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/raid1/www/Hosts/bankrupt/CAR_Public/030714.mbx C L A S S A C T I O N R E P O R T E R Monday, July 14, 2003, Vol. 5, No. 137 Headlines CALIFORNIA: Los Angeles Faces Suit Over Religious Land Use Act CALIFORNIA: Los Angeles to Settle Homeless Lawsuit For $170,000 COMFORT WOMEN: Appeals Suit Refuses To Allow Suit in US Courts ENRON CORPORATION: Court To Set Securities Trial For Oct. 2005 GENCORP INC.: Discovery Proceeds in Retirees' Lawsuit in N.D. OH GUIDANT CORPORATION: Cauley Geller Retained To Sue Over Ancure LITTLE LEAGUE: Ex-players Sue For Alleged Sex Abuses, Negligence NEBRASKA: Court Orders Reinstatement of Single Moms' Medicaid RAMBUS INC.: DE Court Dismisses Shareholder Derivative Lawsuit SECURITIES LITIGATION: Study Measures Effects of Sarbanes-Oxley SECURITIES LITIGATION: Court To Decide on Evidence For NY Suit SONY CORPORATION: Recalls Vaio Laptop For Electric Shock Hazard TALARIAN CORPORATION: Enters Lawsuit Settlement Discussions TELECOMMUNICATIONS FIRMS: To Settle Right-of-Way Suit in N.D. IL TIBCO SOFTWARE: Negotiating To Settle NY Securities Fraud Suit VIVENDI UNIVERSAL: Court Freezes Severance Payment To Former CEO WEGENER CORPORATION: Faces Breach of Fiduciary Duty Suit in DE *Mobile Phone Users Sue Over Added Fees For Number Portability New Securities Fraud Cases ALLOU HEALTHCARE: Marc Henzel Lodges Securities Suit in E.D. NY ASTROPOWER INC.: Marc Henzel Commences Securities Lawsuit in DE AVERY DENNISON: Marc Henzel Lodges Securities Lawsuit in C.D. CA BARRICK GOLD: Marc Henzel Commences Securities Suit in S.D. NY BARRICK GOLD: Bernstein Liebhard Lodges Securities Lawsuit in NY BLUE RHINO: Marc Henzel Lodges Securities Fraud Suit in C.D. CA CARREKER CORPORATION: Marc Henzel Launches Securities Suit in TX COrTS TRUST: Stull Stull Commences Securities Lawsuit in E.D. NY DIVINE INC.: Bernstein Liebhard Files Securities Suit in N.D. IL FEDERAL HOME: Wechsler Harwood Lodges Securities Suit in E.D. VA FEDERAL HOME: Bernstein Liebhard Lodges Securities Lawsuit in NY PARADIGM MEDICAL: Marc Henzel Lodges Securities Lawsuit in Utah PEDIATRIX MEDICAL: Marc Henzel Lodges Securities Suit in S.D. FL PEDIATRIX MEDICAL: Faruqi & Faruqi Lodges Securities Suit in FL PRINTCAFE SOFTWARE: Marc Henzel Files Securities Suit in W.D. PA READ-RITE CORPORATION: Marc Henzel Lodges Securities Suit in CA SARA LEE: Chitwood & Harley Lodges Securities Lawsuit in N.D. IL ********* CALIFORNIA: Los Angeles Faces Suit Over Religious Land Use Act -------------------------------------------------------------- The League of Residential Neighborhood Advocates (LRNA), a new non-profit organization formed to protect and preserve homeowners rights, the integrity of neighborhoods and serve as a resource for neighborhoods under threat of inappropriate uses of buildings for religious purposes, filed a lawsuit against the City of Los Angeles and the Congregation of Etz Chaim which seeks, in part, to prevent use of a rebuilt neighborhood home for what is expected to be a three-story, 8,100-square-foot synagogue in the heart of the long-time residential community. Many homeowner groups around the country are anxiously watching how this lawsuit develops because of its implications for land use issues involving religious organizations in their respective communities. The lawsuit is expected to lead to a Supreme Court challenge of the Religious Land Use and Institutionalized Persons Act (RLUIPA), which effectively takes away zoning control from local communities and governments by giving religious organizations special consideration on land use issues. "Home ownership is a cornerstone of the American dream, but in too many communities across the country, those dreams have become nightmares of traffic, noise and congestion as buildings owned by religious groups are situated alongside single family homes without concern for the impact on the community," Larry Faigin, lead plaintiff said in a statement. "Homeowners expect their government to apply regulations consistently and not to jettison local zoning laws to give special consideration to religious or any other groups." Throughout the United States, religious organizations have used RLUIPA as the basis for lawsuits against local governments who have tried to apply area land use laws to the religious groups. Communities facing similar threats from RLUIPA include: (1) Abington, PA; (2) Austin, TX; (3) Boyle Heights, CA; (4) Castle Hills, TX; (5) Cheyenne, WY; (6) Granada Hills, CA; (7) New Berlin, WI; (8) New Milford, CT; (9) Morgan Hills, CA; and (10) Lake Elsinore, CA The LRNA case is believed to be the first lawsuit in the nation in which local homeowners are challenging a City's zoning decision related to a place of worship and, in essence, RLUIPA. "When Congress passed RLUIPA, Washington usurped local governments' authority and ignored a long-held and fundamental principle of zoning laws -- that local land use decisions should be made by local government in consultation with local communities," said Marci Hamilton, J.D., Professor of Law at the Benjamin N. Cardozo School of Law, Yeshiva University and a leading expert on RLUIPA. Mr. Hamilton is lead counsel and one of the attorneys who filed the case. "In this case and under the shadow of RLUIPA, the City of Los Angeles entered into what we believe is a void settlement that permits the construction of what will be a major neighborhood nuisance," he continued. The suit alleges in part, that the City violated its own zoning ordinances by entering into a void settlement agreement, granting a de facto conditional use permit (CUP), and issuing a building permit, all without community input or disclosure. The allegations in the case stem from actions by the Congregation over the past six years as it attempted to construct a building to be used for a religious purpose in the residential area of Hancock Park, which has maintained its residential character for 75 years. Since 1996, the congregation made a series of unsuccessful attempts to gain approval under local zoning laws; all were rejected at each step of the City's administrative review process and subsequently by a state and appeals court. The suit claims the situating of a religious building that attracts more than 50 people each week and 200-500 people for special events causes a substantial burden on the neighborhood due to parking, traffic and noise problems. This intense use is inconsistent with the character of the neighborhood. The congregation was repeatedly denied a CUP after multiple public hearings. Nonetheless, it continued to use the property as a religious institution. When neighborhood residents complained, they were given assurances by city officials that their quality of life and their community would be protected. The repeated rejection of the congregation's CUP and the Court's upholding of those decisions were subsequently circumvented when Congress passed RLUIPA in 2000. Shortly after that, the congregation asserted its right to build in the residential community based on RLUIPA. The City of Los Angeles then entered into a settlement agreement granting a de facto CUP to the congregation without public hearings or notice. While the settlement agreement contained a provision that ensured the "residential character and architecture" of the property would be restored and maintained, the City later issued a building permit that ignored the terms of the settlement. The congregation then demolished a residential home to build a new structure almost three times larger than the size of the original home for what is expected to be use as a religious building. LRNA has been formed to assist homeowners across the country to expand the efforts to preserve the character, tranquility and quality of life of residential neighborhoods through the enactment and consistent enforcement of zoning and land use laws, as well as public education. This lawsuit is the first in what is expected to be a series of actions by the group to protect the residential character of neighborhoods. "Residents must speak out and be pro-community and pro- neighborhoods, even as they risk being unfairly labeled `anti- religion,'" said Mr. Faigin. "In fact LRNA board members, plaintiffs and supporters represent many religions." "We strongly believe that RLUIPA is unconstitutional. It is beyond the power of Congress, violates states rights and ignores the separation of church and state by giving preferential treatment to religious organizations. And, in this case, it led to the violation of the community's right to due process and equal protection under the law," said Mr. Hamilton. For more details, contact Robert Alaniz of Rogers & Associates by Phone: 310/552-6922 CALIFORNIA: Los Angeles to Settle Homeless Lawsuit For $170,000 --------------------------------------------------------------- The city of Los Angeles agreed to pay nearly $170,000 to settle a class action filed on behalf of homeless persons who were allegedly improperly arrested during the controversial Los Angeles Police Department (LAPD) sweeps of Skid Row last year, NBCTV4 reports. The suit accused the city of arresting the homeless without proper documentation of a violation. The sweeps were "the wrong way to go about getting something done," Carol Sobel, an attorney representing the National Lawyers Guild, which filed the suit with the American Civil Liberties Union of Southern California, told NBCTV4. Under the settlement, about $75,000 will go to as many as 58 people, and the rest will be used to pay for attorneys' fees. The settlement was approved Wednesday with a 10-4 vote from the City Council. The sweeps are part of Police Chief William Bratton's "broken windows" theory of law enforcement, focusing on smaller quality- of-life crimes as well as felonies, NBCTV4 reports. "(Bratton) believed then and believes now that the department acted appropriately," police department spokesman Sgt. John Pasquierello said, adding that homeless sweeps will continue. COMFORT WOMEN: Appeals Suit Refuses To Allow Suit in US Courts -------------------------------------------------------------- The United States Court of Appeals for the DC Circuit upheld a lower court's 2001 ruling refusing to allow the suit filed by 15 Asian women who were raped and tortured by Japanese soldiers during World War II to proceed in US courts, law.com reports. The "comfort women" were used as sex slaves by Japanese soldiers and come from China, Taiwan, South Korea and the Philippines. They filed the suit in 2000. It is estimated than more than 200,000 women were forced into sexual slavery and three-quarters of them did not survive the war. Similar cases have been filed against the Japanese government, but none have prevailed. Federal Judge Henry Kennedy earlier rejected the suit, concluding that, unlike ordinary prostitution, the atrocities were an aspect of Japanese government policy and thus, not commercial in nature. He scrutinized whether the sexual torture to which the "comfort women" were subjected was actually a "commercial activity" that would permit Japan to be sued, but decided that the case presented a "political question" not suitable for the courts. Lawyers for Japan contended that the nation enjoys sovereign immunity and that the case raises "political questions" amenable to diplomatic or legislative solutions but not to lawsuits, law.com reports. The State Department also supported Japan's position, citing the 1951 peace treaty as applicable to Japan's sovereign immunity - a position that was hugely criticized by Asian-American activist groups. The circuit court wrote that "much as we may feel for the plight" of the women -- who are Chinese, Taiwanese, South Korean and Filipino nationals -- "the courts of the United States simply are not authorized to hear their case," law.com reports. The court ruled that the US government does not recognize a "commercial activity" exception to sovereign immunity for any acts committed before 1952. Thus, Japan, as a foreign country, is immune from suit for its activities before and during World War II. Michael Hausfeld of D.C.'s Cohen, Milstein, Hausfeld & Toll, an attorney for the women, calls the decision "tragic" and says he will seek rehearing by the full DC Circuit, law.com reports. "Trafficking in women and children is a modern-day scourge," Mr. Hausfeld said. "This opinion basically skirts the whole issue on a technicality." In a statement, the Japanese government expressed its view that the court decision was correct, while noting that it has expressed "deep regret and apology" to the comfort women and has made contributions to a welfare fund for their support, law.com reports. ENRON CORPORATION: Court To Set Securities Trial For Oct. 2005 -------------------------------------------------------------- United States District Court in Texas Judge Melinda Harmon is considering an October 2005 trial for dozens of shareholder lawsuits against fallen energy trader Enron Corporation over losses they incurred due to the Company's bankruptcy filing in late 2001, the Associated Press reports. Several suits were filed against the Company, former executives and various banks and brokerages, the biggest of which is a $25 billion claim with the University of California as the lead plaintiff. The suits allege that the defendants, Enron's one- time auditor, Arthur Andersen LLP, and several financial institutions artificially inflated profits and hid debt to defraud investors, before the Company collapsed. Judge Harmon initially set trail for December 2003, but the claims kept growing as more defendants and lawsuits were added. Judge Harmon put the claims on hold in May 2002 so she could read and rule on requests from defendants that she either dismiss the cases or release them from the litigation. In December 2002, Judge Harmon decided to keep most of the defendant financial institutions as part of the litigation. In April, she also retained former Enron executives, including former chairman Kenneth Lay and CEO Jeffrey Skilling as defendants. In May 2003, Judge Harmon and US Bankruptcy Judge Arthur Gonzalez, the New York judge overseeing Enron's Chapter 11 case, ordered the plaintiffs to work with a mediator to negotiate a settlement with Enron and the financial institutions, AP reports. She said other defendants may be ordered to try to settle as well in the future. Those talks, with Senior US District Judge William C. Conner of White Plains, NY acting as mediator, began late last month. Similar efforts to settle with Arthur Andersen were abandoned in May last year. Attorneys proposed that they should produce almost 100 million documents by the end of this year and conduct an estimated 500 depositions next year. Judge Harmon did not rule yet on this proposal. GENCORP INC.: Discovery Proceeds in Retirees' Lawsuit in N.D. OH ---------------------------------------------------------------- Discovery will proceed in a class action filed against Gencorp, Inc. and OMNOVA Solutions, Inc. by a group of hourly retirees, disputing certain retiree medical benefits, in the United States District Court for the Northern District of Ohio. The retirees seek rescission of the then current Hourly Retiree Medical Plan established in the spring of 1994, and the reinstatement of the prior plan terms. The crux of the dispute relates to union and GenCorp negotiated modifications to retiree benefits that, in exchange for other consideration, now require retirees to make benefit contributions as a result of caps on Company-paid retiree medical costs implemented in the Fall of 1993. A retiree's failure to pay contributions results in a termination of benefits. The plaintiffs are seeking class action status. The trial court has not yet ruled on the class action certification. The putative class representatives currently consist of four hourly retirees from the Jeannette, Pennsylvania facility of OMNOVA, the company spun-off from GenCorp on October 1, 1999, two hourly retirees from OMNOVA's former Newcomerstown, Ohio facility, and three hourly retirees from GenCorp's former tire plants in Akron, Ohio, Mayfield, Kentucky, and Waco, Texas. The putative class encompasses all eligible hourly retirees formerly represented by the unions URW or USWA. The unions, however, are not party to the suit and have agreed not to support such litigation pursuant to an agreement negotiated with GenCorp. GenCorp prevailed in a similar class action filed in 1995, arising at its Wabash, Indiana location. Plaintiff retirees and the defendants filed cross-motions for summary judgment, which were denied on December 20, 2002. In February 2003, the court approved a case management plan and discovery will proceed throughout most of 2003. GenCorp has given notice to its insurance carriers and intends to vigorously defend against the retirees' claims. OMNOVA has requested defense and indemnification from GenCorp regarding this matter. GenCorp has denied this request. OMNOVA's defense and indemnification claims will likely be decided through binding arbitration pursuant to agreements entered into during the GenCorp-OMNOVA spin-off in 1999. GenCorp and OMNOVA have exchanged letters to initiate the arbitration process and are in the process of selecting an arbitrator. GUIDANT CORPORATION: Cauley Geller Retained To Sue Over Ancure -------------------------------------------------------------- Cauley Geller Bowman & Rudman, LLP has been retained by several clients to pursue claims on their behalf against Guidant Corporation, Inc. (NYSE:GDT), an Indiana Corporation and Endovascular Technologies, Inc., a wholly owned subsidiary of Guidant Corporation, Inc. Before September 30, 1999, and March 16, 2001, Endovascular Technologies sold 7632 stent graft devices in the United States. During this time, 2800 complaints were received by the company. In a criminal act, the company failed to notify the Food and Drug Administration of more than 90% of these complaints. The device in question, the Ancure Endograft System, was used to treat a weakened blood vessel in the abdomen without surgery. This condition is called Abdominal Aortic Aneurysm. The problems with the device centered on the system used to insert it. The equipment could become lodged, potentially requiring emergency surgery to remove it. Guidant has agreed to pay $92.4 million in government fines for their role in this scandal. Kevin V. Ryan, the United States attorney in San Francisco, summed up the case this way: "Because of the company's conduct, thousands of patients underwent surgeries without knowing the risks they faced, and their doctors -- through no fault of their own -- were unprepared to deal with those risks." For more details, contact Steven A. Owings or Gina Cothern by Mail: 11001 Executive Center Drive, Little Rock, AR 72211 or P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 by Fax: 501-312-8505 by E-mail: Ancure@cauleygeller.com or visit the firm's Website: http://www.cauleygeller.com LITTLE LEAGUE: Ex-players Sue For Alleged Sex Abuses, Negligence ---------------------------------------------------------------- Little League Baseball, Inc. faces a possible class action filed by two ex-players, alleging it did not do its part to protect children from sexual abuse by not checking the background of participating adults thoroughly, NBC4TV reports. The suit, filed in Los Angeles, California Superior Court also names as defendants: (1) East Baseline Little League of Highland, in San Bernardino County, (2) Norman Watson, a former East Baseline coach who pleaded guilty in 1998 to molesting five players - four boys and a girl ages 12 to 15 - and is serving 84 years in a state prison, (3) Mike Legge, described as the Western Region director for Little League Baseball, and (4) Dave Bonham, Mr. Legge's assistant The suit alleges that Little League officials knew that Mr. Watson was listed in the Megan's Law high-risk sex offender database and had spent time in Patton State Hospital, papers filed by Los Angeles attorney David R. Lira states. The suit makes claims under deceptive business practices and false advertising, and seeks compensation for Little League's allegedly ill-gotten gains, as well as an injunction preventing LLB from referring to itself as a safe haven for children, NBC4TV reports. The case "arises from the intentional failure of Little League Baseball to safeguard its youth participants from pedophiles," the suit states. "Despite this failure, LLB continued to advertise its activities as wholesome and safe for the children." In January, the Little League enforced new rules ordering ball clubs to conduct background checks on managers, coaches, members of boards of directors and any other persons, volunteers or hired workers who provide regular service to the league and have contact with players or teams. LLB media director Lance Van Auken did not immediately return a call for comment on the class action, NBCTV4 reports. NEBRASKA: Court Orders Reinstatement of Single Moms' Medicaid ------------------------------------------------------------- The United States 8th Circuit Court of Appeals ordered the state of Nebraska to pay an estimated 10,000 single working parents who were kicked off Medicaid while a lawsuit over the matter is pending, the Associated Press reports. Two low-income mothers who lost Medicaid coverage due to the state's budget cuts filed the suit. The state cut people from the program to save itself approximately $18 million, during a special budget-cutting legislative session last year. Plaintiffs Teresa Kai and Stacy Noller claim they have chronic medical problems and are unable to work without prescription drugs provided under Medicaid. They further asserted that under federal law, they are entitled to continuing Medicaid coverage through the Transitional Medical Assistance program. The program provides up to a year of additional health-care coverage for those terminated from Medicaid, AP reports. In March, the United States District Court in Nebraska refused to have the plaintiffs' Medicaid reinstated, saying the likelihood of women winning the case was small. The appeals court disagreed, saying the women's claim is likely to succeed. "There doesn't appear to be any doubt that the 8th Circuit believes we have a very strong success on the merits," Milo Mumgaard, director of the Appleseed Center for Law in the Public Interest, which filed the lawsuit on the women's behalf, told AP. He said he expected the state to settle the lawsuit quickly. "I think they should read the writing on the wall," Mumgaard said. "They will not win this case." Attorneys for the state Health and Human Services System did not have time to review the opinion Thursday and had no immediate comment, spokeswoman Kathie Osterman told AP. Chris Peterson, a spokesman for Gov. Mike Johanns, said an appeal was possible. RAMBUS INC.: DE Court Dismisses Shareholder Derivative Lawsuit -------------------------------------------------------------- Delaware State Court dismissed without prejudice the amended shareholder derivative suit filed against Rambus, Inc., Silicon Strategies reports. The suit was filed over the Company's attendance at a standard setting body called JEDEC from 1991 to 1995. The plaintiffs in this case agreed to stipulate the dismissal without prejudice following rulings favoring Rambus from the US Court of Appeals for the Federal Circuit in Washington, according to the company, Silicon Strategies states. "Dismissal of this derivative case follows the path set by the Federal Circuit in its January ruling and in its en banc ruling in April," John Danforth, vice president and general counsel for Rambus, said in a statement. "As with the recent dismissal of the shareholder class action against Rambus, we view this deference to the reasoning of the Federal Circuit as a further positive step." SECURITIES LITIGATION: Study Measures Effects of Sarbanes-Oxley --------------------------------------------------------------- NERA, an international economic consulting firm, released its 2003 study of recent trends in securities class action litigation, revealing that, contrary to some expectations, the rate of securities class action filings - as well as the average value of litigation settlements - so far appears unaffected by either public indignation over the Enron corporate scandal or the subsequent passage of Sarbanes-Oxley (SOX) anti-fraud legislation. The NERA Study, "Recent Trends in Securities Class Action Litigation," looks at federal class action litigation filings, settlement values and dispositions between January 1991 and late June 2003. The study identifies the following trends since the Enron scandal and the passage of Sarbanes-Oxley legislation: (1) Securities class action filings did not increase dramatically after Sarbanes-Oxley. From the bill's passage on July 25, 2002 until late June 2003, securities class action suits were filed at an annual rate of 214, comparable to the average rate of 208 filings per year between 1996 and 2001; (2) Filings did not increase after the Enron scandal came to light, occurring at an annual rate of 212 from November 2001 through late June 2003, comparable to the average annual rate in previous years; (3) Dismissals have fallen sharply since SOX, with only half as many cases dismissed since its passage as in the previous 11 month period; (4) Average settlement values actually fell modestly in the first ten months after SOX passed, dropping from $25.5 million for the period of January 1996 - July 2002 to $22.7 million for the period of August 2002 - June 2003. They remained unchanged after the Enron scandal. "Securities litigation has been increasing as a long-term trend, but not as a result of either Enron or Sarbanes-Oxley," said NERA economist Elaine Buckberg, co-author of the study with colleagues Todd S. Foster, Ronald I. Miller and Adam Werner. According to NERA, the likelihood of a public company being sued rose approximately 40 percent between 1995 and 2002. Filings of securities class action suits increased from an annual total of 190 to 280 during that period - an increase of over 47 percent. "Many people expected that the angry public mood, combined with tough Sarbanes-Oxley standards and penalties, would bring on a spate of new securities litigation - in addition to increasing the bargaining power of plaintiffs and eventual case settlements. But if you look closely at the numbers, these predictions have not come true," Ms. Buckberg said. The NERA Study, "Recent Trends In Securities Class Action Litigation," will be available later today in its entirety at http://www.nera.com/recenttrends. In addition to examining the aftermath of Enron and SOX, the report also identifies the following long-term developments: (i) Top settlements are on the rise, but plaintiff recoveries relative to losses are declining; (ii) Average settlements more than tripled from $8.6 million in 1996 to $27 million in the first half of 2003, in nominal dollars. However, controlling for the characteristics of the cases, settlements, in constant dollars, have been declining by approximately 8 percent per year, between 1996 and mid-2003; (iii) settlements have not kept up with rising investor losses in the stock market; the median percentage of investor losses paid in settlements fell from a high of 7.2 percent in 1996 to 2.7 percent in 2002; (iv) 70 percent of settlements in the first half of 2003 fell below $10 million, while only 5 percent (4 cases) exceeded $100 million; (v) Cases involving accounting allegations will raise average settlement values by 20 percent or more; (vi) Settlements were also found to be about 20 percent higher where the lead plaintiff is an institutional investor; (vii) Fully 80 percent of federal securities class action lawsuits end in settlement; approximately 19 percent are dismissed and about 1 percent end in judgments. The NERA study also looks at developments since the Private Securities Litigation Reform Act of 1995 (PSLRA), which aimed to reduce frivolous litigation by raising the burden on plaintiffs in securities class actions. The authors assert that the increase in securities litigation despite this legislation "suggests that the plaintiffs' bar is pursuing fraud more aggressively since PSLRA, rather than being limited by it." Congress passed the Sarbanes-Oxley Public Company Accounting Reform and Investor Protection Act in July 2002, in the wake of accounting scandals at Enron and other public companies. The Act is intended to deter securities fraud by increasing the accountability of company executives and directors, increasing oversight via enhanced disclosure requirements and stricter auditor independence standards, and extending the statute of limitations for securities fraud claims and other measures. NERA is a leading global economic consulting firm. Founded in 1961 as National Economic Research Associates, its focus is on the practical application of economics to complex business and legal issues. For more details, contact Christine Creager by Phone: 617-621-2651 or by E-mail: christine.creager@nera.com or contact Elizabeth Ames by Phone: 212-727-1680 or by E-mail: eames@boldepr.com SECURITIES LITIGATION: Court To Decide on Evidence For NY Suit -------------------------------------------------------------- Manhattan Federal Court Judge Shira Scheindlin will hear arguments over how many documents Wall Street giants will have to turn over as evidence in a $5 billion consolidated securities class action, accusing 55 investment firms of manipulating stock prices, the New York Post reports. Lawyers will present arguments in the suit, also named as the "IPO Securities" Litigation and filed on behalf of purchasers of more than 300 stock offerings between 1998 and late 2000. The litigation charges the institutions with reaping excess profits and inflating IPO prices by using "laddering" schemes. The banks allegedly required some investors to buy more shares of an IPO after the price had risen in exchange for allocations to the hot offerings, the Post reports. Judge Scheindlin will decide on several issues, including the time frame for possible designation of the case as a "class action," and how the case will be organized. There have been "serious differences of opinion" over what the 55 banks are required to release. "The banks want to give up as little information about their clients as possible," one person involved in the case told the Post. "We think they are misreading the judge." SONY CORPORATION: Recalls Vaio Laptop For Electric Shock Hazard --------------------------------------------------------------- Sony Corporation is recalling 18,000 Vaio laptops that went on sale in May, due to a faulty modem assembly which could result in a minor electric shock to users, the Associated Press reports. 13,000 units were sold in Japan, 3,000 in the United States and 2,000 in Europe, the Tokyo company said. Spokesman Shigenori Fujita told AP that a person who touches some metal parts in the back of the laptop might feel a slight electric shock when the dial tone goes off while using the modem. The modem is also unusually slow when using an adapter to connect to an outlet. He continued that there have no cases of electronic shock reported, although several cases of the slow modem have already been reported in Japan. The recall costs, including shipping and repair, will total an estimated 500 million yen ($4.2 million), the company said. TALARIAN CORPORATION: Enters Lawsuit Settlement Discussions ----------------------------------------------------------- Talarian Corporation has entered settlement discussions with plaintiffs in the securities class action filed against it, certain of its underwriters, and certain of its former directors and officers in the United States District Court for the Southern District of New York. The suit claims that the purported improper underwriting activities were not disclosed in the registration statement for the Company's IPO and seeks unspecified damages on behalf of a purported class of persons who purchased Talarian securities during the time period from July 20, 2000 to December 6, 2000. On February 19, 2003, the Court issued an Opinion and Order granting the Company's motion to dismiss certain of the claims in the complaint. The Company believes that it has meritorious defenses to the remaining claims. TELECOMMUNICATIONS FIRMS: To Settle Right-of-Way Suit in N.D. IL ---------------------------------------------------------------- Four major telecommunications carriers plan to settle a class action filed in the United States District Court of the Northern District of Illinois, alleging they laid fiber cables on 36,000 miles of rights of way controlled by railroads without getting the permission of the adjacent landowners, phoneplusmag.com reports. The suit names as defendants: (1) Level 3 Communications Inc., (2) Qwest Communications International Inc., (3) Sprint Corporation and (4) WilTel Communications Inc. Judge Wayne Andersen earlier told defendants to revise the settlement agreement, one person familiar with the case told phoneplusmag.com. "The indication was if those changes were made that he is likely to approve the settlement agreement," said the source. Total amount for claims is believed to be $142.5 million. However, one attorney representing the landowners said the judge rejected that settlement agreement and required changes that will "result in much greater value to the landowners." The case could enjoin dozens of similar lawsuits pending in federal and state courts and dictate settlement terms in those cases. Hearing is set for July 15. TIBCO SOFTWARE: Negotiating To Settle NY Securities Fraud Suit -------------------------------------------------------------- Tibco Software, Inc. entered settlement discussions with plaintiffs in the consolidated securities class action filed against it, certain of its directors and officers and certain investment bank underwriters in the United States District Court for the Southern District of New York. Plaintiffs generally allege that certain underwriters engaged in undisclosed and improper underwriting activities, namely the receipt of excessive brokerage commissions and customer agreements regarding post-offering purchases of stock in exchange for allocations of IPO shares. Plaintiffs also allege that various investment bank securities analysts issued false and misleading analyst reports. The complaint against the Company claims that the purported improper underwriting activities were not disclosed in the registration statements for the IPO and secondary public offering and seeks unspecified damages on behalf of a purported class of persons who purchased the Company's securities or sold put options during the time period from July 13, 1999 to December 6, 2000. On February 19, 2003, the court issued an Opinion and Order denying the motion to dismiss certain of the claims in the complaint. The Company believes that it has meritorious defenses to the allegations in the complaint and intends to defend the case vigorously. VIVENDI UNIVERSAL: Court Freezes Severance Payment To Former CEO ---------------------------------------------------------------- Jean-Marie Messier's chances of receiving a golden parachute payment of EUR20.6 M (US$23.3 M) from Vivendi Universal, as he departs that company, seem to have all but vanished, the Financial Times reports. The French stock regulator, Commission des Operations de Bourse (COB), made a dramatic eleventh-hour intervention by the COB's president, Jean-Francois Lepetit, on behalf of the company's shareholders. Mr. Lepetit told the Paris court that the "termination agreement" was invalid under French law because it lacked board and shareholder approval. The result of the intervention was that the Paris high court has ordered Vivendi to freeze payment to Mr. Messier, the company's former chief executive, until it has received shareholder approval. Few persons believe the shareholders will approve the settlement if it is put to a vote at next April's annual meeting. Mr. Messier's foray to the Paris high court came when, last week, Mr. Messier seemed to have won his right to the controversial golden parachute. The American Arbitration Association panel ruled unanimously in his favor and ordered Vivendi Universal to pay him the EUR20.6 M. Mr. Messier immediately called on a US court to enforce the decision, which, in turn, triggered the urgent action of the COB in the Paris court. Still alive, however, is a consolidated class action in the United States, on which a federal judge in New York is expected to rule shortly. WEGENER CORPORATION: Faces Breach of Fiduciary Duty Suit in DE -------------------------------------------------------------- Wegener Corporation faces a class action filed in the Court of Chancery of the State of Delaware, In and For New Castle County. The suit also names as defendants: (1) Robert A. Placek, (2) Thomas G. Elliot, (3) Joe K. Parks, (4) C. Troy Woodbury, Jr., (5) Wendell Bailey, and (6) Ned Mountain The suit alleges that the individual defendants have violated their fiduciary duties due to him and other shareholders, the members of an alleged class of shareholders of the Company. The plaintiff seeks relief, such as: (i) an order that this action is properly styled as a class action; (ii) a declaration that the Defendants have breached their fiduciary duties; (iii) an injunction against the Defendants continuing their allegedly unlawful conduct; (iv) a direction to the Defendants to account for the damages they have allegedly caused; and (v) an award of Plaintiff's costs in bringing the action, as well as applicable attorneys' and experts' fees. The defendants have not yet answered this complaint as the time to do so has not yet run, but will vigorously oppose this litigation. This complaint is substantively similar to a complaint which was commenced in Fulton County, Georgia and was subsequently voluntarily dismissed by the Plaintiff. *Mobile Phone Users Sue Over Added Fees For Number Portability -------------------------------------------------------------- Richard Greenfield, a class action attorney based in Royal Oak, Maryland, filed a lawsuit last week, against Sprint PCS in Palm Beach County, Florida's Circuit Court, the Charlotte Observer (NC) reports. Mr. Greenfield has previously filed two complaints against Nextel and is one of many attorneys being called on by cell-phone users who wonder why they are being asked to pay fees which in fact are part of the normal cost of doing business. These suits are stemming from a federal appeals court decision last month, which granted consumers a victory in a ruling that said cellular-phone companies must allow customers to take phone numbers with them when they switch carriers. However, the victory is coming at a price. Most of the major carriers are tacking on surcharges to cover the costs the carriers are paying to make number switching a reality by the November 24 deadline set by the Federal Communications Commission. These higher fees are already appearing in consumers' bills. Mr. Greenfield calls these extra fees "jack-in-the box charges because they are buried in the back of the customer's monthly bill with the state and local taxes, and then they jump out at the consumers, if they are vigilant about reading their bills. As a result of these number portability fees, cell phone bills will jump $13.20 to $21 per year. Mr. Greenfield contends the cellular carriers "are trying to recoup at the back door what they are losing through the front door because of increased competition," which brought about lower prices for cell phone users. However, the wireless providers assert they have a right to recover the costs incurred to upgrade their networks to facilitate customers' taking their phone numbers with them when they switch carriers - known in industry jargon as number portability. The carriers point out to persons contending that the service is not yet available to consumers, that the costs are incurred in the process of making the service available in November. Verizon announced that it is not passing on these costs to its customer. However, the company also said they will revisit the issue in November, once portability is under way to determine whether or not it will impose a fee at that time. So far, said the company, the "substantial costs we have incurred so far . have been included in our general cost of doing business." New Securities Fraud Cases ALLOU HEALTHCARE: Marc Henzel Lodges Securities Suit in E.D. NY --------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Eastern District of New York, on behalf of purchasers of Allou Healthcare, Inc. (Amex: ALU) publicly traded securities during the period between June 22, 1998 and April 9, 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 June 28, 1998 and April 9, 2003, thereby artificially inflating the price of Allou securities. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's financial results. In particular, the Complaint alleges: (1) that Allou was materially overstating its accounts receivables by at least $78 million, thereby overstating its revenues and earnings; (2) that Allou was materially overstating its inventory, thereby overstating its net worth; and (3) as a result of the foregoing, Allou's financial statements were not prepared in accordance with GAAP and were therefore materially false and misleading. On April 9, 2003, Allou announced that "its lenders have filed an involuntary petition for bankruptcy in the Eastern District of New York under the provisions of chapter 11, title 11, of the United States Code." Following this news, on April 9, 2003, AMEX suspended trading in Allou's common stock. Thereafter, press reports revealed that an outside restructuring expert that had been retained to run Allou discovered, among other things, that "only $30 million of $108 million in accounts receivable reported by Allou to its banks seemed to be valid." Furthermore, on April 24, 2003, Allou announced that it "believes that the levels of assets collateralizing loans were substantially overstated in recent reports submitted by the Company to its senior lenders. The preliminary results of the Company's investigation indicate that inventory was overstated by approximately $35,000,000 and that accounts receivable may be overstated by $75,000,000 to $80,000,000, for a total overstatement of $110,000,000 to $115,000,000. The Company has retained a forensic accounting firm to assist with the continuing investigation of this matter." For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 ASTROPOWER INC.: Marc Henzel Commences Securities Lawsuit in DE --------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the District of Delaware on behalf of purchasers of the securities of AstroPower, Inc. (Nasdaq: APWR) between February 22, 2002 and August 1, 2002, inclusive, and who suffered damages thereby. The action, is pending against the Company, Allen M. Barnett (CEO and President) and Thomas J. Stiner (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 February 22, 2002 and August 1, 2002. The complaint alleges that AstroPower develops, manufactures, markets and sells a range of solar electric power generation products. The complaint further alleges that the company claimed that it was well positioned to take advantage of the increasing demand for solar power products. The complaint further alleges that, throughout the Class Period, the Company reported strong revenue and earnings growth and that, as a result of these statements and reports, which were disseminated to the investing public, and which formed the basis for research analysts' reports on the Company, the Company's per share stock price reached a Class Period high of $27 on March 28, 2002. In truth and in fact, throughout the Class Period, the Company was unable to effectively manage its expanding and increasingly complex operations; it was, inter alia, unable to allocate resources among its various manufacturing facilities to effectively meet regional demand or to tailor its production capacity to actual demand. Consequently, during the time that the Company was stating that it was well positioned to take advantage of the increased demand for solar products, it was in fact losing ground to more effective competitors. Additionally, to maintain the illusion that its operations were successful, the Company throughout the Class Period reported artificially inflated revenue and earnings by, inter alia, recording revenue in advance of shipment, contrary to its stated principles of revenue recognition. The truth was revealed on August 1, 2002 when, after the close of trading, the Company announced its results for the second quarter ended June 30, 2002. Analysts were stunned. Reported revenue and net income had not grown but, on the contrary, second quarter income was $365,000, or $0.02 per diluted share compared to $1.7 million, or $0.07 per diluted share in the year-earlier second quarter and revenue of $20.4 million represented only a one percent increase over reported revenue for the prior quarter and was approximately $4.9 million below analysts' consensus estimate. On this news, AstroPower's share price plunged 48%, or $7.12, to $7.77, its lowest price in almost three years. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 AVERY DENNISON: Marc Henzel Lodges Securities Lawsuit in C.D. CA ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Central District of California on behalf of all purchasers of the common stock of Avery Dennison Corporation (NYSE: AVY) from July 24, 2001 through April 14, 2003, inclusive. The complaint charges Avery and certain of its officers and directors with violations of the Securities Exchange Act of 1934. More specifically, the complaint alleges that Avery failed to disclose that its financial results during the Class Period were a product of a tacit and illegal anti-competitive scheme with its leading competitor, UPM-Kymmene, OYJ (UPM), whereby the Company and UPM manipulated the labelstock supply market. The complaint further alleges that during the Class Period, defendants issued false and misleading statements to the marketplace that artificially inflated the price of Avery's shares. The statements disseminated by the defendants during the Class Period failed to disclose and indicate: (1) that Avery was engaged in an illegal anti-competitive scheme with UPM to drive a more stable price environment within the labelstock industry; (2) that the Company's financial results were a product of its anti-competitive behavior; (3) that the Company knew that its anti-competitive behavior could possibly subject the Company to regulatory scrutiny in the future if such anti- competitive behavior was discovered; and (4) that its financial results would be materially impacted if the Company were forced to stop its anti-competitive behavior. On April 14, 2003, the United States Department of Justice (DOJ) issued a press release wherein it announced that it intended to file a civil antitrust lawsuit in the United States District Court for the Northern District of Illinois in Chicago to block UPM from acquiring Morgan Adhesives Company (MACtac). Among the reasons given for filing the suit, the DOJ stated that its investigation had revealed that the merger between UPM and MACtac was one in which Avery and UPM sought to coordinate. Additionally, on April 14, 2003, Avery announced that the DOJ had started a criminal investigation into competitive prices in the labelstock industry and would shortly issue a subpoena to the Company in connection with that investigation. On April 15, 2003, the DOJ filed its complaint against UPM. Therein, the DOJ alleged that UPM and Avery were in ``positions of marketplace dominance and had significant incentives to engage in explicit competitive coordination.'' The DOJ also alleged that evidence of competitive coordination was enhanced by a ``longstanding strategic paper supply relationship'' between UPM and Avery. The DOJ further alleged that ``the supply relationship provided UPM and Avery with the motivations, opportunities, and means to coordinate on price, monitor adherence, punish cheating, and engage in side payments that could be hidden in label paper transactions.'' News of Avery's anti-competitive behavior shocked the market. On April 15, 2003, Avery's stock fell $4.19 on unusually high trading volume to close at $55.94. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 BARRICK GOLD: Marc Henzel Commences Securities Suit in S.D. 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 Barrick Gold Corporation (NYSE: ABX) between February 14, 2002 and September 26, 2002 inclusive. The action, is pending against the Company and: (1) Randall Oliphant (CEO and President until February 12, 2003), (2) John K. Carrington (COO and Vice Chairman) and (3) Jamie C. Sokalsky (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 February 14, 2002 and September 26, 2002. For example, throughout the Class Period, Barrick assured the markets that it was improving its operations by keeping its production costs in check and that the Company expected to earn $0.42-$0.47 per share in 2002, even taking into account the phasing out of several mines and decreasing ore quality (which increases costs) in several of its mines. These representations were materially false and misleading, according to the complaint, because they failed to disclose that the Company's expected costs for the year would be well above the figures highlighted to the public, that Barrick's costs per ounce had increased dramatically in 2002 and would continue to increase throughout the year, and that the Company's repeated assurances that production and costs would continue to improve in 2002 were lacking in any reasonable basis and were contradicted by facts known to defendants, or, at the very least, recklessly disregarded by them. On September 26, 2002, the Company announced that it expects to earn materially less in 2002 than previously announced, due to increased costs stemming from production issues at several mines (which, the Company misleadingly represented during the Class Period, would be resolved in the second half of 2002). In reaction to the announcement, which came only days after the Company reiterated its positive expectations, Barrick's stock fell by 10.5% in one day, from $17.77 on September 25, 2002 to $15.90 on September 26, on extremely heavy trading volume. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 BARRICK GOLD: Bernstein Liebhard Lodges Securities Lawsuit in NY ---------------------------------------------------------------- Bernstein Liebhard & Lifshitz LLP initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of all persons who purchased or acquired Barrick Gold Corporation (NYSE:ABX) securities between February 14, 2002 and September 26, 2002, inclusive. Plaintiff alleges that Barrick assured the markets that it was improving its operations by keeping its production costs in check and that the Company expected to earn $0.42-$0.47 per share in 2002, even taking into account the phasing out of several mines and decreasing ore quality that increases costs in several of its mines. According to the complaint, these representations were materially false and misleading because they failed to disclose that: (1) the Company's expected costs for the year would be well above the figures highlighted to the public; (2) Barrick's costs per ounce had increased dramatically in 2002 and would continue to increase throughout the year; and (3) the Company's repeated assurances that production and costs would continue to improve in 2002 were lacking in any reasonable basis and were contradicted by facts known to defendants, or, at the very least, recklessly disregarded by them. On September 26, 2002, the Company announced that it expected to earn materially less in 2002 than previously announced due to increased costs stemming from production issues at several mines that the Company misleadingly represented would be resolved in the second half of 2002. In reaction to the announcement, which came only days after the Company reiterated its positive expectations, Barrick's stock fell by 10.5% in one day, from $17.77 per share on September 25, 2002 to $15.90 per share on September 26, 2002 on extremely heavy trading volume. For more details, contact Ms. Linda Flood, Director of Shareholder Relations by Mail: 10 East 40th Street, New York, New York 10016, by Phone: (800) 217-1522 or (212) 779-1414 or by E-mail: ABX@bernlieb.com. BLUE RHINO: Marc Henzel Lodges Securities Fraud Suit in C.D. CA --------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Central District of California on behalf of purchasers of Blue Rhino Corporation (Nasdaq: RINO) securities during the period between August 15, 2002 and February 5, 2003. The complaint charges Blue Rhino and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Blue Rhino securities by disseminating materially false and misleading statements and/or concealing material adverse facts. The scheme: (1) deceived the investing public regarding Blue Rhino's business, operations, management and the intrinsic value of Blue Rhino common stock; (2) enabled defendants to acquire over $30 million in assets, purchased using artificially inflated Blue Rhino shares, to refinance debt upon more favorable terms with its lenders; (3) allowed defendants to sell $15.79 million worth of Company common stock in a private placement, as well as register over $23.8 million in shares of common stock for large shareholders that had entered into a private equity deal the prior year; and (4) caused plaintiff and other members of the Class to purchase Blue Rhino securities at artificially inflated prices. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 CARREKER CORPORATION: Marc Henzel Launches Securities Suit in TX ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Northern District of Texas, Dallas Division, on behalf of purchasers of the securities of Carreker Corporation (Nasdaq: CANIE) between May 20, 1998 and December 10, 2002, inclusive, and who sustained damages thereby. The action, is pending against the Company, John D. Carreker (Chairman and CEO) and Terry L. Gage (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 May 20, 1998 and December 10, 2002. According to the complaint, throughout the Class Period, Carreker filed financial statements with the SEC which represented that the Company was consistently delivering numerous consecutive quarters of record, double-digit growth, which the Company attributed to the strong demand for its products and Carreker's business model. In addition, according to the complaint, the Company expressly assured investors of its "dedication to transparent reporting practices" and highlighted the supposed "quality and integrity of (Carreker's) accounting and corporate governance practices." These statements were materially false and misleading, according to the complaint, because they failed to disclose that the Company had been improperly recognizing revenues throughout the Class Period, thereby artificially inflating its revenues, income and earnings per share. On December 10, 2002, the Company issued a press release announcing that it was investigating whether revenues were improperly recognized by being booked at once instead of ratably over a period of time, as required by applicable generally accepted accounting principles. This belated disclosure severely and negatively impacted Carreker's stock price, causing it to fall by 22.6% in one day on extremely heavy trading volume, from a December 9 close of $5.08 per share to close at $3.93 per share on December 10. Subsequently, the SEC initiated an investigation, which is ongoing, into the Company's accounting practices. On January 28, 2003, the Company announced that it will be restating the financial reports it has filed since 1998. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 COrTS TRUST: Stull Stull Commences Securities Lawsuit in E.D. NY ---------------------------------------------------------------- Stull Stull & Brody filed a securities class action in the United States District Court for the Eastern District of New York on behalf of purchasers of certificates of UnumProvident Corporate-Backed Trust Securities issued by CorTS Trust for Provident Financing Trust I (NYSE:KSA) pursuant to an initial public offering on or about January 31, 2001 and/or in the aftermarket through and including March 24, 2003. The Certificates are a separate security from, and not part of, certificates issued by CORTS II Trust for Provident Financing Trust I (Symbol "KVN") which originated in an initial public offering on or about April 18, 2001. The complaint charges CorTS Trust for Provident Financing Trust I, UnumProvident, Salomon Smith Barney and certain UnumProvident officers with violations of the Securities Exchange Act of 1934 and with violations of the Securities Act of 1933. UnumProvident Corporation is the parent holding company for a group of insurance and non-insurance companies that collectively operate throughout North America and in the United Kingdom, Japan and Argentina. UnumProvident's principal operating subsidiaries are Unum Life Insurance Company of America, Provident Life and Accident Insurance Company, The Paul Revere Life Insurance Company (Paul Revere Life) and Colonial Life & Accident Insurance Company (Colonial). UnumProvident, through its subsidiaries, is a provider of group and individual disability insurance. It also provides a complementary portfolio of other insurance products, including long-term care insurance, life insurance, employer- and employee-paid group benefits and related services. According to the IPO prospectus dated on or about January 31, 2001, UnumProvident Corporation guaranteed the payment of distributions on the Underlying Capital Securities but only to the extent that the Underlying Issuer had funds legally and immediately available therefor. On January 31, 2001, the first day of the class period, the Certificates were issued pursuant to a Prospectus and Registration Statement and began to publicly trade. The trust consisted of a single class of certificates, which represented interests in the trust and the certificates would only be paid through the trust. Therefore, the Certificates would only be paid if UnumProvident paid the original trust. During the class period, UnumProvident falsely reported financial results because it did not properly account for the long-term impairment of its investments. Moreover, the financial information was inflated due to UnumProvident's overzealous denial of legitimate claims of its insureds through, what one federal judge deemed "a comprehensive system for targeting and terminating expensive claims." The financial statements and related press releases by UnumProvident identified above contained statements that were materially false and misleading when made. On March 24, 2003, UnumProvident issued a press release in which they stated their intentions to restate financial statements from previous years. This put the payments of the Certificates in jeopardy. As a result of this news and previous adverse news about the company including the announcement on February 5, 2003 that UnumProvident was the subject of an investigation by the Securities Exchange Commission and had recorded losses of $93 million, the Certificates lost as much as 60% of their value. Plaintiff had purchased the Certificates for $25 per share and sold most of her shares for $15.35 per share. For more details contact Howard Longman of Stull, Stull and Brody by Mail: 6 East 45th Street, New York, NY 10017 by Phone: 1-800-337-4983, by Fax: 212-490-2022 by E-mail: TSVI@aol.com or contact Gary S. Graifman of Kantrowitz, Goldhamer & Graifman by Mail: 747 Chestnut Ridge Road, Chestnut Ridge, New York 10977 by Phone: 1-800-660-7843 by Fax: 845-356-2570 or by E-mail: kgg@kgglaw.com DIVINE INC.: Bernstein Liebhard Files Securities Suit in N.D. IL ---------------------------------------------------------------- Bernstein Liebhard & Lifshitz LLP initiated a securities class action on behalf of all persons who acquired securities of divine, Inc. (OTC BB:DVINQ.OB) between November 12, 2001 to February 14, 2003, inclusive. The case is pending in the United States District Court for the Northern District of Illinois, Eastern Division against Andrew J. Filipowski and Michael P. Cullinane. The complaint charges that certain of divine's officers and directors 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 divine securities. Specifically, the Complaint alleges that divine lacked adequate financial and internal controls with respect to its operations and, as a result, lacked a reasonable basis to project profitability or the ability to maintain its operations. The Complaint further alleges that Defendants engaged in a scheme to inflate revenues by instructing employees of its subsidiary RoweCom to offer discounts to customers who paid by cash in advance, after divine already decided it would no longer continue with RoweCom as an entity. While the cash accounts of RoweCom surged, divine fraudulently diverted nearly $74 million from RoweCom's operations. Even this diversion was not enough to overcome problems at divine. Before the start of the trading day 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 has determined that it must seek alternatives to protect the value and viability of its operations. As a result, divine has engaged Broadview International LLC as advisors to assist in exploring strategic options, which may include asset divestitures, comparable transactions, and/or the filing of a voluntary petition under Chapter 11 off the United States Bankruptcy Code." Market reaction to this news was swift and negative with divine stock falling from a close of $0.35 on February 14, 2003, the preceding trading day, to close at $0.12 on February 18, 2003, or a single-day decline of more than 65% on extremely heavy trading volume. For more details, contact Ms. Linda Flood, Director of Shareholder Relations by Mail: 10 East 40th Street, New York, New York 10016, by Phone: (800) 217-1522 or 212-779-1414 by E- mail: DVINQ@bernlieb.com or visit the firm's Website: http://www.bernlieb.com. FEDERAL HOME: Wechsler Harwood Lodges Securities Suit in E.D. VA ---------------------------------------------------------------- The law firm of Wechsler Harwood LLP filed a securities class action on behalf of its client and on behalf of purchasers of the securities of Federal Home Loan Mortgage Corporation and certain of its current and former officers (NYSE:FRE) between April 18, 2000 and June 6, 2003, inclusive in the United States District Court for the Eastern District of Virginia. 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 18, 2000 and June 6, 2003, thereby artificially inflating the price of Freddie Mac securities. During the Class Period, the Company issued statements that failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the Company failed to properly classify hedges and assets with respect to derivative securities; (2) that the Company used ``cookie jar'' accounting wherein Freddie Mac deferred gains to subsequent quarters in a bid to keep its revenue and earning growth steady; (3) that the Company provided investigators with altered and misleading documents in order to conceal the Company's improper accounting; (4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as a result, the value of the Company's net income and financial results were materially misstated at all relevant times. On June 9, 2003, the Company announced sweeping changes in its management team. These changes arose out of the Company's January 22, 2003 announcement that it would have to restate its financial results for fiscal years 2000, 2001, and 2002. In response to this announcement, shares of Freddie Mac fell $9.61 per share or 16 percent to close at $50.26 per share, wiping out $7 billion in market value. For more details, contact Craig Lowther by Mail: 488 Madison Avenue, 8th Floor New York, New York 10022 by Phone: (877) 935-7400 by E-mail: clowther@whesq.com or visit the firm's Website: http://www.whesq.com FEDERAL HOME: Bernstein Liebhard Lodges Securities Lawsuit in NY ---------------------------------------------------------------- Bernstein Liebhard & Lifshitz LLP initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of all persons who purchased or acquired Federal Home Loan Mortgage Corporation (NYSE:FRE) securities between January 27, 2003 and June 9, 2003, inclusive. 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 Ms. Linda Flood, Director of Shareholder Relations, by Mail: 10 East 40th Street, New York, New York 10016, by Phone: (800) 217-1522 or (212) 779-1414 by E- mail: FRE@bernlieb.com or visit the firm's Website: http://www.bernlieb.com. PARADIGM MEDICAL: Marc Henzel Lodges Securities Lawsuit in Utah --------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the District of Utah on behalf of purchasers of Paradigm Medical Industries, Inc. (NasdaqSC: PMED) publicly traded securities during the period from April 25, 2001 through May 14, 2003, inclusive. The complaint charges that Paradigm and certain of its current and former officers and directors violated Section 10b of the Securities Exchange Act of 1934 by issuing a series of materially false and misleading statements to the market beginning on April 25, 2001 and continuing through December 2002. Paradigm develops and sells laser surgical systems, including the Ocular Blood Flow Analyzer (BFA). The complaint alleges that Paradigm misrepresented in its Securities & Exchange Commission (SEC) filings and in press releases that it had received authorization from the American Medical Association for a Common Procedure Terminology code facilitating insurance reimbursement to doctors for performing medical procedures with the BFA. Additionally, the complaint alleges that the Company misrepresented in a press release that it had received a $105 million purchase order, when no such purchase order existed. As a result of these misrepresentations, according to the complaint, the price of PMED securities was artificially inflated during the Class Period. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 PEDIATRIX MEDICAL: Marc Henzel Lodges 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 on behalf of all purchasers of the common stock of Pediatrix Medical Group, Inc. (NYSE: PDX) from April 17, 2002 through June 23, 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 April 17, 2002 and June 23, 2003, thereby artificially inflating the price of Pediatrix 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 defendants engaged in fraudulent ``upcoding'' in its billing practices while telling the investing public that its billing practices were legitimate; (2) by virtue of having improperly received and recorded as revenue payments to which Pediatrix was not entitled, Pediatrix materially inflated several key indicators, including operating income, net inpatient revenue per admission, EBITDA and EBITDA margins; (3) that these unsafe and unsound business practices materially misrepresented the Company's business operations and financial performance by enabling the defendants to post better financial results; and (4) that as a result, the Company's stock price was artificially inflated. On June 24, 2003, the Company issued a press release with the headline: ``Pediatrix Notified of Billing Inquiry.'' Therein, the Company announced that it had been advised by the U.S. Attorney's Office that it was conducting a civil investigation into Pediatrix's Medicaid billing practices nationwide. Additionally, the Company announced that the U.S. Attorney's Office intended to make a document and information request, informally or by subpoena, within the next few weeks. Market reaction to the news was swift. Pediatrix's shares fell 24% or $9.90 per share, on unusually high trading volume, to close at $32.20 per share. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 PEDIATRIX MEDICAL: Faruqi & Faruqi Lodges Securities Suit in FL --------------------------------------------------------------- Faruqi & Faruqi LLP initiated a securities class action in the United States District Court for the Southern District of Florida on behalf of all purchasers of Pediatrix Medical Group, Inc. (NYSE:PDX) securities between February 7, 2002 and June 23, 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 Pediatrix's financial results and business prospects. Specifically, the complaint alleges that Pediatrix failed to disclose, among other facts, that: (1) the Company engaged in fraudulent ``upcoding'' in its billing practices while representing to the investing public that its billing practices were legitimate; (2) by virtue of having improperly received and recorded as revenue payments to which Pediatrix was not entitled, Pediatrix materially inflated several key indicators, including operating income, net inpatient revenue per admission, EBITDA and EBITDA margins; and (3) these unsafe and unsound business practices materially misrepresented the Company's business operations and financial performance by enabling the Company to post better financial results. As a result, the price of the Company's securities were artificially inflated during the Class Period. On June 24, 2003, however, the Company shocked the market when it announced that the U.S. Attorney's Office was conducting a civil investigation into Pediatrix's Medical billing practices nationwide. Upon this revelation, Pediatrix's common stock fell in excess of 20% in a single day on extremely heavy trading volume. 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 by E-mail: Avozzolo@faruqilaw.com or visit the firm's Website: http://www.faruqilaw.com PRINTCAFE SOFTWARE: Marc Henzel Files Securities Suit in W.D. PA ---------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Western District of Pennsylvania on behalf of all purchasers of the common stock of Printcafe Software, Inc. (NasdaqNM: PCAF) from June 18, 2002 through October 22, 2002, inclusive. The complaint alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a materially false and misleading Registration Statement and Prospectus in connection with Printcafe's initial public offering (IPO). The complaint alleges that the Registration Statement and Prospectus were materially false and misleading because statements made therein failed to disclose and misrepresented the following adverse facts, among others: (1) that demand for the Company's products and services was declining to the extent that the Company was not performing in line with its internal expectations; (2) that the Company's product development efforts were experiencing difficulties; and (3) that the Company's declining financial performance would require it to engage in a material restructuring of its operations in order to generate cost savings and reverse that negative trend. At the time of the filing of the complaint, the price of Printcafe common stock was $2.57 per share. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 READ-RITE CORPORATION: Marc Henzel Lodges Securities Suit in 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 purchasers of Read-Rite Corporation (OTC Bulletin Board: RDRTQ; formerly Nasdaq: RDRT) publicly traded securities during the period between October 30, 2001 and June 6, 2003, inclusive. The complaint charges certain of Read-Rite's officers and directors with violations of the Securities Exchange Act of 1934. Read-Rite is an independent supplier of magnetic recording heads for the hard disk drive (HDD) and tape drive markets. The Company designs, manufactures and markets magnetic recording heads as head gimbal assemblies (HGAs) and incorporates multiple HGAs into head stack assemblies. Read- Rite's products are sold primarily for use in 3.5-inch HDDs for desktop computer devices, for high-performance enterprise HDDs used in network and mainframe applications, as well as for consumer electronic devices such as game stations or personal video recorders. The complaint alleges that during the Class Period defendants issued a series of false and misleading statements about the Company, and as a result Read-Rite's stock traded at inflated prices during the Class Period, increasing to as high as $39 on January 9, 2002, before the Company announced it would file for bankruptcy. The true facts which were known to each of the defendants, but concealed from the investing public during the Class Period, were: (1) the Company's 40 GB/platter inventory was overstated by $16.7 million; (2) the Company's Philippine real estate holdings were overstated by approximately $6.8 million; (3) the Company needed to restructure its operations and the associated charges would cost the Company in excess of $20 million and would cause an earnings shortfall in coming quarters; (4) the Company's Q2 FY03 loss was grossly understated; (5) the Company was experiencing massive technical problems associated with its 40GB/per platter programs. Moreover, the Company was experiencing these problems well before January 2002 and beyond April 2002 when defendants claimed such problems were fixed; and (6) the Company was underfunded and could not complete the production of its 80GB programs. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 SARA LEE: Chitwood & Harley Lodges Securities Lawsuit in N.D. IL ---------------------------------------------------------------- Chitwood & Harley, LLP initiated a securities class action in the United States District Court for the Northern District of Illinois, on behalf of purchasers of the securities of Sara Lee Corporation, (NYSE:SLE), between August 1, 2002 and April 24, 2003, inclusive. The suit is brought against the Company, C. Steven McMillan and Lambertus M. de Kool. The complaint alleges that the statements concerning the Company's operations and prospects were materially false and misleading because they failed to disclose: (1) that, despite the Company Reshaping program, Sara Lee 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 Sara Lee's underperforming businesses were causing the Company to experience declining results and, therefore, Sara Lee 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 market 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 closed down $1.94 from the previous day's closing price on extremely heavy trading volume. In addition, the complaint alleges that during the class period, Sara Lee insiders sold more than $23 million of their Sara Lee common stock to the unsuspecting public. For more details, contact Jennifer Morris by Mail: 1230 Peachtree Street, Suite 2300, Atlanta, Georgia 30309 by Phone: 1-888-873-3999 or 404-873-3900 ext. 6883 by E-mail: jlm@classlaw.com or visit the firm's Website: http://www.classlaw.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. 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