/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/030708.mbx C L A S S A C T I O N R E P O R T E R Tuesday, July 8, 2003, Vol. 5, No. 133 Headlines ALABAMA: Contempt Order Sought Over Failure To Remove Prisoners CATHOLIC CHURCH: New Boston Bishop Troubled By Sex Abuse Issues DEEP VEIN THROMBOSIS: CA Court Allows Passenger Suits To Proceed DEEP VEIN THROMBOSIS: Conflicting Rulings Cause Lawyers To Doubt ELAN CORPORATION: Collapse Likely If Unable To Publish Results EVENFLO COMPANY: Recalls 236T Infant Car Seats For Injury Hazard HOLOCAUST LITIGATION: Ruling Complicates Nazi Victims' Claims IDAHO: Bluegrass Growers Suit Stayed, Appeal Reaches High Court IFCO SYSTEMS: Faces Suits For Acme Barrel In the United States ILLINOIS: Apartment Owners Face Suit Over Deadly Porch Collapse ILLINOIS: Oak Park Mulls Suit Over Damages From Park's Pollution KMART CORPORATION: Ex-Worker Sues Over Improper 401(k) Oversight KRAFT FOODS: To Commence Nationwide Campaign To Against Obesity MERCK & COMPANY: Faces Suit Over Vioxx's Dangerous Side Effects MONTANA: North Havre Residents Settle Suit Over Diesel Fuel Leak NISSAN MOTOR: Readies To Provide Minorities With No-Markup Loans SIX FLAGS: Sues Insurer Over Refusal To Pay Lawsuit Settlement TELECOMMUNICATIONS FIRMS: Must Explain Fees Clearly Under Pact TOBACCO LITIGATION: Court Nullifies $15M Damage Award To Smoker UNITED KINGDOM: Kenyan Women Allege Rapes By British Soldiers WAL-MART STORES: To Include Gays, Lesbians in Anti-Bias Policy WORLDCOM INC.: Offers Ex-Shareholders $250M In SEC Settlement New Securities Fraud Cases ADMINISTAFF INC.: Marc Henzel Lodges Securities Suit in S.D. TX CREE INC.: Schatz & Nobel Commences Securities Suit in M.D. NC GUIDANT CORPORATION: Schatz & Nobel Lodges Securities Suit in IN INTERMUNE INC.: Marc Henzel Lodges Securities Lawsuit in N.D. CA ORTHODONTIC CENTERS: Marc Henzel Commences Securities Suit in LA POLYMEDICA CORPORATION: Wolf Haldenstein Files Stock Suit in MA POLYMEDICA CORPORATION: Marc Henzel Lodges Securities Suit in MA RECOTON CORPORATION: Marc Henzel Lodges Securities Lawsuit in FL REGENERON PHARMACEUTICALS: Marc Henzel Launches Stock Suit in NY SARA LEE: Marc Henzel Launches Securities Fraud Suit in N.D. IL SINGING MACHINE: Cauley Geller Lodges Securities Suit in S.D. FL TYCO INTERNATIONAL: Marc Henzel Files Securities Suit in S.D. FL ********* ALABAMA: Contempt Order Sought Over Failure To Remove Prisoners --------------------------------------------------------------- Jefferson County Sheriff Mike Hale, who said he has been complaining for months about the state's refusal to take charge of inmates promptly after sentencing, has asked a judge for a contempt order against Alabama Prison Commissioner Donald Campbell, the Associated Press Newswires reports. The sheriff contends Jefferson and other counties fall under a class action in which a judge ordered, last year, that the state remove prisoners 30 days after they have been sentenced. Commissioner Campbell, however, said Jefferson County does not fall under the order arising out of the class action. Mr. Campbell said, when the class was created, it exempted counties that already were subject to federal court orders; a category which included Jefferson. Circuit Court Judge Scott Vowell has slated an August 14 hearing in Birmingham's on Sheriff Hale's motion for a contempt order against Commissioner Campbell. CATHOLIC CHURCH: New Boston Bishop Troubled By Sex Abuse Issues --------------------------------------------------------------- Bishop Sean P. O'Malley, a former Washington, D.C. priest who was sent by the Vatican to deal with the aftermath of sex abuse scandals in Fall River, Massachusetts, and Palm Beach, Florida, was named to succeed Cardinal Bernard M. Law as archbishop of Boston, according to a leading Catholic newspaper and church sources in the United States, the Washington Post reports. Bishop O'Malley is one of the Roman Catholic Church's most experienced healers of wounded dioceses, with a track record of settling lawsuits, soothing victims of sexual abuse and instituting criminal background checks for priests and other church workers. In these respects, he is a logical choice to succeed Cardinal Law. He will be a radical change for Boston in many ways. Unlike Cardinal Law, who has a patrician bearing, Bishop O'Malley is a Capuchin Franciscan friar who lives under a vow of poverty and often wears the brown robe and sandals of his order. He is remembered in Washington as a "street chaplain" who, fluent in Spanish, rallied Hispanic residents to fight their eviction from an apartment building in the neighborhood of Adams Morgan in the mid-1970s. Bishop O'Malley, 59, served for less than a year as Bishop of Palm Beach. He was appointed to that wealthy but troubled diocese last fall after its two previous bishops resigned in succession over allegations related to the sex abuse crisis. He was tapped for Palm Beach on the strength of his 10-year record in Fall River, a relatively impoverished diocese south of Boston that had been devastated, financially and spiritually by the criminal conviction of a pedophile priest. DEEP VEIN THROMBOSIS: CA Court Allows Passenger Suits To Proceed ---------------------------------------------------------------- The United States District Court in San Francisco, California allowed suits filed by travelers against several airlines over deep vein thrombosis to proceed, Reuters reports. A California woman and an Arizona man charged Air France, American Airlines and Continental Airlines with failing to warn travelers about the dangers of cramped legroom to their health. "Deep Vein Thrombosis," also known as the economy class syndrome, occurs when a blood clot forms in persons who sit still for a long period of time. The clots can lead to strokes or heart attacks. Attorney for the plaintiffs Michael Danko said airlines should warn passengers of the condition and encourage people to get up and actually walk around. "The risks of a blood clot go up astronomically after a flight of five hours or more," Mr. Danko told Reuters. "Short of redesigning seats and providing more room, airlines should tell people to get up and actually walk around -- not exercise in seats -- every hour and drink more water than they would otherwise be comfortable drinking, and completely avoid alcohol, which dehydrates the body." Plaintiff Debra Miller alleges she suffered a heart attack in April 2001 after traveling on Air France and Continental Airlines flights to San Francisco from Paris. The other plaintiff Daniel Wylie claims he developed a blood clot in his right leg after a July 2001 flight to San Francisco from Paris on American Airlines, a unit of AMR Corporation. Earlier, a British Court barred a similar suit filed by 24 victims of deep vein thrombosis against the world's biggest airlines, including British Airways Plc, Europe's largest airline, Australia's Qantas Airways Ltd. and US carrier Northwest Airlines Corporation. A court in Australia is set to make its own decision in a similar case at the end of the month, Reuters states. The cases come amid difficult times for airlines, which are reeling from a downturn in long-distance and business travel. Attorneys representing Air France, American Airlines and Continental Airlines were not immediately available to comment on the lawsuits, Reuters reports. DEEP VEIN THROMBOSIS: Conflicting Rulings Cause Lawyers To Doubt ---------------------------------------------------------------- The right of airline passengers to sue the airlines after contracting deep vein thrombosis (DVT) remains in doubt after contrary decisions by two overseas courts, said a lawyer for local litigants, according to a report by The Age. The British Court of Appeal recently dismissed a class action lawsuit brought by 24 claimants against 18 airlines, including Qantas. However, in the United States, a federal court in California, cleared the way for two passengers' cases to proceed. The Melbourne law firm of Slater and Gordon is representing about 500 DVT lawsuits, believed to be the majority of such lawsuits in Australia. One test case is due for a hearing on July 28 before the Appeals Court of the Victorian Supreme Court. The case involves a Sydney man, Brian William Povey, who is suing Qantas and British Airways for a blood clot he claims he contracted after a long flight. A Qantas spokeswoman said she believes Qantas will continue defending itself against Mr. Povey's action. Slater and Gordon associate Patrick Over, who is handling the firm's DVT cases, said that while the decisions would be "of interest" to the Victorian Supreme Court, their significance "remains to be seen." The overseas decisions, noted above, in UK and the US, are not binding on the Victorian Supreme Court. Claims for compensation for death and injury during air travel can be made only under the terms of the Warsaw Convention of 1929. "In terms of an injury that occurs on board an aircraft, or in . embarking or disembarking . you must show the injury was caused by an accident in order to recover compensation," Mr. Over said. In December, Justice Bernard Bongiorno, in the Victorian Supreme Court, allowed Mr. Povey's case to proceed on that basis. However, in Britain, three senior judges of Britain's Court of Appeal ruled that DVT could not be classed as accident under the Warsaw Convention. Lawyers for the claimants said they would take the case to the House of Lords, the final British court of appeal. ELAN CORPORATION: Collapse Likely If Unable To Publish Results -------------------------------------------------------------- Elan Corporation, the pharmaceutical company once valued at $2.3 billion, could face collapse within the next few weeks if it fails to persuade the Securities and Exchange Commission (SEC) to allow it to publish its 2002 results, The Sunday Times reports. Holders of Elan's senior debt are likely to demand repayment of loans worth $650 million if the annual accounts for 2002 are not published shortly, analysts said recently. The dispute with SEC certainly affects the 20 or more class actions filed by Elan shareholders last year. Elan's announcement that the publication of its 2002 annual accounts would be delayed because of continuing discussions between the company and the SEC, shook the markets. The SEC has been investigating Elan's books since February of 2002. Arthur Wong, an analyst with rating agency Standard and Poor's, said senior debt holders were "unlikely" to waive their rights to see the annual accounts. A 75 percent majority is necessary to get a waiver from the senior debt holders, said David Marshall, an analyst with NCB Stockbrokers. If there is no waiver, the company could be forced to make the repayment of $650 million of senior debt. This would be the signal for the other lenders to ask for their money back. The company has admitted that it is not in a position to make an immediate repayment of its debts. Holders of senior debt have priority in the payment queue, giving them incentive to pay hard ball if they fear that the company is doomed. The dispute with the SEC stems from Elan's use of off-balance sheet vehicles to consolidate debts contained in its joint ventures. If these had been included in Elan's accounts, as reported under American accounting rules, its profits published in the United States would have been $130 million lower in 2001. The dispute with the SEC almost certainly has implications for more than 20 class actions that were launched by Elan shareholders in the wake of last year's share price collapse. The share fall and legal actions came after The Wall Street Journal published an article in February 2002, accusing the company of concealing losses in the accounts of subsidiaries and partnerships. EVENFLO COMPANY: Recalls 236T Infant Car Seats For Injury Hazard ---------------------------------------------------------------- Evenflo Company Inc. is recalling 236,384 Cozy Carrier infant car seats manufactured between November 2001 and August 2002, the Associated Press reports. National Highway Traffic Safety Administration (NHTSA) tests determined that the detachable base that connects the seat to the vehicle can be easily damaged and infants might not be safely restrained. An NHTSA spokesman said no infants have been killed or injured by the defect, but the recall is being enforced to prevent injuries or accidents from happening. The company will offer affected owners a free upgrade kit. Owners can also go to an authorized vehicle dealer to have the seat repaired. Vandalia, Ohio-based Evenflo did not immediately return a telephone call seeking comment Tuesday, AP reports. This is the second Evenflo child seat recall in 16 months. In April 2002, the company recalled 28,312 Triumph car seats because of a defective harness system. For more information, visit the Company's recall Website: http://www.cozycarry.com HOLOCAUST LITIGATION: Ruling Complicates Nazi Victims' Claims ------------------------------------------------------------- The US Supreme Court recently struck down a California statute intended to compel insurance companies to publish comprehensive lists of holders of Nazi-era (1920 to 1945) policies or risk losing their licenses to operate in the state, Barrons (July 2003) reports. The California law was intended to pressure global insurance companies so that survivors of Nazi atrocities, or their heirs, could seek recovery of assets confiscated by the German government during the war. Resolving such old claims has been difficult, because no death certificates were issued in concentration camps and documentation was lost. The court ruled that the California law interferes with the federal government's ability to conduct foreign policy; specifically, an executive agreement between the United States and the German Foundation, signed by President Clinton in 2000. The agreement sets aside $100 million to resolve "valid" outstanding claims and $175 million for humanitarian purposes. That leaves survivors and their relatives to resolve their claims through the International Commission on Holocaust Era Insurance Claims (ICHEIC). The ICHEIC has been criticized for resolving claims too slowly. It has processed about $40 million in claim-settlement offers, the majority of which, said ICHEIC, have been accepted by the claimants. The Commission also has published more than 440,000 names of people with policies, information which can facilitate processing, as was the goal of the California statute. However, the ICHEIC deadline to register for a possible claim is September 30, a date fast approaching, and many of the survivors are elderly. Democratic Representative Henry Waxman of California, has introduced a bill asking President Bush to change the policy and require the companies to publish complete lists of policy policyholders. A federal class action in New York remains against Assicurazioni Generali. Kenneth Bialkin from the law firm Skadden Arps, is representing the Italian insurer and has moved to have the class action dismissed. Mr. Bialkin has noted that Generali already has paid $100 million to ICHEIC and $40 million to a trust in Israel. Meanwhile, survivors and their relatives who think their families might have had a policy, can register with ICHEIC online at http://www.icheic.orgor by Phone: (800) 957-3203 in the United States. IDAHO: Bluegrass Growers Suit Stayed, Appeal Reaches High Court --------------------------------------------------------------- Pocatello, Idaho Judge William Woodland of the Sixth District has temporarily stayed a major class action against field burning by the bluegrass growers. The case, Moon v. North Idaho Farmers Association, will not proceed until the Idaho Supreme Court decides whether to hear an appeal by the grass growers of Judge John Mitchell's recent ruling invalidating part of a new state law that shields the bluegrass growers from lawsuits, The Spokesman-Review reports. Judge Mitchell, a First District judge in Coeur d'Alene, recently ruled that the "safe harbor" provision of the new state law HB 391 is invalid as an unconstitutional "taking" of private property. HB 391 requires farmers to get burn permits and burn only on days when wind conditions are right to disperse the smoke. The law grants the farmers "safe harbor" from lawsuits if they burn in accordance with the statute's description of what constitutes a burn day. It is a determination of the constitutionality of the "safe harbor" provision, as decided by the Supreme Court, which is sought by Judge Woodland. Judge Woodland has said that such a determination is central to the issues in the Moon case. Judge Woodland recently agreed to take the Moon case when Judge Mitchell recused himself. A lawyer representing two third-party defendants brought into the case by other farmers already sued, challenged the judge under an Idaho law allowing such a challenge, without giving a reason. Judge Mitchell did not fight the recusal which automatically follows upon such a challenge, even though there were charges that the bluegrass growers had "set up" the conditions for such a challenge. Granting a stay at this point deprives the plaintiffs of the chance to argue why burning should be halted this year to protect public health, said plaintiffs' attorney Steve Berman of Seattle. Judge Mitchell already has determined that field burning causes harm to people with breathing problems, Mr. Berman said. Field-burning season is scheduled to begin within three weeks, Idaho officials announced recently. IFCO SYSTEMS: Faces Suits For Acme Barrel In the United States -------------------------------------------------------------- IFCO Systems NV, in Amsterdam, has received two lawsuits that have been filed against IFCO and certain of its subsidiaries in a state court in Illinois, the Dow Jones International News reports. The lawsuits are based upon alleged contaminants discharge, toxic substances and chemicals from the Acme Barrel industrial container facility in Chicago, on or before mid-2001. One of the lawsuits is a class action by approximately 300 plaintiffs claiming injury from exposure to the alleged discharges in the area around the Chicago facility. The second lawsuit is on behalf of a deceased individual and also claims injury from exposure to the alleged discharges during an unspecified period in which the individual worked in a building across the street from the facility. Each of the lawsuits names as defendants a number of former customers of the Acme Barrel facility, as well as the buyer of the IFCO Systems industrial container services. The plaintiffs in each lawsuit seek unspecified damages. IFCO Systems sold its industrial container service business in February 2002. However, within the scope of the sales contract, a subsidiary of IFCO Systems retained title to the Acme Barrel facility pending a future sale to the acquirer of the entire industrial container services. The Acme Barrel facility ceased operations in December 2002. IFCO Systems is in the process of evaluating the claims represented by these lawsuits. IFCO Systems believes it has coverage under an environmental insurance policy with respect to any claims arising out of the Acme Barrel facility that ultimately be successful. ILLINOIS: Apartment Owners Face Suit Over Deadly Porch Collapse --------------------------------------------------------------- The city of Illinois is filing a lawsuit against the owners of a three-story apartment building, whose porch collapsed last weekend and killed 13 people, the Associated Press reports. The suit, filed in Housing Court in Chicago, names as defendants: (1) LG Properties, (2) Philip Pappas, president of LG Properties and (3) George Koutroumos, the contractor who built the porch Fifty people were on a third-floor porch in the building in affluent Lincoln Park when it fell. Seven men and six women died, most of them crushed on the porches below, and at least 57 people were injured. Police said they do not plan to file criminal charges. The State Buildings Department is also inspecting 42 other buildings owned or managed by Mr. Pappas and LG Properties. The city sued the defendants for allegedly constructing the deck without a permit. The suit also states that the porch was too big and built with the wrong materials. The suit further alleges that the three-story apartment building was illegally converted from five units to three. The city seeks a court order requiring immediate replacement of the porch and $500 a day for each violation, which could total hundreds of thousands of dollars since the porch was built in 1998. No one can live in the building until the porches are replaced because they provided needed exits, Jennifer Hoyle, spokeswoman for the city Law Department told AP. Mr. Pappas issued a statement Wednesday saying he and his family were "heartbroken over the loss and injury of so many fine young people." He said that LG Properties was cooperating with the city and referred questions to attorney Michael Ficaro. A message left with Mr. Ficaro's office Wednesday was not immediately returned, AP reports. ILLINOIS: Oak Park Mulls Suit Over Damages From Park's Pollution ---------------------------------------------------------------- On and off for two years, Commonwealth Edison Co. and Nicor Gas have been dealing with the contamination of Barrie Park, a park located in the community of Oak Park, Illinois, the Chicago Tribune reports. The two utilities have been removing coal tar from the park, the toxic leftovers from a gas plant their predecessors ran on that site from 1893 to 1928. After high benzene readings last year caused an 11-month interval during which work could not proceed, the project is more than a year behind schedule, and more than a year away from Barrie Park again looking like a park. Attorney Jerry Homsy said that he is ready to file a lawsuit, seeking class action status, for several neighbors residing in the neighborhood of Barrie Park. The residents are claiming damages from both the contamination as well as from the utilities' $75 million effort to clean the Barrie Park site. Because of the cleanup, the lawsuit claims, "residents have been deprived of the use of their homes; have been made refugees from their homes; or have been made virtual prisoners." While other attempts to bring class actions have failed, Mr. Homsy said he believes the additional information he has gathered and included in the lawsuit will prevail. Some of the "hang-ups" revolving around the remediation cleanup of contamination from surrounding properties promise to become problems in any lawsuit filed. Outside park boundaries, the utilities have paid for consultants to collect samples around more than 50 houses, and contamination has turned up at 21 properties so far, according to Tim Lindberg, the ComEd spokesman. ComEd has agreed to clean out the polluted properties "to remove the potential stigma," according to one company fact sheet. But so far, only one resident has filed the paperwork needed to begin, Mr. Lindberg said. Mistrust prevails over how thoroughly the company would clean. Last winter a grass-roots group was formed among the residents which has been pressing for decontamination in the remediation cleanup of the properties as deep and extensive as the park overhaul. "What we would like to see is a unified standard of cleanup," said Cindy Melin, whose family has rented a house blocks from their Lombard Avenue address in the neighborhood of Barrie Park while the work advances. "A nice, good, deep cleanup that starts with the park and extends through the neighborhood as well." ComEd is proposing to dig up a three-foot stratum of contaminated soil at each property designated as contaminated. If no coal tar residue turns up at that level, the utilities would then fill the hole with clean dirt. Ms. Melin called that inadequate. "To have someone tear out all the trees and shrubbery to take three feet off, that seems a little silly," she said. There are other actions in the works that may result in litigation. Afraid their properties will be forever stigmatized, some residents also have been pushing the village of Oak Park to buy their houses. Some residents have asked for an epidemiological study to examine health consequences of living near Barrie Park. KMART CORPORATION: Ex-Worker Sues Over Improper 401(k) Oversight ---------------------------------------------------------------- Quincie Rankin, a former worker at a Kmart Corporation store in Fairfield, Alabama, sued the company's former executives and directors, including Charles Conaway, its former chief executive officer, and James Adamson, its former chairman and chief executive, in connection with the company's 401(k) plan, the Detroit Free Press reports. Ms. Rankin is seeking class action status for the lawsuit on behalf of all Kmart employees who participated in the 401(k) plan. US District Court Judge Avern Cohen is considering her request. Judge Cohen is also considering a motion by former Kmart Corp. board members to dismiss Ms. Rankin's lawsuit, which alleges the former board members and executives failed to properly oversee the administration of the plan, which was heavily invested in Kmart stock. The lawsuit alleges further that the directors failed to tell the participants in the plan about the company's true financial condition; in fact, the suit alleges, they misled the employees about the retailer's financial condition. Judge Cohn did not indicate when he would rule on the motion. Judge Cohn, however, has ordered Glen Connor, who is representing Ms. Rankin, and who with the Birmingham, Alabama law firm of Whatley Drake, to elaborate exactly how the board members and executives had breached their fiduciary duty to the 401(k) plan. Mr. Connor has said that Kmart's board had a duty under federal pension law to warn employees who held company stock that the company was headed for financial collapse. If Judge Cohn does not dismiss the case, Mr. Connor would be able to depose Kmart's executives and former board members to find out what they might have known about the company's financial collapse. Walter Connolly Jr., a lawyer with Foley & Lardner in Detroit, who represents Mr. Adamson and Kmart's directors, told Judge Cohn his clients regret that Kmart's employees lost money, but Mr. Connolly said they did not control how the company handled its 401(k). Instead, he said, a five-person panel of Kmart executives, called the Employee Benefit Plans Investment Committee, oversaw the plan. Kmart Corporation sought the protection of the US Bankruptcy Law's Chapter 11, on January 22, 2002. When the company emerged from Chapter 11, nearly 16 months later after closing 600 stores and shedding 67,000 workers, the company next canceled its existing stock, rendering its shares worthless. KRAFT FOODS: To Commence Nationwide Campaign To Against Obesity --------------------------------------------------------------- Kraft Foods, Inc. is taking steps to help fight obesity, by placing a limit on portion sizes and eliminating in-school marketing, the Associated Press reports. The Company said it will: (1) halt in-school marketing; (2) use locally appropriate criteria to determine what products to stock in school vending machines; (3) encourage children to develop better eating and activity habits; (4) provide nutrition labeling worldwide; (5) advocate public policies to improve fitness and nutrition in schools and communities; and (6) increase public dialogue The Company produces food items such as Kraft cheese, Nabisco cookies and crackers, Oscar Mayer meats and Post cereals. Recently several fast-food chains, including McDonalds, were charged in class actions for allegedly causing obesity in teenagers. The Company told AP it is forming an expert advisory council to draft standards and measures it can use to promote health. The council will also recommend improved nutritional content of products and provide alternative products where appropriate. "What people eat is ultimately a matter of personal choice, but we can help make it an educated choice," Roger Deromedi, co-CEO at Kraft told AP. "And helping them get more active is every bit as important as helping them eat better." MERCK & COMPANY: Faces Suit Over Vioxx's Dangerous Side Effects --------------------------------------------------------------- Merck & Company faces a lawsuit filed by a California woman, alleging that she suffered dangerous, severe and life threatening side effects after taking the company's arthritis painkiller, Vioxx, Reuters reports. Plaintiff Carolyn Baker filed the suit in Los Angeles Superior Court in California, alleging that she encountered various side effects and is at risk for conditions such as "edema, changes in blood pressure, cardiovascular events, cerebrovascular events and death." Ms. Baker seeks unspecified damages and compensation to enable her "to treat and monitor these side effects" caused by the drug. The suit charges the Company for downplaying the results of a 2000 study linking Vioxx and drugs of its class, called COX-2 inhibitors, to "several severe and life threatening medical disorders" similar to the ones she experienced. The lawsuit also names distributors McKesson Corporation and Bergen Brunswig Corporation as co-defendants. A Merck spokesman said on Wednesday that the drug is safe, Reuters reports. "Merck stands behind the efficacy and safety profiles of Vioxx and will vigorously defend the lawsuit," Chris Loder, Merck spokesman, said. "Merck considers patient safety to be of the utmost importance." MONTANA: North Havre Residents Settle Suit Over Diesel Fuel Leak ---------------------------------------------------------------- The Burlington Northern Santa Fe Railway settled the class action that some 80 North Havre, Montana residents filed decades ago over diesel fuel that leaked from the neighboring railroad yard, the Associated Press Newswires reports. The terms of the settlement, filed in federal court, in Great Falls, are confidential. The North Havre residents' lawsuit sought damages for medical monitoring, cleanup, loss of property value and emotional distress, among other things. They hired an environmental firm in 2001 to investigate the leak and its environmental consequences in the surrounding area. An expert witness for the plaintiffs said their well water is unfit to drink or bathe in and recommended they be plumbed into a public water system, according to court documents. "We have worked with the state on the Havre cleanup situation, and we will continue to work with the state regarding BNSF's responsibility on this matter," said spokesman Gus Melonas from Seattle. Tests have shown that as much as 1.2 million gallons of diesel fuel leaked or spilled at the Havre rail yard along U.S. 2, between the 1940s and the 1970s. The fuel seeped into the groundwater and washed benzene, toluene and other cancer-causing toxins under the community of North Havre, an unincorporated cluster of small homes and trailers between the rail yard and the Milk River. Contamination also escaped from two lagoons filled with chemicals, located in the railroad's diesel engine repair shop, according to environmental reports supplied to the state. Since 1985, the railroad has spent millions of dollars investigating the contamination, most of which occurred prior to the era of strict environmental laws. The railroad submitted a work plan, the result of its investigatory work, to the state's Department of Environmental Quality last fall that recommended the injection of sodium lactate into the shallow water table. Sodium lactate is an organic carbon source that would encourage microorganisms to break down and eat some of the contaminants faster than they would break down naturally. However, the plan needs more study, said Kate Fry, project officer with the DEQ, in Helena. NISSAN MOTOR: Readies To Provide Minorities With No-Markup Loans ---------------------------------------------------------------- Nissan Motor Acceptance Corporation will be providing a number of minorities with loans that have no dealer markups under a $7.6 million settlement recently reached with black and Hispanic consumers. The company also will pay to educate consumers about lending, Newsday reports. The class action which brought about this settlement is only the first in a series of similar class actions being planned. Stuart Rossman, an attorney who represented the plaintiffs, says the Nissan case is the first in a series of lawsuits pending against the finance arms of auto companies which will charge them with discriminatory lending practices. Mr. Rossman said a lawsuit against General Motors Acceptance Corporation is scheduled for trial in February 2004. "We believe (such) settlements are a first step in reforming a practice in the industry that we believe is detrimental to the best interest of consumers," said Mr. Rossman; "we will continue to pursue the other major players in the field." Mr. Rossman is an attorney for the National Consumer Law Center. The class action against Nissan was filed in 1998 in the United States District Court in Nashville, Tennessee. It alleged that Nissan violated federal laws by charging black and Hispanic customers higher interest rates on auto loans than it charged white customers. According to the law center, the settlement calls for Nissan to: (1) send 135,000 offers of no-markup loans on new and used vehicles to creditworthy black and Hispanic customers and potential customers each year for five years. The loans cannot be marked up by the dealers and will save the designated customers at least $750; (2) cap its dealer markup on all other consumer loans at three percentage points for new vehicles and two percentage points for used vehicles; and (3) donate $1 million in grants in the next five years to national and minority consumer education programs. Among the groups receiving funds will be the Consumer Federation of America's America Saves program and the Rainbow Coalition's Rainbow/Push 100 Churches Connected program. The first payment of $200,000 has been sent to America Saves, said Nissan spokesman Kyle Bazemore. SIX FLAGS: Sues Insurer Over Refusal To Pay Lawsuit Settlement -------------------------------------------------------------- Amusement park operator Six Flags Inc. has sued its insurance company, alleging that Pacific Employers Insurance Co. is refusing to pay for the possible settlement and legal costs related to a pending class action, The Daily Oklahoman reports. The lawsuit alleges that the security personnel of Six Flags' Magic Mountain Park discriminated against minority visitors. Six Flags, which is based in Oklahoma, is the named defendant in the 2001 class action, filed in the California Superior Court for Los Angeles County. The lawsuit has been stayed as the parties have entered into mediation. Six Flags has said it is close to reaching a settlement, but needs reassurance from Pacific that its insurance coverage will pick up some of the possible settlement costs. The insurance lawsuit, filed recently in Oklahoma County District Court, claims that the Six Flags insurance policy with Pacific covers up to $8 million in settlement claims and defense costs. The Six Flags lawsuit accuses Pacific of breach of contract and says Pacific benefited financially from Six Flags' efforts to defend the class action. "Six Flags previously has advised Pacific that if the Armendarez action was not settled, the stay lifted and proceeding resumed, Six Flags likely would be exposed to costs, fees and/or damages liability well in excess of the policy limits," the lawsuit against Pacific states. "It's really routine insurance coverage litigation that happens all the time," said John Hermes with the Oklahoma City firm of McAfee & Taft. "The insurance company ultimately decided that in their view there was not coverage, which is why the lawsuit was filed." TELECOMMUNICATIONS FIRMS: Must Explain Fees Clearly Under Pact -------------------------------------------------------------- Sprint Corporation and Nextel Corporation will be obligated to explain extra fees clearly under a settlement that was recently announced by Missouri Attorney General Jay Nixon, who had sued the cell phone companies on behalf of their customers, late last year, for representing surcharges, such as a fee to cover the cost of upgrading emergency 911 systems, as a tax imposed by government, The Kansas City Star reports. Mr. Nixon called the practice engaged in by Sprint and Nextel deceptive, because it led customers to believe non-mandated fees were required by the government, when in reality they were just another cost of doing business, which the telephone were passing along to their customers. The settlement requires Sprint and Nextel to make clearer disclosures about the fees in advertising and in billing statements. The companies also will pay $50,000 each into the Missouri Merchandising Practices Revolving Fund, which pays for consumer education and protection projects. In a statement, Attorney General Nixon called the settlement "a significant victory." "These agreements with Nextel and Sprint will help clarify the bottom line for consumers when comparing plans," the statement said. Sprint and Nextel downplayed the changes they will have to make in explanations about fees charged; they called these changes "minor." The settlement "validates and upholds our longstanding practice of making billing information simple and clear for phone customers," Sprint said in a statement. However, Scott Holste, spokesman for the attorney general, said Sprint and Nextel were singled out in the lawsuit because of concerns about how they represented the charges to customers. With the lawsuit settled, Sprint and Nextel still face more than a dozen class actions concerning the fees. Florida customer Kathy Flaherty filed a class action alleging that Sprint engaged in "false, misleading and deceptive" practices. Matt Clement, a Jefferson City lawyer, is involved in three similar class actions against Sprint, Nextel and Alltel Corporation. Mr. Clement said the lawsuits had been removed to federal court and referred to the Judicial Panel on Multi- district Litigation. The panel will decide whether the similar lawsuits filed throughout the country should be consolidated and handled as one case. Mr. Clement said his clients want the issue handled in state court. "As we see it, it's a state law issue," added Mr. Clement. TOBACCO LITIGATION: Court Nullifies $15M Damage Award To Smoker --------------------------------------------------------------- United States District Judge James Moody granted Brown & Williamson Tobacco Co.'s request asking him to nullify punitive damages awarded in May for the death of Mary Jane Boerner, the Associated Press reports. The decision nullified the $15 million in punitive damages awarded to Ms. Boerner's family. Henry Boerner and Mary Jane Boerner initially filed the suit in June 1998. Ms. Boerner died in 1999, and Henry Boerner and the couple's son, Gary, refiled the suit. The company argued that it was only liable only for compensatory damages since it had simply acquired American Tobacco Co., which made the Lucky Strike and Pall Mall brands that Ms. Boerner smoked, AP stated. Judge Moody agreed with the Company's argument. He, however, upheld the compensatory damages award of $4.25 million. UNITED KINGDOM: Kenyan Women Allege Rapes By British Soldiers ------------------------------------------------------------- In Dol Dol, Kenya, Maasai women dressed in traditional beads waited patiently at an office in this town to relate their allegations of rape against British troops, the Associated Press Newswires reports. It has been 19 years, for example, since Nayook Ole Mosiany, 38, was dragged into a thicket by three British soldiers who attacked her while she was tending her family's cattle near Dol Dol, 155 miles north of Nairobi, according to her allegations. Discussing rape is a taboo in Kenya, and many of the women said their husbands ostracized them after the alleged rapes. Single women raped in Kenya have little prospect of getting married. The rape allegations began to surface as the women's British lawyer, Martyn Day, investigated claims that unexploded ordinance left behind by British troopswho had trained at ranges near Dol Dol had killed and maimed scores of nomadic herdsmen. Last July, Britain agreed to pay $7.4 million to 233 of those victims. Mr. Day acknowledged that following the success of the munitions' case, which turned more than 100 impoverished herdsmen into millionaires in Kenyan terms, there could be bogus rape complainants. Mr. Day is convinced there is a case against the British troops. Some 650 women from the Maasau and Samburu tribes have come forward to allege they were raped between 1972 and 2002, and to join a class action. Many more are expected to follow. "In the end, the central issue is this, were there a significant number of women raped by the British soldiers? And the answer is almost certainly 'yes,' said Mr. Day from London. Mr. Day said he has evidence for at least 100 cases, such as police and medical reports, and he plans to seek compensation of between $33,200 to $49,800 for each alleged victim. Mr. Day said that around 40 of the women have mixed race children. Women with such children are usually forced to leave their community. Recently, a number of Kenyan women filled out questionnaires at the office of a Kenyan human rights organization, called Impact, which is helping the London-based law firm of Leigh, Day and Co. collect evidence about the claims. WAL-MART STORES: To Include Gays, Lesbians in Anti-Bias Policy -------------------------------------------------------------- Wal-Mart Stores, Inc. has decided that it will include gays and lesbians among groups protected by its anti-discrimination policy last week, the Associated Press reports. Seattle-based advocacy group Pride Foundation, which has been working for more than two years to persuade the company not to discriminate on the basis of sexual orientation, welcomed the change, saying they were surprised that victory came so easily. The foundation was prepared to work longer before the change would occur. "We assumed we would be working on Wal-Mart for quite a while," Zan McColloch-Lussier, campaign director for Pride Foundation told AP. "We are quite proud that we did not need to do that." Company spokesman Tom Williams told AP that the change resulted in part from external pressure but also from Wal-Mart workers, who have long urged the company to make the change. "It's the right thing to do," he said. "The issue was that everyone feel valued and treated with respect . No exceptions at all." Pride Foundation, Trillium Asset Management and Walden Asset Management were the groups who worked hard on the Wal-Mart campaign. The groups are members of the Equality Project, a New York-based coalition of funds, investors and others that seek to change corporate policy with the voice that comes from being a shareholder - even a small one, AP reports. The groups are thinking which company to focus on next. Shelly Alpern, an assistant vice president at Trillium told AP that with Wal-Mart's conversion, nine of the top 10 Fortune 500 companies expressly include sexual orientation in their anti- discrimination policies. Exxon Mobil Corporation, however, has stood firm against their requests. It issued a statement saying it did not plan to add the language and believes its "intentionally broad" policy clearly bars discrimination on any basis, including sexual orientation, AP states. In May, shareholders of the oil giant defeated a resolution to ban discrimination against homosexuals. WORLDCOM INC.: Offers Ex-Shareholders $250M In SEC Settlement ------------------------------------------------------------- Telecommunications firm WorldCom, Inc. offered former shareholders $250 million more under a revised agreement proposed by the Company to settle SEC civil fraud charges filed over the accounting scandal that struck the Company last year, the Associated Press reports. The Company faces allegations of filing false and misleading financial statements to hide expenses and inflate earnings. In July 2002, it filed for bankruptcy after investigators discovered accounting irregularities that have soared to $11 billion. In May 2003, the Company agreed to settle the charges by paying $500 million to shareholders who lost money because of the accounting fraud. Last week, the Company filed a new proposal in New York federal courts, stating it would give its former shareholders $250 million in the newly reorganized company, on top of the $500 million cash the Securities and Exchange Commission suggested in an initial settlement. The proposal has to be approved by the court. WorldCom would issue the shares after the company's new stock is trading. The shares would allow fraud victims "to share in the potential upside of owning WorldCom common stock when it emerges from bankruptcy," the SEC said in a statement, AP states. However, critics harshly denounced the settlement as inadequate. Competitors have called for the company to be liquidated as a way of relinquishing gains they contend were made fraudulently. A spokesman for Verizon Communications Inc., Peter Thonis, told AP that the new stock "doesn't change a thing." The rival companies also claim that WorldCom is poised to emerge from bankruptcy at a severe competitive advantage. "This company really shouldn't even be in Chapter 11," Mr. Thonis said. Representatives of Texas-based SBC Communications Inc. did not return calls seeking comment. New Securities Fraud Cases ADMINISTAFF INC.: Marc Henzel Lodges Securities Suit in S.D. TX --------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Southern District of Texas, Houston Division, on behalf of purchasers of Administaff, Inc. (NYSE: ASF) publicly traded securities during the period between April 3, 2001 to July 31, 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 April 3, 2001 and July 31, 2002, thereby artificially inflating the price of Administaff securities. The complaint alleges that these statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (1) that Administaff had inadequate and deficient pricing and billing systems and was incorrectly calibrating pricing for clients that experienced declines in average payroll cost per worksite employee; (2) that Administaff was incorrectly matching the price and cost for health insurance on new and renewing client contracts; and (3) that, in violation of Generally Accepted Accounting Practices and in order to retain its coveted place on the Fortune 500 listing, Administaff was improperly recognizing revenue by failing to net Administaff's worksite employee payroll costs against revenues. On August 1, 2002, before the open of trading, Administaff shocked the investing public when it released its financial and operational results for the second quarter ended June 30, 2002, reporting "a net loss and diluted net loss per share of $3.2 million and $0.11" as compared to Thomson Financial/First Call estimates of $0.04 earnings per share. Market reaction was swift and negative, with Administaff stock falling from a close of $7.50 on July 31, 2002 to a close of $4.20 on August 1, 2002, or a single-day decline of 44% in heavy trading For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 CREE INC.: Schatz & Nobel Commences Securities Suit in M.D. NC -------------------------------------------------------------- Schatz & Nobel PC initiated a securities class action in the United States District Court for the Middle District of North Carolina on behalf of all persons who purchased the common stock of Cree, Inc. (CREE) between August 19, 1998 and June 13, 2003, inclusive. The complaint alleges that Cree and certain of its officers and directors issued materially false and misleading statements about Cree's business during the class period. Specifically, the Complaint alleges defendants manipulated Cree's financial results using transactions between Cree and an affiliated company C3, Inc. Details of the improper transactions are contained in a complaint filed by the brother of the Chairman of Cree's Board of Directors. When these facts were made public on June 13, 2003, the market price of Cree's common stock fell over 18% in one day. For more details, contact Wayne T. Boulton by Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net GUIDANT CORPORATION: Schatz & Nobel Lodges Securities Suit in IN ---------------------------------------------------------------- Schatz & Nobel PC initiated a securities class action in the United States District Court for the Southern District of Indiana on behalf of all persons who purchased Guidant securities (GDT) between September 28, 1999 and June 12, 2003, inclusive. The complaint alleges defendants misled the investing public as to the safety, reliability, marketability and financial impact of Ancure, a device Guidant's subsidiary EndoVascular Technologies (EVT) developed and marketed for the treatment of abdominal aortic aneurysms. The complaint alleges Guidant misled the investing public as to the potential civil and criminal liability the Company may incur as a result of product liability lawsuits and government prosecution relating to Ancure. On June 12, 2003, EVT entered into a settlement agreement with the US Department of Justice relating to problems with Ancure. Under the terms of the agreement, EVT agreed to pay $94.4 million and to plead guilty to 10 felony counts. Prior to the disclosure of this adverse information, the individual defendants and other Guidant insiders sold more than $26.4 million of their personally-held shares of Guidant stock to the unsuspecting public. For more details, contact Wayne T. Boulton by Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net INTERMUNE INC.: Marc Henzel Lodges Securities Lawsuit in N.D. CA ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Northern District of California, on behalf of all purchasers of the securities of InterMune, Inc. (NASDAQ: ITMN) during the period January 6, 2003 to June 11, 2003, inclusive. The suit charges that the Company and the Company's CEO, W. Scott Harkonen, violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and misleading statements about one of the its leading products, Actimmune. Specifically, the complaint alleges that defendants were aware that demand for Actimmune was declining because: (1) the most recent clinical study showed that Actimmune was not effective in the treatment of certain pulmonary diseases; (2) Actimmune inventory levels were increasing, and (3) doctor demand was falling due, in part, to the Company's decision to curtail physician education, the lifeblood of InterMune's off-label sales of Actimmune. However, despite this knowledge, the Company falsely stated during the class period that it was on course to meet projected revenue figures, which had not been previously reduced to reflect lowered demand for the drug. On June 11, 2003, the Company announced that it was cutting its 2003 revenue guidance figures and slashing projected earnings from Actimmune. The Company also announced it had overstated the number of patients using Actimmune and that, contrary to its earlier representations, demand for Actimmune from physicians was flat. These disclosures sent the Company's stock price plummeting to $16.74, a 33% one-day fall. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 ORTHODONTIC CENTERS: Marc Henzel Commences Securities Suit in LA ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Eastern District of Louisiana on behalf of purchasers of the securities of Orthodontic Centers of America, Inc. (NYSE: OCA) between November 14, 2002 and March 18, 2003 inclusive, who have been damaged thereby. The action, is pending against the Company and: (1) Bartholomew Palmisano, Sr. (President and CEO), (2) Bartholomew Palmisano, Jr. (COO) and (3) Thomas Sandeman (CFO) 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 materially false and misleading statements to the market between November 14, 2002 and March 18, 2003. Specifically, the complaint alleges that OCA was at all relevant times a provider of integrated business services to orthodontic and pediatric dental practices. In May 2001, OCA announced that it had entered into a definitive merger agreement whereby a wholly owned subsidiary of OCA would merge into OrthAlliance in a stock-for-stock transaction, with OrthAlliance becoming a wholly owned subsidiary of OCA. Following the May 2001 announcement, a number of OrthAlliance's affiliated practices filed lawsuits against OrthAlliance and/or notified OrthAlliance that it was in default under their service, management service, and consulting agreements and that these practices had stopped paying their service fees. At all relevant times, the Company stated that it had anticipated such lawsuits and that the integration of OrthAlliance and OCA was not only going as planned but also "very very well." The complaint further alleges that the statements disseminated by defendants during the Class Period and with respect to the financial well-being of the Company were each materially false and misleading because: (1) the integration of OrthAlliance practices was not going "very very well" but on the contrary, it was going very poorly and, consequently, the Company's actual revenue and earnings were decreasing; (2) not only had some OrthAlliance practices sued but other OrthAlliance practices had discontinued paying their services fees; (3) the Company continued to recognize revenue from OrthAlliance practices that were in litigation and from those that had stopped paying their service fees and was thereby violating Generally Accepted Accounting Principles (GAAP); and (4) the defendants were actively concealing these facts in order to manipulate the Company's earnings outlook and thereby maintain its favorable stock prices. The complaint further alleges that on March 18, 2003 the Company announced its financial results for the fourth quarter ended December 31, 2002. The Company reported fourth quarter earnings of $0.17 per share, compared to fourth quarter 2001 earnings of $0.34 per share, on fee revenue of $102.1 million compared to fourth quarter fee 2001 revenue of $104.4 million. The Company attributed the decline in revenue and earnings to "26 OrthAlliance affiliated practices that paid service fees in the fourth quarter of 2001 and stopped paying service fees during the third and fourth quarters of 2002." On this news, OCA's share price dropped 41% from a closing price of $9.57 on March 18, 2003 to a closing price of $5.64 on March 19, 2003. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 POLYMEDICA CORPORATION: Wolf Haldenstein Files Stock Suit in MA --------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action in the United States District Court for the District of Massachusetts, on behalf of all persons who purchased or otherwise acquired the securities of PolyMedica (PLMD) between July 23, 2001 and June 30, 2003, inclusive, against PolyMedica and certain officers of the Company. The complaint alleges that throughout the class period, defendants issued statements, press releases, and filed quarterly and annual reports with the SEC describing the Company's business operations and financial condition. These representations were materially false and misleading because they failed to disclose that throughout the class period, the Company had materially misstated its operating earnings. Specifically, during the relevant time period, it has been reported that PolyMedica overstated earnings by capitalizing direct response advertising costs related to the acquisition of new customers rather than expensing them as incurred. Consequently, PolyMedica recorded such advertising costs as assets rather than as expenses. By accounting for these expenses as assets, PolyMedica could spread the cost over a two to four year period rather than accounting for the expense in the quarter in which they were incurred. This allowed PolyMedica to understate operating expenses, overstate assets, and create a false impression of operating efficiencies with the overall effect being that the Company misled investors concerning the Company's growth and earnings. This contrivance violates Generally Accepted Accounting Principles and the SEC has closely scrutinized this practice. On June 30, 2003, after the stock market closed, PolyMedica issued a press release announcing that as a result of discussions with the SEC regarding the expensing of the Company's direct response advertising costs, PolyMedica may be forced to restate results for the fiscal years 2002 and 2003. The Company said the restatement would reduce its fiscal 2002 earnings to $1.76 from $2.38 per share, a reduction of 26%, its fiscal 2003 to $2.61 from $3.21, a reduction of 19%, and fiscal 2004 first quarter earnings expectations to $.66- .72 from $.84- .90. On this news, shares of PolyMedica, which had closed at $45.86 on June 30, 2003, opened for trading on July 1, 2003, at $38.56, down $7.30, or 15.9%. PolyMedica shares closed later that day at $37.39 per share for a loss of $8.47 per share, or 18.5%. For more details, contact Fred Taylor Isquith, Gregory Nespole, Christopher Hinton, 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 PolyMedica. POLYMEDICA CORPORATION: Marc Henzel Lodges Securities Suit in MA ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the District of Massachusetts, on behalf of all persons who purchased or otherwise acquired the securities of PolyMedica (Nasdaq: PLMD) between July 23, 2001 and June 30, 2003, inclusive, against the Company and certain officers of the Company. The complaint alleges that throughout the class period, defendants issued statements, press releases, and filed quarterly and annual reports with the SEC describing the Company's business operations and financial condition. These representations were materially false and misleading because they failed to disclose that throughout the class period, the Company had materially misstated its operating earnings. Specifically, during the relevant time period, it has been reported that PolyMedica overstated earnings by capitalizing direct response advertising costs related to the acquisition of new customers rather than expensing them as incurred. Consequently, PolyMedica recorded such advertising costs as assets rather than as expenses. By accounting for these expenses as assets, PolyMedica could spread the cost over a two to four year period rather than accounting for the expense in the quarter in which they were incurred. This allowed PolyMedica to understate operating expenses, overstate assets, and create a false impression of operating efficiencies with the overall effect being that the Company misled investors concerning the Company's growth and earnings. This contrivance violates Generally Accepted Accounting Principles and the SEC has closely scrutinized this practice. On June 30, 2003, after the stock market closed, PolyMedica issued a press release announcing that as a result of discussions with the SEC regarding the expensing of the Company's direct response advertising costs, PolyMedica may be forced to restate results for the fiscal years 2002 and 2003. The Company said the restatement would reduce its fiscal 2002 earnings to $1.76 from $2.38 per share, a reduction of 26%, its fiscal 2003 to $2.61 from $3.21, a reduction of 19%, and fiscal 2004 first quarter earnings expectations to $.66- .72 from $.84- .90. On this news, shares of PolyMedica, which had closed at $45.86 on June 30, 2003, opened for trading on July 1, 2003, at $38.56, down $7.30, or 15.9%. PolyMedica shares closed later that day at $37.39 per share for a loss of $8.47 per share, or 18.5%. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 RECOTON CORPORATION: Marc Henzel Lodges Securities Lawsuit in FL ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Middle District of Florida, on behalf of purchasers of the securities of Recoton Corporation (NasdaqNM:RCOTQ) between November 15, 1999 through August 19, 2002, inclusive who have been damaged thereby. The action, is pending against: (1) Arnold Kezsbom, (2) Robert L. Borchardt, (3) Stuart Mont, and (4) Tracy Clark 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 November 15, 1999 and August 19, 2002, thereby artificially inflating the price of Recoton securities. During the class period, the Company issued statements that failed to disclose the following adverse facts, among others: (i) that a "strategic plan," which was required by its creditors, was not implemented to improve efficiencies, increase future profitability, improve cash flow, and increase return on assets; (ii) that company executives received bonuses prior to meeting corporate financial goals contrary to the Company's statements that Recoton was moving to a more "incentive-based method of compensation"; (iii) that the Company's reported financial results that were in violation of generally accepted accounting principles (GAAP) because of material inventory overstatements, and improper revenue recognition tactics. On August 19, 2002, the Company revealed that it had granted additional price concessions to customers "on products previously purchased." On news of this, shares of Recoton stock fell 15% to close at $1.76 per share, a far cry from the Class Period high of over $20 per share. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 REGENERON PHARMACEUTICALS: Marc Henzel Launches Stock Suit in NY ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of purchasers of the securities of Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) between March 28, 2000 and March 30, 2003, inclusive, and who suffered damages thereby. The action, is pending against the Company and: (1) Leonard S. Schleifer (President and CEO), (2) George D. Yancopoulos (Chief Scientific Officer), (3) Hans-Peter Guler (VP of Clinical Studies), (4) Neil Stahl (VP) and (5) Murray A. Goldberg (CFO) The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between March 28, 2000 and March 30, 2003. Regeneron is a biopharmaceutical company that discovers, develops and intends to commercialize therapeutic drugs for the treatment of serious medical conditions. During the class period, Regeneron initiated Phase II clinical trials for its diet drug AXOKINE for use in obese patients. The complaint alleges that the defendants claimed that AXOKINE would help patients lose weight better than a placebo over a year. However, more than two-thirds of the 1,467 patients on the medicine in the clinical trials developed antibodies to it after three months, which made the medicine less effective. Patients taking AXOKINE, including those who developed antibodies, lost an average 6.2 pounds, compared with 2.6 pounds for those on a placebo, which the Company admits is similar to results dieters get with already available pills. Before results were released, defendants had led the public to believe that AXOKINE would have more than $500 million in annual sales. On March 31, 2003, Regeneron admitted AXOKINE lost effectiveness in about 70% of patients in a study. On this news, the biotechnology company's shares plunged 57%, a market cap loss of more than $500 million. However, even defendants' admission was false, as, in fact, defendants manipulated the results of the study. In truth, 73.5% of the patients developed antibodies to the drug. As a result of the defendants' false statements, Regeneron's stock price traded at inflated levels during the class period, increasing to as high as $40 on December 18, 2000, whereby the Company and its top officers and directors sold more than $430 million worth of their own securities. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 SARA LEE: Marc Henzel Launches Securities Fraud Suit in N.D. IL --------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Northern District of Illinois on behalf of purchasers of Sara Lee Corporation (NYSE: SLE) publicly traded securities during the period between August 1, 2002 to April 24, 2003, inclusive. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between August 1, 2002 and April 24, 2003, thereby artificially inflating the price of Sara Lee securities. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's operations and prospects. In particular, the Complaint alleges that the statements were materially false and misleading because they failed to disclose: (1) that, despite the Company Reshaping program, the Company was still burdened with numerous poorly performing businesses and would have to reevaluate its various businesses. Accordingly, Sara Lee did not have "the right mix of businesses" in that several material businesses were "not growing" or were "in significant decline;" (2) that the Company's underperforming businesses were causing the Company to experience declining results and, as a result, the Company would not be growing at the rates represented to the market; (3) due to a lack of proper internal or financial controls, Sara Lee failed to identify or recognize those businesses or brands among its portfolio of companies that would need to be "run dramatically differently in the future;" and (4) based on the foregoing, Sara Lee lacked any reasonable basis upon which to project it would experience "double-digit operating income increase" for fiscal 2003 among its "five lines of business" or have diluted EPS for fiscal 2003 in the range of $1.54 to $1.60. On April 24, 2003, Sara Lee shocked the public when it issued a press release announcing its financial results for the third quarter, the period ending March 31, 2003. The Company announced that it was reducing earnings for fiscal 2003 to $1.50 to $1.52 per share, significantly below consensus expectations of $1.59. In response to this announcement, the price of Sara Lee common stock dropped by 10%. During the class period, Sara Lee insiders sold more than $23 million of their personally-held Sara Lee common stock to the unsuspecting public. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 SINGING MACHINE: Cauley Geller Lodges Securities Suit in S.D. FL ---------------------------------------------------------------- Cauley Geller Bowman & Rudman, LLP initiated a securities class action in the United States District Court for the Southern District of Florida on behalf of purchasers of The Singing Machine, Inc. (SMD) common stock during the period between August 9, 2001 and June 27, 2003, inclusive. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between August 9, 2001 and June 27, 2003, thereby artificially inflating the price of The Singing Machine common stock. The complaint alleges that these statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (1) that the Company had materially overstated its net income in violation of Generally Accepted Accounting Principles (GAAP); (2) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; (3) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times; (4) that the Company avoided taking sufficient changes to earnings in 2001 and 2002 to account for income tax liabilities; and (5) that as a result, the Company's financial results were materially overstated at all relevant times. On June 27, 2003, the Company announced that it would restate its fiscal 2002 financial statements and possibly fiscal 2001 financial statements to increase the accrual for income taxes. Moreover, the Company stated that the restatement will have the effect of reducing net income for fiscal 2002 and possibly fiscal 2001. News of The Singing Machine's restatement shocked the market. Shares of The Singing Machine fell 33%, or $1.80 per share, to close at $3.60 per share on June 27, 2003. For more details, contact Samuel H. Rudman, David A. Rosenfeld, Jackie Addison, Heather Gann or Candace Randle by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 by Fax: 1-501-312-8505 or by E-mail: info@cauleygeller.com TYCO INTERNATIONAL: Marc Henzel Files Securities Suit in S.D. FL ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Southern District of Florida, West Palm Beach Division, on behalf of all persons who purchased or acquired Tyco International, Ltd. (NYSE: TYC) securities between December 30, 2002 to March 12, 2003, inclusive. The complaint charges Tyco with a violation of Sections 10(b) and Rule 10b-5 promulgated thereunder and Section 20(a) of The Exchange Act. Specifically, the complaint alleges that Defendants failed to disclose and/or misrepresented the following material adverse facts, among others: (1) that the Company, for as long a period as six years had overstated its income by between $265 million and $325 million by improperly understating its bad debts and its inventory reserves for obsolete product and by improperly amortizing assets in its ADT business segment, in violation of Generally Accepted Accounting Principles (GAAP); (2) that the senior management team in charge of the ADT business segment were honest and capable business managers when, in fact, they were not capable of running the crucial ADT business segment in an honest manner; (3) that the Company's reported quarterly growth rate was illusory, based in material respects on the improper accounting treatment of its ADT business segment, and that material problems with its accounting and reported financial results continued to plague the Company after the actions disclosed by Defendants in the aftermath of the Boies Investigation; and (4) that Defendants had no reasonable basis in fact for their statements to the market that Tyco would earn between $1.50 and $1.75 per share for fiscal year 2003, in light of the overstatement of Tyco's income primarily as a result of the violations of GAAP in its ADT business segment. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 ********* 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. 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