/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/040226.mbx C L A S S A C T I O N R E P O R T E R Thursday, February 26, 2004, Vol. 5, No. 40 Headlines BRIDGESTONE/ FIRESTONE: Certification Hearing Moved To March 17 CHILD CRAFT INDUSTRIES: Recalls Legacy Cribs For Injury Hazard FLEETBOSTON: Regulators To Probe Mutual Funds Unit, Says Source GAYLORD CHEMICAL: Reaches Settlement For LA Tank Car Fire Suit GOLDMAN SACHS: To Pay $45.5M To Settle NYSE Securities Probe GUANTANAMO BAY: Rights Groups Protest Guantanamo Trial Exclusion HEARTLAND ADVISORS: Denies SEC Allegations of Mutual Fund Fraud HERBALIFE INTERNATIONAL: Enters Negotiations For Suit Settlement HERBALIFE INTERNATIONAL: Faces OH Telephone Act Violations Suit INTERNATIONAL GOURMET: Recalls Mislabeled Basil Pesto Product JUNIPER NETWORKS: Discovery Yet To Commence in Securities Suit MARTHA STEWART: Defense in Securities Trial To Rest This Week METRO-GOLDWYN-MAYER INC.: Resolves False Advertising Suit in CA METRO-GOLDWYN-MAYER INC.: Enters Settlement Discussions in Suit MUTUAL FUNDS: Mutual Fund Cases To Be Heard In MD, Panel Rules NATIONAL SECURITIES: CA Court Refuses Stock Suit Certification OWENS CORNING: Plaintiffs File Consolidated OH Securities Suit TEMPLE INLAND: Pays $8M Share in Linerboard Antitrust Suit Pact New Securities Fraud Cases AAIPHARMA INC.: Landskroner-Grieco Files Securities Suit in NC ADECCO SA: Spector Roseman Commences Securities Suit in E.D. NY AMERICAN PHYSICIANS: Deadline For Lead Plaintiff Set For March 3 EL PASO: Berman DeValerio Launches Securities Suit in S.D. TX EL PASO: Charles Piven Lodges Securities Fraud Suit in S.D. TX MFS FUNDS: Deadline To File Lead Plaintiff Motion Set March 5 QUALITY DISTRIBUTION: Schiffrin & Barroway Files FL Stock Suit QUALITY DISTRIBUTION: Cauley Geller Lodges Stock Suit in M.D. FL ROYAL DUTCH/ SHELL: Scott + Scott Launches Securities Suit in NJ WALT DISNEY: Bernard Gross Launches Securities Fraud Suit in CA WAVE SYSTEMS: Stull Stull Launches Securities Fraud Suit in MA ********* BRIDGESTONE/ FIRESTONE: Certification Hearing Moved To March 17 ---------------------------------------------------------------- The court hearing on the motion to certify the lawsuit against Bridgestone/Firestone, Inc. for alleged defects in its Firestone Steeltex tire series as a national class action has been postponed. Two California residents launched the suits, alleging that the Company used substandard materials to make the tire and then concealed the defects. The suits seek at least $1 billion in reimbursement to motorists and a recall of Steeltex R4S, R4SII and A/T tires, an earlier Class Action Reporter story (February 25,2004) states. The hearing was scheduled for 8:30 a.m. on Wednesday, February 25 at the Riverside Branch of the California Superior Court in Indio. The hearing has been rescheduled to Wednesday, March 17, at 8:30 a.m. in Department 2-H of the Riverside Branch. CHILD CRAFT INDUSTRIES: Recalls Legacy Cribs For Injury Hazard -------------------------------------------------------------- Child Craft Industries, of Salem, Indiana, in cooperation with the U.S. Consumer Product Safety Commission (CPSC), is recalling 3,500 Legacy Cribs since the slats on the drop side rail can loosen and detach. When this happens, the space created by the gaps can allow a baby to become entangled, strangle or fall. There have been 12 reports of the slats on the drop side rail completely detaching. No injuries have been reported. The recalled Legacy cribs include model numbers 16741, 21021, 23111 and 28721. The model numbers are printed on the bottom rail of the head or foot board. The full-size cribs were made from ash and maple woods, and sold in a variety of colors. All carry the Legacy Brand label. The legacy cribs, manufactured in China, were sold at The Juvenile furniture stores nationwide from March 2002 through January 2004 for between $399 and $549. Consumers are urged to stop using the cribs and contact Child Craft to receive a replacement drop side rail. For more information, contact Child Craft toll-free at (888) 844-2674 between 8 a.m. and 5 p.m. ET or visit the firm's Web site at www.childcraftindustries.com FLEETBOSTON: Regulators To Probe Mutual Funds Unit, Says Source --------------------------------------------------------------- FleetBoston Financial Corporation and its subsidiaries face potential civil suit to be initiated by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission, charging it with alleged trading abuses in its mutual fund unit, a law enforcement source told the Associated Press reports. The regulators allege that the Company's Columbia Management Advisors Inc. and Columbia Funds Distributor Inc. was involved in a massive timing trading scheme over five years until 2003. The subsidiaries allegedly allowed short-term trading at the expense of more traditional, long-term investors, according to a law enforcement source who spoke on the condition of anonymity. The practice would be a violation of the fiduciary responsibility of corporate officers under law. Since September, a growing number of fund firms and executives have been accused of improper trading and defrauding investors, while dozens of other organizations are under scrutiny by state and federal authorities. AG Spitzer's office uncovered the scandal. An announcement of the suits was expected this week, AP reports. A FleetBoston corporate spokeswoman didn't immediately respond to a request for comment. GAYLORD CHEMICAL: Reaches Settlement For LA Tank Car Fire Suit -------------------------------------------------------------- The Washington Parish, Louisiana State Court will have a fairness hearing for the settlement of a personal injury class action against Gaylord Chemical Corporation in March 2004. On October 23, 1995, a rail tank car of nitrogen tetroxide exploded at the Bogalusa, Louisiana plant of Gaylord Chemical Corporation, a wholly owned, independently-operated subsidiary of Gaylord. Following the explosion, more than 160 lawsuits were filed against the Company, Gaylord Corporation, and third parties alleging personal injury, property damage, economic loss, related injuries and fear of injuries. Plaintiffs sought compensatory and punitive damages. In 1997, the Washington Parish, Louisiana, trial court certified these consolidated cases as a class action. By the deadline to file proof of claim forms, 16,592 persons had filed and 3,978 persons had opted out of the Louisiana class proceeding. All but 12 of the-opt out claimants were also plaintiffs in a class action filed against Gaylord Corporation, the Company, and other third-parties filed in Hinds County, Mississippi State Court. The suit alleged claims and damages similar to those in Louisiana state court. In 1999, 20 of the approximately 4,000 Mississippi cases went to trial in Hinds County, Mississippi. After a three-month trial, Gaylord Chemical was held to be 50 percent at fault for the incident, and none of the 20 plaintiffs was awarded any damages. At trial in the Louisiana class action held during the second half of 2003, 18 randomly selected plaintiffs presented evidence of their claims. The jury found Gaylord Chemical was 35 percent responsible for the accident and that other co-defendants shared 65 percent of the fault. Seven of the 18 plaintiffs were found to have suffered no damages. The remaining 11 plaintiffs were awarded a total of $22,832 in compensatory damages. The jury also determined that the Company's parent was not responsible for its conduct. On December 9, 2003, the Company, its parent, and certain of their insurers agreed in principle to settle the claims from the class action and Mississippi state court actions, including claims for compensatory and punitive damages, arising from this accident. In exchange for payments by certain insurance carriers and assignment of insurance coverage rights against the non-settling carriers, Gaylord and Gaylord Chemical will receive releases and/or dismissals of all claims for damages, including punitive damages. Neither Gaylord nor Gaylord Chemical contributed to the settlement. The class action component of this proposed settlement will be submitted for preliminary approval by the Louisiana court in March 2004. The class settlement is subject to a fairness hearing and final court approval, which we expect to occur during 2004. Full releases and dismissals of all Mississippi claims, opt-outs, and other intervenors are not expected to occur until at least 2005. Until such time, all settlement proceeds will be held in escrow pending receipt of all required settlement documents. On December 10, 2003, the Louisiana jury awarded punitive damages of $92 million against Gaylord Chemical, which will be pursued by the plaintiffs against the non-settling insurance carriers. This award does not affect the settlement by Gaylord and Gaylord Chemical. GOLDMAN SACHS: To Pay $45.5M To Settle NYSE Securities Probe ------------------------------------------------------------ Investment firm Goldman Sachs & Co. intends to settle charges in the New York Stock Exchange specialist firm investigation for $45.5 million, the Associated Press reports. The Company said it is cooperating with state and federal investigations into improper mutual fund activities, the company's annual report stated. The Company is charged with placing their own trades ahead of customers' business on the floor of the NYSE, skimming profits at the expense of other trades. Under the settlement, the Company also agreed to a censure and a cease-and-desist order on similar trades. In its annual report, the Company said it has been contacted by "various regulators including the SEC" regarding its mutual fund activities, and said it was cooperating with the investigations. Goldman Sachs subsidiary Spear, Leeds & Kellogg Specialists LLC was one of five specialist firms that settled with the Securities and Exchange Commission last week for $240 million, AP reports. A spokesman for Goldman Sachs said the company had no comment beyond what was stated in the annual report. GUANTANAMO BAY: Rights Groups Protest Guantanamo Trial Exclusion ---------------------------------------------------------------- Three human rights groups said on Tuesday the Pentagon denied their request to observe upcoming military tribunal trials of foreign terrorism suspects at the U.S. naval base at Guantanamo Bay, Cuba, Reuters News reports. Amnesty International, Human Rights Watch and Human Rights First had sought to send representatives to observe the trials, but the Pentagon responded that it planned to provide courtroom seating only for certain journalists and the International Committee of the Red Cross. Amnesty International spokesman Alistair Hodgett noted that the State Department annually criticizes other countries for closing trials to international monitors. "It seems like that medicine can't be taken at home despite us prescribing it abroad," Mr. Hodgett told Reuters, noting that his organization has been permitted to observe trials in such nations as Libya and Egypt. He said other countries that have refused to allow observers for trials include North Korea, China, Cuba and Myanmar. While saying he was not suggesting U.S. parity with those countries, Mr. Hodgett added, "There's a contrast here that ought to startle people who care about open- trial processes." The three organizations strive to monitor sensitive trials around the world to assess them against international standards, including proceedings for war crimes and crimes against humanity. The groups said they want to attend the U.S. military tribunals to provide the world "independent and informed analysis of the trials." Air Force Brig. Gen. Thomas Hemingway of the Pentagon's Office of Military Commissions wrote in a letter to Human Rights Watch that "we will keep your request in mind" if the Defense Department is able to honor the request in the future, Reuters reports. Mr. Hemingway said no charges have been brought and no trials scheduled, adding the Pentagon has not formally named a location for the trials, although officials have made preparations for such proceedings at the remote base. The organizations said the Pentagon is using space constraints at Guantanamo as a pretext to keep out rights activists who have been critical of the U.S. plans to try some of the more than 600 non-U.S. citizens held at the base under a set of trial rules specially devised by the Pentagon. Critics say the rules are rigged to result in convictions, Reuters states. The groups, which have been critical of the Pentagon's rules for the trials, protested their exclusion in a letter to Defense Secretary Donald Rumsfeld, saying "there can be no legitimate governmental reason for denying our access to the proceedings." HEARTLAND ADVISORS: Denies SEC Allegations of Mutual Fund Fraud --------------------------------------------------------------- Heartland Advisors and its chief operating officer Paul Bester formally denied all allegations in a lawsuit filed by the United States Securities and Exchange Commission against the Company, Knight-Ridder/ Tribune Business News reports. The SEC filed the suit in early December, charging the Company and some of its executives of fraudulently pricing two bond funds to conceal a cash flow crisis from at least August 2000 until March 2001, when the SEC got a court order to put the funds in receivership, causing investors in the Heartland High- Yield Municipal Bond and Short Duration High-Yield Municipal funds to lose about $93 million. The suit also charges four current or former employees, including founder William J. Nasgovitz and his friend Raymond R. Krueger, of insider trading related to the funds. Greg D. Winston, former co-manager of the troubled bond funds, is accused of selling shares while possessing insider information and giving that same information to his parents so they could sell their shares. Mr. Winston has denied all of the SEC allegations against him, the Tribune Business News reports. In its response to the SEC complaint, the Company asserted its executives had acted in good faith at all times and were correct in relying on an outside pricing service to determine the value of the bonds in two troubled mutual funds. "This is a required filing in response to the SEC complaint," Paul Beste, Heartland's chief operating officer told the Tribune Business News. "It reiterates the company's position that Heartland has always operated consistently within the SEC guidelines." Jilaine H. Bauer, Heartland's former general counsel and compliance officer, and Kenneth J. Della, Heartland's former treasurer, have received extensions from the court and do not have to respond to charges against them until March 8. Mr. Bauer is charged with using insider information to sell out of one of the bond funds in early October, and Mr. Della is charged with using insider information to liquidate his and his father's investments in the bond funds a few days before Heartland slashed their prices. HERBALIFE INTERNATIONAL: Enters Negotiations For Suit Settlement ---------------------------------------------------------------- Herbalife International, Inc. has entered discussions for a possible settlement of a class action filed in the U.S. District Court of California, styled "Jacobs v. Herbalife International, Inc., et al." The suit challenges marketing practices of several distributors and Herbalife under various state and federal laws. As a result of recent rulings by the Court, only claims under federal securities law remain. The Company understands that the plaintiffs have re-filed certain state law claims in the Superior Court of the State of California, County of San Francisco, it stated in a disclosure to the Securities and Exchange Commission. The Company has not been served with a complaint. The parties are in discussions regarding a possible settlement but no binding settlement agreement has yet been reached. HERBALIFE INTERNATIONAL: Faces OH Telephone Act Violations Suit --------------------------------------------------------------- Hebalife International, Inc. and certain of its distributors face a purported class action lawsuit filed in the Circuit Court of Ohio County in the State of Virginia, styled "Mey v. Herbalife International, Inc., et al." The complaint alleges that certain telemarketing practices of certain Herbalife distributors violate the Telephone Consumer Protection Act and seeks to hold Herbalife liable for the practices of its distributors. The Company removed the lawsuit to federal court and the plaintiff sought to remand the lawsuit to state court. The plaintiff's motion was denied. The Company believes it has meritorious defenses to the suit, it stated in a disclosure to the Securities and Exchange Commission. INTERNATIONAL GOURMET: Recalls Mislabeled Basil Pesto Product ------------------------------------------------------------- International Gourmet Specialties Co., in cooperation with the U.S. Food and Drug Administration, is voluntarily recalling a limited amount of its Traditional Basil Pesto Sauce and Spread sold under the Classicor brand in the United States due to a labeling error. Specifically, the back label does not identify that the product contains pine nuts, which is normally listed on the product as an allergen. Individuals who have an allergy or severe sensitivity to pine nuts, peanuts or tree nuts run the risk of serious or life- threatening illness if they consume Traditional Basil Pesto product from Classico that contains the following codes: (1) UPC Code: 411296 (found on back label), or (2) Lot numbers: VA3M08 or VA3M09 (found on cap) Containers not bearing these codes are unaffected by this recall, nor are any other products sold under the Classico brand name. Classico Traditional Basil Pesto product sold in Canada with bi-lingual labels also is not affected by this recall. The voluntary recall was initiated after it was discovered that some Classico Traditional Basil Pesto 10-ounce glass jars were mislabeled with back panels from another variety. The product was produced over two days in December 2003 at the company's facility in Pennsauken, New Jersey and likely has been distributed nationally. Stores across the country have been notified of this recall and are pulling the product from their shelves. Consumers with containers of the recalled Classico Traditional Basil Pesto product can return them to the place of purchase for a full refund. Consumers with questions may contact International Gourmet Specialties' consumer affairs hotline: 1-888-337-2420. JUNIPER NETWORKS: Discovery Yet To Commence in Securities Suit -------------------------------------------------------------- Discovery has yet to commence in the consolidated securities class action filed in the United States District Court for the Northern District of California against Juniper Networks, Inc. and certain of its officers and former officers. The suit, filed on behalf of those stockholders who purchased the Company's publicly traded securities between April 12, 2001 and June 7, 2001, alleges that the defendants made false and misleading statements, assert claims for violations of the federal securities laws and seek unspecified compensatory damages and other relief. In September 2002, the defendants moved to dismiss the amended complaint. In March 2003, the judge granted defendants motion to dismiss with leave to amend. The plaintiffs filed their amended complaint in April 2003 and the defendants moved to dismiss the amended complaint in May 2003. The hearing on defendants' motion to dismiss was held on September 12, 2003. The judge has not yet ruled on the motion. MARTHA STEWART: Defense in Securities Trial To Rest This Week ------------------------------------------------------------- Defense attorneys for domestic trendsetter Martha Stewart are ready to wrap up their case this week, without calling Ms. Stewart to defend herself against allegations of securities fraud over her December 2001 sale of ImClone Systems stock, just before its prices plunged, Reuters reports. Ms. Stewart's attorney Robert Morvillo said he only plans to call one or two witnesses - a former lawyer for the celebrity homemaker and possibly a memory expert. Government prosecutors charged Ms. Stewart and her broker Peter Bacanovic of selling nearly 4,000 shares of ImClone after learning from a broker's assistant that the biotech company's founder, Sam Waksal, was dumping his shares. Mr. Bacanovic's assistant Douglas Faneuil earlier issued a damaging testimony, saying Mr. Bacanovic ordered him on December 27, 2001 to pass Ms. Stewart the inside information. Observers of the trial have been speculating whether Ms. Stewart would testify. She and Mr. Bacanovic have maintained that they had a standing agreement to sell ImClone stock the minute it drops below $60 per share. U.S. District Judge Miriam Goldman Cedarbaum said deliberations will begin next week but the specific date will not be set until a timetable for closing arguments is finalized, Reuters reports. METRO-GOLDWYN-MAYER INC.: Resolves False Advertising Suit in CA --------------------------------------------------------------- Metro-Goldwyn-Mayer, Inc. reached a resolution for the class action filed in the California Superior Court for Los Angeles' decision against it and eight of its subsidiaries, styled "Brian Rector, Citizens for Truth in Movie Advertising (CTMA), et al. v. Metro-Goldwyn-Mayer Inc., et al., L.A.S.C. Case No. BC253405." The suit alleges deceptive and unfair business practices, fraudulent concealment, fraudulent inducement, false and misleading advertising, and claims under the Consumers Legal Remedies Act arising from the studio's use of reviewer quotes in film advertisements without disclosing that the reviewers allegedly received things of value from the studio in connection with press junkets and publicity efforts. The same plaintiffs simultaneously sued nine studios, including the six other major studios in identical but separate class action lawsuits. On September 28, 2001, the plaintiffs amended their complaints to include claims based on allegations that studios use reviewer quotes out of context and include in "trailers" scenes that are not included in the associated films, thus constituting false and misleading advertising. The complaints against the studios seek restitution and disgorgement of all monies attributable to the alleged wrongdoing, as well as compensatory and punitive damages and an injunction requiring the studios to make certain disclosures in their advertising. The studios filed demurrers and motions to strike the complaint. On January 24, 2002, the court granted the studios' motions to strike the complaint pursuant to the California SLAPP statute. The court entered judgment in favor of the studios on January 14, 2003 and awarded attorneys' fees and costs against the plaintiffs. Plaintiffs filed a notice of appeal. The case was later resolved and the appeal was dismissed. METRO-GOLDWYN-MAYER INC.: Enters Settlement Discussions in Suit --------------------------------------------------------------- Metro-Goldwyn-Mayer, Inc. has entered settlement discussions for the class action filed against it, one of its subsidiaries, and five retail entities (each of which is indemnified by MGM), in the California Superior Court for Los Angeles County, styled "Warren Eallonardo v. Metro-Goldwyn-Mayer Inc. et al., Case No. BC286950." The suit alleges fraud, false advertising and unfair business practices under the California Business & Professions Code and Consumer Legal Remedies Act arising from representations contained in packaging of certain of MGM's DVDs that allegedly mislead or deceive consumers regarding the characteristics of MGM's widescreen DVDs. The class is alleged to include all those who purchased MGM widescreen DVDs shot in the aspect ratio of 1:85 or 1:33 between certain dates. On July 10, 2003, plaintiff filed its final and Third Amended Complaint in which it added an additional named plaintiff and also added a cause of action for breach of the implied warranty of merchantability. Plaintiffs seek compensatory and punitive damages and attorneys fees. The court thus far has made no findings as to the merits of the litigation, or any ruling to certify a class. MUTUAL FUNDS: Mutual Fund Cases To Be Heard In MD, Panel Rules -------------------------------------------------------------- The Judicial Panel on Multidistrict Litigation has ruled that private lawsuits alleging trading abuses at six mutual fund firms will be handled by a federal court in Maryland, Dow Jones Business News reports. In an order issued Friday, the Judicial Panel transferred lawsuits seeking class-action status to Maryland, saying the federal courthouse in Baltimore has the capacity and experience to steer them "on a prudent course." Private suits naming Alliance Capital Management Holdings LP (AC); Bank of America Corp. (BAC); Bank One Corp. (ONE); Strong Capital Management Inc.; Janus Capital Group Inc. (JNS); and Putnam Investments, a unit of Marsh & McLennan Cos. Inc. (MMC), are covered by the order. Most plaintiffs in the mutual fund suits had argued for consolidating the cases in federal court in Manhattan, while mutual funds generally favored a home-field approach that would designate a courthouse near their headquarters. Given that fund investors are scattered across the U.S., "no district stands out as the geographic focal point for this nationwide litigation," the panel ruled. It decreed that hundreds of suits against the six fund companies be moved to Baltimore and assigned to Judge J. Frederick Motz and Andre Davis. Motz serves on the multidistrict litigation panel. Private claims seeking class action status in state courts aren't covered by the transfer. NATIONAL SECURITIES: CA Court Refuses Stock Suit Certification -------------------------------------------------------------- The Superior Court for the State of California for the County of San Diego denied class certification filed against National Securities Corporation and others, relating to a series of private placements of securities in Fastpoint Communications, Inc. Plaintiffs are seeking approximately $14.0 million, but no specific amount of damages has been sought against the Company in the complaint. The Company filed its answer, and believes it has meritorious defenses and intends to vigorously defend this action, although the ultimate outcome of the matter cannot be determined at this time, the Company stated in a disclosure with the Securities and Exchange Commission. OWENS CORNING: Plaintiffs File Consolidated OH Securities Suit -------------------------------------------------------------- Plaintiffs filed a consolidated class action against certain of Owens Corning's current and former directors and officers, captioned "Robert Greenburg, et al. v. Glen Hiner, et al." in the United States District Court for the Northern District of Ohio, Western Division. Three substantially similar actions, with named plaintiffs Nicholas Radosevich, Howard E. Leppla, and William Benanchietti, respectively, were filed against the same defendants in the same court. The court later ordered them consolidated and appointed lead plaintiffs JKF Investment Co., Icarus Trading, Inc. and HGK Asset Management. The Company is not named in the lawsuit. The suit purports to be a class action for securities fraud under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, on behalf of a class comprised of persons who purchased stock of Owens Corning during the period from September 20, 1999, through October 4, 2000. The complaint seeks an unspecified amount of damages and/or, where appropriate, rescission. TEMPLE INLAND: Pays $8M Share in Linerboard Antitrust Suit Pact --------------------------------------------------------------- Temple Inland, Inc. and Gaylord Chemical Corporation have paid a total of $8 million to settle claims in a consolidated class action that alleged a civil violation of Section 1 of the Sherman Act. The suit, captioned "Winoff Industries, Inc. v. Stone Container Corporation, MDL No. 1261," is pending in the United States District Court for the Eastern District of Pennsylvania. The suit named Inland, Gaylord, and eight other linerboard manufacturers as defendants. The complaint alleged that the defendants, during the period from October 1, 1993, through November 30, 1995, conspired to limit the supply of linerboard, and that the purpose and effect of the alleged conspiracy was artificially to increase prices of corrugated containers. Inland and Gaylord executed a settlement agreement on April 11, 2003, with the representatives of the class, which has been finally approved by the trial court. Gaylord and Inland paid a total of $8 million into escrow to fulfill the terms of the class action settlement. Prior to the deadline for potential class members to "opt-out" of the class action lawsuit, over 100 companies and their named subsidiaries advised the court of their opt-out election. As a result of the opt-outs, the Company received a refund of $800,000 from the original class action settlement amount. New Securities Fraud Cases AAIPHARMA INC.: Landskroner-Grieco Files Securities Suit in NC -------------------------------------------------------------- The law firm of Landskroner - Grieco, Ltd. initiated a securities fraud class action complaint in the U.S. District Court, Eastern District of North Carolina, on behalf of purchasers of AAII securities from April 24, 2002 through and including February 4, 2004, against aaiPharma Inc. and three of its senior officers. 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. Specifically, the complaint alleges throughout the Class Period, defendants issued quarter after quarter of "record" financial results. Defendants emphasized increased revenues throughout the Class Period, fueled by strong sales of pharmaceutical products. The complaint alleges that Defendants failed to disclose that these stellar financial results were only made possible through improper sales practices, such as "channel stuffing" or flooding wholesalers with products in order to artificially boost sales, and failing to properly reserve for product returns in violation of Generally Accepted Accounting Principles. On February 5, 2004, before the market opened, defendants shocked the market by announcing fourth quarter net revenues were reduced by $15.9 million. In response to the news concerning aaiPharma's previously undisclosed inventory issues, the price of aaiPharma stock dropped from over $27 per share on February 4, 2004 to $21.30 on February 5, 2004, a drop of over 23% on unusually large trading volumes of 4.8 million shares traded. The stock continued to drop as the fraudulent nature of the Company's sales and accounting practices came to light, trading at only $20 per share on February 9, 2004. For more information, contact Jack Landskroner, by Mail: 1360 West 9th St., Suite 200, Cleveland, Ohio 44113, by Phone: 866-522-9500 (toll-free), by e-mail: jack@landskronerlaw.com, or visit the firm's Website: http://www.landskronerlaw.com. ADECCO SA: Spector Roseman Commences Securities Suit in E.D. NY --------------------------------------------------------------- The law firm of Spector, Roseman & Kodroff, P.C. initiated a securities class action lawsuit in the United States District Court for the Eastern District of New York, on behalf of purchasers of its publicly traded securities between March 16, 2000 through January 12, 2004, inclusive, against Adecco S.A. and certain of its officers and directors. The Complaint alleges that during the Class Period, defendants violated the federal securities laws by issuing materially false and misleading financial information contained in Adecco's public filings, press releases and other public statements. The Complaint alleges that the Company's revenues and earnings were artificially inflated due to improper accounting practices. On January 12, 2004, Adecco announced the delay in the completion of an audit of the Company's 2003 financial results. The Company's press release disclosed that the delay was the result of "material weaknesses in internal controls in the Company's North American operations of Adecco Staffing" and "possible accounting, control and compliance issues in the Company's operations in certain countries." As a result of this disclosure, the Company's stock price dropped more than 30%. For more information, contact Robert M. Roseman, by Phone: 888-844-5862 (toll free), by E-mail: classaction@srk-law.com, or visit the firm's Website: http://www.srk-law.com. AMERICAN PHYSICIANS: Deadline For Lead Plaintiff Set For March 3 ---------------------------------------------------------------- Cauley Geller Bowman & Rudman, LLP announced that the deadline for purchasers of American Physicians Capital Inc. publicly traded securities to move for lead plaintiff in a securities fraud class action recently brought against the Company in the United States District Court for the Western District of Michigan, on behalf of purchasers of AP Capital publicly traded securities between February 13, 2003 and November 6, 2003, inclusive, is set for March 3, 2004. The complaint charges defendants American Physicians Capital, Inc., William B. Cheeseman and Frank H. Freund with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. More specifically, the Complaint alleges that defendants failed to disclose and indicate: (1) that the Company's provisions for loss reserves were inadequate; (2) that defendants failed to sufficiently increase the Company's loss reserves during the Class Period; and (3) as a result of the foregoing, the Company's operating results, an important metric used to value the Company's financial performance, were overstated at all relevant times. On November 6, 2003, AP Capital shocked the market when it issued a press release announcing that its earnings release scheduled for that afternoon will be delayed until Wednesday, November 12, 2003 after the market closes. The Company further stated that it expects to announce a "substantial net loss" for the quarter due to significant adjustments in reserves for policy losses. The additional reserves are expected to approximate $43 million, before taxes ($28 million, net of tax). In addition, as a result of the net loss, the Company expects that, for the foreseeable future, it will not be able to report the deferred tax asset that results from its accumulated net operating losses and other timing differences. This will require the Company to incur a non-cash charge of approximately $50 million to establish a valuation allowance in order to eliminate the deferred tax asset. The Company also said it will discontinue offering workers' compensation and health care insurance, which account for about 30 percent of its premiums. Upon this news, shares of the Company's stock fell 37%, or $10.34 per share, to close at $17.41 per share on extremely high trading volume. For more information, contact Samuel H. Rudman or David A. Rosenfeld, Client Relations Department: Jackie Addison, Heather Gann or Chandra West, by Mail: P.O. Box 25438, Little Rock, Ark. 72221-5438, by Phone: (631)367-7100 or 1-888-551-9944 (toll free), Fax: (501) 312-8505, or by E-mail: info@cauleygeller.com. EL PASO: Berman DeValerio Launches Securities Suit in S.D. TX ------------------------------------------------------------- Berman DeValerio Pease Tabacco Burt & Pucillo, LLP initiated a class action lawsuit in the U.S. District Court for the Southern District of Texas, on behalf of all investors who bought El Paso common stock from March 31, 2003 through and including February 17, 2004, against defendants El Paso Corporation, and: (1) Ronald L. Kuehn, Jr., (2) Douglas L. Foshee, and (3) D. Dwight Scott The lawsuit claims that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, including U.S. Securities and Exchange Commission (SEC) Rule 10b-5. According to the complaint, the defendants materially misrepresented El Paso's financial condition during the Class Period, causing the company's stock to trade at artificially high prices. Specifically, El Paso reported strong proved global oil and natural gas reserves. Proved reserves are defined as those that can be extracted from known fields under existing economic and operating conditions and represent a key metric in assessing an oil company's future growth. All along, however, El Paso's seemingly strong financial prospects were the direct result of the defendants having artificially inflated the company's proved reserves and, correspondingly, its potential future revenue stream, the lawsuit says. After the markets closed on February 17, 2004, El Paso shocked the investing public by announcing that an independent review of the company's proved oil and gas reserves revealed that, as of January 1, 2003, El Paso overstated such reserves by a staggering 41%, or 3.64 trillion cubic feet. The company further revealed that, as a direct result, it expects to take a pre-tax charge of approximately $1 billion for the fourth quarter of fiscal year 2004. On the heels of these revelations, El Paso's common stock fell 17.6% from a closing price of $8.81 on February 17, 2004 to a close of $7.26 on February 18, 2004. For more information, contact Bryan A. Wood or Jeffrey C. Block, by Mail: One Liberty Square, Boston, MA 02109, by Phone: (800) 516-9926, or by E-mail: law@bermanesq.com. EL PASO: Charles Piven Lodges Securities Fraud Suit in S.D. TX -------------------------------------------------------------- Charles J. Piven, P.A. initiated a securities class action in the United States District Court for the Southern District of Texas, on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of El Paso Corp. between February 22, 2000 and February 17, 2004, inclusive, against defendants El Paso Corp., and: (1) Ronald L. Kuehn, Jr., and (2) William A. Wise The action charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities. For more information, contact Charles J. Piven, by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202, by Phone: 410/986-0036, or by E-mail: hoffman@pivenlaw.com. MFS FUNDS: Deadline To File Lead Plaintiff Motion Set March 5 -------------------------------------------------------------- Cauley Geller Bowman & Rudman, LLP announced that the deadline for all who purchased or otherwise acquired shares or other ownership units of Alliance Capital Management's AllianceBernstein Family of Mutual Funds and Massachusetts Financial Services' Family of Mutual Funds, which is a subsidiary of Sun Life Financial, Inc., to move for lead plaintiff in a securities fraud class action recently brought against the Company in the United States District Court for the District of Nevada, on behalf of those who purchased or otherwise acquired shares or other ownership units of the Mutual Funds between January 1, 2001 and September 30, 2003, inclusive, is set for March 5, 2004. The complaint charges that Security Brokerage, Inc. and Daniel G. Calugar with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and aided and abetted in the breach of fiduciary duties. More specifically, the complaint alleges that from at least 2001 to September 2003, Calugar, trading through Security Brokerage, engaged in a scheme involving market timing of various mutual funds using investments totaling between $400- $500 million. Market timing refers to the practice of short term buying and selling of mutual fund shares in order to exploit inefficiencies in mutual fund pricing. Most of Calugar's market timing trades were through two mutual fund families: Alliance Capital Management, LP and Massachusetts Financial Services. Calugar also engaged in late trading of MFS and Alliance funds. Late trading refers to the practice of placing orders to buy or sell mutual fund shares after close of market at 4:00 p.m. EST, but at the mutual fund's Net Asset Value, or price, determined at the market close. Late trading enables the trader to profit from market events that occur after 4:00 p.m. EST but that are not reflected in that day's price. Because of Security Brokerage's status as a broker-dealer, it was permitted to submit trades received from its clients before 4:00 pm EST to the National Securities Clearing Corporation after 4:00 p.m. EST. Calugar and Security Brokerage thus participated in a scheme with Alliance and MFS to engage in market timing that most other fund investors were not permitted to do. The Mutual Funds as well as Calugar profited at the expense of such investors. Calugar and Security Brokerage made trading profits of $175 million from their market timing and late trading at Alliance and MFS. The Mutual Funds profited by way of increased advisory and other fees. On December 22, 2003, the SEC filed civil fraud charges against Security Brokerage, and its president and majority owner, Calugar, for their participation in a scheme to defraud mutual fund shareholders through improper late trading and market timing. On December 24, 2003, the SEC announced that United States District Judge Robert Clive Jones of the District of Nevada issued a temporary restraining order freezing the assets of the defendants, prohibiting the destruction of documents, and granting expedited discovery. For more information, contact Samuel H. Rudman or David A. Rosenfeld, Client Relations Department: Jackie Addison, Heather Gann or Chandra West, by Mail: P.O. Box 25438, Little Rock, AR 72221-5438, by Phone: 1-888-551-9944 (toll free), Fax: 1-501-312-8505, or by E-mail: info@cauleygeller.com. QUALITY DISTRIBUTION: Schiffrin & Barroway Files FL Stock Suit -------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a class action lawsuit in the United States District Court for the Middle District of Florida, on behalf of purchasers of Quality Distribution, Inc. common stock during the period between November 7, 2003 and February 2, 2004, inclusive, against defendants Quality Distribution, and: (1) Thomas L. Finkbiner, and (2) Samuel M. Hensley The lawsuit alleges violations of Sections 11 and 15 of the Securities Exchange Act of 1933. On or about November 7, 2003, Quality Distribution commenced an initial public offering of 7 million of its shares of common stock at an offering price of $17.00 per share, thereby raising approximately $110.7 million. In connection therewith, Quality Distribution filed a registration statement, which incorporated a prospectus, with the SEC. The complaint alleges that the Prospectus was materially false and misleading because Quality Distribution materially overstated its financial results and its financial statements were not prepared in accordance with Generally Accepted Accounting Principles. On February 2, 2004, the Company announced that it expected to take a fourth-quarter charge and restate its results back to 2001 after discovering insurance law violations at Power Purchasing Inc., one of its subsidiaries. The Company announced that it expects to take fourth-quarter 2003 charges of between $3 million and $6 million and it forecast net income for the same period would be negatively impacted by the problems at the subsidiary, along with other one-time expenses. For more information, contact Marc A. Topaz or Stuart L. Berman, by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004, by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706, or by E-mail: info@sbclasslaw.com. QUALITY DISTRIBUTION: Cauley Geller Lodges Stock Suit in M.D. FL ---------------------------------------------------------------- The Law Firm of Cauley Geller Bowman & Rudman, LLP initiated a class action lawsuit in the United States District Court for the Middle District of Florida, on behalf of purchasers of Quality Distribution, Inc. common stock during the period between November 7, 2003 and February 2, 2004, inclusive, against defendants Quality Distribution, and: (1) Thomas L. Finkbiner, and (2) Samuel M. Hensley The lawsuit alleges violations of Sections 11 and 15 of the Securities Exchange Act of 1933. On or about November 7, 2003, Quality Distribution commenced an initial public offering of 7 million of its shares of common stock at an offering price of $17.00 per share, thereby raising approximately $110.7 million. In connection therewith, Quality Distribution filed a registration statement, which incorporated a prospectus, with the SEC. The complaint alleges that the Prospectus was materially false and misleading because Quality Distribution materially overstated its financial results and its financial statements were not prepared in accordance with Generally Accepted Accounting Principles. On February 2, 2004, the Company announced that it expected to take a fourth-quarter charge and restate its results back to 2001 after discovering insurance law violations at Power Purchasing Inc., one of its subsidiaries. The Company announced that it expects to take fourth-quarter 2003 charges of between $3 million and $6 million and it forecast net income for the same period would be negatively impacted by the problems at the subsidiary, along with other one-time expenses. For more information, contact Samuel H. Rudman or David A. Rosenfeld, Client Relations Department: Chandra West, Jackie Addison or Heather Gann, by Mail: P.O. Box 25438, Little Rock, AR 72221-5438, by Phone: 1-888-551-9944 (toll free), Fax: 1-501-312-8505, or by E-mail: info@cauleygeller.com. ROYAL DUTCH/ SHELL: Scott + Scott Launches Securities Suit in NJ ---------------------------------------------------------------- The law firm of Scott + Scott, LLC initiated a securities fraud action in the United States District Court for the District of New Jersey, on behalf of purchasers of the securities, including the common stock traded in overseas markets and the American Depository Receipts trading on the NYSE, of Royal Dutch Petroleum Company and/or The Shell Transport and Trading Company, PLC between December 3, 1999 and January 9, 2004, inclusive, seeking to pursue remedies under the Securities Exchange Act of 1934, against defendants Royal Dutch & Shell Transport, and: (1) Shell Petroleum N.V., (2) the Shell Petroleum Limited, (3) Maarten van der Bergh, (4) Judy Boynton, (5) Malcolm Brinded, (6) S.L. Miller, (7) Harry J.M. Roels, (8) Paul D. Skinner, (9) M. Moody- Stuart, (10) Jeroen van der Veer, and (11) Philip R. Watts According to the complaint, defendants violated federal securities laws (sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and all amendments thereto) by issuing a series of material misrepresentations to the market during the Class Period. The complaint alleges that defendants deliberately violated accounting rules and guidelines relating to oil and gas reserves which resulted in a material overstatement of oil and gas reserves, the eventual disclosure of which damaged purchasers of Royal Dutch and Shell Transport securities and negatively impacted the investment community. The complaint alleges that Royal Dutch and Shell Transport had classified and reported, in SEC filings and other public documents, certain reserves as "proved reserves" from a project off the western coast of Australia called the Gorgon Joint Venture (and other projects in Nigeria). In fact, without the investors knowledge, the reserves did not meet SEC and industry requirements necessary to be classified as "proved," and were improperly reported as such in Royal Dutch's and Shell Transport's financial reports. These reports were therefore materially and artificially inflating a key measure of the companies' financial position and competitive standing. As a result of these material misrepresentations, Royal Dutch and Shell Transport's true value in the marketplace was severely overstated and misunderstood. On January 9, 2004, Royal Dutch announced that it was going to write-down its proved oil and gas reserves by 20%, or 3.9 billion barrels, from 19.5 billion barrels to 15.6 billion barrels. The write-down: (i) cut Shell's reserve life from 13.4 years to 10.6 years; (ii) increased its worldwide 5-year average reserve replacement cost per barrel from $5.49 to $12.57 -- $7.06, or 128% greater than the industry average of $5.51; (iii) increased Shell's finding and development costs to $7.90 per barrel -- well above the costs of its competitors; and (iv) reduced Shell's Appraised Net Worth downward by up to 7.1%, or $9.6 billion. Following the announcement, Royal Dutch ADRs fell 7.87% from $52.76 to $48.61 on the NYSE and Royal Dutch ordinary shares fell by 7.10% from the U.S. equivalent of $52.91 to $49.15 on the Amsterdam exchange. Shell Transport ADRs were down 6.96% from $44.81 to $41.69 on the NYSE and Shell Transport ordinary shares were down 6.84% on the London exchange from the U.S. equivalent of $7.36 to $6.86. In addition, Moody's placed the AAA rating of Royal Dutch and Shell Transport under review for possible downgrade because the write-down materially and adversely affected the companies' reserves-to-debt ratio. Following the belated disclosure, most analysts and commentators concluded that, because of the magnitude of the write-down and the clear SEC and industry guidelines relating to reserve classification, the reserve overstatements could not have been a result of error or accident, but rather, that the reserves were knowingly overstated to preserve the companies' credit rating and to shore up their competitive position. For more information, contact Neil Rothstein, by Mail: 108 Norwich Avenue, Colchester, CT 06415, by Phone: 860/537-3818; Fax: 860/537-4432, or visit the firm's Website: http://www.scott-scott.com. WALT DISNEY: Bernard Gross Launches Securities Fraud Suit in CA --------------------------------------------------------------- The Law Offices of Bernard M. Gross, P.C. initiated a class action lawsuit in the United States District Court for the Central District of California, on behalf of all persons who sold the securities of Walt Disney Company during the period February 9, 2004 through February 10, 2004, seeking remedies under the Securities Exchange Act of 1934, against defendants The Walt Disney Company and Michael Eisner. The Complaint alleges that defendants violated the federal securities laws by failing to disclose that Comcast Corp.'s CEO had approached Disney with an offer to merge Disney with Comcast for approximately $47 billion. The complaint charges that Disney and Eisner violated Section 10(b) of the Securities Exchange Act or 1934 and SEC Rule 10b-5 by omitting to disclose the offer from Comcast and charges Michael Eisner with violating Section 20(a) of the Exchange Act. After the public learned about the Comcast merger proposal on February 11, 2004, the price of Disney's common stock increased significantly. For more information, contact Deborah R. Gross or Susan R. Gross, by Mail: 1515 Locust Street, Suite 200, Philadelphia, PA 19102, by Phone: 866-561-3600 (toll-free), or by E-mail: susang@bernardmgross.com. WAVE SYSTEMS: Stull Stull Launches Securities Fraud Suit in MA -------------------------------------------------------------- Stull Stull & Brody, LLP initiated a class action lawsuit in the United States District Court for the District of Massachusetts, on behalf of all persons who purchased common stock of Wave Systems Corp. between July 31, 2003 and December 18, 2003, inclusive, against defendants Wave Systems, and: (1) Steven Sprague, and (2) Gerard T. Feeney 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 July 31, 2003 and December 18, 2003, thereby artificially inflating the price of Wave Systems common stock. More specifically, the Complaint alleges that, throughout the Class Period, the defendants issued a series of material misrepresentations to the market concerning the Company's business agreements with Intel Corporation and IBM. In truth and in fact, however, unbeknownst to investors, the defendants' statements during the Class Period were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that Intel would not be entering into a revenue producing licensing agreement with the Company; (ii) that the Intel contract did not require Intel to purchase any software; and (iii) that IBM was not embedding Wave Systems' software into IBM computers; and (iv) that the IBM transaction would provide no direct revenue to the Company. On December 18, 2003, Wave Systems reported that the SEC had commenced a formal investigation into certain matters relating to Wave Systems. The SEC's investigative order, received by Wave Systems on December 17, 2003, related to certain public statements made by Wave Systems during and around August 2003, as well as certain trading in Wave Systems' securities during such time. News of this shocked the financial market. Shares of Wave Systems fell 17.13%, or $0.31 per share, to close at $1.50 per share on extremely high volume on December 19, 2003. For more information, contact Tzivia Brody, by Mail: 6 East 45th Street, New York, NY 10017, by Phone: 1-800-337-4983 (toll free), Fax: 212/490-2022, or by E-mail: SSBNY@aol.com. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Enid Sterling, Roberto Amor, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2003. All rights reserved. ISSN 1525-2272. 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