/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/030612.mbx C L A S S A C T I O N R E P O R T E R Thursday, June 12, 2003, Vol. 5, No. 115 Headlines ALLAIRE CORPORATION: Enters into MOU in MA Securities Fraud Suit BAYER AG: Reaches Out-of-Court Settlements For 888 Baycol Suits CRAYFISH CO.: Reaches Agreement To Settle Securities Suit in NY CREDIT CARDS: Merchants May Get Lump Sum In Debit Card Lawsuit CREDIT CARDS: Merchants Commence Suit For RICO Violations in NC EL PASO: Largest Shareholder Suggests Replacement of Directors KENTUCKY: Louisville Diocese Reaches Agreement for Abuse Suits MCDATA CORPORATION: NY Court Dismisses in Part Securities Suit MILBERG WEISS: Break-up Will Create Smaller, Competing Firms NORDSTROM INC.: Participates in Mediation For CA Antitrust Suit PAXIL: UK Health Dept Warns Against Using Paxil to Treat Youth SLAVE REPARATIONS: Lawyers Find 104-Year-Old Witness To Slavery UNITED STATES: Court Rules Direct Evidence Of Bias Not Needed VITAMIN FIRMS: MA Court Approves $850T Antitrust Suit Settlement New Securities Fraud Cases ALLOU HEALTHCARE: Abbey Gardy Lodges Securities Suit in E.D. NY CORNERSTONE PROPANE: Abbey Gardy Launches Securities Suit in CA CREDIT SUISSE: Chitwood & Harley Lodges Securities Lawsuit in NY CREDIT SUISSE: Rabin Murray Lodges Securities Lawsuit in S.D. NY CRYO-CELL INTERNATIONAL: Brodsky & Smith Lodges Stock Suit in FL DAISYTEK INTERNATIONAL: Wolf Haldenstein Lodges Stock Suit in TX DAISYTEK INTERNATIONAL: Chitwood & Harley Files Stock Suit in TX DAISYTEK INTERNATIONAL: Emerson Poynter Lodges Stock Suit in TX DIVINE INC.: Milberg Weiss Lodges Securities Lawsuit in N.D. IL eUNIVERSE INC.: Faruqi & Faruqi Files Securities Suit in C.D. CA FEDERAL HOME: Charles Piven Lodges Securities Lawsuit in S.D. NY FEDERAL HOME: Brian Felgoise Lodges Securities Suit in S.D. NY FEDERAL HOME: Milberg Weiss Lodges Securities Lawsuit in S.D. NY J. JILL: Milberg Weiss Lodges Securities Fraud Suit in MA Court J. JILL: Chitwood & Harley Lodges Securities Fraud Lawsuit in MA RECOTON CORPORATION: Brodsky & Smith Files Securities Suit in FL ********* ALLAIRE CORPORATION: Enters into MOU in MA Securities Fraud Suit ---------------------------------------------------------------- Allaire Corporation entered into a memorandum of understanding with plaintiffs in the consolidated securities class action filed against it and certain of the Company's officers and directors in the United States District Court for the District of Massachusetts, alleging violations of the federal securities laws. The suit was filed on behalf of a putative class defined as those who purchased Company stock between December 7,1999 and September 18, 2000, and names as defendants the Company and: (1) Joseph J. Allaire, (2) Jeremy Allaire, (3) David A. Gerth, and (4) David J. Orfao The defendants allegedly violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The plaintiffs are seeking damages, interest, and attorneys' fees and costs. The defendants filed a motion to dismiss the suit. On September 25, 2001, the court ruled that the complaint did not comply with the pleading standards imposed by the Private Securities Litigation Reform Act of 1995, and permitted plaintiffs to file an amended complaint in accordance with specific requirements imposed by the court. Plaintiffs then filed an amended complaint on November 30, 2001, which asserted similar claims. On June 19, 2002, the court denied defendants' motion to dismiss the amended complaint, and thereafter set a trial date for the class action for November 2003. The parties commenced discovery and thereafter mediated their dispute before a United States Magistrate Judge. On May 21, 2003, the parties executed a Memorandum of Understanding (MOU) that sets forth the basic terms of a settlement whereby the plaintiffs agree to dismiss the suit and provide a broad release of all claims arising out of their purchase, sale or holding of Allaire stock in exchange for a payment of $12.0 million. The MOU calls for the parties to negotiate additional terms to be set forth in a stipulation of settlement. The parties' settlement is expressly contingent on Court approval, which may be withheld or, if provided, may be subject to an appeal to, or reversal by, an appellate court. BAYER AG: Reaches Out-of-Court Settlements For 888 Baycol Suits --------------------------------------------------------------- Pharmaceutical giant Bayer AG settled 888 lawsuits over cholesterol drug Baycol out of court, an increase over 785 at the time of its May update, Reuters reports. On its website, the Company stated however, that the number of Baycol-related cases pending against it had increased to 9,400 from 8,800 in May. Baycol was withdrawn from the market in August 2001, after it was linked to over 100 deaths. The Company revealed in May that it had spent $240 million on settling the 785 cases then, but did not say on Tuesday how much more it had spent since then. "The settlement figure is not surprising, and the company is now more than half-way towards settling the estimated 1,600 serious cases," WestLB Panmure analyst Andreas Theisen told Reuters. "We're somewhat surprised with the growth in cases filed, though this is not really a worry yet." Mr. Theisen also said he was watching attempts to get certain suits against the Company in the United States to be certified as a class action. "We expect to hear on the class action in the next couple of weeks and that is clearly the more important event," he said. Bayer said earlier this month it had settled all individual Baycol lawsuits due for hearing in June, Reuters states. It said then it expected the next cases to be heard in Oregon and Mississippi in the beginning of July. CRAYFISH CO.: Reaches Agreement To Settle Securities Suit in NY --------------------------------------------------------------- Crayfish Co., Ltd. (Nasdaq: CRFH; MOTHERS: 4747) reached an agreement to settle the consolidated class actions pending against the Company in the United States District Court for the Southern District of New York. Suits were filed against the Company and: (1) Isao Matsushima, the Company's CEO, (2) Morgan Stanley Dean Witter, (3) Nomura Securities International Inc., (4) Merrill Lynch & Co., and (5) Hikari Tsushin, Inc. The complaints included allegations that, during the course of its March 8, 2000 public offering of American Depositary Shares, the Company violated US securities law by making inaccurate and misleading statements. The complaints included related allegations against the other defendants based on US securities law. Eleven class actions were initially filed. On September 26, 2001, the court entered an order consolidating all eleven actions and appointed lead plaintiff and lead counsel for the plaintiffs. On June 4, 2002, the court entered an order appointing a new lead plaintiff and new counsel for the plaintiffs. A consolidated amended class action complaint was served and filed on July 19, 2002. The Company negotiated with the plaintiffs and has received a copy of a memorandum of understanding regarding the class actions, signed by all parties to the litigation, from its litigation counsel on the morning of June 7, 2003 (Japan Time). The defendants in the class actions, Crayfish, Hikari Tsushin, Inc., and Isao Matsushima, the Company's CEO at the time of the Company's public offering, have reached a settlement agreement with the plaintiffs to settle all pending class actions for US$9,000,000. This settlement will not become final until approved by the court. The Company has entered into this settlement agreement solely to avoid any further cost, burden or uncertainty from the class actions, and has not acknowledged any claims alleged by the plaintiffs. Out of US$9,000,000, US$6,625,000 will be paid by the Company. The Company expects to expense the settlement payment in the fiscal year ending September 30, 2003. CREDIT CARDS: Merchants May Get Lump Sum In Debit Card Lawsuit -------------------------------------------------------------- The nation's retailers may receive money from the settlement of a lawsuit involving debit cards from Visa USA and MasterCard International sooner than they expected, according to agreements announced recently, The New York Times reports. The original settlement plans, disclosed in April, called for payment of $3 billion over 10 years, but the retailers are allowed to look for a financial institution that would pay or raise the money immediately in exchange for the rights to the payments over the next decade, lawyers said. The lump sum would be less than $3 billion, however, to reflect the greater value of receiving all of the money at once. In addition, Visa and MasterCard have agreed to make their databases of debit card transactions available, allowing retailers to determine exactly how much each merchant is owed. The agreements, filed in US District Court in Brooklyn, New York for preliminary approval, otherwise repeat or expand on provisions made public when Visa and MasterCard agreed to settle with the retailers in April. The settlements stemmed from a class action filed in 1996, by Wal-Mart Stores Inc. Sears, Roebuck & Company and a handful of other larger retailers, which contended that Visa and MasterCard had violated antitrust laws by forcing merchants to accept their debit cards if they wanted to accept their credit cards. Debit card transactions that are routed through Visa's or MasterCard's networks typically cost merchants 10 times what transactions routed through competing networks do. Under the terms of the settlements, made just as the case was about to go to trial, Visa and MasterCard agreed to no longer require merchants to accept both types of cards, and their networks will lower the fees they charge merchants for debit card transactions beginning in August. "At the end of the day, these changes in market structure will drive the use of debit cards up," said Craig Peckham, an analyst with Jefferies & Company, a brokerage firm in New York. Banks that issue Visa and MasterCard debit cards may lose considerable income as a result of the settlement, Mr. Peckham said. In 2002, debit transactions handled by Visa and Master- Card earned banks $4.76 billion in revenue. Visa and MasterCard predicted that few retailers would refuse their debit cards, especially after receiving price breaks and the settlements. "We don't believe they want to lose the sales," said Noah Hanft, MasterCard's general counsel. Lloyd Constantine, a lawyer for the retailers, estimated that the average merchant would receive a few hundred dollars under the settlement and that the lump-sum payouts would save the retailers close to $100 million in administrative costs that would otherwise reduce the amount of the settlement. The agreement that Visa signed also spells out how the company's debit cards will be reissued to make them distinct from its credit cards, allowing merchants to identify them more easily and to reject them if they choose. MasterCard has yet to decide how it will restyle its debit cards. Final approval of the agreements is expected in September, Mr. Constantine said. CREDIT CARDS: Merchants Commence Suit For RICO Violations in NC --------------------------------------------------------------- Several credit card firms face a class action charging them with failing to take appropriate measures to address fraud in card- not-present transactions, in the United States District Court in North Carolina. The suit, filed by class action firm the Triangle Law Center PLLC, names as defendants: (1) Visa USA, (2) MasterCard International, (3) American Express Co. and (4) Discover Financial Services Inc. and (5) their member card-issuing banks and merchant acquirers The suit further states that the firms charged merchants excessive transactional and penalty fees. The suit represents all web, catalog and telephone merchants, Triangle says, the Internet Retailer states. The suit further alleges the firms never disclosed many of the fees to its merchants during contracting, but were only stated in unpublished rules and regulations set by the card companies. In cases of cyber fraud, the card companies' policies leave direct merchants with no effective means of opposing the imposition of penalties that the companies debit from merchant accounts. The suit makes allegations under the Racketeering and Corrupt Organizations Act (RICO) and other laws on business practices. Last month a similar suit was filed against MasterCard by payments processor Paycom Billing Services Inc., alleging that the credit card giant charges unfair penalties against web merchants for fraudulent transactions and chargebacks. Mastercard has denied the allegations in the suit. MasterCard says it just received notification of the suit today and will have no comment until it has a chance to review the allegations. Visa, AmEx and Discover did not return calls seeking comment, the Internet Retailer states. EL PASO: Largest Shareholder Suggests Replacement of Directors -------------------------------------------------------------- Oscar Wyatt Jr., one of the largest shareholders of energy company El Paso Corporation, as well as its most vocal critic, took out a full-page ad recently in the Sunday editions of the Houston Chronicle, telling El Paso's shareholders that the 2001 stock deal by which Mr. Wyatt sold his energy company Coastal Corporation to El Paso, did not turn out well because of later "ill-advised" decisions by El Paso's board and management, the Associated Press Newswires reports. He apologized to the former Coastal shareholders for the current state of affairs and urged the investors to vote to oust El Paso's 12 directors and replace them with a new slate. This incident is but the latest chapter in the increasingly heated contest between the incumbent board and dissident shareholders vying for control of Houston-based El Paso. Mr. Wyatt holds about five million shares of El Paso stock after El Paso's acquisition of Coastal in 2001. Mr. Wyatt is financing one-third of Selim K. Zilkha's $5.9 million effort to remove El Paso's directors in favor of a new lineup of nine when shareholders vote at their annual meeting June 17. Mr. Zilkha is El Paso's largest individual shareholder, with 8.9 million shares. El Paso expects to spend $10 million soliciting votes. For more than a year, Oscar Wyatt, 78, has been a vocal critic of El Paso's leadership as the company scrambled to sell assets and cut costs to counteract falling stock and junk credit ratings in the post-Enron era of skittish investors and increased scrutiny. The ad is in the form of a letter from Mr. Wyatt to former Coastal shareholders now holding El Paso stock, and it echoes criticisms previously launched by Mr. Wyatt, who is the lead plaintiff in a shareholder class action accusing El Paso of violating federal securities laws. "The Zilkha board possesses the sound judgment and business acumen to solve El Paso's many problems and, just as important, can hit the ground running," Mr. Wyatt's ad in the Houston Chronicle said, referring to the slate of candidates Mr. Wyatt, Mr. Zilkha and their followers are proposing and supporting to replace the current directors. KENTUCKY: Louisville Diocese Reaches Agreement for Abuse Suits -------------------------------------------------------------- The Diocese of Louisville, Kentucky reached a settlement with representatives of 243 plaintiffs in lawsuits alleging child sexual abuse by priests, teachers and others connected to the church, the Courier Journal reports. The suits charged the diocese with covering up sexual abuse during the past 50 years by dozens of priests and others associated with the diocese. The diocese has denied the charges. Earlier this year, Judge James M. Shake of the Jefferson Circuit Court approved mediation and granted class status solely for the purpose of reaching an agreement. 242 plaintiffs joined the talks. One opted out, six have settled and the rest filed lawsuits after the deadline for signing up for the talks, the Journal states. Details of the settlement were not revealed, the Journal stated. MCDATA CORPORATION: NY Court Dismisses in Part Securities Suit -------------------------------------------------------------- The United States District Court for the Southern District of New York dismissed in part the consolidated securities class action filed against McDATA Corporation, two of its current officers and one former officer. The The suit generally alleges, among other things, that the registration statements and prospectus filed with the SEC by such companies were materially false and misleading because they failed to disclose: (1) that certain underwriters had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the underwriters allocated to those investors material portions of shares in connection with the initial public offerings; and (2) that certain of the underwriters had entered into agreements with customers whereby the underwriters agreed to allocate initial public offering shares in exchange for which the customers agreed to purchase additional company shares in the aftermarket at pre- determined prices. The complaints relating to the Company allege claims against it, two of its current officers, one of its former officers and Credit Suisse First Boston, or CSFB, the lead underwriter for its August 9, 2000 initial public offering, under Sections 11 and 15 of the Securities Act of 1933, as amended, or the Securities Act. In September 2002, plaintiffs' counsel in the above-mentioned lawsuits offered to individual defendants of many of the public companies being sued the opportunity to enter into a Reservation of Rights and Tolling Agreement that would dismiss without prejudice and without costs all claims against such persons if the company itself had entity coverage insurance. Under the Reservation of Rights and Tolling Agreement the plaintiffs are required to dismiss the claims against such individuals. On February 19, 2003, the court entered a ruling on the pending motions to dismiss that dismissed some, but not all, of the plaintiff's claims against the Company. MILBERG WEISS: Break-up Will Create Smaller, Competing Firms ------------------------------------------------------------- High-profile class action law firm Milberg Weiss Bershad Hynes & Lerach is splitting up, attorneys for the firms announced Tuesday, the Houston Chronicle reports. The legal powerhouse has been around from 35 years and employs about 200 lawyers in shareholder suits and other litigation. Attorneys at the firm said that the break-up has long been coming and will not affect the representation of its shareholders, especially in suits against Enron or Dynegy in anyway. It will, in a matter of months, likely regroup as competing law firms. "We're a big, high-profile firm handling big, high-profile cases," William Lerach, the San Diego, Calif.-based firm partner who heads both the Enron and Dynegy efforts told the Chronicle. "It's a difficult size, and we're restructuring." Mr. Lerach said he and the other lawyers on the Enron and Dynegy cases will stay with those lawsuits. He added he hopes that the resulting smaller firms will be "friendly" competitors, and emphasized that the reorganization had nothing to do with the investigation by a Los Angeles grand jury to determine whether the law firm paid people to become plaintiffs in class actions. In February 2002, when Houston-based US District Judge Melinda Harmon appointed University of California and Milberg Weiss as lead plaintiffs and counsel in the Enron shareholder suit, she mentioned the investigation and dismissed it as "unproven allegations of solicitation of clients by payment and higher fees," the Houston Chronicle stated. Trey Davis, director of special projects for the University of California, the lead plaintiff in both the Enron and Dynegy lawsuits, told the Chronicle the law firm split "will have no effect on our cases." He said they anticipate no change in legal representation. NORDSTROM INC.: Participates in Mediation For CA Antitrust Suit --------------------------------------------------------------- Nordstrom, Inc. is engaged in mediation with plaintiffs in the consolidated class action filed in the Superior Court of California, Marin County. The suit names the Company, other department store and specialty retailers and a number of manufacturers of cosmetics and fragrances. Plaintiffs' amended complaint alleges that the retail price of the "prestige" cosmetics sold in department and specialty stores was collusively controlled by the retailer and manufacturer defendants in violation of the Cartwright Act and the California Unfair Competition Act. Plaintiffs seek treble damages and restitution in an unspecified amount, attorneys' fees and prejudgment interest, on behalf of a class of all California residents who purchased cosmetics and fragrances for personal use from any of the defendants during the period four years prior to the filing of the amended complaint. Defendants, including the Company, have answered the amended complaint denying the allegations. The defendants have produced documents and responded to plaintiffs' other discovery requests, including providing witnesses for depositions. Plaintiffs have not yet moved for class certification. The California state court has set a status conference for June 2003. PAXIL: UK Health Dept Warns Against Using Paxil to Treat Youth -------------------------------------------------------------- Britain's Department of Health warned against giving children and adolescents the antidepressant Paxil, also called Seroxat outside the United States and made by British-based GlaxoSmithKline, the Associated Press reports. The drug is not licensed for use in children and teenagers anywhere in the world but some doctors give it to treat depression, based on their own judgment. New research shows that the risk of suicidal thoughts and self-harm is higher in youngsters taking the drug. The new research, provided to Britain's Medicines and Healthcare products Regulatory Agency by GlaxoSmithKline, does not apply to adults, officials said. The evidence provided by the Company from nine studies based on more than 1,000 youngsters, shows there is an increase in the rate of self-harm and potentially suicidal behavior in those under 18 taking Paxil. GlaxoSmithKline spokesman David Mawdsley revealed the rate of a collection of emotional side-effects, ranging from mood swings and increased crying, to suicidal thoughts and self-harm, was twice as high in the Paxil group as in those taking a fake pill. A total of 3.2 percent of patients on Paxil had the emotional side-effects, compared with 1.5 percent of those taking the dummy pill, AP reports. "It has become clear that the benefits of Seroxat in children for the treatment of depressive illness do not outweigh these risks," the government said in a statement. "Young people under 18 years currently taking Seroxat for depression should consult their doctor." Alasdair Breckenridge, chairman of the regulatory agency, said the benefits for adults of taking Seroxat for depression were well known. "It is important that patients who are benefiting from Seroxat should not be alarmed by the announcement and should continue their treatment," he said. SLAVE REPARATIONS: Lawyers Find 104-Year-Old Witness To Slavery --------------------------------------------------------------- Lawyers in the suits seeking reparations for African-American descendants of slaves say they have a 104-year-old man who says that he and his children were enslaved throughout much of the 20th century and even in the 1960s rights movement, FortWayne.com reports. The man reportedly lives in Louisiana. Lawyers, however, have refused to identify the man and gave only sketchy details of the man's life, thus doubts remain about how he served as a slave, years after slavery was abolished. Lawyers in the suit say the man's testimony could give their lawsuit critical, firsthand evidence of slavery in America. However Chicago Federal Judge Charles Norgle, Sr. refused the lawyer's request for approval to take the man's deposition to ensure his account doesn't die with him. He put off a decision until after the plaintiffs file a consolidated complaint. The judge gave them another week to file the complaint, not until August as the lawyers sought, FortWayne.com reports. Lawyers gave several reasons for the secrecy about the man. Lawyer Diane Sammons of New Jersey, suggested the family was afraid to break away from the slave masters because of repeated rapes and other physical abuses. Lionel Jean-Baptiste, an Evanston, Ill., attorney who is playing a key role in the lawsuit, said the man is concerned that his testimony in the case could endanger his and his family's safety. Saying the man has the "normal infirmities" of someone more than a century old, the lawyers sought approval to immediately take his deposition to preserve his testimony before he dies, FortWayne.com reports. Several class actions were filed last year in several states, seeking reparations for millions of African-American slave descendants and alleging business and industry illicitly profited from slavery. The cases were consolidated in Chicago in front of Judge Norgle. Lawyers said an independent historian, described as a genealogist, had discovered the 104-year-old former slave. After multiple visits with him over one to two weeks, lawyers in the lawsuit were able to put together a statement on the man's behalf. They asked Judge Norgle to keep it sealed indefinitely. UNITED STATES: Court Rules Direct Evidence Of Bias Not Needed ------------------------------------------------------------- In a ruling that could increase the number of employment- discrimination lawsuits, the Supreme Court said an employee does not need direct evidence of bias in order to be entitled to bring a lawsuit against an employer, the Wall Street Journal reports. The High Court's unanimous ruling resolves a split among US appeal courts, making it easier for workers who believe they have been discriminated against on the basis of race, color, religion, gender or national origin to file suit. "It will now be easier to get to a jury trial," said Mark Theodore, a lawyer who specializes in labor and employment issues for law firm Proskauer Rose, which was not involved in the case. The discrimination case has been followed closely by civil- rights activists, because direct proof often is difficult to find, since discrimination can occur in subtle ways. The case involves Catherine Costa, the only female employed as a warehouse worker and heavy-equipment operator at Park Place Entertainment Corporation's Caesars Palace Hotel & Casino in Las Vegas. Ms. Costa had a history of disciplinary actions against her related to disputes with workers, and was fired after a physical fight with another worker; the other worker received a five-day suspension. Ms. Costa sued, claiming sex discrimination and sexual harassment under Title VII of the 1964 Civil Rights Act. A US District Court in Nevada allowed the gender-discrimination case to go to the jury. At issue in the case is whether Ms. Costa needed to show direct or circumstantial evidence of sex discrimination to get her case to the jury. In other words, did the company discriminate against her, or theoretically, would its action have been the same if Ms. Costa were a man? The US Court of Appeals for the Ninth Circuit, in San Francisco ruled that Ms. Costa may establish her case through "a preponderance" of either direct or circumstantial evidence. The Supreme Court stepped in at this point, because appeals courts have been split on this issue. In a 1989 case, the justices had not provided clear guidance. Four justices in 1989 held that if a plaintiff proves her gender played a "motivating" part in a company's decision, the burden is on the company to defend against the charge. A concurring opinion written by Justice Sandra Day O'Connor said the person filing the lawsuit must show "direct evidence." Congress, in 1991, passed a law to try to clear up the confusion. In the recent decision, the Supreme Court had its first opportunity to consider the law's affect on juries in such cases. Writing for the court, Justice Clarence Thomas said that if Congress intended to require a standard of direct evidence, it would have said so. Justice Thomas said that Congress's "failure to do so is significant, for Congress has been unequivocal when imposing heightened proof requirements in other circumstances." This time, Justice O'Connor wrote a separate, concurring opinion, saying she agreed with her colleagues. VITAMIN FIRMS: MA Court Approves $850T Antitrust Suit Settlement ---------------------------------------------------------------- Massachusetts state court granted preliminary approval to the US$850,000 settlement of an antitrust class action filed against four vitamin producers: (1) Dupont, (2) ConAgra Foods, Inc., (3) Bioproducts, Inc. and (4) Chinook Group, Ltd. Last year, 10 other major producers of bulk vitamins settled the suits against them, providing more than $22 million for Massachusetts charities. The suit alleges that more than 40 companies engaged in a widespread international conspiracy over a 10-year period to fix prices and allocate markets for the bulk vitamins that are used in many processed products, including milk, cereals, juices and pet foods, the Associated Press reports. Ellis & Rapacki LLP, the law firm representing the plaintiffs, said all of the companies had small shares of the bulk vitamin market, and the settlement money will go to Massachusetts charities for food and nutrition programs. A DuPont spokesman confirmed the company agreed to a preliminary approval for a settlement, but couldn't comment further, AP states. A ConAgra representative wasn't immediately available. New Securities Fraud Cases ALLOU HEALTHCARE: Abbey Gardy Lodges Securities Suit in E.D. NY --------------------------------------------------------------- Abbey Gardy, 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., formerly Allou Health & Beauty Care, Inc. (AMEX:ALU) publicly traded securities during the period between July 3, 2002 and April 9, 2003, inclusive. The complaint names as defendants certain officers and directors of Allou and its auditors, KPMG LLP. 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 during the class period thereby artificially inflating the price of Allou securities. Those materially false and misleading statements concerning the Company's financial results include allegations: (1) that Allou was materially overstating its accounts receivables by approximately $80 million and its inventory by approximately $35 million, thereby overstating Allou's revenue and earnings; and (2) as a result of the foregoing, Allou's financial statements were not prepared in accordance with GAAP and were therefore materially false and misleading. For more details, contact Damon Williams or Nancy Kaboolian by Phone: 800-889-3701 or 212-889-3700 by E-mail: dwilliam@abbeygardy.com or nkaboolian@abbeygardy.com CORNERSTONE PROPANE: Abbey Gardy Launches Securities Suit in CA --------------------------------------------------------------- Abbey Gardy, LLP initiated a securities class action in the United States District Court for the Northern District of California on behalf of a class of all persons who purchased securities of CornerStone Propane Partners LP (Other OTC:CNPP.PK) between November 2, 1999 and February 11, 2003 inclusive. The complaint names as the Company and: (1) Keith Baxter, (2) Richard Nye, (3) Ronald J. Goedde and (4) Curtis Solsvig, III 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 during the class period thereby artificially inflating the price of CornerStone securities. More specifically, the complaint alleges that during the Class Period, defendants reported false and misleading financial results and made false statements concerning CornerStone's financial status and business condition, and failed to disclose: (1) that CornerStone had been systematically concealing that it was overpaying for acquisitions made as early as 1997 by improperly misallocating portions of the purchase price of physical assets which should have been allocated to goodwill; (2) that it was materially overstating its earnings before interest, taxes, depreciation and amortization, its net income and its earnings per unit; and (3) that CornerStone lacked adequate internal controls and was therefore unable to ascertain or report the true financial condition of the Partnership. On February 11, 2003, the Partnership revealed in its 8-K filed with SEC that it had to restate its financial results for fiscal years 2000 and 2001 due to the Partnership's knowledge of known errors in reporting its financial results for fiscal years 2000 and 2001. In response to this announcement, the price of CornerStone securities declined precipitously. For more details, contact Damon Williams or Nancy Kaboolian by Phone: (212) 889-3700 or 800-889-3701, or by E-mail: dwilliams@abbeygardy.com or nkaboolian@abbeygardy.com CREDIT SUISSE: Chitwood & Harley Lodges Securities Lawsuit in NY ---------------------------------------------------------------- Chitwood & Harley, LLP initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of investors who purchased or otherwise acquired Winstar Communications, Inc., (WCII), between January 5, 2001, and April 5, 2001, inclusive. The suit is brought against Credit Suisse First Boston. The complaint alleges that defendants violated section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission. In particular, the complaint alleges that defendants: (1) issued and maintained a ``Buy'' recommendation on Winstar securities without any rational economic basis; (2) failed to disclose that they were issuing and maintaining these recommendations to obtain investment banking business; and (3) concealed significant, material conflicts of interest that prevented them from providing independent and objective analysis. The complaint alleges that as a result of these false and misleading statements and omissions of material fact, the price of Winstar securities was artificially inflated throughout the class period causing plaintiff and the other members of the class to suffer damages. For more details, contact Jennifer Morris by Mail: 1230 Peachtree Street, Suite 2300, Atlanta, Georgia 30309 by Phone: (888) 873-3999 or (404) 873-3900 or by E-mail: jlm@classlaw.com CREDIT SUISSE: Rabin Murray Lodges Securities Lawsuit in S.D. NY ---------------------------------------------------------------- Rabin, Murray & Frank LLP initiated a securities class action in the United States District Court for the Southern District of New York on behalf of all persons or entities who purchased or otherwise acquired Winstar Communications, Inc. securities (WCII) between January 5, 2001 and April 5, 2001, both dates inclusive. Credit Suisse First Boston is the named as defendant in the complaint. The complaint alleges that defendant violated section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission. In particular, the complaint alleges that defendants: (1) issued and maintained a "Buy" recommendation on Winstar securities without any rational economic basis; (2) failed to disclose that they were issuing and maintaining these recommendations to obtain investment banking business; and (3) concealed significant, material conflicts of interest that prevented them from providing independent and objective analysis. The complaint alleges that as a result of these false and misleading statements and omissions of material fact, the price of Winstar securities was artificially inflated throughout the class period causing plaintiff and the other members of the class to suffer damages. For more details, contact Eric J. Belfi or Sharon Lee by Phone: (800) 497-8076 or (212) 682-1818 by Fax: (212) 682-1892 by E- mail: email@rabinlaw.com or visit the firm's Website: http://www.rabinlaw.com CRYO-CELL INTERNATIONAL: Brodsky & Smith Lodges Stock Suit in FL ---------------------------------------------------------------- Brodsky & Smith, LLC initiated a securities class action on behalf of shareholders who purchased the common stock and other securities of CRYO-CELL International, Inc. (NasdaqSC:CCELE) between, March 16, 1999 through May 20, 2003, inclusive. The class action lawsuit was filed in the United States District Court for the Middle District of Florida, Tampa Division. The complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the class period, thereby artificially inflating the price of CRYO-CELL securities. On April 15, 2003, the Company issued a press release stating that it may be necessary to restate its financial results for fiscal years 2001 and 2002 because of improper recognition of revenue. On May 20, 2003, the Company issued another press release regarding the continued assessment of certain revenue recognition accounting policies. On this news, CRYO-CELL shares fell 14%. For more details, contact Marc L. Ackerman or Evan J. Smith by Mail: Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by Phone: 877-LEGAL-90 or by E-mail: clients@brodsky-smith.com DAISYTEK INTERNATIONAL: Wolf Haldenstein Lodges Stock Suit in TX ---------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action in the United States District Court for the Northern District of Texas, Dallas Division, on behalf of all persons who purchased the securities of Daisytek International Corporation (Nasdaq: DZTK) between November 9, 2001 and April 28, 2003, inclusive, against certain officers of the Company. Similar actions have been filed in the Eastern District of Texas near the Company's headquarters, but based upon Daisytek's recent bankruptcy filing, Wolf Haldenstein filed an action solely against certain officers of the Company in the Northern District of Texas. Plaintiff alleges violations of the federal securities laws stemming from defendants' issuance of false and misleading statements about Daisytek's business, operating performance and prospects. In particular, defendants were improperly accounting for uncollectible customer accounts receivables and vendor rebates receivables in order to increase Daisytek's financial results. The complaint alleges that defendants obtained vital financing to the Company, pursuant to Daisytek's favorable results which were reported to the investing public. The Company consequently divulged it would record "significant" write-downs of customer and vendor receivables and inventory and large restructuring changes. Following this news, the Company's stock decreased to $0.53. The Company consequently announced the resignations of its CEO and its CFO. For more details, contact Fred Taylor Isquith, Gregory Nespole, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016, by Phone: (800) 575- 0735 by E-mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com. All e-mail correspondence should make reference to Daisytek. DAISYTEK INTERNATIONAL: Chitwood & Harley Files Stock Suit in TX ---------------------------------------------------------------- Chitwood & Harley initiated a securities class action in the United States District Court for the Northern District of Texas, Dallas Division, on behalf of all purchasers of securities of Daisytek International Corporation (NasdaqNM:DZTK) between November 9, 2001 and April 28, 2003, inclusive. Plaintiff alleges violations of the federal securities laws stemming from defendants' issuance of false and misleading statements about Daisytek's business, operating performance and prospects. In particular, defendants were improperly accounting for uncollectible customer accounts receivables and vendor rebates receivables in order to increase Daisytek's financial results. The complaint alleges that defendants obtained vital financing to the Company, pursuant to Daisytek's favorable results which were reported to the investing public. The Company consequently divulged it would record "significant" write-downs of customer and vendor receivables and inventory and large restructuring changes. Following this news, the Company's stock decreased to $0.53. The Company consequently announced the resignations of its CEO and its CFO. For more details, contact Jennifer Morris by Mail: 1230 Peachtree Street, Suite 2300, Atlanta, Georgia 30309 by Phone: (888) 873-3999 or (404) 873-3900 or by E-mail: jlm@classlaw.com DAISYTEK INTERNATIONAL: Emerson Poynter Lodges Stock Suit in TX --------------------------------------------------------------- Emerson Poynter LLP initiated a securities class action in the United States District Court for the Northern District of Texas, Dallas Division, on behalf of purchasers of Daisytek International Corporation (NasdaqNM:DZTK) publicly traded securities during the period between November 9, 2001 and April 28, 2003, inclusive. Other similar actions are filed in the Eastern District of Texas near the Company's headquarters, but based upon Disytek's recent bankruptcy filing Emerson Poynter LLP filed an action solely against certain officers and directors of the Company in federal court in Dallas. The complaint charges Daisytek and certain of its officers and directors with violations of the Securities Exchange Act of 1934. To that end, the complaint further alleges that the defendants were improperly accounting for uncollectible customer accounts receivables and vendor rebates receivables to inflate the Company's financial results and its stock price. For more details, contact John G. Emerson or Scott E. Poynter by Mail: 1509 Louisiana, Suites C & D, Little Rock, AR by Phone: 1- 800-663-9817 or by E-mail: shareholder@emersonfirm.com DIVINE INC.: Milberg Weiss Lodges Securities Lawsuit in N.D. IL --------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action in the United States District Court for the Northern District of Illinois, Eastern Division on behalf of purchasers of divine inc. (OTC Pink Sheets:DVINQ) publicly traded securities during the period between November 12, 2001 and February 18, 2003. The complaint charges certain of divine's officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants violated the federal securities laws by issuing a series of material misrepresentations to the market between Nov. 12, 2001 and Feb. 18, 2003, and thereby artificially inflated the prices of divine securities. Throughout the class period, the complaint alleges, defendants failed to disclose and misrepresented the following material adverse facts: (1) by purchasing the income streams of companies divine acquired with artificially inflated stock, defendants were building a financial house of cards that would crumble once the pool of willing investors and acquisition targets willing to sell to divine on the terms divine's management sought dried up; (2) by collecting $65 million in prepayments from the customers of its wholly owned subsidiary, RoweCom Inc., in late 2002 with no intention of completing their sales and by diverting over $73 million in cash from RoweCom's accounts to divine, defendants were destroying the Company's largest source of revenue and subjecting the Company to great potential civil and criminal liability; and (3) by operating the Company and its subsidiaries without adequate financial and internal controls, defendants lacked a reasonable basis to project profitability and to report accurate financial results and caused the Company to engage in criminal misconduct. On February 18, 2003, divine announced that "despite efforts over the past several months to minimize operating expenses and various liabilities," its board of directors had determined to "seek alternatives to protect the value and viability of its operations." Defendants advised that divine had engaged Broadview International LLC as advisors to assist in exploring strategic options, which could include asset divestitures, comparable transactions, and/or the filing of a voluntary petition under Chapter 11 of the United States Bankruptcy Code. As a result of the defendants' false statements, divine's stock price traded at inflated levels during the class period, increasing to as high as $23 on January 8, 2002. The Company's stock now trades at $0.02 per share. For more details, contact William Lerach by Phone: 800/449-4900 by E-mail: wsl@milberg.com eUNIVERSE INC.: Faruqi & Faruqi Files Securities Suit in C.D. CA ---------------------------------------------------------------- Faruqi & Faruqi LLP initiated a securities class action in the United States District Court for the Central District of California on behalf of all purchasers of eUniverse Inc. (NasdaqSC:EUNI) securities between July 30, 2002 and May 5, 2003, inclusive. The complaint charges defendants with violations of federal securities laws by, among other things, issuing a series of materially false and misleading press releases concerning eUniverse's financial results and business prospects. Specifically, the complaint alleges that eUniverse failed to disclose that: (1) the Company had materially overstated its net income and earnings per share; (2) that the Company lacked adequate internal controls; and (3) that as a result, the value of the Company's net income and financial results were materially overstated throughout the class period. On May 6, 2003, however, eUniverse shocked the market by announcing that it would restate its financial results for the second and third quarters of the year ended March 31, 2003 and possibly for the first quarter of Fiscal 2003. Following this announcement, the NASDAQ halted trading in the Company's securities. Additionally, on May 8, 2003, eUniverse announced that the United States Securities and Exchange Commission (SEC) had begun an informal inquiry into the announced restatement. For more details, contact Anthony Vozzolo by Mail: 320 East 39th Street, New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 or by E-mail: Avozzolo@faruqilaw.com FEDERAL HOME: Charles Piven Lodges Securities Lawsuit in S.D. NY ---------------------------------------------------------------- The Law Offices Of Charles J. Piven, PA initiated a securities class action on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of Federal Home Loan Mortgage Corporation (Freddie Mac) (NYSE:FRE) between January 27, 2003 and June 9, 2003, inclusive. The case is pending in the United States District Court for the Southern District of New York against defendant Freddie Mac and certain of its executive officers. The action charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the class period which statements had the effect of artificially inflating the market price of the Company's securities. For more details, contact Charles J. Piven, PA by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202, by Phone: 410-986-0036 or by E-mail: hoffman@pivenlaw.com FEDERAL HOME: Brian Felgoise Lodges Securities Suit in S.D. NY -------------------------------------------------------------- The Law Offices of Brian M. Felgoise, PC initiated a securities class action on behalf of shareholders who acquired Federal Home Loan Mortgage Corporation (NYSE:FRE) securities between January 27, 2003 and June 9, 2003, inclusive. The case is pending in the United States District Court for the Southern District of New York, 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 FEDERAL HOME: Milberg Weiss Lodges Securities Lawsuit in S.D. NY ---------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the securities of Federal Home Loan Mortgage Corporation (NYSE: FRE) between January 27, 2003 and June 9, 2003, inclusive. The action, numbered 03-CV-4170, is pending in the United States District Court for the Southern District of New York against Freddie Mac and: (1) David Glenn (COO until June 9, 2003), (2) Vaughn Clarke (CFO until June 9, 2003) and (3) Leland C. Brendsel (CEO and Chairman until June 9, 2003) 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 January 27, 2003 and June 9, 2003. According to the complaint, the Company's class period earnings announcement was materially false and misleading because it failed to disclose that the Company lacked adequate internal accounting controls and personnel expertise, failed to follow accounting rules that require derivative securities to be marked to market, "smoothed out its earnings" using accounting techniques to lower results in good times and lift results when business conditions deteriorated and provided investigators with doctored records to conceal their improper accounting techniques. For more details, contact Steven G. Schulman by Phone: 800/320-5081 by E-mail: freddiemaccomplaint@milbergNY.com or visit the firm's Website: http://www.milberg.com J. JILL: Milberg Weiss Lodges Securities Fraud Suit in MA Court --------------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the securities of J. Jill Group, Inc., (NASDAQ: JILL) between February 12, 2002 and December 4, 2002, inclusive and who suffered damages thereby. The action, numbered 03CV11100, is pending in the United States District Court for the District of Massachusetts against the Company, Gordon R. Cooke (President, CEO, Chairman) and Olga L. Conley (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 material misrepresentations to the market between February 12, 2002 and December 4, 2002, thereby artificially inflating the price of J. Jill securities. The complaint alleges that defendants failed to disclose the following facts: (1) that the Company was accumulating a large amount of products whose value was diminishing. These products would have to be discounted in promotional campaigns which would cause the Company to experience declining financial results; (2) that the Company's same-store sales growth, a figure that is important to investors in retailing stocks but which was not disclosed by the Company during the class period, was declining; (3) that the Company was not collecting taxes in certain states where it made internet sales; and (4) as a result of the foregoing, the earnings projections and positive statements about the Company by defendants were lacking in a reasonable basis and therefore materially false and misleading. On December 5, 2002, J. Jill shocked the market by announcing that it was revising downward its projections for the fourth quarter of 2002: The Company announced that it expected net sales for the fourth quarter to be in the range of $102.0 to $107.5 million and diluted earnings per share to be between $0.25 and $0.30. In response to this announcement, the price of J. Jill common stock dropped from $23.01 per share on December 4, 2002 to a close of $16.52 per share on December 5, 2002. For more details, contact Steven G. Schulman by Mail: One Pennsylvania Plaza, 49th fl., New York, NY, 10119-0165 by Phone: (800) 320-5081 by E-mail: jill@milbergNY.com or visit the firm's Website: http://www.milberg.com J. JILL: Chitwood & Harley Lodges Securities Fraud Lawsuit in MA ---------------------------------------------------------------- Chitwood & Harley LLP initiated a securities class action in the United States District Court for the District of Massachusettes, against J. Jill Group, Inc. (NasdaqNM:JILL) and certain of its officers and directors, on behalf of purchasers of the securities of J. Jill Group between February 12, 2002 and December 4, 2002, 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 February 12, 2002 and December 4, 2002, thereby artificially inflating the price of J. Jill Group securities. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's operations and financial results. In particular, the complaint alleges that defendants' statements were materially false and misleading because defendants failed to disclose and misrepresented: (1) that the Company's same-store sales growth -- an operating metric that is important to investors in retailing stocks -- was declining during the class period as demand for the Company's products weakened; (2) that the Company was amassing a material amount of product that was of diminishing value and would have to be discounted in promotional campaigns, thereby causing the Company to experience declining financial results; (3) that the Company was not collecting taxes in certain States where it made Internet sales and also had a retail store. As a result, the Company was exposed to the heightened risk that it would be subject to regulatory scrutiny; and (4) as a result of the foregoing, defendants' earnings projections and positive statements about the Company were lacking in a reasonable basis and were therefore materially false and misleading. On December 5, 2002, prior to the open of the market, J. Jill Group shocked the market by announcing that it was revising its earnings for the fourth quarter of 2002. The Company reported that it expected fourth quarter diluted earnings per share to range between $0.25 and $0.30. In response to this announcement, the price of J. Jill common stock declined from $23.01 per share to $16.52 per share, a decline of 28%, on extremely heavy volume. Prior to the end of the class period, J. Jill insiders sold more than $17 million of their personally-held stock to the unsuspecting public. For more details, contact Jennifer Morris by Mail: 1230 Peachtree Street, Suite 2300, Atlanta Georga 30309 by Phone: 1-888-873-3999 (toll-free) ext. 6883, by E-mail: jlm@classlaw.com. RECOTON CORPORATION: Brodsky & Smith Files Securities Suit in FL ---------------------------------------------------------------- Brodsky & Smith, LLC initiated a securities class action on behalf of shareholders who purchased the common stock and other securities of Recoton Corporation (Other OTC:RCOTQ.PK) between November 15, 1999 and August 19, 2002, inclusive. The class action lawsuit was filed in the United States District Court for the Middle District of Florida, against former officers and directors of the Company. The complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the class period, thereby artificially inflating the price of Recoton securities. Specifically, the Complaint alleges, inter alia, that defendants materially overstated revenue during the class period and failed to timely take material write-downs of inventory. For more details, contact Marc L. Ackerman or Evan J. Smith by Mail: Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by Phone: 877-LEGAL-90 or by E-mail: clients@brodsky-smith.com ********* A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the Class Action Reporter. Submissions via e-mail to carconf@beard.com are encouraged. Each Friday's edition of the CAR includes a section featuring news on asbestos-related litigation and profiles of target asbestos defendants that, according to independent researches, collectively face billions of dollars in asbestos-related liabilities. The Asbestos Defendant Profiles is backed by an online database created to respond to custom searches. Go to http://litigationdatasource.com/asbestos_defendant_profiles.html ********* 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 * * *