. Plaintiff alleges that Symbol's undisclosed violations of GAAP that occurred prior to and at the time of the merger, as well as the false and misleading financial statements and other representations included in the Registration Statement, damaged Telxon securities holders who received Symbol securities in the merger. For more details, contact Tzivia Brody by Mail: 6 East 45th Street New York NY 10017 by Phone: 1-800-337-4983, by Fax: 212/490-2022 or visit the firm's Website: http://www.ssbny.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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