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/raid1/www/Hosts/bankrupt/CAR_Public/030515.mbx C L A S S A C T I O N R E P O R T E R Thursday, May 15, 2003, Vol. 5, No. 95 Headlines ASHFORD.COM: NY Court Refuses To Dismiss Securities Fraud Suit ATALANTA SOSNOFF: Investors File Suit Over Sosnoff Stock Offer CITIZENS INC.: Firm Growth Targets Hindered By Possible Lawsuit CONCORD EFS: Asks For Dismissal of Consumer Fraud Lawsuit in TN CONCORD EFS: Officers, Directors Face Investors' Lawsuit in TN CONCORD EFS: Faces TN Securities Fraud Suit V. First Data Merger CONCORD EFS: Plaintiffs File Amended Derivative Suit in TN Court DOMINION RESOURCES: Named As Defendant in D.C. Antitrust Lawsuit ENTERASYS NETWORKS: Discovery Commences in NH Securities Lawsuit ENTERASYS NETWORKS: Court To Hear Motion To Dismiss Stock Suit FIRST DATA: Fairness Hearing Scheduled in August FIRST DATA: Fairness Hearing For Settlement Set April 2004 in NY GREAT ATLANTIC: Asks NY Court To Decertify Overtime Wage Lawsuit GREAT ATLANTIC: NY Court Approves Settlement, Wage Suits Dropped GREAT ATLANTIC: Asks NJ Court To Dismiss Securities Fraud Suit GREAT ATLANTIC: To Appeal Certification of Franchisees' Suit HECLA MINING: ID Court Dismisses Coeur d'Alene Residents' Suit HONEYWELL INTERNATIONAL: Fails To Reach Settlement For NJ Suit HONEYWELL INTERNATIONAL: Faces Suit for ERISA Violations in NJ MATRIXONE INC.: NY Court Dismisses In Part Securities Fraud Suit OKLAHOMA: Judge Okays Settlement Between Tulsa, Black Officers SCIENTIFIC ATLANTA: Named As Defendant in MO Charter Fraud Suit SCIENTIFIC ATLANTA: GA Court Allows Interlocutory Appeal in Suit SELECT COMFORT: Court Grants Final Suit Settlement Approval TOBACCO LITIGATION: Philip Morris Asks Court To Hear Lights Suit UICI: Texas Court Grants Final Approval To Securities Settlement UICI: Investors Commence Lawsuit Over Trade Practice in TX Court WATTS INDUSTRIES: NCHG Lodges Suit Over Commercial Valve Models WELLS REAL ESTATE: Court Refuses To Compel Arbitration in Suit New Security Fraud Cases ALLOU HEALTHCARE: Glancy & Binkow Launches Securities Suit in NY AVERY DENNISON: Brian Felgoise Lodges Securities Suit in C.D. CA ********* ASHFORD.COM: 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 Ashford.com, Inc., several of its officers and directors, and various underwriters of the Company's initial public offering. The suit, filed on behalf of purchasers of the Company's common stock during various periods beginning on September 22, 1999, the date of the Company's initial public offering, allege that the Company's prospectus, included in its Registration Statement on Form S-1 filed with the Securities and Exchange Commission, was materially false and misleading because it failed to disclose, among other things, certain fees and commissions collected by the underwriters or arrangements designed to inflate the price of the common stock. The plaintiffs further allege that because of these purchases, the Company's post-initial public offering stock price was artificially inflated. As a result of the alleged omissions in the prospectus and the purported inflation of the stock price, the plaintiffs claim violations of Sections 11 and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. The suit has been consolidated with similarly consolidated cases filed against 308 other issuer defendants for the purposes of pretrial proceedings. The claims against the Company's officers and directors were dismissed in exchange for tolling agreements which permit the re-filing of claims against officers and directors at a later date. A motion to dismiss filed on behalf of all issuer defendants, including the Company, was denied in all aspects relevant to Ashford on February 19, 2003. The Company believes that it has defenses against these actions, and that the ultimate disposition of these matters will not have a material effect on its business, financial condition or results of operations. ATALANTA SOSNOFF: Investors File Suit Over Sosnoff Stock Offer -------------------------------------------------------------- Atalanta Sosnoff Capital Corporation faces a consolidated securities class action filed in the Court of Chancery in Delaware after the Company's December 2002 announcement that it had received a proposal from Martin Sosnoff to acquire the approximately 17% of the Common Stock of the Company that he does not own in a "going private" transaction at a price of $12.50 per share, subject to adjustment to reflect changes in the value of the Company's portfolio of marketable securities from current levels from Martin Sosnoff, Chairman of the Board and Chief Executive Officer. The suit also names as defendants the Company's directors, and Mr. Sosnoff. Each of the plaintiffs seeks to enjoin a transaction arising out of Mr. Sosnoff's proposal and alleges in generalized form breaches of fiduciary duty by him and the directors. The Company believes these actions are without merit and intends to vigorously defend them. CITIZENS INC.: Firm Growth Targets Hindered By Possible Lawsuit --------------------------------------------------------------- Citizens Inc., an Austin, Texas-based insurance holding company, has told investors it has some ambitious growth targets, like tripling its assets to $1 billion and tripling annual sales to $250 million by 2010, the Austin American-Statesman reports. To reach these goals, Citizen has been buying up smaller insurance companies while trying to boost sales, but both strategies have suffered a couple of recent setbacks. The 3rd Court of Appeals in Austin on April 24, upheld the certification of a potentially costly class action against the Company for policies it sells in Latin America, one of the company's biggest markets. The appeals court ruled only on permitting a class of plaintiffs to sue Citizens, not on the merits of the suit itself. A group of Colombians sued Citizen in 2001, accusing the company of selling unregulated life insurance, charging exorbitant premiums for severely restricted coverage. The lawsuit also claims that the policies are actually securities because they are structured to pay dividends, which can be converted into Citizens stock. The class could contain as many as 12,000 plaintiffs and damages could run into the hundreds of millions of dollars, according to court records. Citizens also is facing resistance from its most recent acquisition target, First American Capital Corporation, a small, privately held life insurance company based in Topeka, Kansas. First American rejected Citizens' buyout offer last year, prompting Citizens to nominate its own slate of candidates to take control of First American's board of directors. First American shareholders will elect board members June 2. Acquiring First American "would be a nice complement to our business, but it is not a make-or-break situation one-way or the other," Citizens President Mark Oliver said. Mr. Oliver also said Citizens expects the Texas Supreme Court to reject the class-action status for the Latin-American insurance case. The nine-member court, in recent years, has clamped down on the certification of classes of plaintiffs. Still, both developments threaten key strategies of Citizens, and, consequently its stock price has "languished" for some two years. When the company moved its listing from the American Stock Exchange to the New York Stock Exchange on August 22, its share price declined by 48 percent. Citizens recently boosted sales through acquisitions. In 2002, 14 percent of Citizens' $83 million in sales were from companies it acquired. The company has picked up pace this year, buying two small insurance holding companies in the first quarter and reaching a not-yet-finalized agreement to acquire a third. Mr. Oliver has said that the First American board is running the company "out of its own self-interest," not in the interests of the shareholders. The two companies broke off talks early this year after First American said it wanted to see whether any other companies would make a bid. Mr. Oliver contends that the current First American board has little insurance experience. Citizens, by contrast, is led by executives with decades in the industry. Two former First American executives are helping Citizens. They left the company last year and have put their shares in First American under the control of Citizens officials, who used the shares to put up its own slate of directors, as indicated above. The June 2 date when the shareholders elect board members is approaching. Mr. Oliver said the board takeover is an anomaly. "Opposing a board is not a typical approach for us. But we are not in this to lose." CONCORD EFS: Asks For Dismissal of Consumer Fraud Lawsuit in TN --------------------------------------------------------------- Concord EFS, Inc., EFS National Bank, and John Doe Corporations face a class action filed in the United States District Court for the Western District of Tennessee, alleging that the Company changed fees and charges without providing the requisite notice, charged merchants for transactions that never occurred, and failed to route payments in accordance with the plaintiffs' instructions. The plaintiffs allege: (1) fraud, (2) breach of contract, (3) conversion, (4) causes of action under the Tennessee Consumer Protection Act and (5) causes of action under the Racketeer Influenced and Corrupt Organizations Act (RICO) The class plaintiffs seek to certify consists of all merchant customers of EFS National Bank, Concord, or John Doe Corporations, who were subject to charges that were not fully disclosed on their statements, charges for transactions which the merchant never undertook, and/or charges in excess of the amount agreed upon in their contracts. The Company has moved to dismiss all claims, but the court has not yet ruled on the motion. Although this matter is in the preliminary stages, the Company believes that the claims against it are without merit and intends to vigorously defend against all claims. CONCORD EFS: Officers, Directors Face Investors' Lawsuit in TN -------------------------------------------------------------- Concord EFS, Inc.'s current and former officers and directors face two class actions filed in the Circuit Court of Tennessee for the Thirtieth Judicial District at Memphis. The complaints generally allege breaches of the defendants' duty of loyalty and due care in connection with the defendants' alleged attempt to sell Concord without maximizing the value to shareholders in order to advance the defendants' alleged individual interests in obtaining indemnification agreements related to the securities and other derivative litigation discussed above. The complaints seek class certification, injunctive relief directing the defendants' conduct in connection with an alleged sale or auction of the Company, reasonable attorneys' fees, experts' fees and other costs and relief the court deems just and proper. These complaints have recently been consolidated into one action and transferred to the division of the Shelby County Circuit Court in which the Tennessee consolidated state-court derivative action is pending. Although these matters are in the very preliminary stages, the Company believes that the claims against its officers and directors are without merit and intends to vigorously contest these claims. CONCORD EFS: Faces TN Securities Fraud Suit V. First Data Merger --------------------------------------------------------------- Concord EFS, Inc., certain of its current and former officers and directors and First Data Corporation face a purported class action filed in the Chancery Court for Shelby County, Tennessee. The complaint contains allegations regarding the individual defendants' alleged insider trading and alleged violations of securities and other laws and alleges that this alleged misconduct reduced the consideration offered to the Company's shareholders in the proposed merger between Concord and First Data. The complaint seeks class certification, attorneys' fees, expert fees, costs and other relief the court deems just and proper. The complaint seeks an order enjoining consummation of the merger, rescinding the merger if it is consummated and setting it aside or awarding rescissory damages to members of the putative class, and directing the defendants to account to the putative class members for unspecified damages. Although this matter is in the very preliminary stages, the Company believes that the claims are without merit and intends to vigorously contest these claims. CONCORD EFS: Plaintiffs File Amended Derivative Suit in TN Court ---------------------------------------------------------------- Plaintiffs in the stockholder derivative suits filed against Concord EFS, Inc. and certain of its current and former directors and officers filed an amended consolidated suit in the Circuit Court for the Thirtieth Judicial District at Memphis. The Company also faces a securities class action in the United States District Court for the Western District of Tennessee. The lawsuits raise allegations relating to the Company's financial performance between March 2001 and September 2002, changes in the price of the Company's common stock during that time, alleged failures to disclose material facts, and alleged insider trading and breaches of fiduciary duties by certain officers and certain directors. On April 21, 2003 the plaintiffs in the Tennessee state court derivative action filed a consolidated complaint which adds allegations that the defendants arranged the proposed merger with First Data at a below market price in return for indemnification against alleged prior wrongdoing and for other benefits to them personally. The lawsuits seek unspecified compensatory and punitive damages, attorneys' fees, and other relief. In addition, the Tennessee state court derivative action seeks an injunction against the proposed merger. Although these matters are in the preliminary stages, the Company believes that the claims against it and its directors and officers are without merit and intends to vigorously defend against all claims. Any losses incurred by the Company in connection with this litigation may be covered in part by the Company's directors' and officers' liability insurance. DOMINION RESOURCES: Named As Defendant in D.C. Antitrust Lawsuit ---------------------------------------------------------------- Dominion Resources, Inc. faces an antitrust class action filed by Triad Energy Resources Corporation and other parties filed in the United States District Court for the District of Columbia. The suit names a number of defendants, including Virginia Power and Cove Point LNG Limited Partnership, an affiliate of CNG. The complaint seeks compensatory damages for alleged violations of the Sherman Act and tortious interference with contractual and business relationships as a result of activities involving the storage and transportation of natural gas. No trial date has been set. The outcome of the proceeding, including an estimate as to any potential loss, cannot be predicted at this time. ENTERASYS NETWORKS: Discovery Commences in NH Securities Lawsuit ---------------------------------------------------------------- Parties in the consolidated securities class action filed against Enterasys Networks, Inc. and certain of its officers and directors in the United States District Court for the District of New Hampshire are now engaged in discovery. The complaint alleges that the Company and several of its officers and directors disseminated materially false and misleading information about the Company's operations and acted in violation of Section10(b) and Rule10b-5 of the Exchange Act during the period between March 3, 1997 and December 2, 1997. The complaint further alleges that certain officers and directors profited from the dissemination of such misleading information by selling shares of the Company's common stock during this period. The complaint does not specify the amount of damages sought on behalf of the class. In a ruling dated May 23, 2001, the court dismissed this complaint with prejudice. The plaintiffs appealed that ruling to the First Circuit Court of Appeals, and, in a ruling issued on November 12, 2002, the Court of Appeals reversed and remanded the case to the court for further proceedings. On January 17, 2003, the defendants filed an answer denying all material allegations of the complaint. By order of the court dated March 18, 2003, the parties are now engaged in limited discovery. If the plaintiffs prevail on the merits of this case, the Company could be required to pay substantial damages. ENTERASYS NETWORKS: Court To Hear Motion To Dismiss Stock Suit -------------------------------------------------------------- The United States District Court for the District of New Hampshire is set to hear the motion for the dismissal of the securities class action filed against Enterasys Networks, Inc. and: (1) former chairman and chief executive officer Enrique Fiallo, (2) former chief financial officer Robert Gagalis, (3) former Cabletron Systems, Inc. chief executive officer and (4) former Cabletron chief financial officer David Kirkpatrick The amended complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 thereunder. Specifically, plaintiffs allege that during periods spanning from June 28, 2000 and August 3, 2001 and in the period between August 6, 2001 and February 1, 2002, defendants issued materially false and misleading financial statements and press releases that overstated the Company's revenues, income, and cash, and understated the Company's net losses, because the Company purportedly recognized revenue in violation of Generally Accepted Accounting Principles (GAAP) and the Company's own accounting policies in connection with various sales and/or investment transactions. On February 10, 2003, the Company filed a motion to dismiss the amended complaint. A hearing on this motion has been scheduled to convene during the second quarter of fiscal year 2003. If plaintiffs prevail on the merits of the case, the Company could be required to pay substantial damages. FIRST DATA: Fairness Hearing Scheduled in August ------------------------------------------------ Fairness hearing for final approval of the settlement of a class action filed against First Data Corporation, Western Union Financial Services, Inc. and Orlandi Valuta has been set for August 4, 2003 in California State Court. The plaintiffs claimed that an undisclosed "commission" is charged by the Company or its subsidiaries when consumers transmit money to Mexico, in that the exchange rate used in these transactions is less favorable than the exchange rate that the Company or its subsidiaries receive when they trade dollars in the international money market. The plaintiffs asserted that the Company and its subsidiaries violated the law by failing to disclose this "commission" in advertising and in the transactions. The putative class consists of those persons who have used Western Union's or Orlandi Valuta's services after August 31, 1999 to transmit money from California to Mexico, or who have used the Western Union or Orlandi Valuta money transfer services to transmit money from California to Mexico and have opted out of one of the nationwide settlements of similar actions previously filed against the Company and its subsidiaries. The plaintiffs seek injunctive relief, imposition of a constructive trust, an accounting, restitution, compensatory and statutory damages alleged to be in excess of $500,000,000, statutory penalties in an amount of $1,000 for each offense, punitive damages, attorneys' fees, prejudgment interest, and costs of suit. The parties to this action have reached a proposed settlement of all claims that includes the following: (1) Western Union and Orlandi Valuta will issue coupons for discounts on future money transfer transactions from California to Mexico to class members who transferred money from California to Mexico between January 1, 1987 and March 31, 2000; (2) the Company also will make a payment of $1.5 million to be distributed to charitable organizations that assist the Mexican and Mexican-American communities in the State of California; (3) injunctive relief requiring Western Union and Orlandi Valuta to make additional disclosures regarding their foreign exchange practices and to include a provision in new and renewed contracts with agents in Mexico prohibiting the imposition of an undisclosed charge on recipients of money transfers; and (4) reasonable attorneys' fees, expenses and costs as well as the costs of settlement notice and administration On October 7, 2002, the court issued an order preliminarily approving the proposed settlement and enjoining the prosecution of any action that asserts claims that would be resolved by the settlement. If the settlement is not approved, the Company intends to vigorously defend this action. FIRST DATA: Fairness Hearing For Settlement Set April 2004 in NY ---------------------------------------------------------------- Fairness hearing for the settlement of a consolidated class action filed against First Data Corporation and its subsidiary Western Union Financial Services, Inc. has been set for April 9,2004 in the United States District Court for the Eastern District of New York The suit asserts claims on behalf of a putative worldwide class (excluding members of the settlement class of similar actions previously filed against the Company and its subsidiaries). The plaintiffs claim that the Company, Western Union and Orlandi Valuta impose an undisclosed "charge" when they transmit consumers' money by wire either from the United States to international locations or from international locations to the United States, in that the exchange rate used in these transactions is less favorable than the exchange rate that Western Union and Orlandi Valuta receives when it trades currency in the international money market. Plaintiffs further assert that Western Union's failure to disclose this "charge" in the transactions violates 18 U.S.C. section 1961 et seq. and state deceptive trade practices statutes, and also asserts claims for civil conspiracy. The plaintiffs seek injunctive relief, compensatory damages in an amount to be proven at trial, treble damages, punitive damages, attorneys' fees, and costs of suit. The parties to this action reached a proposed settlement of all claims that includes the following: (1) Western Union (and, with respect to money transfer transactions from the U.S. other than California to Mexico, Orlandi Valuta) will issue coupons for discounts on future international money transfer transactions to customers who transferred money from the US to certain countries other than Mexico between January 1, 1995 and approximately March 31, 2000 (for certain services, Western Union will issue coupons for transactions conducted as late as December 31, 2001), from anywhere in the US other than California to Mexico between September 1, 1999 and March 31, 2000 (again, for certain services, Western Union will issue coupons for transactions conducted as late as December 31, 2001), from countries other than Canada to the US between January 1, 1995 and March 31, 2000, and from Canada to the US between January 1, 1995 and approximately July 31, 2002; (2) injunctive relief requiring Western Union and Orlandi Valuta to make additional disclosures regarding their foreign exchange practices; and (3) reasonable attorneys' fees, expenses and costs as well as the costs of settlement notice and administration The Court has granted conditional preliminary approval of the proposed settlement, granted conditional approval of the proposed form and manner of class notice. If the settlement is not approved, the Company intends to vigorously defend this action. GREAT ATLANTIC: Asks NY Court To Decertify Overtime Wage Lawsuit ---------------------------------------------------------------- The Great Atlantic & Pacific Tea Co., Inc. asked the United States District Court in New York to decertify the class action filed against it by four present and former employees of The Food Emporium for unpaid wages and overtime. In April 2000, the judge granted class action status to the case covering approximately 82 stores in 9 counties in the New York metropolitan area. Approximately 840 current and former full and part-time employees of The Food Emporium and A&P opted into the class. GREAT ATLANTIC: NY Court Approves Settlement, Wage Suits Dropped ---------------------------------------------------------------- The United States District Court for the Southern District of New York approved the settlement proposed by Great Atlantic & Pacific Tea Co., Inc. to settle two overtime wage lawsuits. The Attorney General of the State of New York filed the first suit in New York Supreme Court, County of New York, alleging that the Company and its subsidiary Shopwell, Inc., together with its outside delivery service Chelsea Trucking, Inc., violated New York law by failing to pay minimum and overtime wages to individuals who deliver groceries at one of the Food Emporium's stores in New York City. The complaint sought a determination of violation of law, an unspecified amount of restitution, an injunction and costs. A purported class action was filed on January 13, 2000 in the United States District Court for the Southern District of New York against the Company, Shopwell, Inc. and others by Faty Ansoumana and others. The federal suit made similar minimum wage and overtime pay allegations under both federal and state law and extends the allegations to various stores operated by the Company. In May 2001, the federal court granted plaintiffs' motion for certification of a class action. On September 18, 2002, the plaintiffs, the Attorney General and the Company entered into a Stipulation and Agreement of Settlement pursuant to which the Company would pay approximately $3.3 million in full settlement of the actions and would receive releases from the class and the Attorney General. The actions would be dismissed with prejudice. On January 23, 2003, the federal court entered an order and final judgment approving the settlement and dismissing the action against the Company. On March 17, 2003, the Attorney General and the Company filed a Stipulation of Discontinuance in New York Supreme Court, dismissing with prejudice the Attorney General's action against it. The Company has made the full payment required by the settlement agreement. GREAT ATLANTIC: Asks NJ Court To Dismiss Securities Fraud Suit -------------------------------------------------------------- Great Atlantic & Pacific Tea Co., Inc. asked the United States District Court for the District of New Jersey to dismiss the consolidated securities class action filed against it and certain of its officers and directors. The suit alleges claims under Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of 1934 arising out of the Company's July 5, 2002 filing of restated financial statements for fiscal 1999, fiscal 2000 and the first three quarters of fiscal 2001. On January 17, 2003, defendants filed a motion seeking to dismiss the suit. On February 28, 2003, plaintiffs filed their brief in opposition to defendants' motion. Defendants' reply brief in support of their dismissal motion was filed on March 28, 2003. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on its consolidated results of operations, financial position or cash flows. GREAT ATLANTIC: To Appeal Certification of Franchisees' Suit ------------------------------------------------------------- The Great Atlantic & Pacific Company of Canada, Limited will proceed with the appeal of class certification for the lawsuit filed by three Canadian Food Basics franchisees for breach of contract. The suit was filed in a Canadian court on behalf of a purported class of approximately 70 current and former Canadian Food Basics franchisees. The lawsuit seeks unspecified damages in connection with the Company's alleged failure to distribute to the franchisees the full amount of vendor allowances and/or rebates to which the franchisees claim they are entitled under the operative franchise agreements. The Company disputes the plaintiff-franchisees' claim and has filed a counterclaim seeking to recover subsidies made by it to the plaintiffs. The lawsuit was certified as a class action in December 2002. The majority of the potential class members have opted out of this class proceeding. The Company later obtained leave to appeal the class certification order. HECLA MINING: ID Court Dismisses Coeur d'Alene Residents' Suit -------------------------------------------------------------- The Idaho District Court, County of Kootenai dismissed a class action filed against Hecla Mining Company and other corporate defendants, seeking certification of three plaintiff classes of Coeur d'Alene Basin residents and current and former property owners to pursue three types of relief: various medical monitoring programs, real property remediation and restoration programs, and damages for diminution in property value, plus other damages and costs. On April 23, 2002, the Company filed a motion with the court to dismiss the claims for relief relating to any medical monitoring programs and the remediation and restoration programs. At a hearing before the Idaho District Court on the Company's and other defendants' motions held October 16, 2002, the Judge struck the complaint filed by the plaintiffs in January 2002 and instructed the plaintiffs to re-file the complaint limiting the relief requested by the plaintiffs to wholly private damages. The court also dismissed the medical monitoring claim as a separate cause of action and stated that any requested remedy that encroached upon the EPA's cleanup in the Silver Valley would be precluded by the pending court case. The plaintiffs re-filed their amended complaint on January 9, 2003. As ordered by the Court, the amended complaint omits any cause of action for medical monitoring and no longer requests relief in the form of real property remediation or restoration programs. At a hearing on May 7, 2003, the court vacated the entire amended complaint and issued sanctions against plaintiffs' counsel for noncompliance with Idaho law. The court gave plaintiffs' counsel until June 30, 2003, to re-file an amended complaint that complies with Idaho law. The Company believes the claims alleged against it are subject to challenge on a number of bases and intends to vigorously defend this litigation. HONEYWELL INTERNATIONAL: Fails To Reach Settlement For NJ Suit -------------------------------------------------------------- Honeywell International, Inc. and plaintiffs in the consolidated securities class action filed against the Company failed to reach a settlement in the two-day mediation held in April 2003. The suit is pending in the United States District Court for the District of New Jersey, alleging that the defendants violated federal securities laws by purportedly making false and misleading statements and by failing to disclose material information concerning the Company's financial performance, thereby allegedly causing the value of the Company's stock to be artificially inflated. On January 15, 2002, the court dismissed the consolidated complaint against four of Honeywell's current and former officers. The court also granted plaintiffs' motion for class certification defining the purported class as all purchasers of Honeywell stock between December 20, 1999 and June 19, 2000. The parties participated in mediation in an attempt to resolve the cases without resort to a trial. The mediation proved unsuccessful in resolving the cases. As all significant discovery in the cases had been stayed pending completion of the mediation, the Company expects discovery to resume immediately. The Company continues to believe that the allegations in the securities suits are without merit. Although it is not possible at this time to predict the outcome of these cases, the Company expects to prevail. However, an adverse outcome could be material to the Company's consolidated financial position or results of operations. HONEYWELL INTERNATIONAL: Faces Suit for ERISA Violations in NJ -------------------------------------------------------------- Honeywell International, Inc. and several of its current and former officers face a class action filed in the United States District Court for the District of New Jersey. The complaint principally alleges that the defendants breached their fiduciary duties to participants in the Honeywell Savings and Ownership Plan by: (1) purportedly making false and misleading statements; (2) failing to disclose material information concerning Honeywell's financial performance; and (3) failing to diversify the Savings Plan's assets and monitor the prudence of Honeywell stock as a Savings Plan investment. The Company has been advised that a second complaint making similar allegations has been filed in the same district, which complaint is likely to be consolidated with the original one. No answers have been filed and discovery has not commenced. Although it is not possible at this time to predict the outcome of this litigation, the Company believes that the allegations in these complaints are without merit and expects to prevail. An adverse litigation outcome could, however, be material to the Company's consolidated financial position or results of operations. As a result of the uncertainty regarding the outcome of this matter, no provision has been made in the Company's financial statements with respect to this contingent liability. MATRIXONE INC.: NY Court Dismisses In Part Securities Fraud Suit ---------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed the consolidated securities class action filed against MatrixOne, Inc., two of its officers, and certain underwriters involved in its initial public offering (IPO) of common stock. The suit, filed on behalf of purchasers of the Company's common stock during the period from February 29, 2000 to December 6, 2000, asserts, among other things, that the Company's IPO prospectus and registration statement violated federal securities laws because they contained material misrepresentations and/or omissions regarding the conduct of the Company's IPO underwriters in allocating shares in its IPO to the underwriters' customers, and that the Company and the two named officers engaged in fraudulent practices with respect to this underwriters' conduct. Pursuant to a stipulation between the parties, the Company's two named officers were dismissed from the lawsuit, without prejudice, on October 9, 2002. The court later ruled on a motion to dismiss the complaint that had been filed by the Company, along with the three hundred plus other publicly-traded companies that have been named by various plaintiffs in substantially similar lawsuits. The court granted the Company's motion to dismiss the claim filed against it under Section 10(b) of the Securities Exchange Act of 1934, but denied the Company's motion to dismiss the claim filed against it under Section 11 of the Securities Act of 1933, as it denied the motions under this statute for virtually every other company sued in the substantially similar lawsuits. The Company believes that the allegations in the complaint are without merit and intends to contest them vigorously. The litigation process is inherently uncertain and unpredictable, however, and there can be no guarantee as to the ultimate outcome of this pending lawsuit. OKLAHOMA: Judge Okays Settlement Between Tulsa, Black Officers -------------------------------------------------------------- US District Court Judge Sven Erik Holmes recently approved a settlement decree between the city of Tulsa and black officers who had filed a racial discrimination lawsuit some nine years earlier, the Associated Press Newswire reports. The Fraternal Order of Police (FOP) immediately said it would appeal. The settlement, wrote Judge Holmes in a 122-page order, "offers the parties and the community the opportunity to settle this case and move forward." The Black Officers Coalition's lawsuit, filed in January 1994, alleged blacks faced a segregated work environment, were discriminated against in hiring and promotions, received no help when calling for backup and faced retaliation if they complained of discrimination. Judge Holmes wrote that police officers and city officials have been subject to "destructive allegations and recriminations" over nine "divisive" years of litigation. "Many honorable men and women, the TPD (Tulsa Police Department) and the community at large have suffered as a result," he wrote. The FOP claimed the decree should be rejected on grounds that it violated the union's contractual and legal rights under the Oklahoma Fire and Police Arbitration Act as well as the union's collective bargaining agreement with the city. However, Judge Holmes found that the agreement did not "erode or infringe" upon the union's contractual or legal rights underneath the arbitration act or the collective bargaining agreement. Judge Holmes ruled that the decree does not impose any legal duties or obligations on the FOP and does not bind it to act. "Let the appeals begin," said Bob Jackson, president of the Fraternal Order of Police. Scott Wood, an attorney for the police union, said he expected to ask Judge Holmes to issue a stay, which would keep the decree's terms from being put into effect while an appeal is pending. The FOP had encouraged the court to have a trial on the plaintiffs' claims in the class action. However, Judge Holmes wrote that such a proceeding would have been "lengthy and complex" and "very expensive for all parties." Judge Holmes wrote that because the FOP had an opportunity to present its objections, and because the court had thoroughly considered those objections, the union has been afforded all the process it is due, according to US Supreme Court precedent. "Thus, the court finds that it may approve the December 2002 decree over the FOP's objections," Judge Holmes wrote. Joel Wohlgemuth, who represents the city, said the city would "vigorously oppose" an attempt for a stay. Mr. Wohlgemuth said it was time "to move forward as expeditiously as possible," and that drawing out the nine-year-old case further with a stay would be of no benefit to the community." Plaintiffs' attorney Louis Bullock, said he would oppose any request for a stay; any appeal, he said, would probably last from nine months to a year or longer. The agreement states that hiring and promotions at the department are to be based on merit, and that the police force must adhere to its policy against racial profiling. Additionally, the city will collect data on officers and their policing activities, including their race, training level and any traffic or pedestrian stops, in order that an independent auditor can monitor compliance. In all, the agreement reached in December and recently approved by Judge Holmes addresses about 30 policies, many of which already are in place at the department, and will cost about $6 million to implement. The city admits no wrongdoing. SCIENTIFIC ATLANTA: Named As Defendant in MO Charter Fraud Suit --------------------------------------------------------------- Scientific Atlanta Corporation was added as co-defendant in the consolidated securities class action filed against Charter Communications, Inc. in the United States District Court in St. Louis, Missouri. Securities investors brought the suit against Charter, a number of its present and former officers and Arthur Andersen LLP. The consolidated complaint, which alleges various purported securities laws violations by Charter and its management, also alleges that certain commercial transactions between Charter and Scientific-Atlanta relating to Charter's purchase of digital set-top boxes and a marketing support arrangement purportedly resulted in violations of the anti-fraud provisions of the federal securities laws with respect to investors in Charter securities. The consolidated complaint has not been filed with the court, and Scientific-Atlanta has been advised that the Court has stayed the filing pending transfer of all of the cases to the Missouri Court and a Court conference. The suit does not allege any impropriety by Scientific-Atlanta regarding its financial statements or its investors. The Company intends to vigorously defend the claim. SCIENTIFIC ATLANTA: GA Court Allows Interlocutory Appeal in Suit ---------------------------------------------------------------- The United States District Court for the Northern District of Georgia certified for appeal an issue raised by Scientific Atlanta, Inc. in its motion for certification for interlocutory appeal in the consolidated securities class action filed against it and certain of its officers. The suit alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, promulgated thereunder. The defendants allegedly issued materially false and misleading statements that had the effect of artificially inflating the market price of the Company's securities, an earlier Class Action Reporter story states. The court has stayed discovery in the securities class action pending resolution of such appeal. SELECT COMFORT: Court Grants Final Suit Settlement Approval ----------------------------------------------------------- The United States District Court for the District of Minnesota granted final approval to the settlement of a securities class action filed against Select Comfort Corporation and certain of its former officers and directors. The suit, filed on behalf of purchasers of the Company's common stock between December 4, 1998 and June 7, 1999, alleges that the Company and the named former directors and officers failed to disclose or misrepresented certain information concerning the Company in violation of federal securities laws. The Company believes that the suit is without merit and has vigorously defended the matter. The Company consented to a settlement of this litigation negotiated by the Company's insurance carrier. The settlement did not have any impact on the Company's results of operations or financial condition. On February 28, 2003, the settlement agreement received final approval from the court, resulting in the dismissal with prejudice of the plaintiffs' complaint. TOBACCO LITIGATION: Philip Morris Asks Court To Hear Lights Suit ---------------------------------------------------------------- Philip Morris USA has asked the Illinois Supreme Court to bypass a lower court and hear its appeal of a $10.1 billion verdict in the class action over 'light cigarettes,' the Associated Press Newswires reports. The company's lawyers recently filed a petition seeking the dispensation, saying that the direct appeal would bring quicker resolution and address questions running to an important question about whether the case should have been certified as a class action. In March, Madison County Judge Nicholas Byron ordered Philip Morris to pay 1.1 million 'light' cigarette' smokers $10.1 billion for deceiving Illinois smokers into believing that light cigarettes are less harmful than are regular cigarettes. If the state's Supreme Court approves the petition, Philip Morris will be able to bypass the 5th District Appellate Court in Mount Vernon, Illinois, and appeal Judge Brody's verdict directly to the Supreme Court. The plaintiffs' lead attorney, Stephen Tillery, said that he has not yet decided whether to challenge the cigarette maker's petition. Philip Morris also petitioned the Illinois Supreme Court to limit appeal bonds at $100 million, or 10 percent of the company's net worth, whichever is lower. Judge Brody already has reduced the amount of the initial appeal bond from $12 billion, on grounds that failure to do so would cause Philip Morris to seek the protection of a Chapter 11 bankruptcy. Illinois law requires those who lose big lawsuits to post a bond before appealing the judgment to ensure those who were awarded the judgment ultimately receive it should the appellant lose his appeal. UICI: Texas Court Grants Final Approval To Securities Settlement ---------------------------------------------------------------- The United States District Court for the Northern District of Texas granted final approval to the settlement of a consolidated securities class action filed against UICI and certain of its executive officers. The suit alleges, among other things, that the Company's periodic filings with the SEC contained untrue statements of material facts and/or failed to disclose all material facts relating to the condition of the Company's credit card business, in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Plaintiffs purport to represent a class of persons who purchased the Company's common stock from February 10, 1999 through December 9, 1999. Following a mediation held on May 23, 2002, the parties entered into definitive settlement agreement on July 3, 2002 pursuant to which the parties have agreed, without admitting or denying liability and provided that certain conditions are satisfied, to fully and finally resolve the litigation. The Company believes that the terms of the settlement as contemplated by the settlement agreement will not have a material adverse effect upon the financial condition or results of operations of the Company. Funding of the settlement amount was completed on July 15, 2002. On December 12, 2002, the court issued an order preliminarily approving the settlement and providing for notice to prospective class members. At fairness hearing, held on March 3, 2003, the court confirmed the settlement and entered final judgment that, pursuant to the terms of the settlement agreement, released the Company and named individual defendants with respect to all issues raised or which could have been raised in the litigation. UICI: Investors Commence Lawsuit Over Trade Practice in TX Court ---------------------------------------------------------------- UICI and The MEGA Life and Health Insurance Company face a class action filed in the District Court of Starr County, Texas for the 381st Judicial District. The suit also names as defendants NASE Group Insurance Trust and National Association for the Self Employed. Plaintiff on behalf of himself and a purported class of similarly situated individuals has asserted, among other things, that MEGA, NASE Group Trust and NASE are under common control and ownership and operate as a "unified business arrangement" which is used solely for the purpose of generating profits through association dues and avoiding state insurance regulations. Plaintiffs have alleged that defendants have used false and deceptive advertising and sales practices in connection with the sale of insurance in Texas in violation of the Texas Insurance Code. Plaintiffs further allege conversion and breach of contract, for which they have asked for a return of all association dues and administrative fees collected by the defendants. Plaintiffs have served discovery requests on MEGA, UICI and NASE, though neither UICI nor MEGA has answered or otherwise pleaded in the case. The Company believes that plaintiffs' claims in these cases are wholly without merit, and intends to vigorously contest the claims. WATTS INDUSTRIES: NCHG Lodges Suit Over Commercial Valve Models --------------------------------------------------------------- Watts Industries, Inc. and Watts Regulator Company faces a class action filed by North Carolina Hospitality Group, Inc. (NCHG) in the Circuit Court of Maryland, Prince George's County. The suit alleges that certain Watts commercial valve models contain a design defect that causes them to fail prematurely. The complaint asserts claims for: (1) breach of implied warranty of merchantability, (2) strict liability for defective design, (3) strict liability for failure to warn, (4) negligence and (5) unjust enrichment The complaint seeks unspecified compensatory damages sufficient to permit the members of the alleged class (national or Maryland purchasers of the valves for self use) to inspect, repair and/or replace the valves, and also seeks to recover costs, interest and attorneys fees. The Company believes that the allegations in the complaint are without merit and intends to defend vigorously against those claims. Based on the facts presently known to the Company, it does not believe that the ultimate outcome of this litigation will have a material adverse effect on its liquidity, financial condition or results of operations. WELLS REAL ESTATE: Court Refuses To Compel Arbitration in Suit -------------------------------------------------------------- The Superior Court of Gwinnett County, Georgia refused to compel arbitration of all claims in a class action filed against Wells Real Estate Fund I by a limited partner holding Class B units, on behalf of all limited partners holding Class B units as of January 15, 2003. The suit seeks equitable relief with regard to the rights and obligations of all the Partnership's limited partners and general partners under the Partnership Agreement. The plaintiff generally alleges that the terms of the Partnership Agreement, as it relates to the allocation and distribution of net sale proceeds, are inconsistent with the original intent of the parties. The plaintiff alleges that the original intent was that limited partners holding Class B units would have a priority in payment of cash distributions of net sale proceeds to bring them even with the amount of cash distributions previously made to limited partners holding Class A units. The suit seeks, among other things, to have the Partnership's Partnership Agreement equitably reformed consistent with the alleged original intent or, in the alternative, to have the investments made by limited partners holding Class B units equitably rescinded, and requests an injunction prohibiting the general partners of the Partnership from distributing net sales proceeds until the resolution of the action. On March 31, 2003, the Partnership's motion requesting the court to compel arbitration of all claims alleged in the Johnston Action was denied by the Court. New Security Fraud Cases ALLOU HEALTHCARE: Glancy & Binkow Launches Securities Suit in NY ---------------------------------------------------------------- Glancy & Binkow LLP initiated a securities class action in the United States District Court for the Eastern District of New York on behalf of all persons who purchased securities of Allou Healthcare, Inc. (Amex: ALU) between June 22, 1998, and April 9, 2003, inclusive. The complaint charges the auditors and certain executive officers of the Company with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and the dissemination of materially false and misleading statements concerning the Company's financial performance caused the Company's stock price to become artificially inflated, inflicting damages on investors. The Company is a distributor of consumer personal care products and prescription pharmaceuticals, and also manufactures upscale hair- and skin-care products for sale under private labels. The complaint alleges that, during the class period, Allou was materially overstating its account receivables, thereby overstating its revenue and earnings, and overstating its inventory, thereby overstating its net worth. As a result of the foregoing, Allou's financial statements during the class period were not prepared in accordance with Generally Accepted Accounting Principles (GAAP). Additionally, plaintiff claims that the Company's auditors did not audit Allou's financial statements in accordance with Generally Accepted Auditing Standards (GAAS), as they either knew of the accounting fraud at Allou or recklessly disregarded it. On April 9, 2003, Allou announced that its lenders have filed an involuntary petition for bankruptcy in the Eastern District of New York under the provisions of Chapter 11 of the United States Bankruptcy Code. Also on April 9, 2003, the American Stock Exchange halted trading in Allou stock. For more details, contact Lionel Z. Glancy by Mail: 1801 Avenue of the Stars, Suite 311, Los Angeles, California 90067, by Phone: (310) 201-9161 or (888) 773-9224 or by E-mail: info@glancylaw.com. AVERY DENNISON: Brian Felgoise Lodges Securities Suit in C.D. CA ---------------------------------------------------------------- The Law Offices of Brian M. Felgoise initiated a securities class action on behalf of shareholders who acquired Avery Dennison Corporation (NYSE:AVY) securities between July 24, 2001 and April 14, 2003, inclusive. The case is pending in the United States District Court for the Central District of California, against the company and certain key officers and directors. The action charges that defendants violated the federal securities laws by issuing a series of materially false and misleading statements to the market throughout the class period which statements had the effect of artificially inflating the market price of the Company's securities. For more details, contact Brian M. Felgoise by Mail: 261 Old York Road, Suite 423, Jenkintown, Pennsylvania, 19046 by Phone: 215-886-1900 or by E-mail: FelgoiseLaw@aol.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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *