/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/040503.mbx C L A S S A C T I O N R E P O R T E R Monday, May 3, 2004, Vol. 6, No. 86 Headlines ALLSTATE INSURANCE: IL Jury Dismisses $300M Consumer Lawsuit ANTI-SPAM LITIGATION: Investigators Launch Suit V. Four Spammers CATHOLIC CHURCH: Insurer Sues Boston Diocese Over Sex Abuse Pact HOLOCAUST LITIGATION: SBA Denies Secrecy Laws Are Delaying Pact INTERPOOL INC.: Shareholders Launch Securities Fraud Suits in NJ LIFEPOINT HOSPITALS: Plaintiffs Finish Inspection of Hospitals NORTEL NETWORKS: Decision To Fire Execs Bolsters Lawsuit Claims PARADYNE NETWORKS: Reaches Settlement For FL Securities Lawsuit PHELPS DODGE: Dropped From Several Carbon Black Antitrust Suits PLAINS RESOURCES: Plaintiffs Consolidate Securities Suits in DE PLAINS RESOURCES: Faces Lawsuit Over Proposed Sale in TX Court PLAINS RESOURCES: Faces Unitholder, Partner Lawsuit in DE Court SAGE ADVISORY: Former Principal Enjoined From Securities Fraud SCHERING-PLOUGH: Jury Requests Sales Practices Information SCHERING-PLOUGH: Lawsuit Against Puerto Rico Plant in Mediation SCHERING-PLOUGH: Asks NJ Court To Dismiss Securities Fraud Suit SCHERING-PLOUGH: Continues To Face Litigation Over PPA Products SIERRA HEALTH: Named as Co-Conspirator in HMO Litigation in FL SMART & FINAL: CA Court Approves Settlement For Employees' Suit SMART & FINAL: CA Court Grants Certification To Employee Lawsuit T. ROWE: Mutual Fund Participants Launch Stock Fraud Suits in IL TRU-COAT PLATING: Kenneth B. Moll Launches Investigation in IL New Securities Fraud Cases ABATIX CORPORATION: Brodsky & Smith Files Securities Suit in TX ACTIVISION INC.: Bernstein Liebhard Files Stock Suit in C.D. CA CANADIAN SUPERIOR: Schatz & Nobel Launches Securities Suit in NY CANADIAN SUPERIOR: Scott + Scott Lodges Securities Lawsuit in NY DATATEC SYSTEMS: Bernstein Liebhard Lodges Stock Lawsuit in NJ ITT EDUCATIONAL: Schatz & Nobel Lodges Securities Lawsuit in IN MOBILITY ELECTRONICS: Goodkind Labaton Lodges Stock Suit in AZ NOKIA CORPORATION: Glancy Binkow Files Stock Suit in S.D. NY NORTEL NETWORKS: Milberg Weiss Commences Securities Suit in NY QUOVADX INC.: Schatz & Nobel Lodges Securities Suit in CO Court SONUS NETWORKS: Zwerling Schachter Lodges Securities Suit in MA UNIVERSAL HEALTH: Schatz & Nobel Lodges Securities Lawsuit in PA VASO ACTIVE: Murray Frank Lodges Securities Fraud Lawsuit in MA ********* ALLSTATE INSURANCE: IL Jury Dismisses $300M Consumer Lawsuit ------------------------------------------------------------ An Illinois jury dismissed the class action filed by the Carr, Korein, Tillery, Kunin, Montroy, Cates & Glass Law Firm, against Allstate Insurance, who were saved by the jury from paying an estimated $300 million in claims. Represented by Atty. Judy L. Cates, the lead plaintiffs Michael and Tiffany Sims of East St. Louis, Ill., demanded that Allstate Insurance should compensate policyholders for the drop in value of their vehicles even though Allstate paid for repairs. The class action lawsuits also covered 387,000 Allstate policyholders from 29 states, concerning vehicles that were damaged between June 1996 and February 2001. Defense attorney H. Sinclair Kerr had argued that Allstate was obligated only to repair a vehicle to "substantially the same condition" it was in before the accident. Allstate spokesman Mike Siemienas said the company was pleased with the verdict even though it still questions the decision to allow a multistate class-action lawsuit to decide the matter. "The issue of diminished value should be decided by the regulators and courts in individual states," Siemienas said. As of press time it is unknown if the plaintiffs wanted to appeal the court's decision. For more details, contact Atty. Judy Cates of Carr, Korein, Tillery, Kunin, Montroy, Cates & Glass by Mail: East St. Louis, Illinois 62201, U.S.A. by Phone: (618) 274-0434 by Fax: (618) 274-8369 or by E-Mail: rcarr@legal-matters.com ANTI-SPAM LITIGATION: Investigators Launch Suit V. Four Spammers ---------------------------------------------------------------- Four persons face a lawsuit filed by federal authorities in the United States District Court in Detroit, Michigan, over unwanted e-mails sent by the defendants, the Associated Press reports. The landmark suit names as defendants: (1) Daniel J. Lin, (2) James J. Lin, (3) Mark M. Sadek and (4) Christopher Chung The suit was filed under the government's new "can spam" legislation, which requires unsolicited e-mails to include a mechanism so recipients can indicate they do not want future mass mailings. The law took effect on January 1. Investigators with the U.S. Federal Trade Commission told US postal investigators that they had received more than 10,000 complaints about unwanted e-mails sent by the defendants. The defendants allegedly disguised their identities in thousands of sales pitches for fraudulent weight-loss products and delivering e-mails by bouncing messages through unprotected relay computers on the Internet. The defendants' company sold a weight-loss patch under the corporate names AIT Herbal, Avatar Nutrition, Phoenix Avatar and others. The company allegedly operated out of Detroit and nearby communities of West Bloomfield and Birmingham. Mr. Chung and Mr. Sadek appeared in U.S. District Court and were released on unsecured bonds, Gina Balaya, a spokeswoman for the U.S. Attorney's Office, told AP. The Lins have not been arrested. Mr. Sadek's lawyer, James L. Feinberg, told AP U.S. agents arrived at Sadek's home early in the morning "out of the clear blue" and arrested him. "He was absolutely shocked," Mr. Feinberg said. He said Mr. Sadek will plead innocent to the criminal charges, which have not yet been challenged in court. "No one's done this before," Mr. Feinberg said. "It will be fun - not for my client but for me professionally." The Lins and Chung could not be located at any of the addresses or telephone numbers listed in the court documents, AP reports. CATHOLIC CHURCH: Insurer Sues Boston Diocese Over Sex Abuse Pact ---------------------------------------------------------------- Lumbermans Mutual Casualty Co. filed a countersuit against the Archdiocese of Boston, after the church alleged in a suit that it failed to cover payments to priest abuse victims, the Associated Press reports. In a court filing with the United States District Court in Illinois, the insurer stated that its insurance policy was not meant to cover damages resulting from crimes. The Company insisted that the policy was for accidental injuries, not "intentional criminal conduct of priests who committed acts of sexual abuse against minors." The archdiocese agreed to settle with 552 victims of sexual abuse for US$85 million last September. The Company wrote to Archbishop Sean P O'Malley, saying that it was not obligated to contribute to the settlement as it was a "voluntary payment." The archdiocese then sued, asking the court to rule that the Company had a duty to indemnify the archdiocese for sexual abuse claims between 1964 and March 31,1983. The archdiocese further asserted that US$59.3 million of the settlement relates to perions when the Company was the church's sole insurer. An additional $7.7 million arises from periods when Lumbermens' coverage overlapped with another insurer. The Rev. Christopher J. Coyne, a spokesman for the archdiocese, told The Boston Globe, "The archdiocese has used up all of its assets basically to pay off the settlement and maintain its own finances, and there's a serious debt that's been realized. We're going to continue to move forward and work vigorously to retain the payment from the insurance company due us. ... We paid our premiums." HOLOCAUST LITIGATION: SBA Denies Secrecy Laws Are Delaying Pact --------------------------------------------------------------- The Swiss Bankers Association (SBA) dismissed two United States lawyers' claims that the country's banking secrecy law is delaying the distribution of a US$1.25 billion settlement to victims of the Holocaust, swissinfo.com reports. Jewish organizations and Holocaust survivors filed the suit against major Swiss banks in the United States District Court in Brooklyn, New York. In August 1998, Swiss banks Credit Suisse and UBS entered a global accord with the plaintiffs. However, only about a third of the money has been paid to claimants. In a report last week to presiding Judge Edward Korman, Judah Gribetz, a Manhattan lawyer overseeing the distribution of the settlement money, asserted that Swiss banks restricted information about millions of bank accounts opened in Switzerland during the Nazi era. The report further stated that a committee under former Federal Reserve Board chairman Paul Volcker had carried out a comprehensive audit of all dormant Holocaust-era accounts. Burt Neuborne, lead counsel for the plaintiffs also accused both Swiss banks and the Swiss government of obstructing distribution of the money. He said the Swiss authorities had placed "every conceivable obstacle" in the way since the beginning of the class action. "Swiss banking laws are hindering the examination of 4.1 million accounts, which could contribute to a speedy distribution of the money," he told swissinfo. "Paul Volcker and his committee conducted a very thorough investigation and had full access to the bank accounts," SBA spokesman Thomas Sutter told swissinfo. Mr. Sutter added that the vast majority of Nazi-era accounts were totally unrelated to the Holocaust, and it was never part of the settlement to provide access to all accounts. "In our opinion, it makes no sense to centralize all bank accounts that were active during the Second World War," Mr. Sutter said. "The Volcker committee has already had access and it makes no sense to repeat the procedure." INTERPOOL INC.: Shareholders Launch Securities Fraud Suits in NJ ---------------------------------------------------------------- Interpool, Inc., certain of its present and former executive officers and directors face several securities class actions filed in the United States District Court for the District of New Jersey on behalf of its stockholders on various periods. The complaints allege violations of the federal securities laws relating to the Company's reported financial statements for the years ended December 31, 2000 and 2001 and the nine months ended September 30, 2002, which the Company announced in March 2003 would require restatement. The lawsuits seek unspecified amounts of compensatory damages and costs and expenses, including legal fees. LIFEPOINT HOSPITALS: Plaintiffs Finish Inspection of Hospitals -------------------------------------------------------------- Plaintiffs have conducted inspections of 18 of Lifepoint Hospitals, Inc.'s hospitals as of March 30,2004 in relation to a class action filed against them, alleging non-compliance with the accessibility guidelines under the Americans with Disabilities Act (ADA). On January 12, 2001, Access Now, Inc., a disability rights organization, filed the suit in the United States District Court for the Eastern District of Tennessee, seeking injunctive relief requiring facility modification, where necessary, to meet the ADA guidelines, along with attorneys fees and costs. In January 2002, the District Court certified the class action and issued a scheduling order that requires the parties to complete discovery and inspection for approximately six facilities per year. NORTEL NETWORKS: Decision To Fire Execs Bolsters Lawsuit Claims --------------------------------------------------------------- Nortel Networks Corporation's decision to fire three of its top executives will strengthen the claims in the securities class actions filed against them, a New York lawyer told the Canadian Press. The Canadian high-tech giant faces several securities class actions filed in the United States District Court for the Southern District of New York on behalf of all persons or entities, other than defendants, who purchased the securities of Nortel Networks Corp. (NYSE: NT), between December 23, 2003 and March 12, 2004, inclusive and who suffered damages thereby. The suits allege that during the Class Period, Defendants issued a series of materially false and misleading financial statements and press releases causing the Company's securities to trade at artificially inflated levels. The suits were filed immediately after the Company made an announcement that it would delay filing its annual report and further disclosed that it may have to restate results for a second time in six months, an earlier Class Action Reporter story (April 11,2004) states. The Company recently announced that it fired CEO Frank Dunn, chief financial officer Douglas Beatty and controller Michael Gollogly "for cause." The Company also announced it was suspending four other financial executives pending a review of its accounting practices. "The firings of the top officers is a clear indication that something was going on with them that was not supposed to be going on," David Rosenfeld, an associate at the prominent Cauley Geller Bowman and Rudman, told the Canadian Press. "It shows that they knew what they were doing." United States and Canadian securities regulators are also investigating the Company's finances. Meanwhile, the Company appointed former U.S. navy admiral Bill Owens as CEO, while William Kerr, a chartered accountant who had replaced Beatty on an interim basis, became CFO. MaryAnne Pahapill was named controller. Nortel said it is reviewing the legal situation and had no comment, the Canadian Press reports. "We've been in negotiations with some large clients who were floored by the announcement," he told the Canadian Press. "They had actually increased their positions following the earlier announcement, thinking they were in the clear now, and there was yet another bad announcement from Nortel - and they keep coming." PARADYNE NETWORKS: Reaches Settlement For FL Securities Lawsuit --------------------------------------------------------------- Paradyne Networks, Inc. reached a settlement for the consolidated securities class action filed in the United States District Court for the Middle District of Florida against it, and: (1) certain of its officers and directors, (2) Andrew May, Chief Executive Officer and President at the time, (3) Patrick Murphy, Chief Financial Officer and Senior Vice President, (4) Thomas Epley, then Chairman of the Board, and (5) Sean E. Belanger, current President, Chief Executive Officer and Chairman of the Board, was added as a The Court appointed Frank Gruttadauria and Larry Spitcaufsky as the lead plaintiffs and the law firms of Milberg Weiss Bershad Hynes & Lerach, LLP and Barrack Rodos & Bacine as the lead counsel. The amended consolidated complaint alleges violations by the Defendants of the securities anti-fraud provisions of the federal securities laws, specifically Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. It further alleges that the individual Defendants are liable under Section 20(a) of the Securities Exchange Act as "control persons of Paradyne." The plaintiffs purport to represent a class of investors during a class period of September 28, 1999 through September 28, 2000 and allege, in effect, that the Defendants during that time, through material misrepresentations and omissions, fraudulently or recklessly inflated the market price of the Company's stock by allegedly erroneously reporting that the Company was performing well, that its inventories were properly stated, and that its customer base and product demand were solid. The Securities Actions seek damages in an unspecified amount for the purported class for the alleged inflated amount of the stock price during the class period. The Defendants filed a motion on May 25, 2001, asking the Court to dismiss the complaint, with prejudice, after which the Plaintiffs filed a memorandum of law in opposition to Defendant's dismissal motion on July 2, 2001. The Defendant's dismissal motion was denied by the Court on April 4, 2002. By order dated October 24, 2002, the Court granted plaintiffs' motion to certify a class, but accepted Defendants' arguments that the class should begin no earlier than March 20, 2000, instead of September 28, 1999 as plaintiffs had proposed. The class certified consists of purchasers of Paradyne stock from March 20, 2000 through September 29, 2000. On October 14, 2003, the parties filed a notice with the Court that they had reached an agreement to settle the Florida Securities Actions. In exchange for a payment of $3 million, to be funded solely by the Company's insurer, the plaintiff class agreed to release the Defendants and dismiss the Florida Securities Actions. Defendants admitted no liability in making this settlement. The settlement is subject to the following conditions: notice to the plaintiff class of the terms of the settlement, an opportunity to opt out of the settlement, and final approval by the Court. PHELPS DODGE: Dropped From Several Carbon Black Antitrust Suits --------------------------------------------------------------- Phelps Dodge Corporation was dropped as a defendant in several class actions filed on behalf of purchasers of carbon black, alleging violations of federal antitrust law. The Company and Columbian Chemicals Company, together with several other companies, were named as defendants in an action entitled "Technical Industries, Inc. v. Cabot Corporation, et al.," filed on January 30, 2003, in the U.S. District Court in Boston, Massachusetts, and 14 other actions filed in four U.S. district courts, on behalf of a purported class of all individuals or entities who purchased carbon black directly from the defendants since January 1999. The Judicial Panel on Multidistrict Litigation, consolidated all of these actions in the U.S. District Court for the District of Massachusetts under the caption "In re Carbon Black Antitrust Litigation." The consolidated complaint, which alleges that the defendants fixed the prices of carbon black and engaged in other unlawful activities in violation of the U.S. antitrust laws, seeks treble damages in an unspecified amount and attorneys' fees. The consolidated complaint filed in these actions by the plaintiffs has dropped the Company as a defendant. The Company and Columbian Chemicals Company, together with several other companies, have also been named as defendants in an action entitled "Level Construction, Inc. v. Cabot Corporation, et al.," filed in Superior Court of the state of California for the County of San Francisco and eight other actions filed in California Superior Courts on behalf of a purported class of indirect purchasers of carbon black in the state of California from as early as November 1998 to the present. The complaints allege similar claims by indirect purchasers under California state law and seek treble damages in an unspecified amount and attorneys' fees. These complaints have been consolidated in the Superior Court of the State of California for the County of San Francisco under the caption Carbon Black Cases. The consolidated complaint filed in three actions by the plaintiffs has dropped the Company as a defendant. Similar class actions have been filed in state courts in North Carolina, Florida, Kansas, New Jersey, South Dakota and Tennessee on behalf of indirect purchasers of carbon black in those and six other states alleging violations of state antitrust and deceptive trade practices laws. Columbian has also received a demand for relief on behalf of indirect purchasers in Massachusetts, but no lawsuit has been filed. PLAINS RESOURCES: Plaintiffs Consolidate Securities Suits in DE --------------------------------------------------------------- The six class actions filed against Plains Resources, Inc., its directors and its Chief Executive Officer and President John T. Raymond have been consolidated in the Court of Chancery in the State of Delaware, in and for New Castle County. The suits uniformly seek to enjoin the sale of Plains Resources. The lawsuits, and dates of filing, are: (1) No. 071-N, Twist Partners LLP v. Flores et al. (filed November 21, 2003); (2) No. 073-N, Klein v. Flores et al. (filed November 21, 2003); (3) No. 074-N, Levy v. Flores et al. (filed November 21, 2003); (4) No. 075-N, Lanza v. Flores et al. (filed November 21, 2003); (5) No. 076-N, Burt v. Flores et al. (filed November 21, 2003); (6) No. 143-N, South Broadway Capital v. Flores et al. (filed December 30, 2003); Four of the complaints (Twist Partners, Klein, Levy, and South Broadway Capital) also named Vulcan Capital as a defendant. Each complaint alleged that the $14.25 per share Vulcan Capital proposal would be inadequate compensation. The Twist Partners complaint alleged that the Company's stock traded as high as $23.05 per share as recently as December 2002 and as high as $14.75 per share as recently as June 2003. It further alleged that the downward trend of the price of the Company's stock reflects temporary market conditions in the industry, and that Mr. Flores and Mr. Raymond recognized a strong likelihood that the price would soon rebound to the levels at which it traded in 2003 and late 2002. The complaint further alleged that Mr. Flores, Mr. Raymond, and Vulcan Capital determined to "usurp this hidden value for themselves," thereby allegedly denying our minority stockholders the opportunity to obtain fair value for their equity interest. The Twist Partners November 21, 2003 complaint alleged that all individual defendants breached fiduciary duties of due care and loyalty to the Company's stockholders. Vulcan Capital was alleged to have aided and abetted these alleged breaches of fiduciary duty. The complaint asserted, among other things, that the November 20, 2003 announcement of a November 19, 2003 buyout offer represented "a paltry premium of 7.6 percent to Plains' current trading price and . a very significant discount to what it had traded at earlier in the year." As of the November 21, 2003 filing of the complaint, Twist Partners alleged that the individually named defendants had failed to auction the Company, had failed to conduct an active market check, had not appointed an independent person to negotiate on behalf of the Company's stockholders. The relief sought by Twist Partners includes certification of a class action, an injunction preventing consummation of the buyout offer (or rescinding it if consummated), compensatory and/or rescissory damages to the class, interest, attorneys' fees, expert fees, and other costs, along with such other relief as the Court might find just and proper. Substantially the same allegations and prayer for relief were made in each of the first five suits filed (Twist Partners, Klein, Levy, Lanza, and Burt). (Klein, Lanza, and Levy additionally alleged that Mr. Flores and Mr. Raymond dominated and controlled the rest of the Board of Directors.) The Klein complaint was subsequently amended to name and seek relief from Vulcan Energy rather than Vulcan Capital. These five cases were consolidated on December 11, 2003 under the action No. 071-N, "In re Plains Resources Inc. Shareholders Litigation", and defendants are not required to respond to the originally filed complaints. On December 30, 2003, a sixth complaint was filed by South Broadway Capital asserting substantially the same allegations and prayer for relief as the complaints consolidated under No. 071-N, "In re Plains Resources Inc. Shareholders Litigation." Plaintiff's Delaware counsel of record for South Broadway Capital are also plaintiff's counsel of record in No. 071-N, "In re Plains Resources Inc. Shareholders Litigation." The defendants expect that the South Broadway Capital action will be consolidated with the other five shareholder suits. On February 24, 2004, the first amended consolidated complaint was filed in No. 071-N, "In re Plains Resources Inc. Shareholders Litigation." That complaint makes additional factual allegations. It alleges that the $14.25 per share Vulcan Capital proposal failed to adequately reflect the value of certain assets and results of the transaction, including: (i) the resulting controlling interest in PAA (for which plaintiffs allege the fair market value of the premium for such control is between $360 and $540 million); (ii) incentive distribution rights in Plains AAP (for which plaintiffs allege an estimated present value of $54.4 million); (iii) limited partner interest in PAA; (iv) the Company's proved oil reserves (of which plaintiffs allege the market value is 15% higher than its standardized measure); (v) certain unspecified tax credits not reflected on our balance sheet; and (vi) other unspecified assets, net of liabilities. The amended consolidated complaint also alleges that: (a) Mr. O'Malley has "significant business and/or personal relationships" with Mr. Flores and Mr. Raymond and is not capable of being a truly independent member of the special committee; (b) the Leucadia proposal was rejected without adequate consideration by the special committee; (c) the special committee's January 22, 2004 statement that it was "prepared to enter into discussions or negotiations with . other parties relating to a transaction" was materially false and misleading, and that the special committee "never intended to entertain proposals from anyone other than Vulcan and/or the Company's directors;" (d) the Vulcan Capital proposal is not the result of a full and fair auction process or active market check, that the $16.75 per share price was reached without a full and thorough investigation, that the price and process are intrinsically unfair and inadequate; and (e) the Company's directors failed to make an informed decision with respect to the Vulcan Capital proposal. PLAINS RESOURCES: Faces Lawsuit Over Proposed Sale in TX Court -------------------------------------------------------------- Plains Resources, Inc. its directors, its President and CEO John T. Raymond and Vulcan Capital face a class action filed in the 157th District Court for Harris County, Texas (No. 2004-10509), styled "Gilbert v. Plains Resources Inc. et al." The suit particularly alleges that "members of the Class will be irreparably harmed in that they will not receive fair value for Plains Resources' assets and business and will be prevented from obtaining the real value of their equity ownership in the Company," and that unless an injunction is entered, Vulcan Capital and Mr. Flores and Mr. Raymond "will continue to aid and abet a process that inhibits the maximization of shareholder value." For purported causes of action, the Texas lawsuit alleges that the Company's directors breached fiduciary duties of loyalty and due care by allegedly failing to: (1) inform themselves of our market value before taking action, (2) act in the best interest of our shareholders, (3) maximize shareholder value, (4) obtain the best financial and unspecified other terms when the Company's independent existence will be materially altered by a transaction, and (5) act in accordance with their fundamental duties of due care and loyalty. It further alleges that Vulcan Capital and Mr. Flores and Mr. Raymond aided and abetted the Company's directors' alleged breaches of fiduciary duties. The relief sought includes: (i) declaration of a class action, (ii) declaration that the proposed merger agreement "was entered into in breach of the fiduciary duties of" the Company's directors, (iii) injunction prohibiting the from proceeding with and consummating the proposed merger, (iv) injunction requiring the implementation of procedures to obtain the highest price, (v) injunction requiring our directors "to exercise their fiduciary duties to obtain a transaction which is in the best interests of shareholders until the process for the sale or auction of the Company is completed and the highest possible price is obtained," (vi) unspecified "appropriate damages," (vii) "costs and disbursements," including reasonable attorneys' and experts' fees, and (viii) other and further relief which the Court may deem just and proper PLAINS RESOURCES: Faces Unitholder, Partner Lawsuit in DE Court --------------------------------------------------------------- Plains Resources, Inc. faces a class action filed in the Court of Chancery in the State of Delaware, in and for New Castle County, styled "Sperber v. Plains Resouces, Inc. et al., No. 123-N. The suit also names as defendants: (1) Plains All American Pipeline, L.P. (2) Plains AAP, L.P., (3) PAA GP LLC, and (4) several individual defendants The suit was putatively brought on behalf of all limited partners and unit holders in PAA and alleges breach of the fiduciary duties owed to PAA and its unit holders and limited partners by PAA; Plains AAP, L.P.; PAA GP, L.L.C.; and the individually named directors of PAA GP, L.L.C.; and breach of the fiduciary duties owed to PAA and its unit holders and limited partners by Plains Resources Inc. and its individually named directors as controlling stockholder of PAA GP, L.L.C. The suit's factual allegations concerning the buyout proposal are substantially the same as those alleged in the consolidated Plains Resources stockholders litigation. In addition, the plaintiff alleged that as a result of the buyout proposal, Mr. Flores and Mr. Raymond will effectively control PAA. Sperber alleged that PAA had made no disclosure concerning the buyout proposal, and that no actions had been taken to protect the interests of PAA, its limited partners, or its unitholders with respect to the Plains Resources buyout proposal. The plaintiff specifically alleged that defendants have breached their contractual and/or fiduciary duties by: (i) failing to seek, pursuant to their respective governing documents, to acquire Plains Resources or the PAA units and general partnership interests held by Plains Resources; (ii) failing to amend the PAA GP Amended and Restated Limited Liability Company Agreement and/or PAA's Amended and Restated Limited Partnership Agreement to limit the power of Mr. Flores and Mr. Raymond and Vulcan Capital over selection of five of the seven members of the PAA GP board and the chief executive officer of PAA GP; (iii) failing to ensure that the transaction does not adversely affect PAA's interests under the Crude Oil Marketing Agreement, dated as of November 23, 1998, by and among Plains Resources, Plains Illinois Inc., Stocker Resources, LP, Calumet Florida, Inc., and Plains Marketing, LP and the Omnibus Agreement among Plains Resources, PAA, Plains Marketing, LP, All American Pipeline, LP and Plains All American Inc., dated as of November 23, 1998, or to obtain fair value for any waiver of those interests; (iv) failing to convene the conflicts committee to determine whether the proposed transaction is fair and reasonable to PAA; and (v) failing to appoint a special committee of independent directors to consider the effects of the transaction. The suit alleged that all defendants to that action owe fiduciary duties to PAA, its limited partners, and its unitholders which allegedly have been breached by the failure to take actions to protect the interests of PAA, its limited partners, and its unitholders. The Sperber complaint requests certification of a class action, an injunction preventing consummation of the buyout offer (or rescinding it if consummated), an injunction requiring PAA and Plains AAP to act to protect the interest of PAA, its limited partners, and its unitholders, a declaration that the individual defendants breached their fiduciary duties to the plaintiff and the putative class, an accounting of all assets, money, and other value improperly received from Plains Resources, disgorgement and imposition of a constructive trust on all property and profits defendants received as a result of wrongful conduct, damages to the class, interest, attorneys' fees, and other costs, along with such other relief as the Court might find just and proper. Pursuant to an agreement among counsel, no response to the Sperber complaint is required until March 10, 2004. SAGE ADVISORY: Former Principal Enjoined From Securities Fraud -------------------------------------------------------------- The Securities and Exchange Commission announced that, on March 30, 2004, Gordon J. Rollert, the former principal of registered investment advisers Sage Advisory Services LLC and Standard Asset Group, L.P., was enjoined, by consent, from violations of the antifraud and false filing provisions of the federal securities laws and ordered to pay $50,000 disgorgement. In February 2001, the Commission charged Mr. Rollert, of Wellesley, Massachusetts, with defrauding one of his clients, the Pakachoag Church of Auburn, Massachusetts, of approximately $900,000 between 1993 and 1997. In its Complaint, the Commission alleged that Mr. Rollert used his investment advisory firm, Sage Advisory Services, LLC, and its predecessor, Standard Asset Group LP (collectively, Sage), to misappropriate hundreds of thousands of dollars in soft dollar credits generated by securities transactions made on the Church's behalf in an account that Mr. Rollert set up at a Boston-area broker-dealer. It also alleged that Mr. Rollert fraudulently induced the Church to invest $250,000 in his advisory firm. The complaint alleged that as part of the scheme to misappropriate soft dollar credits, Mr. Rollert submitted invoices to the broker-dealer for payments with soft dollars that had been generated by trading in the Church's account. Many of the invoices that Rollert submitted were in the name of FA Partners, a shell entity that Rollert controlled, and falsely indicated that FA Partners had provided services to Sage that were payable with soft dollars. The broker-dealer paid FA Partners based on these false invoices. Rollert personally picked up these payments from the broker-dealer and deposited them into bank accounts that he controlled. He then withdrew the majority of the funds for his personal use. The Commission alleged that the Church was not informed that its soft dollars were being used for Rollert's personal benefit. Soft dollar credits are created when an investment adviser and a broker-dealer enter into an arrangement in which a percentage of commissions are used to pay for products and services, such as research, that help the adviser in making investment decisions. Because soft dollar credits are generated by commissions paid by the advisory client, they are assets of the client. Soft dollar arrangements are permissible under the securities laws if there is appropriate disclosure to the client about the products and services for which the soft dollars will be used, as well as disclosure that the client may pay higher commission rates as a result of the soft dollar arrangement. The complaint also charged that Rollert churned the Church's endowment account to generate additional soft dollar credits, which he then misappropriated, and that Rollert fraudulently offered and sold to the Church at least $250,000 in securities in the form of equity interests in and promissory notes offered by Sage and its predecessor. Finally, according to the complaint, Rollert failed to disclose his soft dollar practices in Form ADV amendments filed with the Commission by Sage. Rollert was enjoined from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1), 206(2) and 207 of the Advisers Act. In addition, he was ordered to pay $50,000 disgorgement, with additional amounts waived and penalties not assessed based on his financial condition. In July 2001, Sage was ordered to pay an additional $304,852 in disgorgement and interest in a related Commission administrative proceeding. In October 2002, Rollert pled guilty to mail and wire fraud charges in a related criminal action. In December 2002, Rollert was criminally sentenced to pay an additional $100,000 in disgorgement, was fined $15,000, and ordered to serve six months of home confinement. In January 2003, Rollert was barred by the Commission from association with any investment adviser on the basis of his criminal conviction. The suit is styled "SEC v. Gordon J. Rollert, USDC, District of Massachusetts, No. 01-Civ.-10237-JLT." SCHERING-PLOUGH: Jury Requests Sales Practices Information ---------------------------------------------------------- A grand jury has subpoenaed information on Schering-Plough Corporation's sales and marketing practices, specifically about the Company's generic respiratory and cardiovascular medicines, the Associated Press reports. In a filing with the Securities and Exchange Commission (SEC), the Company revealed that the grand jury requested documents concerning the company's asthma and allergy drugs Claritin, Proventil, Vanceril and Vancenase; its angina medicines Nitro- Dur and Imdur and its K-Dur potassium supplement, earlier this month. The subpoena also seeks documents from managed care companies, documents relating to all contracts where the price of one drug is dependent on purchase of another, documents relating to required lowest prices to the state-run Medicaid insurance program and documents related to Schering-Plough's Warrick generic subsidiary. The subpoena is an outgrowth of a two-year-old investigation by the U.S. Attorney in Boston of Schering-Plough's sales and marketing practices. A company spokesman declined to comment on the latest subpoena. Officials at the U.S. Attorney's Office could not immediately be reached for comment, AP reports. SCHERING-PLOUGH: Lawsuit Against Puerto Rico Plant in Mediation --------------------------------------------------------------- The class action filed against one of Schering-Plough Corporation's subsidiaries by residents in the vicinity of a publicly owned wastewater treatment plant in Barceloneta, Puerto Rico, has been submitted to mediation. The suit names as defendants the plant owner and operator, and numerous companies that discharge into the plant, including the Company's subsidiary, for damages and injunctive relief relating to odors allegedly coming from the plant and connecting sewers. The class action alleges damages of $600 million. No trial date has been set for these cases. SCHERING-PLOUGH: Asks NJ Court To Dismiss Securities Fraud Suit --------------------------------------------------------------- Schering-Plough Corporation asked the United States District Court in New Jersey to dismiss the class action filed against it and: (1) Richard Jay Kogan (who resigned as Chairman of the Board November 13, 2002, and retired as Chief Executive Officer, President and Director of the Company April 20, 2003) and (2) the Company's Employee Savings Plan administrator breached their fiduciary obligations to certain participants in the Plan The allegations primarily relate to disclosures about the Company's Good Manufacturing Practices issues, in relation to the Company's disclosures about its consent decree with FDA and related matters and disclosures about the meetings with investors the week of September 30, 2002 and other communications. In May 2003, the Company was served with a second putative class action complaint filed in the same court with allegations nearly identical to the complaint filed March 31, 2003. On October 6, 2003, a consolidated amended complaint was filed, which names as additional defendants: (1) Eugene McGrath, (2) Donald Miller, (3) Carl Mundy, (4) Patricia Russo, (5) Kathryn Turner, (6) James Wood and (7) Regina Herzlinger and (8) other corporate officers. SCHERING-PLOUGH: Continues To Face Litigation Over PPA Products --------------------------------------------------------------- Schering-Plough Corporation faces several class actions, in which plaintiffs seek a refund of the purchase price of laxatives or phenylpropanolamine-containing cough/cold remedies (PPA products) they purchased. Other pharmaceutical manufacturers are co-defendants in some of these lawsuits. In general, plaintiffs claim that they would not have purchased or would have paid less for these products had they known of certain defects or medical risks attendant with their use. In the litigation of the claims relating to the Company's PPA products, courts in the national class action suit and several state class action suits have denied certification and dismissed the suits. A similar application to dismiss in New Jersey, the only remaining statewide class action suit involving the Company, is pending. Approximately 122 individual lawsuits relating to the laxative products, PPA products and recalled albuterol/VANCERIL/VANCENASE inhalers are also pending against the Company seeking recovery for personal injuries or death. In a number of these lawsuits punitive damages are claimed. SIERRA HEALTH: Named as Co-Conspirator in HMO Litigation in FL -------------------------------------------------------------- Sierra Health Services is named as a co-conspirator in the class action lawsuit, styled "In Re: Managed Care Litigation: MDL No. 1334," filed in the United States District Court for the Southern District of Florida. The Company, however, is not named as a defendant. Beginning in 1999, a series of class actions were filed against most other major entities in the health benefits business. A multi-district litigation panel has consolidated most of these cases in the Southern District Court of Florida, Miami division. The plaintiffs assert that the defendants improperly paid providers' claims and "downcoded" their claims by paying lesser amounts than they submitted. The complaint alleges, among other things, multiple violations under the Racketeer Influenced and Corrupt Organizations Act, or RICO, as well as various breaches of contract and violations of regulations governing the timeliness of claim payments. The consolidated suits seek injunctive, compensatory and equitable relief as well as restitution, costs, fees and interest payments. Discovery commenced on September 30, 2002. In November 2002, the Eleventh Circuit granted the industry defendants' petition to review the class certification order. That appeal is pending. On April 7, 2003, the United States Supreme Court determined that the RICO claims against certain defendants should be arbitrated. On September 15, 2003, the district court granted in part and denied in part the industry defendants' further motion to compel arbitration. Significantly, the court denied the industry defendants' motion with respect to plaintiffs' derivative RICO claims. On September 19, 2003, the industry defendants appealed the district court's arbitration order to the Eleventh Circuit. Discovery is ongoing and a trial date has been set for September 13, 2004. In the meantime, two of the defendants, Aetna Inc. and Cigna Corporation, have entered into settlement agreements which have been approved by the Court. SMART & FINAL: CA Court Approves Settlement For Employees' Suit --------------------------------------------------------------- The Superior Court of the State of California for the County of Los Angeles granted final approval to the settlement proposed by Smart & Final, Inc. for the consolidated class action filed on behalf of its employees. The first suit, styled "Camacho vs. Smart & Final Inc., was filed on behalf of all other store managers and assistant managers in California, alleging that the Company misclassified the status of store managers and assistant managers in California as exempt employees for employment purposes. The action seeks unspecified monetary damages. On February 24, 2003, following an extensive period of investigation and discovery, the plaintiff filed a motion for class certification. On May 2, 2003, the Company filed its opposing papers to plaintiff's motion for class certification. Another suit was filed in the same court, styled "Perea vs. Smart & Final Inc.," on behalf of all other employees who participate in the commission program in California, alleging that the Company improperly calculated commission payments. In September 2003, the Company entered into a tentative settlement agreement for the resolution of the actions. In October 2003, the court consolidated the actions and, on October 27, 2003, preliminarily approved the settlement and set a fairness hearing and final court certification of the settlement for January 13, 2004. This court date was subsequently deferred to February 24, 2004. The final approval hearing was heard and granted by the court on February 26, 2004. Under the terms of the settlement, the Company paid into the settlement fund $7.6 million in cash during the first quarter of 2004 and will issue $1.5 million in scrip redeemable at the Company's Smart & Final stores. Plaintiff's attorney fees, costs and administrative expenses will be paid from the settlement amount. In addition, the Company will pay its own attorney fees and certain other expenses. SMART & FINAL: CA Court Grants Certification To Employee Lawsuit ---------------------------------------------------------------- The Orange County Superior Court of the State of California granted class certification as to nine sub-classes in the lawsuit filed against Smart & Final, Inc., styled "Olivas vs. Smart & Final Inc. The suit was filed on behalf of all non-exempt Smart & Final employees in California alleging that the Company failed to pay proper overtime and other compensation. The action seeks to be classified as a "class action" and seeks unspecified monetary damages. On August 9, 2001, the Company filed a general denial to these claims and asserted numerous defenses. A hearing on plaintiff's motion for class certification was heard and certification as to nine sub-classes was granted on January 22, 2004. The Company is pursuing its legal remedies at both the appellate and trial court levels. T. ROWE: Mutual Fund Participants Launch Stock Fraud Suits in IL ---------------------------------------------------------------- T. Rowe Price International faces two class actions filed in Illinois state and federal courts, alleging fraudulent mutual fund trading practices. The suits also name as defendant T. Rowe Price International Funds, Inc. The suits are: (1) T.K. Parthasarathy, et al., including Woodbury, v. T. Rowe Price International Funds, Inc., et al., filed in the Circuit Court, Third Judicial Circuit, Madison County, Illinois, against T. Rowe Price International and the T. Rowe Price International Funds with respect to the T. Rowe Price International Stock Fund. Two unrelated fund groups were also named as defendants. (2) John Bilski v. T. Rowe Price International Funds, Inc., et al., filed in the United States District Court, Southern District of Illinois, against T. Rowe Price International and the T. Rowe Price International Funds with respect to the T. Rowe Price New Asia Fund. Two unrelated fund groups were also named as defendants. The basic allegations in the two complaints are that the T. Rowe Price defendants do not make appropriate value adjustments to the foreign securities of the T. Rowe Price International Stock and New Asia Funds prior to calculating the funds' daily share prices, thereby benefiting market timing traders at the expense of the long-term mutual fund shareholders. In the view of the T. Rowe Price funds and T. Rowe Price International, the allegations set forth in the complaints are factually and legally inaccurate and wholly without merit. TRU-COAT PLATING: Kenneth B. Moll Launches Investigation in IL -------------------------------------------------------------- The Law Offices of Kenneth B. Moll & Associates, Ltd. has launched an investigation into the alleged claims that the Tru- Coat Plating and Finishing Company, Inc. is allowing severe and dangerous levels of hexavalent chromium ("Chromium VI") to escape into the atmosphere. The investigation centers on the residents of Bellwood, Illinois (just south of O'Hare International Airport) and the its surrounding areas, who have made reports of serious injuries and deaths due to Chromium VI exposure. Chromium VI also known as hexavalent chromium is used in several industrial processes including chrome plating, electro-plating, manufacturing of steel and other alloys, and as an additive to limit corrosion in industrial equipment. Exposure to the chemical is known to cause lung cancer, liver, heart, respiratory and reproductive failure as well as cancer of the brain, kidney, breast, uterus and gastrointestinal system, Hodgkin disease, frequent miscarriages, death and more. Early symptoms of inhalation toxicity may include ulcers and holes in the nasal septum. It is also important to take note that the very same chemical mentioned was involved in the 1993 California lawsuit by 77 Hinkley residents against Pacific Gas and Electric Company (PG&E). An employee of a local law firm by the name of Erin Brockovich was credited for the lawsuits success. The case though is still controversial among chromium experts because most of the Hinkley exposures involved drinking Chromium VI- laced water. Drinking Chromiun VI-laced water causes much less toxicity than inhalation of the chemical, since ingested Chromium VI is converted to inactive trivalent chromium in the stomach. Claims against Tru-Coat Plating and Finishing, Company, Inc. allege exposure to severe and dangerous levels of Chromium VI by inhalation. The Illinois Attorney General's upon hearing these reports took action by filing a Complaint for injunctive relief and civil penalties against Tru-Coat. The complaint seeks temporary and permanent injunctions forcing Tru-Coat to stop releasing unsafe levels of Chromium VI into the atmosphere placing residents in the Bellwood, Illinois area at substantial risk of health problems. For more details, contact Kenneth B. Moll & Associates, Ltd. By Mail: Three First National Plaza, 50th Floor, Chicago, Illinois 60602 by Phone: 312-558-6444 or 888-882-3453 by Fax: 312-558-1112 by E-Mail: lawyers@kbmoll.com or visit their Web site: www.kbmoll.com New Securities Fraud Cases ABATIX CORPORATION: Brodsky & Smith Files Securities Suit in TX -------------------------------------------------------------- The Law Offices of Brodsky & Smith, LLC filed a securities class action on behalf of shareholders who acquired or acquired Abatix Corporation securities and common stock between the periods of April 14, 2004 to April 21, 2004, inclusive. Though still pending in the United States District Court for the Northern District of Texas, the suit has not yet certified a class. The class action alleges that defendants issued materially false and misleading statements to the market during the Class Period, which had the effect of artificially inflating the market price of Company securities. The statements, the action claims was a blatant violation of federal securities laws. For more details, contact Marc L. Ackerman, Esquire or Evan J. Smith, Esquire by Mail: Brodsky & Smith, LLC, Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by Phone: 877-LEGAL-90 or by E-Mail: clients@brodsky-smith.com ACTIVISION INC.: Bernstein Liebhard Files Stock Suit in C.D. CA --------------------------------------------------------------- Bernstein, Liebhard & Lihsfitz, LLP commenced a securities class action on behalf of purchasers of securities of Activision, Inc. (NASDAQ: ATVI) between and including February 1, 2001 and December 17, 2003. The class action lawsuit is pending in the United States District Court for the Central District of California. In addition to Activision, the Complaint named the following officers or directors of the Company as Defendants: (1) Robert A. Kotick, (2) Brian G. Kelly, (3) Lawrence Goldberg, (4) Steven T. Mayer, (5) Kathy P. Vraback, (6) Michael J. Rowe, (7) Ronald Doornink, (8) William J. Chardavoyne, (9) Barbara S. Isgur, (10) Richard A. Steele, and (11) Daniel J. Hammett The Complaint charges defendants 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: (i) that the Company's market share for its video games was eroding; (ii) that sales of its recently introduced products sharply underperformed expectations, leading to reduced sales and earnings; (iii) that the slump in sales from its new products would cause the Company to lose significant ground to its closest competitors; and (iv) that, as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and their earnings projections. On December 17, 2002, with weaker-than-expected sales during the holiday season, Activision slashed quarterly and yearly earnings estimates. The news followed defendant Kotick's statements at the end of the fiscal second quarter that the Company would likely have its "best year ever" next year. At that time, the Company raised earnings and sales guidance for the next several quarters. For the fiscal fourth quarter, the Company stated that it expected to post a loss of 15 cents a share on revenue of $100 million, compared with earlier expectations of a profit of 2 cents a share on revenue of $139 million. News of this shocked the market so much that by December 18, 2002 shares of Activision plunged down $3.10 per share to close at $12.63 per share. For more details, contact The Shareholder Relations Department of Bernstein Liebhard & Lifshitz, LLP, by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or (212) 779-1414 or by E-Mail: ATVI@bernlieb.com CANADIAN SUPERIOR: Schatz & Nobel Launches Securities Suit in NY ---------------------------------------------------------------- Schatz & Nobel, P.C. initiated a securities class action filed in the United States District Court for the Southern District of New York on behalf of all persons who purchased the publicly traded securities of Canadian Superior Energy (Amex: SNG; TSX: SNG) from November 17, 2003 through March 10, 2004 inclusive. The Complaint alleges that defendants issued materially false statements about an offshore well known as the Mariner I-85 in Nova Scotia, Canada. Specifically, defendants failed to disclose that the Mariner I-85 well did not contain the substantial gas reservoir required to support a commercial project and that the costs of testing and drilling at the well were significantly exceeding the budget. As a result of the foregoing, positive announcements concerning the Mariner I-85 well were lacking in a reasonable basis when made. On March 11, 2004 Canadian Superior announced that it had halted operations at the Mariner I-85 well due to budget constraints. On this news, shares of Canadian Superior plummeted 44.44%. For more information about the case, contact Nancy Kulesa by Phone: (800) 797-5499, by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net. CANADIAN SUPERIOR: Scott + Scott Lodges Securities Lawsuit in NY ---------------------------------------------------------------- Scott + Scott, LLC initiated a securities class action in the United States District Court for the Southern District of New York on behalf of people who purchased the shares of Canadian Superior Energy Inc. (AMEX: SNG); TSX: SNG.TO) during the period between November 17, 2003 and March 11, 2004, inclusive. The complaint alleges that Defendants Canadian Superior, Greg Noval, and Michael Coolen violated the United States securities laws (specifically, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5) by issuing a number of materially false and misleading statements. The statements made that are alleged to be false and misleading include that some of the Company's oil/gas well operations located in Nova Scotia, Canada were performing better than they actually were and that sound financing for oil/gas exploration was accurately reflected in public statements. The complaint alleges that these positive statements, when made, failed to disclose that Defendants knew that the Mariner \ I-85 well was not going to be able to produce commercial amounts of oil/gas. Further, these positive, public statements, coupled with the under-funded budget for testing and drilling at the Mariner\ I-85--funding that was proclaimed sufficient in public statements---resulted in artificially inflated common stock prices. These statements were materially false and misleading when made and designed to inflate the value of the Company's stock. On March 11, 2004, the Company announced that it had halted operations at the Mariner \ I-85 well and that it would not continue these operations. The market reacted strongly to this news and Canadian Superior shares plunged 44.44%, or $1.44 per share, to close at $1.80 per share on March 11, 2004. For more details, contact Neil Rothstein by Mail: 108 Norwich Avenue, Colchester, CT 06415 by Phone: 860/537-3818 by Fax: 860/537-4432 or visit the firm's Website: nrothstein@scott-scott.com DATATEC SYSTEMS: Bernstein Liebhard Lodges Stock Lawsuit in NJ -------------------------------------------------------------- Bernstein Liebhard & Lifshitz LLP initiated a securities class action lawsuit on behalf of all persons who acquired securities of Datatec Systems, Inc. (NasdaqSC:DATCE) between June 26, 2003 and December 16, 2003, inclusive in the United States District Court of New Jersey. The suit names as defendants the Company and: (1) Isaac Gaon, (2) Mark Hirschhorn, and (3) Raymond Koch The Complaint charges that Datatec and certain 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 Datatec's securities. Specifically, the Complaint alleges that while CEO Isaac Gaon told investors that Datatec was on track to earn $0.14 to $0.16 per share for fiscal 2004, Datatec hid its true financial condition so that it could maintain financing from IBM Credit. On December 5, 2003, Datatec surprised investors with the news that CEO Isaac Gaon had stepped down as Chairman and CEO. Then on December 17, 2003, the Company revealed that it would suffer a $10 million loss for the fiscal quarter ended October 31, 2003, and that Datatec's Audit Committee had hired outside counsel to review Datatec's valuation of its long-term contracts. IBM Credit has since refused to waive Datatec's non- compliance with financial covenants. As a result, Datatec's stock price fell substantially on large volume. For more details, contact the Shareholder Relations Department at Bernstein Liebhard & Lifshitz, LLP by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or (212) 779-1414 or by E-mail: DATCE@bernlieb.com. ITT EDUCATIONAL: Schatz & Nobel Lodges Securities Lawsuit in IN --------------------------------------------------------------- Schatz & Nobel, P.C. initiated a securities class action in the United States District Court for the Southern District of Indiana on behalf of all persons who purchased the publicly traded securities of ITT Educational Services from October 17, 2002 through March 9, 2004 inclusive. The Complaint alleges that defendants failed to disclose that they had systematically falsified records relating to enrollment, graduation and job placement rates to artificially inflate ITT''s financial performance and that a substantial portion of ITT''s revenues were secured by submitting false statistics to the government to obtain federal grants and financial aid. During the Class Period, insiders sold their personally held shares for proceeds of over $14 million. On February 25, 2004, ITT announced that it had been served with search warrants and related grand jury subpoenas for headquarters and several schools. On this news, shares of ITT plummeted 33%, or $18.90 per share. On March 9, 2004, ITT announced that it had been under investigation by the California Attorney General since October 2002. For more details, contact Nancy Kulesa by Phone: (800) 797-5499, or by e-mail: sn06106@aol.com. MOBILITY ELECTRONICS: Goodkind Labaton Lodges Stock Suit in AZ -------------------------------------------------------------- Goodkind Labaton Rudoff & Sucharow LLP initiated a securities class action in the United States District Court for the District of Arizona, on behalf of persons who purchased or otherwise acquired publicly traded securities of Mobility Electronics, Inc. MOBE between September 2, 2003 and January 5, 2004, inclusive. The lawsuit was filed against the Company, Charles R. Mollo and Joan W. Brubacher. 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 that throughout the Class Period Defendants repeatedly represented that it expected Mobility to earn $15 million in revenues in the fourth quarter of 2003, which was attributable to an agreement with Fellowes, Inc. whereby Fellowes would globally market and distribute a line of Fellowes branded products from Mobility through its wide distribution network, encompassing more than 30,000 retail stores. In truth however, and unknown to investors, Fellowes was not meeting its sales forecasts and accordingly Mobility was not generating the revenues and earnings it had anticipated from the agreement with Fellowes. Prior to disclosing these adverse facts to the investing public, Mobility completed a $15 million private placement, and purchased assets from InVision Software and InVision Wireless using its artificially inflated stock, and insiders sold more than $6 million of their personally owned shares. On January 5, 2004, Mobility announced that it expected revenue for the fourth quarter of 2003 to be approximately $1.0 million to $1.3 million less than the Company's previous guidance of approximately $5 million. In response to this news, shares of Mobility fell dramatically, to $1.85 per share or approximately 21%. For more details, contact Christopher Keller, Esq. by Phone: 800-321-0476 or by E-mail: investorrelations@glrslaw.com NOKIA CORPORATION: Glancy Binkow Files Stock Suit in S.D. NY ------------------------------------------------------------ The Law Firm of Glancy Binkow & Goldberg, LLP 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 Nokia OYJ (Nokia Corporation) between January 8, 2004 and April 6, 2004, inclusive. The Complaint charges Nokia and certain of the Company's executive officers with violations of federal securities laws. Among other things, plaintiff claims that defendants' omissions and material misrepresentations concerning Nokia's business operations and prospects artificially inflated the Company's stock price, inflicting damages on investors. Nokia designs and produces mobile phones, remote controls, digital TV receivers, digital music players, antennas and other accessories. The complaint alleges that defendants failed to disclose and/or misrepresented the following adverse facts, among others: (1) that the Company's market share for its handsets was eroding; (2) that this was due to Nokia's failure to introduce GSM clamshell handsets in key middle-markets such as the United States, Asia and Europe; (3) that sales of networking equipment were worse than expected due to market erosion of Nokia's products; (4) that the Company's new reorganization to four operating divisions did not energize the Company, but rather reduced responsiveness to its business problems; and (5) that, as a result of the foregoing, defendants lacked a reasonable basis for their positive earnings projections. On the 6th of April 2004, Nokia announced that its first-quarter 2004 net sales would be below guidance. Nokia's net sales for first-quarter 2004 were estimated to be EUR 6.6 billion, representing a decline of 2% compared to first-quarter 2003, and below guidance of a 3-7% increase. This news shocked the market, and shares of Nokia on the NYSE fell 18.6% to close down nearly 27% from their 52-week high of $23.52 per share in early March 2004. Additionally, shares of Nokia on the Helsinki exchange dropped 17.1% to 14.38 euros ($17.39). For more details, contact Glancy Binkow & Goldberg LLP, (Lionel Z. Glancy & Michael Goldberg) by Mail: Los Angeles, CA by Phone: (310) 201-9150 or (888) 773-9224 by E-Mail: info@glancylaw.com NORTEL NETWORKS: Milberg Weiss Commences Securities Suit in NY -------------------------------------------------------------- Milberg Weiss Bershad Hynes and Lerach LLP initiated a securities class action on behalf of an institutional investor in the United States District Court for the Southern District of New York on behalf of purchasers of Nortel Networks Corporation (NYSE:NT) publicly traded securities during the period between December 23, 2003 and April 27, 2004. The amended complaint charges Nortel and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Nortel supplies products and services that support the Internet and other public and private data, voice and multimedia communications networks using wireline and wireless technologies. The amended complaint alleges that during the Class Period, defendants caused Nortel's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. Defendants had formulated a plan to have the Company's credit rating on its $4.1 billion debt raised from "B3" to "investment grade." Defendants were advised by Moody's that if the Company could improve its financials, the Company's rating would be raised. Not only would this rating change have a positive impact on the Company's stock price but this would in turn further inflate the Company's net income (beyond the already falsified accounting). By raising the Company rating, the Company could refinance its debt at a preferable rate, and increase the Company's margins. Defendants had hoped that the Company's positive (albeit false) Q4 2003 report would put pressure on Moody's to raise its rating. Regardless, by posting the false (but positive) Q4 results, defendants and the Company's top executives were rewarded with $30 million in bonuses. Then as defendants' scheme began to unwind, Nortel put its chief financial officer and controller on leave of absence pending completion of an investigation into the circumstances leading to the restatement. On March 15, 2004, Nortel delayed filing its annual report and admitted it may have to restate results for a second time in six months while the timing of certain accruals and provisions in 2003 and earlier periods were re-examined. In response to this delay in filing, the price of the Company's shares fell. Defendants knew that as a result of their actions, Nortel's lenders could demand early repayment of $3.6 billion of notes and convertibles bonds. As this leaked out into the market the Company's shares continued to decline. Then on April 28, 2004, the Company fired its CEO, CFO and Controller and disclosed that its previously announced restatement would be worse than earlier planned. In addition, the Company disclosed that its financial results for Q1 2004 would be indefinitely delayed. On this news, Nortel shares plunged to below $4.00 per share. The amended complaint also demands the executives return their ill-gotten bonuses for 2003. Plaintiff seeks to recover damages on behalf of all purchasers of Nortel publicly traded securities during the Class Period. For more details, contact Milberg Weiss Bershad Hynes & Lerach LLP (William Lerach or Darren Robbins) by Phone: 800/449-4900 by E-Mail: wsl@milberg.com or visit their Web site: http://www.milberg.com/cases/nortelnetworks/ QUOVADX INC.: Schatz & Nobel Lodges Securities Suit in CO Court --------------------------------------------------------------- Schatz & Nobel, P.C., initiated a securities class action filed in the United States District Court for the District of Colorado on behalf of all persons who purchased the publicly traded securities of Quovadx, Inc. (QVDX) from October 22, 2003 through March 15, 2004 inclusive. The Complaint alleges that Quovadx and certain of its officers and directors issued materially false statements during the class period concerning the Company's financial results. Specifically, defendants failed to disclose that Quovadx had materially overstated its net income and earnings per share; and that defendants prematurely recognized revenue from contracts with Infotech Network Group in violation of generally accepted accounting principals. As a result of the foregoing, Quovadx's financial results were materially overstated throughout the Class Period. On March 15, 2004, Quovadx announced that it would delay the filing of its 10-K for the year ended December 31, 2003 to restate its third quarter financial results and revise its 2003 fourth quarter and full year financial results. The SEC is currently investigating the restatement. For more information about the case, contact Nancy Kulesa by Phone: (800) 797-5499, by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net. SONUS NETWORKS: Zwerling Schachter Lodges Securities Suit in MA --------------------------------------------------------------- Zwerling, Schachter & Zwerling, LLP initiated a securities class action lawsuit in the United States District Court for the District of Massachusetts, on behalf of all persons and entities who purchased the common stock of Sonus Networks, Inc. (Nasdaq: SONSE) between June 3, 2003 and February 11, 2004, 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 investing community during the Class Period thereby artificially inflating the price of Sonus common stock. As alleged in the complaint, throughout the Class Period, defendants issued numerous statements to the market concerning the Company's financial results, which failed to disclosed and/or misrepresented the following adverse facts, among others: (1) that defendants had improperly and untimely recognized revenue on certain of the Company's customer transactions; (2) that defendants violated Generally Accepted Accounting Principles and the Company's own internal policies regarding the timing of revenue recognition; and (3) as a result of the foregoing, the Company's revenues, net income and earnings per share published during the Class Period were materially false and misleading. On February 11, 2004, after the close of regular trading, Sonus announced that the Company had identified certain issues, practices and actions of its employees relating to both the timing of revenue recognized and other financial statement items, which may affect the Company's 2003 financial statements and possibly financial statements for prior periods. Prior to disclosing these adverse facts, Sonus completed a $126.14 million public offering, and Sonus insiders sold approximately $2 million of their personally held shares to the public. On February 12, 2004, when the market opened for trading, shares of Sonus stock fell as low as $5.02 per share, a decline of $1.67 per share, or approximately 25%. For more details, contact Shaye J. Fuchs, Esq. and Jayne Nykolyn by Phone: 1-800-721-3900 or by E-mail: sfuchs@zsz.com and jnykolyn@zsz.com. UNIVERSAL HEALTH: Schatz & Nobel Lodges Securities Lawsuit in PA ---------------------------------------------------------------- Schatz & Nobel, P.C. initiated a securities class action in the United States District Court for the Eastern District of Pennsylvania on behalf of all persons who purchased the publicly traded securities of Universal Health Services (NYSE:UHS) from July 21, 2003 through February 27, 2004, inclusive. The Complaint alleges that Defendants issued materially false statements concerning the Company's business condition. Specifically, Defendants failed to disclose that: (1) Universal was unable to compete effectively in two key markets; (2) Universal's market share had eroded; (3) poor case management had resulted in an increase of patient stays beyond the period reimbursable by Medicaid or Medicare; and (4) there was a pronounced increase in bad debt from uninsured patients. On March 1, 2004, Universal withdrew its guidance for 2004 and announced that earnings per diluted share for the quarter ended March 31, 2004 could be as much as 25% lower than for the same period in the prior year. On this news, Universal fell $9.05 or 17% to $44.88. For more details, contact Nancy A. Kulesa by Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net/ VASO ACTIVE: Murray Frank Lodges Securities Fraud Lawsuit in MA --------------------------------------------------------------- Murray, Frank & Sailer, LLP filed a securities class action against Vaso Active Pharmaceuticals, Inc. The case has been brought in the United States District Court for the District of Massachusetts on behalf of people who purchased or otherwise acquired Vaso Active securities during the period between December 11, 2003 and March 31, 2004, inclusive. The complaint alleges that during the class period, defendants based their financial projections on "misrepresentations" by the New England Medical Center in Boston, Massachusetts. These so called misrepresentations stated that clinical trials conducted by the Center confirmed that Ternim8, a foot cream product by Vaso, was a "remarkably effective cure." In truth though, the New England Medical Center didn't actually conduct clinical trials on Ternim8 it only analyzed studies made on it for a fee. The lone researcher, a podiatrist, single-handedly conducted the research and was handpicked by BioChemics, Vaso's parent company. The Securities and Exchange Commission ("SEC") then made an announcement in the 1st of April 2004 that it was suspending the trading of Vaso stock due to questions regarding the accuracy of assertions made by Vaso in press releases, its annual report, its registration statement and public statements to investors. Fifteen days later, the SEC permitted the stock to resume trading. It resumed trading on the over-the-counter bulletin board exchange (the "OTC-BB market") at $1.99, a 73.8% drop in share price. For more details, contact Murray, Frank & Sailer LLP (Eric J. Belfi or Gregory Linkh) by Phone: (800) 497-8076 or (212) 682-1818 by Fax: (212) 682-1892 or by E-Mail: info@murrayfrank.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. ********* 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. Roberto Amor, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2004. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *