/raid1/www/Hosts/bankrupt/CAR_Public/040607.mbx
C L A S S A C T I O N R E P O R T E R
Monday, June 7, 2004, Vol. 6, No. 111
Headlines
ABATIX CORPORATION: Investors Launch Securities Suits in N.D. TX
AMERICAN SPOON: Recalls Almonds Due To Salmonella Contamination
ARVIDA/JMB PARTNERS: Reaches Pacts For Lakes of the Meadow Suit
ARVIDA/JMB PARTNERS: FL Court Refuses To Dismiss Homeowner Suit
BRISTOL-MYERS SQUIBB: Taxol Pact Checks Mailed to FL Residents
C+ CAPITAL: SEC Sues To Stop $36M Affinity Fraud Scheme in CA
CATALINA MARKETING: To File Consolidated Securities Suits in FL
CHERRY REPUBLIC: Recalls Almonds Due To Salmonella Contamination
COMMUNITY BANK: Plaintiffs Drop Class Claims in AL Consumer Suit
CONCORD CAMERA: FL Court Yet To Decide on Stock Suit Dismissal
CROSS COUNTRY: TX A.G. Abbott Launches Suit For Consumer Fraud
ELECTROLUX HOME: Recalls 5,800 Air Conditioners For Fire Hazard
FISCHER IMAGING: Asks CO Court To Dismiss Securities Fraud Suit
GILMAN & CIOCIA: Asks DE Court To Dismiss Shareholder Fraud Suit
GOODY'S FAMILY: GA Court Grants Final Approval To Consent Decree
GOODYEAR TIRE: Working Towards Resolution of Entran II Lawsuits
GOODYEAR TIRE: Securities Fraud Suits Consolidated in N.D. Ohio
GOODYEAR TIRE: IL Court Grants Final Approval to Suit Settlement
HALLWOOD REALTY: DE Court Postpones Trial For Unit Holder Suit
ILX RESORTS: Amended Suit Over Resort Ownership Interests Filed
KASTORIA INC.: Recalls Oasis Spread For Salmonella Contamination
LOWELL INC.: Recalls Winiary Mayonnaise Due To Undeclared Eggs
MARUKYO USA: Recalls 6,100 Hair Dryers For Electrocution Hazard
MATAV-CABLE SYSTEMS: Tel-Aviv Court Denies Certification Motion
METRETEK TECHNOLOGIES: CO Settlement Hearing Set For June 2004
NORTH COUNTRY: MI Court Hears Motion To Dismiss Securities Suit
NORTH COUNTRY: MI Court Allows Filing of Amended Derivative Suit
NUI CORPORATION: NJ Court Partially Dismisses Securities Lawsuit
PARAMETRIC TECHNOLOGY: MA Court Mulls Dismissal of Stock Lawsuit
PROLONG INTERNATIONAL: Reaches Settlement Framework For OH Suit
QUALITY DISTRIBUTION: Faces Securities Fraud Lawsuits in M.D. FL
RARE MEDIUM: To File Summary Judgment Motion For Securities Suit
RARE MEDIUM: Plaintiffs Appeal Refusal of Reconsideration Motion
RARE MEDIUM: Former Employees Launch Overtime Wage Lawsuit in CA
RURAL CELLULAR: MN Court Hears Motion To Dismiss Securities Suit
SPORTSLINE.COM: Asks FL Court To Dismiss Securities Fraud Suit
SPORTSLINE.COM: Special Committee Probes Derivative Suit Claims
TENGASCO INC.: TN Court Grants Final Approval To Suit Settlement
TRANSACTION SYSTEMS: Enters Mediation For NE Securities Lawsuits
WESTWOOD GROUP: DE Court Suspends Briefing in Securities Lawsuit
New Securities Fraud Cases
BALLY TOTAL: Schiffrin & Barroway Files Securities Suit in IL
BALLY TOTAL: Milberg Weiss Lodges Securities Lawsuit in N.D. IL
IDACORP INC.: Glancy Binknow Lodges Securities Fraud Suit in ID
KRISPY KREME: Murray Frank Lodges Securities Lawsuit in M.D. NC
LEXAR MEDIA: Lasky & Rifkind Lodges Securities Suit in N.D. CA
LEXAR MEDIA: Lerach Coughlin Lodges Securities Suit in N.D. CA
MERRILL LYNCH: Stull Stull Lodges Securities Lawsuit in S.D. NY
MUTUAL BENEFITS: Two Firms Lodge Securities Suit in S.D. FL
NOVASTAR FINANCIAL: Pomerantz Haudek Files Securities Suit in MO
SALTON INC.: Schiffrin & Barroway Lodges Securities Suit in IL
SALTON INC.: Lasky & Rifkind Lodges Securities Suit in N.D. IL
UICI: Murray Frank Commences Securities Fraud Lawsuit in N.D. TX
*********
ABATIX CORPORATION: Investors Launch Securities Suits in N.D. TX
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Abatix Corporation and certain of its officers and directors
face several securities class actions filed in the United States
District Court for the Northern District of Texas.
The suits generally allege that defendants violated the
Securities and Exchange Act of 1934 by allegedly making a series
of materially false and supposedly misleading statements
concerning the Company's business agreement with the Goodwin
Group LLC and, as a result, the price of the Abatix stock was
allegedly artificially inflated causing plaintiff and other
members of the class to allegedly suffer damages.
The suits are:
(1) Lynne Sinay, individually and on behalf of all others
similarly situated, Plaintiff, against Abatix
Corporation, Terry Shaver and Frank Cinatl, Defendants
(4-04CV-297-Y)
(2) Family Medicine Specialists and Howard Kalnitsky, and
on Behalf of All Others Similarly Situated, Plaintiffs
v. Abatix Corp., Terry Shaver, Frank Cinatl, IV and
Gary Cox, Defendants (304CV-872 D)
(3) David Maione, Individually And On Behalf of All Others
Similarly Situated, Plaintiff vs. Abatix Corp and Terry
Shaver, Defendants (304 CV0926-P)
(4) Eve Gelman, individually and on behalf of all others
similarly situated, Plaintiff v. Abatix Corporation,
Terry Shaver and Frank Cinatl (4-04CV-341-A)
(5) Vincent Teal, individually and on behalf of all others
similarly situated, Plaintiff v. Abatix Corp., Terry
Shaver, Frank Cinatl, IV and Gary Cox, Defendants (3-
04CV-1002P)
(6) Flame Control International, Inc., Metro Fire and
Rescue, Inc. d/b/a PyroCool Technologies, Inc.,
Plaintiffs v. Abatix Corporation, RapidCool, Inc.,
Goodwin Group, LLC., and Frank Goodwin, Defendants.
The Company is also responding to certain inquiries from the SEC
Regional Office pertaining to the Company's agreement with
Goodwin Group LLC and the RapidCoolTM line of products.
AMERICAN SPOON: Recalls Almonds Due To Salmonella Contamination
---------------------------------------------------------------
American Spoon Foodsr is conducting a voluntary recall on its
distribution of Paramount Farms raw natural whole (or diced)
almonds packaged as Cherry Berry Nut Mix and American Spoon Bar
Mix due to the possibility of contamination with Salmonella
Enteritidis.
The recalled almonds were packed in 6 oz and one pound packages
of the Cherry Berry Nut Mix and 7 oz packages of American Spoon
Bar Mix. The recall includes any packages dated on or before
August 18, 2004.
Our company is taking this action because of a nationwide recall
implemented by Paramount Farms of Lost Hills, California that
supplied the almonds. ASF is working closely with the FDA to
assure the quality and safety of the products we distribute.
Salmonella is an organism, which can cause serious and sometimes
fatal infections in young children, frail or elderly people, and
others with weakened immune systems. Healthy persons infected
with Salmonella often experience fever, diarrhea (which may be
bloody), nausea, vomiting and abdominal pain. In rare
circumstances, infection with Salmonella can result in the
organism getting into the bloodstream and producing more severe
illnesses such as arterial infections (i.e, infected aneurysms),
endocarditis and arthritis.
American Spoon Foods distributes this product through ASF retail
stores located in Michigan as well as our mail order catalog.
This recall is in follow-up to a voluntary recall announced in
mid-May by Paramount Farms of California of whole and diced raw
almonds based on over 20 possible cases of illnesses associated
with the almonds. The cases were reported in California,
Arizona, Oregon, Washington, Utah, New Mexico, Arkansas,
Tennessee, Massachusetts and Michigan. We are working with FDA
to assure that all potentially contaminated almonds are removed
from the marketplace and that consumers are notified of the
recall.
The raw almonds should not be consumed but rather returned to
the store of purchase for a full refund. For further
information, call American Spoon Foods at 1-800-222-5886 between
8:30am-5: 30pm Eastern Time.
ARVIDA/JMB PARTNERS: Reaches Pacts For Lakes of the Meadow Suit
---------------------------------------------------------------
Arvida/JMB Partners, L.P. reached settlements with the
plaintiffs in the class action filed against it in the Circuit
Court of the Eleventh Judicial Circuit in and for Miami-Dade
County, Florida, styled "Lakes of the Meadow Village Homes
Condominium Nos. One, Two, Three, Four, Five, Six, Seven, Eight
and Nine Maintenance Associations, Inc., v. Arvida/JMB Partners,
L.P. and Walt Disney World Company, Case No. 95-23003-CA-08."
The original complaint was filed on November 27, 1995 and an
amended complaint, which purports to be a class action, was
filed on or about February 28, 1997. In the amended
complaint, plaintiffs have sought unspecified damages,
attorneys' fees and costs, rescission of specified releases, and
all other relief that plaintiffs may be entitled to at equity or
at law on behalf of the 460 building units they allegedly
represent for, among other things, alleged damages discovered in
the course of making Hurricane Andrew repairs.
Plaintiffs have alleged that Walt Disney World Company is
responsible for liabilities that may arise in connection with
approximately 80% of the buildings at the Lakes of the Meadow
Village Homes and that the Partnership is potentially liable for
the approximately 20% remaining amount of the buildings. In the
three-count amended complaint, plaintiffs allege breach of
building codes and breach of implied warranties.
In addition, plaintiffs seek rescission and cancellation of
various general releases obtained by the Partnership allegedly
in the course of the turnover of the Community to the residents.
Plaintiffs have indicated that they may seek to hold the
Partnership responsible for the entire amount of alleged
damages owing as a result of the alleged deficiencies existing
throughout the entire development.
The Partnership has tendered this matter to Disney pursuant to
the Partnership's indemnification rights and has filed a third-
party complaint against it pursuant to the Partnership's rights
of contractual indemnity. The Partnership has also answered the
amended complaint and has filed a cross-claim against Disney's
affiliate, Walt Disney World Company, for common law indemnity
and contribution. Discovery cut-off in this litigation has
expired; however, discovery is ongoing but proceeding to a
conclusion. No trial date has been set. This case is
subject to several pending settlements.
In a matter related to the Lakes of the Meadow development, the
Miami-Dade County Building Department retained the services of
an engineering firm, All State Engineering, to inspect the
condominiums that are the subject of the lawsuit. On February
27, 2002, the Building Department apparently advised condominium
owners throughout the development that it found serious life-
safety building code violations in the original construction of
the structures and on May 29, 2002, issued notices of violation
under the South Florida Building Code. The condominium owners
were further advised that the notices of violation would require
affirmative action on their part to respond to the notices
through administrative proceedings and/or by addressing the
alleged deficiencies.
On August 8, 2002, the Partnership attended a mediation with
representatives of Lakes of the Meadow Village Homes Condominium
Nos. One through Seven and Nine Maintenance Associations
(collectively, "Association Nos. 1-7 and 9"). As a result of
this and subsequent mediation sessions and other discussions
among the parties, and without admitting any liability, the
Partnership has entered into an agreement with Association
Nos. 1-7 and 9 and their members for a settlement that received
preliminary approval of the Court on February 12, 2004. On
April 30, 2004, the Court gave its final approval of the
settlement as fair, reasonable and adequate and in the best
interest of Association Nos. 1-7 and 9 and their members. The
Court's order giving its final approval is subject to the filing
of an appeal during the 30-day period following the entry of the
order of approval. The settlement agreement provides, among
other things, for:
(1) a release by Association Nos. 1-7 and 9 and their
members of all manner of actions, claims, and damages
arising out of or relating to the subject matters of
the lawsuit;
(2) any order of the Miami-Dade County, Florida Unsafe
Structures Board relating to the units in the
condominiums of Association Nos. 1-7 and 9;
(3) any remediation action undertaken in regard to those
units;
(4) the failure of any of Association Nos. 1-7 and 9 to
undertake appropriate or timely remediation; or
(5) the past, present or future governance of Association
Nos. 1-7 and 9.
Under the terms of the settlement agreement, the claims of
Association Nos. 1-7 and 9 and their members would be dismissed,
each side bearing its own fees and costs. The Partnership would
pay $5.5 million to Association Nos. 1-7 and 9 as part of the
settlement. The Partnership would continue to reserve its right
to pursue claims for indemnity or contribution against The Walt
Disney Company or its affiliates in connection with the
condominium units that were constructed in whole or in part
prior to September 10, 1987 (the date that the Partnership
acquired the assets of Arvida Corporation from The Walt Disney
Company) but were sold by the Partnership on or after that date.
Completion of the settlement is subject to the satisfaction or
waiver of certain conditions, including that there be no
reversal or material modification of the Court's final approval
order on an appeal, if any, taken from such order. There is
no assurance that all remaining conditions for completion of the
settlement will be satisfied or waived. If the settlement is
not completed, the litigation brought by Association Nos. 1-7
and 9 against the Partnership may continue. The Partnership's
claims for indemnity and contribution have been severed for
separate proceedings and trial from the case in chief in
the Lakes of the Meadow litigation.
During 2001, the Partnership settled the claims brought in the
lawsuit by Lakes of the Meadow Village Homes Condominium No.
Eight Maintenance Association, Inc. ("Association No. 8") for a
payment of $155,000 funded by U.S. Fire. Representatives of the
Partnership have discussed with representatives of Association
No. 8 issues raised by the Building Department's notices of
violations for that Association's condominium units.
Association No. 8 submitted construction plans to address the
issues raised by the Building Department notices of violations
and comments received by the plan reviewers for that
Association's units. On February 7, 2003, Association No. 8
received permits approving its plans for most of its condominium
units and is in the process of engaging a general contractor for
the work. Association No. 8 asked the Partnership to pay the
cost to remediate the units in its condominium. On March 9,
2004, the Partnership entered into a separate settlement
agreement with Association No. 8 and its members. This
settlement was completed in May 2004 with the Partnership paying
$1,385,000 in exchange for a release of all of the claims of
Association No. 8 and its members. In addition, the Court has
entered an order dismissing the claims of Association No. 8 and
its members in the lawsuit, and the time for appealing that
order has expired.
The Partnership intends to pursue claims for indemnity or
contribution against The Walt Disney Company or its affiliates
in connection with the units in the condominium of Association
No. 8 that were constructed in whole or in part prior to
September 10, 1987 but were sold by the Partnership on or
after that date.
ARVIDA/JMB PARTNERS: FL Court Refuses To Dismiss Homeowner Suit
---------------------------------------------------------------
The 17th Judicial Circuit Court in and for Broward County,
Florida denied Arvida/JMB Partners Ltd.'s motion to dismiss the
class action filed against it, its General Partner and certain
related parties as well as other unrelated parties, arising out
of construction defects occurring during the development of
Camellia Island in Weston, which has approximately 150 homes.
The Plaintiff has filed a fourteen-count complaint seeking
unspecified general damages, special damages, statutory damages,
prejudgment and post-judgment interest, costs, attorneys' fees,
and such other relief as the court may deem just and proper.
Plaintiff complains, among other things, that:
(1) the homes were not built of high quality and adequate
construction,
(2) the homes were not built in conformity with the South
Florida Building Code and plans on file with Broward
County, Florida,
(3) the roofs were not properly attached or were
inadequate,
(4) the truss systems and installation were improper, and
(5) that the homes suffer from improper shutter storm
protection systems
This case has been tendered to one of the Partnership's
insurance carriers, Zurich American Insurance Company (together
with its affiliates collectively, "Zurich") for defense and
indemnity. Zurich is providing a defense of this matter under a
purported reservation of rights. The Partnership has also
engaged other counsel in connection with this lawsuit.
BRISTOL-MYERS SQUIBB: Taxol Pact Checks Mailed to FL Residents
--------------------------------------------------------------
Florida Attorney General Charlie Crist announced that checks are
being mailed to more than 800 eligible Floridians beginning this
week as part of a settlement agreement with Bristol-Myers Squibb
for unlawfully monopolizing the manufacture and sale of the
anticancer drug Taxol and its generic form paclitaxel.
"This is a major step forward for Floridians who were charged
too much for this life-giving cancer treatment," said AG Crist
in a statement. "We will continue to fight to ensure that our
citizens receive high-quality medication at reasonable prices."
The settlement was the result of an antitrust case filed against
Bristol-Myers Squibb by the Florida Attorney General's Office
and attorneys general from the 49 other states, the District of
Columbia and U.S. territories. The lawsuit alleged that the
company obtained invalid patents for Taxol, which delayed the
availability of lower-cost generic substitutes.
As a result of the Company's actions, patients had to pay higher
prices for the drug. The settlement was approved last November
and victims were asked to submit claims before February 29,
2004. More than 800 claims were submitted by Floridians, and
restitution for these victims totals more than $453,000.
Individuals whose Taxol treatments were covered in part by
insurance, or who paid the entire cost of one treatment, will
receive checks for $525. Those who paid the entire cost for two
or more treatments will receive $438 for each treatment. As
part of the settlement, the State of Florida will receive an
additional $2.1 million. $1.5 million will go to the state's
General Revenue budget and the remaining $600,000 will go to
state and local hospitals that were overcharged for Taxol.
C+ CAPITAL: SEC Sues To Stop $36M Affinity Fraud Scheme in CA
-------------------------------------------------------------
The Securities and Exchange Commission filed an emergency action
on May 25 to halt an affinity fraud scheme perpetrated by Won
Charlie Yi and his investment advisory firm, C+ Capital
Management, LLC. The scheme targeted primarily members of the
Korean community in Los Angeles. The Honorable Gary A. Feess,
United States District Judge for the Central District of
California, granted the Commission's request for a temporary
restraining order as well as orders freezing the assets of Yi
and C+ Capital.
Also on May 25, the Federal Bureau of Investigation executed a
search warrant at C+ Capital's offices located in Los Angeles.
Simultaneously, the California Department of Corporations
initiated an administrative action to revoke C+ Capital's
investment adviser's certificate.
The defendants named in the Commission's complaint are:
(1) Won Charlie Yi (also known as Won Charles Yi, W.
Charlie Yi, W. Charles Yi, Won Chong Yi, and Charlie
Yi), age 34, of Pacific Palisades, California, is the
managing member and principal owner of C+ Capital.
(2) C+ Capital Management, LLC. is a Delaware limited
liability company registered as an investment adviser
with the State of California. C+ Capital is
headquartered in Los Angeles, California and operates
an office in Seoul, South Korea.
In its lawsuit and request for emergency relief, the Commission
alleges that Yi raised at least $36 million by soliciting
members of the Korean community to invest funds through C+
Capital. According to the complaint, Yi misrepresented to
investors that C+ Capital would establish brokerage accounts at
Carlin Equities Corp., a registered broker-dealer, in which Yi
would buy and sell stocks on behalf of the investors at
discounted prices. He then instructed his clients to make
checks payable to "Carlin Corp." The Commission further alleges
that Yi not only failed to open brokerage accounts for his
advisory clients, but he also deposited the checks into a bank
account held in his own name. Yi then provided the clients with
fabricated Carlin account statements, and lulled investors when
they later sought to withdraw funds from their accounts by
giving them various reasons why their holdings could not or
should not be immediately liquidated.
The Commission's complaint alleges that Yi and C+ Capital
violated the antifraud provisions of the federal securities
laws, Section 10(b) of the Securities Exchange Act of 1934 and
Rule 10b-5 thereunder, and as to C+ Capital, Sections 206(1) and
206(2) of the Investment Advisers Act of 1940, while Yi aided
and abetted C+ Capital's violations of these provisions. In
addition to the emergency relief described below, the
Commission seeks, from each defendant, permanent injunctions,
disgorgement with prejudgment interest, and a civil penalty.
In its emergency relief, the Commission obtained an order:
(1) temporarily enjoining both defendants from future
violations of the antifraud provisions,
(2) freezing the assets of Yi and C+ Capital;
(3) preventing destruction of documents;
(4) requiring accountings from the defendants; and
(5) authorizing expedited discovery.
A hearing on whether a preliminary injunction should be issued
against the defendants is scheduled for June 8, 2004, at 4:30
p.m. The Commission wishes to acknowledge the assistance of the
Federal Bureau of Investigation, the U.S. Attorney's Office for
the Central District of California, and the California
Department of Corporations.
The suit is styled "SEC v. C+ Capital Management, LLC & Won
Charlie Yi, USDC, CDCA, Civil Action No. CV 04-3670 GAF (VBKx)."
CATALINA MARKETING: To File Consolidated Securities Suits in FL
---------------------------------------------------------------
The United States District Court for the Middle District of
Florida, Tampa Division ordered consolidated the securities
class action filed against Catalina Marketing Corporation,
certain of its present and former officers and directors of the
Company and Catalina Health Resource (CHR).
The suits allege violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The
actions are brought on behalf of those who purchased the
Company's common stock between January 17, 2002 and August 25,
2003, inclusive. The complaints contain varying allegations,
including that, during the alleged class period, the defendants
issued false and misleading statements concerning the Company's
business and operations with the result of artificially
inflating the Company's share price and maintained inadequate
internal controls. The complaints seek unspecified compensatory
damages and other relief.
In October 2003, the complaints were consolidated in the United
States District Court for the Middle District of Florida and
given the caption "In re Catalina Marketing Corporation
Securities Litigation, Case No. 8:03-CV-1582-T-27TBM." In
December 2003, Virginia P. Anderson and the Alaska Electric
Pension Fund were named as co-lead plaintiffs. In January
2004, the Court ordered that Lead Plaintiffs file their
Consolidated Amended Class Action Complaint 30 days after the
filing of the Company's revised financial statements.
CHERRY REPUBLIC: Recalls Almonds Due To Salmonella Contamination
----------------------------------------------------------------
Cherry Republic is conducting a voluntary recall on its
distribution of raw whole (or diced) almonds packaged as Cherry
Nut Mix, Cherry Trail Mix to the possibility of contamination
with Salmonella Enteritidis. The recalled almonds are packed in
8oz. and 1 pound packages under the Cherry Republic label, from
dates 08/21/2003 to 5/20/2004.
Salmonella is an organism that can cause serious and sometimes
fatal infections in young children, frail or elderly people, and
others with weakened immune systems. Healthy persons infected
with Salmonella often experience fever, diarrhea (which may be
bloody), nausea, vomiting and abdominal pain. In rare
circumstances, infection with Salmonella can result in the
organism getting into the bloodstream and producing more severe
illnesses such as arterial infections (i.e, infected aneurysms),
endocarditis and arthritis.
Cherry Republic distributes this product in all 48 contiguous
states.
This recall is in follow-up to a voluntary recall announced in
mid-May by Paramount Farms of California of whole and diced raw
almonds based on over 20 possible cases of illnesses associated
with the almonds. The cases were reported in California,
Arizona, Oregon, Washington, Utah, New Mexico, Arkansas,
Tennessee, Massachusetts and Michigan. We are working with FDA
to assure that all potentially contaminated almonds are removed
from the marketplace and that consumers are notified of the
recall.
The raw almonds should not be consumed but rather returned to
the store of purchase for a full refund. For further
information, contact the Company by Phone: 231-334-3150 from 9am
to 9pm EST.
COMMUNITY BANK: Plaintiffs Drop Class Claims in AL Consumer Suit
----------------------------------------------------------------
Plaintiffs filed an amended suit against Community Bank in
Alabama State Court, styled "William Alston, Murphy Howard, and
Jason Tittle v. Community Bancshares, Community Bank, Holsombeck
Motors, Inc., Lee Brown d/b/a Alabama Bond & Investigation a/k/a
ABI Recovery, Chris Holmes d/b/a Alabama Bond & Investigation
a/k/a ABI Recovery, Regina Holsombeck, Kennon "Ken" Patterson,
Sr., Hodge Patterson, James Timothy "Tim" Hodge, Ernie Stephens,
and the State of Alabama Department of Revenue." The amended
suit dropped class action and racketeering claims in the
original suit
The suit alleges that the Company and others conspired or used
extortionate methods to effect a lending scheme of "churning
phantom loans," and that profits from the scheme were used to
secure an interest in and/or to invest in an enterprise that
affects interstate commerce. The plaintiffs specifically allege
that the Company used various methods to get uneducated
customers with fair to poor credit to sign numerous "phantom
Loans" when the customers only intended to sign for one loan.
Claims include:
(1) racketeering activity within the meaning of the
Racketeer Influenced and Corrupt Organizations Act of
1970 (RICO),
(2) conspiracy,
(3) spoliation,
(4) conversion,
(5) negligence,
(6) wantonness,
(7) outrage, and
(8) civil conspiracy
On February 17, 2004, an amended complaint was filed in this
lending acts litigation. The amended complaint, which
completely replaces the original complaint, omits class action
and racketeering claims and alleges violations of the Truth in
Lending Act and Regulation Z of the Federal Reserve Board in
addition to conversion, negligence, outrage, suppression, fraud
and misrepresentation, trespass, conspiracy and failure to
provide notice before disposition of collateral for loans.
On April 2, 2004, eighty-one individuals, most of whom were
formerly members of the purported class in the lending acts
litigation filed by William Alston, filed suit against Community
Bancshares, Community Bank and a former Community Bank employee
in the Circuit Court of Jefferson County, Alabama. This suit
claims that the defendants injured the plaintiffs, primarily in
connection with lending at Community Bank's office in Double
Springs, Alabama, by wrongfully taking property, committing
fraud, furnishing inaccurate information to credit reporting
agencies, negligently hiring, training and supervising
employees, negligently handling customer accounts, altering loan
documents and failing to honor oral and written contracts with
the plaintiffs.
CONCORD CAMERA: FL Court Yet To Decide on Stock Suit Dismissal
--------------------------------------------------------------
The United States District Court for the Southern District of
Florida has yet to rule on Concord Camera Corporation's motion
to dismiss the consolidated amended securities class action
filed against it, certain of its officers and certain of its
current and former directors by individuals purporting to be
shareholders of the Company. However, it has dismissed two
defendants from the suit.
The lead plaintiffs in the Amended Complaint seek to act as
representatives of a class consisting of all persons who
purchased the Company's Common Stock issued pursuant to the
Company's September 26, 2000 secondary offering or during the
period from September 26, 2000 through June 22, 2001, inclusive.
The Amended Complaint asserts, among other things, that the
Company made untrue statements of material fact and omitted to
state material facts necessary to make statements made not
misleading in the Registration Statement and Prospectus issued
in connection with the Secondary Offering, in periodic reports
it filed with the Securities and Exchange Commission (SEC) and
in press releases it made to the public regarding its operations
and financial results.
The allegations are centered on claims that the Company failed
to disclose that the transaction with then customer, KB
Gear Interactive, Inc. ("KB Gear"), was a highly risky
transaction, claims that throughout the Class Period the Company
failed to disclose that a large portion of its accounts
receivable was represented by a delinquent and uncollectible
balance due from then customer, KB Gear, and claims that such
failures artificially inflated the price of the Common Stock.
The Amended Complaint seeks unspecified damages, interest,
attorneys' fees, costs of suit and unspecified other and further
relief from the Court.
The Company filed a motion to dismiss the Amended Complaint on
April 18, 2003. Oral argument on the Company's motion to
dismiss was heard by the Court on October 2, 2003 and no
decision has been rendered by the Court to date. Co-defendants,
Raymond James & Associates, Inc. and Robinson-Humphrey Company
LLC, filed a motion to dismiss the claims against them and, on
March 16, 2004, the Court issued an order granting their motion
to dismiss. The lawsuit is in the earliest stage and discovery
has not yet commenced.
CROSS COUNTRY: TX A.G. Abbott Launches Suit For Consumer Fraud
--------------------------------------------------------------
Texas Attorney General Greg Abbott has sued a Delaware-based
bank that markets credit cards to Texas consumers who have low
incomes or tarnished credit records.
Cross Country Bank Inc. and its affiliate, Applied Card Systems
Inc., allegedly prey on low-income consumers with poor or no
credit ratings, promising them credit cards with high credit
limits and an opportunity to improve their damaged credit
records. In fact, the credit cards carry exorbitant fees and
other hidden costs that often lead consumers into a worsened
financial situation.
"These companies engaged in egregious and offensive tactics
against Texans who sought to establish decent credit ratings and
improve their livelihoods," said Attorney General Abbott in a
statement. "As it turns out, the companies succeeded in padding
their pockets and making life miserable for these consumers. I'm
asking for the court's help in protecting all Texans from these
abusive practices."
According to the lawsuit, the company advertises that consumers
will receive credit limits up to $2,500, but in reality, most
obtain limits as low as $200 to $400, with an interest rate of
about 20 percent.
In addition, upon opening the account, consumers are charged an
origination fee, annual fee and other charges that consume half
or more of the consumers' credit lines. Many consumers also
incur additional fees when, without their knowledge, they are
enrolled by Cross Country Bank in membership programs.
Most consumers are not aware of these charges, causing them to
unwittingly exceed their credit limits, which results in
additional fees. Ultimately, a downward spiral results in which
consumers never gain control of their accounts as the finance
charges, over-the-limit fees and other charges continue to
accrue.
As this descent into debt worsens, Cross Country Bank's
affiliate, Applied Card Systems, then begin harassing the
consumers, their family members, and even complete strangers
with repeated and sometimes threatening or obscene telephone
calls seeking to collect the outstanding debt. The companies
were both founded and owned by Rocco A. Abessinio of Boca Raton,
Florida, who has also been named as a defendant.
The Attorney General seeks an injunction to stop these unlawful
practices, as well as civil penalties of $20,000 for each
violation of the Deceptive Trade Practices or Debt Collection
Acts, restitution for harmed consumers and reimbursement for
state attorneys' fees.
ELECTROLUX HOME: Recalls 5,800 Air Conditioners For Fire Hazard
---------------------------------------------------------------
Electrolux Home Products, Inc. is cooperating with the U.S.
Consumer Product Safety Commission by voluntarily recalling
5,800 Room Air Conditioning and Heating Units. The heating coil
in the units can be damaged during assembly, causing an
electrical short and overheating, which poses a fire hazard
to consumers. The Company has received two reports of
incidents, though there have been no injuries.
The recalled air conditioning/heating units are installed "thru-
the-wall" and include the Frigidaire FAH12EM21 model and Carrier
models 52FED31201AA. The model numbers can be found on a serial
plate on the side of the unit. The beige AC/heating units are
about 14" high, 24" wide, and 20" in depth.
Independent dealer, builders, and remodelers sold these items
between June 2003 and September 2003 for about $500.
Consumers should stop using the units immediately and contact
Electrolux for a free inspection and repair, if needed. For
more details, contact Frigidaire by Phone: (866) 335-1754
between 8 a.m. and 5 p.m. ET Monday through Friday.
FISCHER IMAGING: Asks CO Court To Dismiss Securities Fraud Suit
---------------------------------------------------------------
Fischer Imaging Corporation asked the United States District
Court for the District of Colorado to dismiss the consolidated
class action filed against it and three of its former officers
and directors Morgan Nields, and Louis Rivelli.
On April 10, 2003 and on June 3, 2003, The Sorkin, LLC and James
K. Harbert filed putative class actions on behalf of purchasers
of shares of the Company's common stock during the period
February 14, 2001 to April 1, 2003 and allege that, among other
things, during the putative class period, the Company and the
individual defendants made materially false statements in
violation of Section 10(b) of the Exchange Act, Rule 10b-5
promulgated under the Exchange Act, and Section 20(a) of the
Exchange Act. The complaints seek unspecified compensatory
damages and other relief.
On August 7, 2003, the Company, Mr. Nields and Mr. Knudson moved
to dismiss all claims asserted by The Sorkin, LLC and Harbert.
On August 18, 2003, Mr. Rivelli moved to dismiss all claims
asserted in those lawsuits. On October 20, 2003, Mr. Harbert
moved to dismiss his lawsuit, which the court subsequently
granted.
On October 21, 2003, The Sorkin, LLC and Mr. Harbert filed an
amended class action complaint. The amended complaint contains
the same claims for relief against the Company, Mr. Nields and
Mr. Rivelli. In addition, the amended complaint seeks to
recover unspecified compensatory damages and other relief on
behalf of purchasers of shares of the Company's common stock
during the period February 14, 2001 to July 17, 2003.
GILMAN & CIOCIA: Asks DE Court To Dismiss Shareholder Fraud Suit
----------------------------------------------------------------
Gilman & Ciocia, Inc. asked the Court of Chancery of the State
of Delaware in and for New Castle County to dismiss the class
action and derivative complaint filed against it's registered
agent in Delaware, styled "Gary Kosseff, Plaintiff, against
James Ciocia, Thomas Povinelli, Michael P. Ryan, Kathryn Travis,
Seth A. Akabas, Louis P. Karol, Edward H. Cohen, Steven Gilbert
and Doreen Biebusch, Defendants and Gilman & Ciocia, Inc.,
Nominal Defendant, Civil Action No. 188-N."
The nature of the action is that the Company, its Board of
Directors and its management, breached their fiduciary duty of
loyalty in connection with the sale of the Purchased Offices to
Pinnacle Taxx Advisors, LLC. The action alleges that the sale
to Pinnacle was for inadequate consideration and without a
fairness opinion by independent financial advisors, without
independent legal advice and without a thorough evaluation and
vote by an independent committee of the Board of Directors. The
action prays for the following relief:
(1) a declaration that the action is maintainable as a
class action and certifying the plaintiff as the
representative of the class;
(2) a declaration that the Company, its Board of Directors
and its management breached their fiduciary duty and
other duties to the plaintiff and to the other members
of the purported class;
(3) a rescission of the Purchase Agreement;
(4) unspecified monetary damages; and
(5) an award to the plaintiff of costs and disbursements,
including reasonable legal, expert and accountants
fees.
GOODY'S FAMILY: GA Court Grants Final Approval To Consent Decree
----------------------------------------------------------------
The United States District Court for the Middle District of
Georgia granted final approval to the consent decree proposed
for the class action filed against Goody's Family Clothing, Inc.
and Robert M. Goodfriend, its chairman of the board and chief
executive officer.
20 named plaintiffs filed the suit, generally alleging that the
Company discriminated against a class of African-American
employees at its retail stores through the use of discriminatory
selection and compensation procedures and by maintaining unequal
terms and conditions of employment. The plaintiffs further
alleged that the Company maintained a racially hostile working
environment.
On February 28, 2003, a proposed Consent Decree was filed with
the District Court for its preliminary approval. The proposed
Consent Decree sets forth the proposed settlement of the class
action race discrimination lawsuit. Ultimately, class action
certification was sought in the lawsuit only with respect to
alleged discrimination in promotion to management positions and
the proposed Consent Decree is limited to such claims.
Generally, the proposed settlement provides for a payment by the
Company in the aggregate amount of $3.2 million to the class
members (including the named plaintiffs) and their counsel, as
well as the Company's implementation of certain policies,
practices and procedures regarding, among other things, training
of employees. The Company's employer liability insurance
underwriter has funded $3.1 million of such payment to a third-
party administrator. The proposed Consent Decree explicitly
provides that it is not an admission of liability by the Company
and the Company continues to deny all of the allegations.
On April 30, 2003, the Court granted preliminary approval of the
proposed Consent Decree, and a hearing was held on June 30,
2003, regarding the adequacy and fairness of the proposed
settlement. On March 3, 2004, the United States District Court
for the Middle District of Georgia issued an Order granting
final approval of the Consent Decree.
On February 23, 2004, a purported class member filed an appeal
with the U.S. Court of Appeals for the Eleventh Circuit,
alleging, among other things, misconduct on the part of the
District Court and the plaintiff's/appellant's counsel; the
Eleventh Circuit dismissed this appeal on March 5, 2004. On
March 12, 2004, a Motion to set aside the dismissal was filed
with the Eleventh Circuit. There can be no assurance that the
Consent Decree will not be affected by the motion pending with
the Eleventh Circuit.
GOODYEAR TIRE: Working Towards Resolution of Entran II Lawsuits
---------------------------------------------------------------
Goodyear Tire & Rubber Company continues to face and is working
to settle a number of lawsuits relating to a rubber hose
product, Entran II, it supplied from 1989 to 1993 to Chiles
Power Supply, Inc. (d/b/a Heatway Systems), a designer and
marketer of hydronic radiant heating systems headquartered in
Springfield, Missouri. Heating systems using Entran II are
typically attached or embedded in either indoor flooring or
outdoor pavement, and use Entran II hose as a conduit to
circulate warm fluid as a source of heat.
Beginning in late 1997, property owners, primarily homeowners,
began to file lawsuits against the Company, Heatway and others
relating to the alleged failure of Entran II in their heating
systems. As to the Company, the plaintiffs in these lawsuits
generally allege that Entran II undergoes progressive
deterioration in the heating system and ultimately fails,
resulting in leakage and property damage.
The plaintiffs in these lawsuits typically seek recovery under
various tort, contract and statutory causes of action, including
breach of express warranty, breach of implied warranty of
merchantability, breach of implied warranty of fitness for a
particular purpose, negligence, strict liability and violation
of state consumer protection statutes.
The Company denied that Entran II hose is unsafe or defective
and contends that the hose was manufactured in accordance with
specifications agreed upon with Heatway, for use in custom
designed heating systems for which Heatway was responsible for
supplying design and installation services and maintenance
information. The Company maintained that any leakage is
attributable to improper design, installation, and maintenance
of heating systems by Heatway and by the unsupervised
contractors to whom Heatway distributed Entran II in bulk
quantities, contrary to its representations to the Company.
The Company is currently subject to 22 Entran II class actions
and putative class actions in federal and state courts in
Alaska, California, Colorado, New Jersey, New Mexico, New York,
Massachusetts, Pennsylvania, South Dakota, Utah, Washington,
Wisconsin and Wyoming and in Canada. These actions
are:
(1) Anderson, et al. v. Goodyear, et al. (Case No. 98CV439,
District Court of Eagle County, Colorado)
(2) Jane Bates, et al. v. Goodyear, (Case No. D-0101-CV-
2001-359, First Judicial District Court, Santa Fe
County, New Mexico)
(3) Crawford, et al. v. Goodyear (Case No. 001206, Superior
Court, Philadelphia County, Pennsylvania)
(4) Feldman v. Goodyear (Case No. 002790, Common Pleas
Court, Philadelphia County, Pennsylvania)
(5) McFarland et al. v. Goodyear (Case No. 03-1653, Circuit
Court for the Second Judicial Circuit, Minnehaha
County, South Dakota)
(6) The Seth Peterson Cottage Conservancy, Inc. et al. v.
Goodyear et al. (Case No. 03 CV 1399, Circuit Court,
Dane County, Wisconsin)
(7) James E. Simon v. Goodyear, et al. (Case No. BC294423,
Superior Court of California, County of Los Angeles)
(8) Bates, et al. v. Goodyear (Case No. 02-CV-0662A, United
States District Court, Western District of New York)
(9) Ditlow, et al. v. Goodyear (Case No. CV-03-5004, United
States District Court, District of New Jersey)
(10) Ronald J. Frank, et al. v. Goodyear (Case No. 02-CV-
0985, United States District Court for the Northern
District of New York)
(11) Galanti, et al. v. Goodyear (Case No. 03-209, United
States District Court, Southern District of New
Jersey)
(12) Glanville, et al. v. Goodyear (Case No. A03-018, United
States District Court for the District of Alaska)
(13) Huber, et al. v. Goodyear (Case No. CO 31290 C, United
States District Court, Western District of Washington)
(14) Mingalone et al. v. Goodyear (Case No. 03-3539, United
States District Court, District of New Jersey)
(15) Nye et al. v. Goodyear (Case No. 03-CV-1037, United
States District Court, District of Wyoming)
(16) Stephen Payne, et al. v. Goodyear (Case No. 01-10118-
NG, United States District Court, District of
Massachusetts)
(17) Pena, et al. v. Goodyear (Case No. 02-0600147, United
States District Court, Central Division of Utah)
(18) Shirley and David Ford v. Goodyear Canada Inc. and
Goodyear (Case Number 03-CV-255653CP, Superior Court,
Ontario, Canada)
(19) Gary and Janis Kelman v. Goodyear and Goodyear Canada
Inc., (Case No. 42665, Superior Court, Ontario,
Canada)
(20) Mona Lahaie v. Goodyear Canada Inc. and Goodyear (Case
No. 0303 13282, District Court, Alberta, Canada)
(21) Allen May v. Goodyear Canada Inc. and Goodyear (Case
No. L 032196, Supreme Court of British Columbia)
(22) Mike Myshack Management Ltd. v. Goodyear and Goodyear
Canada Inc. (Case No. 0301-15976, Court of Queen's
Bench of Alberta, District of Calgary, Canada)
In addition to the class actions and putative class actions,
Goodyear is also a defendant in three cases involving homeowners
in Colorado:
(i) Davis et al. v. Goodyear (Case No. 99CV594, District
Court, Eagle County, Colorado)
(ii) Albers v. Goodyear (Case No. 04CV2100, District Court,
Arapahoe County, Colorado); and
(iii) Holmes v. Goodyear (Case No. 98CV268-A, District Court,
Pitkin County, Colorado).
These individual cases involve between one and 38 property
owners. Holmes, a case involving one site, is scheduled to go
to trial on June 7, 2004. The plaintiff in Holmes has opted out
of the Proposed Settlement defined below.
Goodyear has also been named as a third party defendant in a
case pending in New Mexico, "Zubchenok, et al. v. Quintana, et
al. v. Goodyear," (Case No. D101-CV-2003-01980, District Court,
Santa Fe County, New Mexico). Two additional cases are on
appeal following a verdict. In "Goodyear v. Vista Resorts,
Inc." (Case No. 02CA1690, Colorado Court of Appeals), an action
involving five homesites, a trial was held in Colorado state
court, and on February 28, 2002, a jury rendered a verdict
in favor of plaintiffs in the aggregate amount of approximately
$5.9 million, which damages were trebled under the Colorado
Consumer Protection Act. The total damages awarded are
approximately $22.7 million, including interest, attorney's fees
and costs.
In another case in Colorado state court involving six sites,
"Sumerel et al. v. Goodyear et al." (Case No. 02CA1997, Colorado
Court of Appeals), a judgment was entered against Goodyear in
the amount of $1.3 million plus interest and costs. Also, in
"Loughridge v. Goodyear and Chiles Power Supply, Inc." (Case No.
98-B-1302, United States District Court for the District of
Colorado), a case consolidating claims involving 36 Entran II
sites, on June 19, 2003, a federal jury in Colorado awarded 34
homeowners aggregate damages of $8.2 million. The jury
allocated 50% of the fault to Goodyear and 50% to Heatway,
resulting in a judgment against Goodyear of approximately $4.1
million.
On September 8, 2003, judgment was entered in "Loughridge" and
an additional $5.7 million in prejudgment interest was awarded
to the plaintiffs, all of which is allocated to Goodyear. Post-
trial motions have been filed in "Loughridge" by all parties
seeking modifications to the judgment.
In addition, in "Malek, et al. v. Goodyear (Case No. 02-B-1172,
United States District Court for the District of Colorado), a
case involving 25 homesites, on May 13, 2004, a federal jury
awarded the plaintiffs aggregate damages of $8.1 million. The
jury allocated 40% of the fault to Goodyear and 60% to Heatway
resulting in a judgment against Goodyear of $3.2 million.
On October 8, 2003, attorneys representing certain class members
filed a proposed settlement covering all pending Entran II
actions in the United States and Canada except for the claims of
persons arising from property they own or have owned in
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island
and Vermont. The Proposed Settlement was initiated through the
filing of a national class action complaint in "Galanti et al.
v. Goodyear" on October 6, 2003 and motion for preliminary
approval of settlement filed October 8, 2003.
On October 9, 2003, the judge in "Galanti" gave preliminary
approval to the Proposed Settlement and conditionally certified
the class. A national class has also been conditionally
certified in Canada. On February 9, 2004, notice of the
settlement was given to potential class members pursuant to a
court approved notice plan. The "Galanti" court will conduct a
fairness hearing to resolve any objections to final approval of
the settlement. Class members who object to the settlement had
the right to opt out until May 7, 2004.
Class members participating in the Proposed Settlement will be
required to release all claims against Goodyear relating in any
way to damage caused by Entran II hose. The plaintiffs in
Vista, Sumerel, Loughridge and Malek will not participate in the
Proposed Settlement. Goodyear will continue to pursue appeals
of Vista, Sumerel and Loughridge and will decide whether or not
to appeal Malek when the final order of judgment is issued.
Goodyear reserves the right to withdraw from the settlement if
it determines in its sole discretion that an excessive number of
persons have opted out of the settlement. The notice period,
during which claimants could exercise their right to opt out,
ended May 7, 2004. As of May 17, 2004, the Company had
received notice that at least 525 potential sites had been opted
out of the Proposed Settlement. The Company is currently
assessing its options with respect to the Proposed Settlement
and expects to decide shortly whether or not to withdraw from
the Proposed Settlement.
Under the Proposed Settlement, Goodyear will make annual cash
contributions to a settlement fund of $40 million, $6 million,
$6 million, $8 million and $16 million in 2004, 2005, 2006, 2007
and 2008, respectively. Goodyear will also make additional
contingent payments of $10 million in each of 2005, 2006, 2007
and 2008 if Goodyear meets the following EBITDA targets:
$1.2 billion in 2004 and $1.4 billion in each of 2005, 2006 and
2007. For purposes of the Proposed Settlement, EBITDA is
defined by reference to the definition of "Consolidated EBITDA"
in Goodyear's $645 million U.S. term loan agreement. In the
event the EBITDA target is not met in any given year, the
contingent payment will remain payable in the first subsequent
year in which the following cumulative EBITDA targets are met:
$2.6 billion in 2005, $4.0 billion in 2006 and $5.4 billion in
2007.
The settlement fund will be used to pay for damage awards to
class members, class counsel's attorney fees, the cost of notice
to the class and the cost to administer the claims process. In
addition to the required contributions of Goodyear, 80% of
Goodyear's insurance recoveries from Entran II claims will be
paid into the settlement fund. The settlement agreement
provides that if these insurance recoveries, plus any additional
amounts that Goodyear elects to pay into the settlement fund,
were less than $120 million by February 23, 2004, the plaintiffs
may withdraw from the settlement. Since less than $120 million
was paid into the settlement fund by February 23, 2004, the
plaintiffs have the right, which has not yet been exercised, to
withdraw from the settlement.
Goodyear remains subject to "Payne et al. v. Goodyear," a class
action in the United States District Court for the District of
Massachusetts covering six northeastern states. The members of
the class in Payne are owners of real property or improvements
in Connecticut, Maine, Massachusetts, New Hampshire, Rhode
Island and Vermont in which Entran II hose was or is installed
in a hydronic heating system.
According to the plaintiffs in Payne, approximately 5 million
feet of Entran II hose sold to Heatway was installed in these
states. On October 24, 2003, at the request of the plaintiffs'
attorneys, the judge in Payne enjoined Goodyear from entering
into a settlement that would affect the class certified in
Payne. This injunction is currently under appeal by Goodyear.
The Payne case is presently scheduled for trial commencing
September 30, 2004.
Goodyear is also subject to Anderson, et al. v. Goodyear, et
al., a class action in state court in Colorado, and Jane Bates,
et al. v. Goodyear, a class action in state court in New Mexico.
Plaintiff attorneys in both Anderson and Bates filed motions
seeking to exclude the Colorado and New Mexico state court
plaintiffs from the Proposed Settlement. However, the judge in
Galanti has issued an order enjoining the plaintiffs' counsel
in both Anderson and Bates from engaging in any activities that
interfere with the settlement process.
On March 2, 2004, the court in Galanti issued an order
preventing the Anderson case from proceeding to trial during the
settlement notice and opt-out period. The Anderson trial is now
scheduled to begin on July 12, 2004.
The ultimate cost of disposing of Entran II claims is dependent
upon a number of factors, including the Company's ability to
satisfy the contingencies in any settlement, the number of
claimants that opt out of any settlement, final approval of the
terms of any settlement, Goodyear's ability to resolve claims
not subject to any settlement (including the cases in which the
Company received adverse judgments), and, in the event Goodyear
fails to consummate a settlement for any reason, future
judgments by courts in other currently pending or yet unasserted
actions.
GOODYEAR TIRE: Securities Fraud Suits Consolidated in N.D. Ohio
---------------------------------------------------------------
The securities class actions filed against Goodyear Tire and
Rubber Co. have been consolidated in the United States District
Court for the Northern District of Ohio.
On October 23, 2003, a purported class action was filed against
the Company in the United States District Court for the Northern
District of Ohio on behalf of purchasers of its common stock
alleging violations of the federal securities laws. After that
date, a total of 20 of these purported class actions were filed
against the Company in that court.
These lawsuits name as defendants several of the Company's
present or former officers and directors, including its current
Chief Executive Officer, Robert J. Keegan, and its current chief
financial officer, Robert W. Tieken. The suits allege, among
other things, that the Company and the other named defendants
violated federal securities laws by artificially inflating and
maintaining the market price of the Company's securities.
Since October 24, 2003, three derivative lawsuits have also been
filed by purported shareholders on behalf of the Company in the
United States District Court for the Northern District of Ohio
and two similar derivative lawsuits originally filed in the
Court of Common Pleas for Summit County, Ohio were removed to
federal court.
The derivative actions are against present and former directors,
the Company's present and former chief executive officers and
its chief financial officer. The suits allege, among other
things, breach of fiduciary duty and corporate waste arising out
of the same events and circumstances upon which the securities
class actions are based. The plaintiffs in the federal
derivative actions also allege violations of Section 304 of the
Sarbanes-Oxley Act of 2002, by certain of the named defendants.
Finally, since October 27, 2003, at least 11 lawsuits have been
filed in the United States District Court for the Northern
District of Ohio against the Company, The Northern Trust
Company, and current and/or former officers of Goodyear
asserting breach of fiduciary claims under the Employee
Retirement Income Security Act (ERISA) on behalf of a putative
class of participants in Goodyear's Employee Savings Plan for
Bargaining Unit Employees and Goodyear's Savings Plan for
Salaried Employees. The plaintiffs' claims in these actions
arise out of the same events and circumstances upon which the
securities class actions and derivative actions are based.
All of the above actions have been consolidated before the
Honorable Judge John Adams in the United States District Court
for the Northern District of Ohio.
GOODYEAR TIRE: IL Court Grants Final Approval to Suit Settlement
----------------------------------------------------------------
The Third Judicial Circuit Court in Madison County, Illinois
granted final approval to the settlement agreement proposed by
Goodyear Tire & Rubber Co. for a national class action with
respect to allegedly defective Goodyear, Kelly and house brand
load range E light truck and recreational vehicle tires.
On December 5, 2003, the settlement was preliminarily approved
by the court in "Baugh et al. v. Goodyear, Civil Action No. 00-
L-1154, (formerly styled Julie Harper et al. v. Goodyear et
al.). The settlement received final approval at an April 28,
2004, fairness hearing. The settlement class includes persons
who purchased load range E tires manufactured between January 1,
1992 and June 30, 2000. Notwithstanding the settlement, the
Company maintains that the subject tires are not defective.
Pursuant to the settlement, class members are eligible to
receive benefits pursuant to an enhanced warranty program or a
rebate program. Additionally, the Company agreed to continue to
provide consumer education regarding tire safety. The Company
also agreed to bear the costs associated with publishing notice
to the class members and with the administration of the
settlement. Subject to court approval, the Company will pay
class counsel attorneys fees in the amount of $1.745 million
plus interest. The class does not include, among others,
persons who may have a claim for personal injury or damage to
property, owners of 15 passenger vans notified under NHTSA
campaign number 02X-001, or resellers of tires.
Goodyear remains subject to a number of civil lawsuits related
to death or injury involving allegedly defective Goodyear
manufactured load range E light truck tires. The settlement
does not include these actions. Actions related to alleged
breaches of warranty or product defects relating to certain of
Goodyear's load range D light truck tires were dismissed in the
fourth quarter of 2003.
HALLWOOD REALTY: DE Court Postpones Trial For Unit Holder Suit
--------------------------------------------------------------
The Court of Chancery of the State of Delaware postponed the
trial for the class action filed against Hallwood Realty, LLC,
its directors and Hallwood Realty Partners, L.P. (HRP) as
nominal defendants at the request of the plaintiffs of one of
the coordinated actions.
The suit was filed by three purported unitholders of HRP in the
Court of Chancery of the State of Delaware, styled "I.G.
Holdings, Inc., et al, v. Hallwood Realty LLC, et al, (C.A. No.
20283)."
The action asserts that in allegedly refusing to consider High
River Limited Partnership's tender offer for any and all of the
outstanding limited partnership units of HRP at $100 per
Unit, the defendants are not acting in good faith and are
deriving an improper personal benefit in impeding a potential
removal of the General Partner or a sale of control of HRP, in
breach of their fiduciary duties under the partnership
agreement.
The action further asserts that HRP's Schedule 14D-9 issued in
response to the High River tender offer fails to disclose
material information relating to the General Partner's
recommendation regarding the offer. The complaint seeks as
relief an order requiring the General Partner to consider the
High River tender offer, an order preventing the General Partner
or its affiliates from acquiring units or otherwise improperly
entrenching the General Partner or impeding a transaction that
would maximize value for the public unitholders, an order
directing the defendants to use the Rights Plan fairly and
disclose all material information in connection with the tender
offer and the General Partner's recommendations and conclusions
with respect thereto, and damages.
This matter was coordinated with action was filed against the
General Partner, its directors and HRP as nominal defendant by
High River Limited Partnership, which is indirectly wholly owned
by Carl C. Icahn, in the Court of Chancery of the State of
Delaware, styled "High River Limited Partnership v. Hallwood
Realty, LLC, et al, (C.A. No. 20276)." The suits were
coordinated for discovery and trial purposes.
On October 7 and 8, 2003, a trial in the two coordinated actions
discussed above was held in the Delaware Court of Chancery.
Subsequent to the trial, the Delaware Court of Chancery held
several status conferences relating to these matters. On
February 10, 2004, plaintiffs in C.A. No. 20283 moved to amend
their complaint to add claims challenging the potential
allocation of consideration between the Company and its
affiliates on one hand, and the public unit holders on the
other, that would result upon the sale or merger of HRP, by
alleging that the Company and its principal stockholder have
breached their fiduciary duties by demanding more than 1% of the
merger consideration.
On February 11, 2004, the Court granted class plaintiff's motion
to amend their complaint to add these claims. At a status
conference held with the Court on April 2, 2004, the Court ruled
that a trial in the coordinated actions would be continued,
commencing on May 17, 2004. At a status conference on May 3,
2004, the Court postponed trial at the request of plaintiffs in
the coordinated actions.
ILX RESORTS: Amended Suit Over Resort Ownership Interests Filed
---------------------------------------------------------------
Plaintiffs filed an amended class action against ILX Resorts,
Inc., its Sedona Vacation Club and Premiere Vacation Club
businesses in Arizona State Court, claiming damages for
deceptive and abusive practices on behalf of a purported class
of purchasers of vacation ownership interests. The suit alleges
claims for:
(1) breach of the Arizona Consumer Fraud Act,
(2) breach of the Arizona Real Estate Timeshare Act,
(3) breach of contract and
(4) unjust enrichment
Plaintiffs also seek declaratory relief and imposition of a
constructive trust over timeshare owners' purchase money and
maintenance fee payments. Plaintiffs seek to have their claims
certified for class action treatment.
The Company has conferred and corresponded with plaintiffs'
counsel in an effort to convince them that the factual
assertions of the complaint are wrong and that there is no merit
to the action. To date, the Company has been given an open
extension to respond to the complaint. On the date that the
Company's response to the complaint is due, defendants will
answer and file certain motions. Discovery and motion practice
have not begun.
KASTORIA INC.: Recalls Oasis Spread For Salmonella Contamination
----------------------------------------------------------------
Kastoria, Inc., Seattle, WA is conducting a voluntary recall on
its distribution of Oasis brand Almond Garlic Spread. The raw
almonds used in the product are potentially contaminated with
Salmonella Enteritidis. The recalled Oasis brand Almond Garlic
Spread is packed in 8 oz plastic tubs under the Oasis brand
label with code date reading "If Frozen Use By: 05/04/04".
Salmonella is an organism that can cause serious and sometimes
fatal infections in young children, frail or elderly people, and
others with weakened immune systems. Healthy persons infected
with Salmonella often experience fever, diarrhea (which may be
bloody), nausea, vomiting and abdominal pain. In rare
circumstances, infection with Salmonella can result in the
organism getting into the bloodstream and producing more severe
illnesses such as arterial infections (i.e, infected aneurysms),
endocarditis and arthritis.
Oasis brand Almond Garlic Spread is distributed in retail stores
in Washington, Oregon, and Alaska.
The recall is in follow-up to a voluntary recall announced in
mid-May by Paramount Farms of California of whole and diced raw
almonds based on over 20 possible cases of illnesses associated
with the almonds. The cases were reported in California,
Arizona, Oregon, Washington, Utah, New Mexico, Arkansas,
Tennessee, Massachusetts and Michigan. We are working with FDA
to assure that all potentially contaminated product is removed
from the marketplace and that consumers are notified of the
recall.
No reports of illness have been made from consumers of Oasis
brand Almond Garlic Spread.
The Oasis brand Almond Garlic Spread should not be consumed but
rather returned to the store of purchase for a full refund. For
further information, call Kastoria, Inc., (206) 633-4163 Monday-
Friday 9-4pm PST.
LOWELL INC.: Recalls Winiary Mayonnaise Due To Undeclared Eggs
--------------------------------------------------------------
Lowell Int'l. located at 24 Greenpoint Ave., Brooklyn, NY 11222,
is recalling "Winiary" Mayonnaise because it may contain
undeclared eggs. Consumers who are allergic to eggs may run the
risk of serious or life-threatening allergic reactions if they
consume this product.
The recalled "Winiary" Mayonnaise, packed in a 250ml glass jar
with a metal cap and code 06 08 2004 and "Winiary" Mayonnaise,
packed in a 400ml glass jar with a metal cap and code 20 08
2004, were sold in New York and distributed to the firm's other
warehouse in Chicago, Illinois.
The recall was initiated after routine sampling by New York
State Department of Agriculture and Markets Food Inspectors
revealed the presence of eggs in "Winiary" Mayonnaise in
packages which did not declare eggs as an ingredient on the
label. The consumption of eggs by allergic individuals has been
reported to elicit severe reactions. Life threatening and
anaphylactic shock could occur in certain egg sensitive
individuals upon consumption of eggs and products containing
eggs.
No illnesses have been reported to date in connection with this
problem.
Consumers who are allergic to eggs and purchased "Winiary"
Mayonnaise are urged to return it to the place of purchase.
Consumers with questions may contact the company at
(847) 439-6300.
MARUKYO USA: Recalls 6,100 Hair Dryers For Electrocution Hazard
---------------------------------------------------------------
Marukyo U.S.A., Inc. is cooperating with the U.S. Consumer
Product Safety Commission by voluntarily recalling 6,100 Kuru
Kuru Hair Dryers, manufactured by National Electric, of Japan.
These electric hair dryers are not equipped with an immersion
protection device to prevent electrocution if the hair dryer
falls into water. No injuries have been reported.
The recalled Kuru Kuru model hair dryers include the following
model numbers: EHP798P, EHP790P, EH724V, and EH725PK. The model
name and number can be found on the handle. The recalled units,
which come in blue and pink, do not have an immersion protection
device at the end of the plug.
Asian retail stores sold these items nationwide between January
2002 and December 2003 for about $27.
Consumers should stop using the hair dryers immediately and
return them to the store where purchased or to Marukyo U.S.A.
Inc. for a refund. For more details, contact Marukyo U.S.A.
collect at (213) 488-0707 between 9 a.m. and 4 p.m. PT Monday
through Friday, or by E-mail: marukyo@sbcglobal.net.
MATAV-CABLE SYSTEMS: Tel-Aviv Court Denies Certification Motion
---------------------------------------------------------------
A Tel-Aviv District Court refused to grant class certification
to a lawsuit filed against the Matav-Cable Systems Media Ltd.
(MATV) and two other Israeli cable television providers, Dow
Jones Business News reports.
According to a Sunday press release, seven Israeli residents
filed the lawsuit back in 2002 seeking approval for a class
action lawsuit representing 1.05 million cable television
subscribers. The suit alleges that the companies violated the
terms of approval set by the Israeli Council for Cable and
Satellite Broadcasting for the transmission of the pay per view
sports channel. The companies allegedly maintained a sports
channel devoid of programs that were part of the basic package
offered to subscribers.
METRETEK TECHNOLOGIES: CO Settlement Hearing Set For June 2004
--------------------------------------------------------------
Final fairness hearing for the settlement of the class action
filed against Metretek Technologies, Inc. is set for June
11,2004 in the District Court for the City and County of Denver,
Colorado.
Douglas W. Heins, individually and on behalf of a class of other
persons similarly situated, filed a complaint against the
Company and several defendants. The "Metretek Defendants" are:
(1) Marcum Midstream 1997-1 Business Trust (the "1997
Trust"),
(2) Marcum Midstream-Farstad, LLC ("MMF"),
(3) Marcum Gas Transmission (MGT),
(4) Marcum Capital Resources, Inc. ("MCR"),
(5) W. Phillip Marcum,
(6) Richard M. Wanger and
(7) Daniel J. Packard
The suit also names several other defendants, collectively named
"The Farstad defendants:"
(i) Farstad Gas & Oil, LLC ("Farstad LLC")
(ii) Farstad Oil, Inc. ("Farstad Inc." and, collectively
with Farstad LLC, the "Farstad Entities"), and
(iii) Jeff Farstad
On March 27, 2003, the Company, along with the Class Action
Plaintiff, filed a Stipulation of Settlement, which contains the
terms and conditions of a proposed settlement intended to fully
resolve all claims by the Class Action Plaintiff against the
Company and the other Metretek Defendants in the Class
Action. On March 2, 2004, the Company and the Class Action
Plaintiff filed a revised Stipulation of Settlement (as revised,
the "Heins Stipulation"), which revises certain terms of the
settlement (as revised, the "Heins Settlement").
The terms and conditions of the Heins Settlement are set forth
in the 2003 Form 10-K. Because this is a class action, the
Heins Settlement is subject to objection by the Class members
and will have to be approved by the Denver Court as described
below. Other defendants in the Class Action that are not
parties to the Heins Stipulation may also attempt to object to
the Heins Settlement.
The Heins Settlement is contingent, among other things, upon the
payment of not less than $2,375,000 from the proceeds of the
Company's directors' and officers' insurance policy (the
"Policy"), which was issued by Gulf Insurance Company.
In settlement of the Interpleader Action discussed below, Gulf
has paid into escrow $2,375,000 in Policy proceeds to be used in
the Heins Settlement. Pursuant to the Heins Stipulation, the
Company has paid $375,000 into escrow for use in the Heins
Settlement, and the Company has agreed to issue a note payable
to the Heins Settlement Fund in the amount of $3.0 million (the
"Heins Settlement Note"), and to commence payments thereunder in
escrow beginning June 30, 2004. The Heins Settlement Note will
bear interest at the rate of prime plus three percent (prime +
3%), payable in 16 quarterly installments, each of $187,500
principal plus accrued interest, and will be guaranteed by the
1997 Trust and all of the Company's subsidiaries.
The Heins Stipulation creates a settlement fund (the "Heins
Settlement Fund") for the benefit of the Class. If the Denver
Court approves the Heins Settlement and all other conditions to
the Heins Settlement are met, then the Heins Settlement Fund
will be funded by the escrowed funds and by the Company's
payments on the Heins Settlement Note which will then be paid
directly to the Heins Settlement Fund.
At the preliminary approval hearing held by the Denver Court on
the Heins Settlement on April 15, 2004, the Denver Court granted
preliminary approval, authorized notice of the Heins Settlement
to be sent to the Class, and set a date for the final approval
hearing on June 11, 2004. Notice of the Heins Settlement has
been sent to the Class members. The Company cannot provide any
assurance that the Denver Court will grant final approval of the
Heins Settlement. In addition, final approval by the Denver
Court may be subject to post-judgment challenge or appeal.
On March 28, 2003, Gulf filed an interpleader complaint against
the Metretek Defendants, the Farstad Defendants and the Class
Action Plaintiff (the "Interpleader Action") in the Denver
Court, seeking a determination by the Denver Court as to the
proper beneficiaries of the Policy. In March 2004, the Company
settled the Interpleader Action with Gulf and the Farstad
Defendants (the "Interpleader Settlement").
Pursuant to the terms of the Interpleader Settlement, Gulf paid
into escrow $2,375,000 for use in the Heins Settlement, and has
paid the remainder of the Policy proceeds to the Farstad
Defendants. In exchange, the Company and the Farstad Defendants
have fully released Gulf from all further claims under the
Policy. The Interpleader Action was dismissed on April 2, 2004.
NORTH COUNTRY: MI Court Hears Motion To Dismiss Securities Suit
---------------------------------------------------------------
The United States District Court for the Western District of
Michigan heard oral arguments on North Country Financial
Corporation's motion to dismiss the class action filed against
it, its former chairman and chief executive officer and current
director, Ronald G. Ford, and its former chief executive officer
and director, Sherry L. Littlejohn.
The consolidated complaint alleges violations of Federal
securities laws, and is styled "In re North Country Financial
Corporation Securities Litigation." The court has designated
Charles D. Lanctot and John F. Stevens as "Lead Plaintiffs," and
designated "Co-Lead Counsel" and "Liaison Counsel" for the
class.
On December 1, 2003, the plaintiffs filed their Corrected
Consolidated Amended Class Action, which adds John F. Stevens as
a plaintiff. The Amended Complaint, which demands a jury trial,
is brought on behalf of all persons, subject to certain
exceptions, who purchased the Corporation's common stock during
the period from November 13, 2000, through April 15, 2003.
The suit alleges that the Company and the individual defendants
violated section 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5 of the Securities and Exchange Commission issued
under the Exchange Act, by disseminating materially false and
misleading statements and/or concealing material adverse facts
concerning the financial condition and operations of the
Corporation, with knowledge, or in reckless disregard, of the
materially false and misleading character thereof.
The Amended Complaint also alleges violations of Section 20 of
the Exchange Act by the individual defendants, by reason of
their control, at relevant times, of the Company. Among other
things, the Amended Complaint is based upon allegations of
deficiencies in the Corporation's policies and procedures for
safe and sound operation, including its directorate and
management personnel and practices, credit underwriting, credit
administration, and policies regarding asset/liability
management, liquidity, funds management, and investments, and
its compliance with all applicable laws and regulations,
including Regulations O and U of the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance
Corporation (FDIC) Rules and Regulations, and the Michigan
Banking Code of 1999.
The Amended Complaint further alleges that:
(1) the Company's acquisition of American Financial
Mortgage, which had an "unusually large number of
defaulted loans . which triggered the attention of
banking regulators;"
(2) a Cease and Desist Order, dated March 26, 2002, which
is attached as Exhibit 1 to the Amended Complaint,
demonstrates how defendants made "false statements" in
public filings and other communications, and were
required to take "corrective actions;"
(3) various public filings were "false because the
Company's operations resulted in an excessive level of
adversely classified assets, delinquent loans, and non-
accrual loans as well as an inadequate level of capital
protection for the kind and qualify of assets held;"
(4) "according to former employees, loans for Company
insiders and their related entities were often approved
regardless of the quality of the loan;" and
(5) the Company incorrectly attributed its performance to
the World Trade Center disaster and other factors
impacting tourism and hospitality businesses, instead
of disclosing "insider loans," a "disproportionately
high loan concentration" in the hospitality industry,
and information about the Corporation's banking
practices and loan loss reserves.
The Amended Complaint seeks certification of a class consisting
of all persons who purchased the common stock of the Company on
the open market between the dates noted above, compensatory
damages on a joint and several basis against all defendants,
including the Corporation, plus interest and costs, including
attorney's fees and expert's fees.
On January 23, 2004, the Company and the other defendants filed
their Joint Motion to Dismiss the Corrected Consolidated Amended
Class Action, principally based on the ground that plaintiffs
have not adequately plead that the Company, through its officers
and directors, acted with the intent to defraud the investing
public under the standard articulated in Helwig v. Vencor,
Inc., 251 F.3d 540 (6th Cir. 2001), cert. dismissed, 536 U.S.
935, 122 S.Ct. 2616 (2002). During the pendency of the motion
to dismiss, a stay of "all discovery and other proceedings"
automatically is imposed under 15 U.S.C. Section 78u-4(b)(3)(B).
Plaintiffs filed their Brief in Opposition to Defendants' Motion
to Dismiss on March 8, 2004. Defendants filed a reply brief
in support of their Motion to Dismiss on March 23, 2004.
NORTH COUNTRY: MI Court Allows Filing of Amended Derivative Suit
----------------------------------------------------------------
The United States District Court for the Western District of
Michigan granted plaintiffs leave to amend the shareholder
derivative lawsuit filed against North Country Financial
Corporation, styled "Virginia M. Damon Trust v. North Country
Financial Corporation, Nominal Defendant, and Dennis Bittner,
Bernard A. Bouschor, Ronald G. Ford, Sherry L. Littlejohn,
Stanley J. Gerou II, John D. Lindroth, Stephen Madigan, Spencer
Shunk, Michael Henrickson, Glen Tolksdorf, and Wesley Hoffman."
A shareholder of the Company filed the action under Section 27
of the Exchange Act against the Company and certain of its
current and former directors and senior executive officers. The
Complaint, which demands a jury trial, is brought on behalf of
the Company against the individual defendants. The suit alleges
that the individual defendants have caused loss and damage to
the Company through breaches of their fiduciary duties of
oversight and supervision by failing:
(1) adequately to safeguard the assets of the Corporation;
(2) to ensure that adequate administrative, operating, and
internal controls were in place and implemented,
(3) to ensure that the Corporation was operated in
accordance with legally-prescribed procedures, and
(4) to oversee the audit process to ensure that the
Company's assets were properly accounted for and
preserved.
The Company further alleges that the individual defendants
violated Section 14(a) of the Exchange Act by making materially
false and misleading statements in the proxy statement mailed to
shareholders in connection with the annual meeting of the
Corporation held May 29, 2000, and the adoption by the
shareholders at that meeting of the Corporation's 2000 Stock
Incentive Plan.
The Complaint also alleges that Mr. Ford and Ms. Littlejohn,
through a series of compensation arrangements, stock options,
and employment agreements obtained by them through improper
means resulting from the offices they held with the Company,
received excessive compensation, to the injury of the
Corporation. Among other things, the Company is based upon
allegations of material misstatements or omissions in filings
made by the Company with the SEC, and deficiencies in the
Company's policies and procedures for safe and sound operation,
including its directorate and management personnel and
practices, credit underwriting, credit administration, and
policies regarding asset/liability management, liquidity, funds
management, and investments, and its compliance with all
applicable laws and regulations, including Regulations O and U
of the Board, FDIC Rules and Regulations, and the Michigan
Banking Code of 1999. The Complaint seeks:
(i) rescission of the approval of the 2000 Stock Incentive
Plan and return of all stock and options granted under
the Plan,
(ii) a declaration that the individual defendants breached
their fiduciary duty to the Corporation,
(iii) an order to the individual defendants to account to
the Corporation for all losses and/or damages by
reason of the acts and omissions alleged,
(iv) an order to each of the individual defendants to remit
to the Corporation all salaries and other compensation
received for periods during which they breached their
fiduciary duties,
(v) compensatory damages in favor of the Corporation,
(vi) injunctive relief, and
(vii) interest, costs, and attorney's and expert's fees.
On September 18, 2003, the Company filed a motion to dismiss the
action because plaintiff did not satisfy the mandatory
precondition, under Section 493a of the Michigan Business
Corporation Act (MBCA), M.C.L. Section 450.1493a, for filing a
shareholder derivative action that the shareholder must first
have submitted a written demand that the Corporation pursue in
its own right the claims asserted by the shareholder (the
plaintiff here).
Certain of the individual defendants in the Damon action filed
their own motion to dismiss on November 25, 2003, in which
motion the other individual defendants later joined. The
plaintiff filed an Opposition to both motions to dismiss on
January 9, 2004, and on January 30, 2004, the defendants filed
reply briefs in support of their motions to dismiss.
By letter dated September 17, 2003, and expressly without
prejudice to the argument that any such written demand is not
required, plaintiff's counsel purported to make a written demand
that the Company pursue a number of indicated putative claims
against present and former officers and directors of the Company
who also are the individual defendants in the Damon action, and
the certified public accounting firm of Wipfli, Ullrich,
Bertelson, LLP. The MBCA grants the Corporation ninety (90)
days in which to respond to a proper written demand.
On November 11, 2003, the Corporation filed a motion, as
permitted by section 495 of the MBCA, M.C.L. Section 450.1495,
requesting the Court to appoint a disinterested person to
conduct a reasonable investigation of the claims made by the
plaintiff and to make a good faith determination whether
the maintenance of the derivative action is in the best
interests of the Corporation. On January 9, 2004, the plaintiff
filed a Supplemental Response to the Corporation's motion to
dismiss, requesting that the Court appoint two persons other
than the one nominated by the Corporation, to act as a
disinterested person for such purpose.
Following an in camera conference and telephone conference held
by the Court, plaintiff is understood to have withdrawn its
objection to the individual nominated by the Company in its
motion to the Court for appointment as a disinterested person.
The parties, through their respective counsel, are currently
negotiating a stipulated form of order to be entered by the
Court making the appointment of the disinterested person. It is
anticipated that the disinterested person, once appointed, will
complete his investigation of the claims made by the plaintiff
and will make his good faith determination whether the
maintenance of the derivative action is in the best interests of
the Company within 120 days of his appointment.
On March 22, the Court issued an Opinion and Order granting in
part and denying in part the motions to dismiss in the Damon
case. The Court dismissed the Section 14(a) claim against all
of the defendants as barred by the statute of limitations and,
as further grounds, dismissed that claim as to those who were
not directors at the time of the mailing of the proxy statement.
The Court has permitted the plaintiff to proceed with its breach
of fiduciary duty claims against the Directors on the grounds
that the plaintiff cured its procedural failings by subsequently
transmitting a demand letter as required by Section 493 of the
MBCA. In addition, the Court entered an Order Granting
Stipulation to Grant Plaintiff Leave to File Amended Complaint
and to Grant Related Relief to All Parties; under that Order,
plaintiff is required to file, but has not yet filed, an amended
complaint alleging the Court's diversity jurisdiction over this
action.
NUI CORPORATION: NJ Court Partially Dismisses Securities Lawsuit
----------------------------------------------------------------
The United States District Court for the District of New Jersey
dismissed in part the second amended consolidated securities
class action filed against NUI Corporation and two of its former
presidents.
Between October 28, 2002 and December 20, 2002, five
substantially similar civil actions were commenced, alleging
that the company and two of its former presidents violated
federal securities laws by issuing false statements and failing
to disclose information regarding the company's financial
condition and current and future financial prospects in its
earnings statements, press releases, and in statements to
analysts and others.
By orders dated December 19, 2002, January 22, 2003, and
February 3, 2003, the five actions were consolidated into one
action captioned In re NUI Securities Litigation. The five
consolidated lawsuits include:
(1) an action captioned Jack Klebanow, on behalf of himself
and all others similarly situated v. NUI Corporation
and John Kean, Jr., filed in the United States District
Court for the District of New Jersey on October 28,
2002;
(2) an action captioned Gisela Friedman, on behalf of
herself and all others similarly situated v. NUI
Corporation and John Kean, Jr., filed in the United
States District Court for the District of New Jersey on
October 31, 2002;
(3) an action captioned Thomas Davis, on behalf of himself
and all others similarly situated v. NUI Corporation
and John Kean, Jr., filed in the United States District
Court for the District of New Jersey on November 6,
2002;
(4) an action captioned Marvin E. Russell, on behalf of
himself and all others similarly situated v. NUI
Corporation and John Kean, Jr., filed in the United
States District Court for the District of New Jersey on
December 10, 2002; and
(5) an action captioned Phyllis Waltzer, on behalf of
herself and all others similarly situated v. NUI
Corporation and John Kean, Jr., filed in the United
States District Court for the District of New Jersey on
December 20, 2002
By order dated February 3, 2003, a Lead Plaintiff, Lead Counsel
and Liaison Counsel were appointed in the consolidated action.
By stipulation of the parties, an Amended Consolidated Class
Action Complaint was filed on May 12, 2003, and subsequently
plaintiffs were granted leave to file a Second Amended
Consolidated Class Action Complaint, which was filed on July 17,
2003.
The Second Amended Complaint, brought on behalf of a putative
class of purchasers of NUI's common stock between November 8,
2001 and October 17, 2002, asserts claims under Section 10(b),
including Rule 10b-5 promulgated thereunder, and Section 20(a)
of the Exchange Act against the company, and two of its former
presidents.
Specifically, the Second Amended Complaint alleges that the
Defendants:
(i) failed to disclose material facts that would impair
the company's current and future earnings, including
the allegedly accurate amount and explanation of the
company's bad debts, a purportedly illegal practice by
the company in "re-terminating" intrastate calls,
alleged accounting improprieties in connection with
purportedly unearned revenue, and allegedly inaccurate
earnings per share information, and
(ii) inflated the company's earnings materially by
allegedly making misleading statements concerning, and
failing to properly record, bad debt costs, allegedly
attributing the company's rising costs to incorrect
and immaterial factors, and purportedly pursuing
illegal telecommunications billing practices.
The Second Amended Complaint seeks unspecified monetary damages
on behalf of the class, including costs and attorneys fees. On
October 14, 2003, defendants moved to dismiss the Second Amended
Complaint under, inter alia, the Private Securities Litigation
Reform Act. Opposition papers to the motion to dismiss were
served on December 19, 2003, and reply papers were filed on
February 23, 2004. The motion was heard on March 15, 2004.
By decision and order dated April 23, 2004, the district court
granted in part and denied in part defendants' motion to
dismiss. The district court dismissed the Section 10(b) claims
against the individual defendants and dismissed all claims
against the company concerning the alleged "reterminating"
scheme. The district court denied the motion to dismiss with
respect to certain allegations that the company made misleading
misstatements concerning the accurate level of bad debt and
earnings and denied the motion to dismiss the Section 20(a)
claims against the individual defendants. Defendants filed an
Answer to the Second Amended Complaint on May 10, 2004. No
discovery has occurred yet.
PARAMETRIC TECHNOLOGY: MA Court Mulls Dismissal of Stock Lawsuit
----------------------------------------------------------------
The United States District Court for the District of
Massachusetts heard Parametric Technology Corporation's motion
to dismiss the consolidated securities class action filed
against it and certain of its officers, claiming violations of
the federal securities laws based on alleged misrepresentations
regarding its reported financial results for the fiscal years
1999, 2000 and 2001 and revisions to its announced results for
2002.
The Company filed a motion to dismiss the consolidated action
and the court held a hearing on the motion on April 28, 2004.
The motion currently is under consideration by the court.
PROLONG INTERNATIONAL: Reaches Settlement Framework For OH Suit
---------------------------------------------------------------
Prolong International Corporation has reached a framework for
the settlement of the class action filed against it and EPL
Prolong, Inc. in the Court of Common Pleas, Columbiana County,
Ohio, styled "Francis Helman et al vs. EPL Prolong Inc. and PIC
et al."
The suit alleges:
(1) breach of contract,
(2) fraudulent conveyance of corporate assets,
(3) breach of fiduciary duties,
(4) breach of an alleged novation and
(5) fraud in the inducement relating to the alleged
novation
Plaintiffs allege that they purchased certain "pre-primary
shares" of stock in a Canadian company known as Prolong
Industries Inc. from Defendant Ronald Sloan and other agents of
the Canadian company during the period of May 1985 through
October 1987, a period prior in time to the formation of EPL
Prolong, Inc.
It remains undisputed that the EPL Defendants had no involvement
in the solicitation or sale of the pre-primary shares that were
allegedly sold to the plaintiffs between 1985 and 1987. The
court has ruled that the case can proceed as a class action. A
framework for settlement of the dispute has been reached and the
parties are preparing the agreement for filing with the court
for approval.
QUALITY DISTRIBUTION: Faces Securities Fraud Lawsuits in M.D. FL
----------------------------------------------------------------
Quality Distribution, Inc. faces three class actions filed in
the United States District Court for the Middle District of
Florida, alleging violations of federal securities laws.
On February 24, 2004, the first of three putative class action
lawsuits was filed, styled "Meigs v. Quality Distribution, Inc.,
et al." The suit names as defendants the Company and:
(1) Thomas L. Finkbiner, President, Chief Executive Officer
and Chairman of the Board, and
(2) Samuel M. Hensley, Senior Vice President and Chief
Financial Officer
The plaintiff purports to represent a class of purchasers of the
Company's common stock traceable to its November 6, 2003,
initial public offering. The complaint alleges that, in
connection with the IPO, the Company filed a registration
statement with the Securities and Exchange Commission that
incorporated a materially false or misleading prospectus.
Specifically, the complaint alleges that the prospectus
materially overstated the Company's financial results for the
years ended December 31, 2001, December 31, 2002, and the nine
months ended September 30, 2003. In addition, the complaint
alleges that these financial statements were not prepared
consistently with generally accepted accounting principles.
Accordingly, it asserts causes of action (and seeks unspecified
damages) against all defendants based on the alleged violation
of Section 11 of the Securities Act of 1933, and against Mr.
Finkbiner and Mr. Hensley as "control persons," under the Act
Section 15, by virtue of their positions at the Company.
The second suit, styled "Steamfitters Local 449 Pension &
Retirement Security Funds v. Quality Distribution, Inc., et
al.," was filed in the Circuit Court of the Thirteenth Judicial
Circuit in and for Hillsborough County, Florida, on March 26,
2004. In addition to the Company, Mr. Finkbiner and Mr.
Hensley, the suit names as defendants the other signatories to
the registration statement, namely Company directors Anthony R.
Ignaczak, Joshua J. Harris, Michael D. Weiner, Marc J. Rowan,
Marc E. Becker, and Donald C. Orris, and three of the Company's
IPO underwriters, Credit Suisse First Boston LLC, Bear, Stearns
& Co., Inc., and Deutsche Bank Securities Inc.
The Steamfitters complaint alleges substantially identical facts
to those in the Meigs complaint and also includes the same
causes of action, plus an additional claim for rescission or
damages based on an alleged violation of Section 12 of the
Securities Act of 1933. On April 28, 2004, the defendants
removed the action to the United States District Court for the
Middle District of Florida, where Meigs was already pending.
Plaintiff in Steamfitters was given until May 28, 2004, to seek
to remand the case to state court.
The third suit, styled "Cochran v. Quality Distribution, Inc.,
et al.," was filed in the United States District Court for the
Middle District of Florida on April 15, 2004. The complaint is
substantially identical to that in Meigs, naming the same
defendants and asserting the same claims based on the same
allegations. On April 23, 2004, plaintiff sought to consolidate
her action with Meigs and to be named lead plaintiff in the
consolidated case. Another plaintiff, Jemmco Investments
Management LLC, has also sought to be named lead plaintiff in
Meigs.
All three complaints' allegations stem from the disclosures in a
Form 8-K that the Company filed on February 2, 2004, stating
that the Company had discovered irregularities at Power
Purchasing, Inc., a non-core subsidiary that, through its
subsidiary, American Transinsurance Group, Inc. (collectively,
PPI), primarily assists independent contractors in obtaining
various lines of insurance, for which PPI derives fees as an
insurance broker. The 8-K stated that the irregularities
resulted from unauthorized actions by PPI's former vice
president and would result in a restatement of the Company's
financial statements.
While three class actions lawsuits have thus far been served on
QDI regarding the above matters, plaintiffs may file additional
complaints and/or an Amended and Consolidated Complaint. The
Company will timely respond to all complaints and expects that
the individual defendants will do the same.
RARE MEDIUM: To File Summary Judgment Motion For Securities Suit
----------------------------------------------------------------
Rare Medium Group, Inc. expects to file and complete briefing on
summary judgment for the securities class action filed against
it, certain of its subsidiaries and certain of the current and
former officers and directors in the United States District
Court for the Southern District of New York, styled "Dovitz v.
Rare Medium Group, Inc. et al., No. 01 Civ. 10196."
Plaintiffs became owners of restricted Company stock when they
sold the company that they owned to the Company. Plaintiffs
assert four claims against defendants:
(1) common-law fraud;
(2) violation of Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder;
(3) violation of the Michigan Securities Act; and
(4) breach of fiduciary duty
These claims arise out of alleged representations by defendants
to induce plaintiffs to enter into the transaction. The
complaint seeks compensatory damages of approximately $5.6
million, exemplary and/or punitive damages in the same amount,
as well as attorney fees.
On January 25, 2002, the Company filed a motion to dismiss the
complaint in its entirety. On June 3, 2002, the Court dismissed
the matter without prejudice. On July 17, 2002, the plaintiffs
filed an amended complaint asserting similar causes of action to
those asserted in the original complaint. On September 12,
2002, the Company filed a motion to dismiss on behalf of itself
and its current and former officers and directors. On March 7,
2003, the Court denied the motion to dismiss, and discovery
commenced.
RARE MEDIUM: Plaintiffs Appeal Refusal of Reconsideration Motion
----------------------------------------------------------------
Plaintiffs appealed refusal of the United States District Court
for the District of Kansas to reconsider its dismissal of a
lawsuit filed against Rare Medium Group, Inc. and certain of its
current and former officers in the United States District Court
for the District of Kansas, relating to the securities class
action filed against the Company in New York federal court.
Plaintiffs James D. Loeffelbein, Terrie L. Pham and certain
related parties filed the suit, which also names as defendants
the lead plaintiff's counsel in the class action, the Company's
former investor relations firm and a former employee of
plaintiff Loeffelbein, styled "Loeffelbein v. Milberg Weiss
Bershad Hynes & Lerach, LLP, et al., 02 CV 04867.
The plaintiffs assert claims for fraud, negligence and breach of
fiduciary duty against all of the Company and certain of its
current and former officers in connection with allegedly false
statements purportedly made to the plaintiffs. The plaintiffs
have sought unspecified damages from the defendants.
The suit was initially filed in the District Court of Johnson
County, Kansas but was later removed to federal court. On
October 11, 2002, the plaintiffs sought to have the matter
remanded to state court. On May 7, 2003, the Federal District
Court denied the plaintiffs request to remand the matter as it
related to the Company, the Company defendants and an additional
defendant.
On June 9, 2003, the Company and Company defendants filed a
motion to dismiss. On August 4, 2003, the plaintiffs responded.
On October 21, 2003, the Federal District Court dismissed the
action, holding that it lacked personal jurisdiction over
the Company and the Company defendants and, accordingly, found
it unnecessary to rule upon the Company's other bases for
dismissal. On February 26, 2004, the court denied a motion by
the plaintiffs to reconsider the dismissal.
RARE MEDIUM: Former Employees Launch Overtime Wage Lawsuit in CA
----------------------------------------------------------------
Rare Medium Group, Inc. faces a class action filed in Los
Angeles County Superior Court in California by a former employee
of the Company's discontinued services subsidiary. The suit
also names as defendants Rare Medium, Inc. and certain other
former subsidiaries that were merged into Rare Medium, Inc. and
is styled "Joe Robuck, individually and on behalf of all
similarly situated individuals v. Rare Medium Group, Inc., Rare
Medium L.A., Inc., Rare Medium, Inc., and Rare Medium Dallas,
Inc., Los Angeles County Superior Court Case No. BC300310.
The plaintiff filed the action as a putative class action and
putative representative action asserting that:
(1) certain payments were purportedly due and went unpaid
for overtime for employees with five job titles;
(2) certain related violations of California's overtime
statute were committed when these employees were not
paid such allegedly due and unpaid overtime at the time
of their termination; and
(3) certain related alleged violations of California's
unfair competition statute were committed.
Plaintiff seeks to recover for himself and all of the putative
class, alleged unpaid overtime, waiting time penalties (which
can be up to 30 days' pay for each person not paid all wages due
at the time of termination), interest, attorneys' fees, costs
and disgorgement of profits garnered as a result of the alleged
failure to pay overtime.
Plaintiff has served discovery requests and all of the
defendants have submitted objections and do not intend to
provide substantive responses until the Court determines
whether Plaintiff must arbitrate his individual claims.
RURAL CELLULAR: MN Court Hears Motion To Dismiss Securities Suit
----------------------------------------------------------------
The United States District Court for the District of Minnesota
heard Rural Cellular Corporation's motion to dismiss the class
action filed against it and three of its executive officers,
styled "In re Rural Cellular Corporation Securities Litigation,
Civil Action No.: 02-4893 PAM/RLE."
The consolidated suit also names as defendants four directors
who were members of the Company's audit committee during the
class period and Arthur Andersen LLP, its former independent
auditors. The lead plaintiffs sought to represent a class
consisting of all persons (except defendants and members of
their families and entities in which they held interests) who
purchased or otherwise obligated themselves to purchase the
Company's publicly traded equity and debt securities between May
7, 2001 and November 12, 2002.
The lead plaintiffs alleged that the Company's publicly-
announced financial results were false and misleading and that
it made false and misleading statements about its operating
performance and financial condition. The lead plaintiffs
further alleged that, as a result, the market price of the
Company's securities was artificially inflated during the class
period and investors were deceived into buying its securities at
artificially inflated prices. The lead plaintiffs alleged that
defendants were liable under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. The lead plaintiffs sought
compensatory damages in an unspecified amount, plus their
attorneys' fees and costs.
On September 2, 2003, the Company served a motion to dismiss the
consolidated amended complaint as against it and the defendant
directors, on the grounds that it failed to plead fraud with the
particularity required by Rule 9(b) of the Federal Rules of
Civil Procedure and the Private Securities Litigation Reform
Act of 1995, 15 U.S.C. 78u-4, and failed to state a claim upon
which relief may be granted. Arthur Andersen LLP also filed a
motion to dismiss.
By Memorandum and Order filed on January 12, 2004, the court
dismissed the consolidated amended complaint without prejudice.
The court held that the lead plaintiffs had failed to plead
specific facts showing that the defendants knew facts, or had
access to information, suggesting that the Company's financial
statements were materially false when they originally were
issued. The court allowed the lead plaintiffs to file a further
amended complaint within 30 days to attempt to correct the
deficiencies in their pleading.
On February 9, 2004, the lead plaintiffs filed a second
consolidated amended complaint. The Company and the defendant
directors have filed a motion to dismiss the second consolidated
amended complaint with prejudice. The Court heard the motion on
May 19, 2004.
SPORTSLINE.COM: Asks FL Court To Dismiss Securities Fraud Suit
--------------------------------------------------------------
SportsLine.com, Inc. asked the United States District Court for
the Southern District of Florida to dismiss the consolidated
securities class action filed against it, its chief executive
officer and its former chief financial officer, alleging
violations of the Securities Exchange Act of 1934, as amended.
The suit, styled "In re SportsLine.com Securities Litigation,
Master File No. 03-61849-CIV-MIDDLEBROOKS," purports to state
claims against us on behalf of all persons who purchased our
common stock between January 30, 2001 and September 25, 2003;
and seeks money damages in unspecified amounts and litigation
expenses including attorneys' and experts' fees.
The essence of the allegations in the complaint is that the
Company intentionally or recklessly made false or misleading
statements in its previously issued consolidated financial
statements which were subsequently restated due primarily to its
failure to properly recognize non-cash compensation expense
relating to certain option grants. The plaintiffs contend that
such statements or omissions caused the Company's stock price to
be artificially inflated.
SPORTSLINE.COM: Special Committee Probes Derivative Suit Claims
---------------------------------------------------------------
SportsLine.com, Inc.'s board of directors formed a special
committee to investigate the allegations in a shareholder
derivative class action filed by a purported shareholder on
behalf of SportsLine.com in the United States District Court for
the Southern District of Florida against the Company's chief
executive officer, its former chief financial officer and each
member of its Board of Directors as of September 25, 2003.
In April 2004, the plaintiff filed an amended derivative
complaint against the same individuals. The plaintiff alleges
violations of Section 304 of the Sarbanes-Oxley Act of 2002 and
breaches of fiduciary duty arising out of the payment of
incentive compensation by certain of the named defendants and
breaches of fiduciary duties and claims for contribution and
indemnification against all the named defendants.
In December 2003, in response to a purported shareholders'
demand that the Company file a derivative law suit against
certain of its officers, its board of directors formed a special
committee to investigate the allegations of such demand and
recommend appropriate action to the Board. The special
committee has also been delegated authority to evaluate the
allegations of the derivative shareholder lawsuit and to
determine whether such suit is in the best interests of the
company. As of April 30, 2004, the special committee had not
yet reported the results of its investigation to the full board
of directors.
TENGASCO INC.: TN Court Grants Final Approval To Suit Settlement
----------------------------------------------------------------
The United States District Court for the Eastern District of
Tennessee in Knoxville entered its final order approving the
fairness of the settlement to of the class action filed against
Tengasco, Inc., styled "Paul Miller v. M. E. Ratliff and
Tengasco, Inc., Number 3:02-CV-644."
This action was commenced in November 2002 and sought
certification of a class action to recover on behalf of a class
of all persons who purchased shares of the Company's common
stock between August 1, 2001 and April 23, 2002, damages in an
amount not specified which were allegedly caused by violations
of the federal securities laws, specifically Rule 10b-5 issued
under the Securities Exchange Act of 1934 as to the Company and
Malcolm E. Ratliff, the Company's former Chief Executive Officer
and a Director, and Section 20(a) the Securities Exchange Act of
1934 as to Mr. Ratliff. The complaint alleges that documents
and statements made to the investing public by the Company and
Mr. Ratliff misrepresented material facts regarding the business
and finances of the Company.
As of January 30, 2004, a written stipulation of settlement
documenting the settlement terms was signed by counsel for all
parties. The stipulation of settlement was presented to the
Court on February 27, 2004 for a determination of initial
fairness and initiation of other procedures leading to a final
hearing. At the hearing, the Court granted initial approval
of the settlement as proposed and established periods for
determination of the class and dates for a final settlement
hearing approving disbursement of settlement funds to any
class members.
Under the settlement, the Company has paid into a settlement
fund the amount of $37,500 to include all costs of
administration, and has also contributed 150,000 shares of stock
of Miller Petroleum, Inc. that is currently owned by the Company
that had been accepted in payment of an obligation owed to the
Company by Miller Petroleum. The Company also contributed to
the settlement fund the Company's agreement to issue 300,000
warrants to purchase a share of the Company's common stock for a
period of three years from date of issue at $1 per share. The
number or price of the warrants is to be adjusted to account for
the additional shares sold pursuant to the rights offering made
by the Company or other stated events. All expenses including
attorney's fees as are awarded by the court on final hearing are
to be paid out of the settlement funds. The parties stipulated
the existence of a class for settlement purposes only.
On April 29, 2004, a final hearing for approval of the
settlement was held in federal court in Knoxville, Tennessee.
On May 10, 2004 the Court entered its final order approving the
fairness of the settlement to the class, dismissing the action
pursuant to the Settlement Stipulation, and fully releasing the
claims of the class members. Pursuant to the Settlement
Stipulation and the Court's final order, class members may file
their claims against the settlement fund through July 15, 2004.
The fund will be disbursed in accordance with the claims filed.
No further court approval is required or contemplated, although
the Court retains jurisdiction to enforce the settlement
stipulation and the Court's final order.
TRANSACTION SYSTEMS: Enters Mediation For NE Securities Lawsuits
----------------------------------------------------------------
Transaction Systems Architects, Inc. entered mediation to settle
the consolidated securities class action filed in the U.S.
District Court for the District of Nebraska against it and
certain individuals alleging violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder.
The suit is styled "Desert Orchid Partners v. Transaction
Systems Architects, Inc., et al.," and Genesee County Employees'
Retirement System has been designated as the Lead Plaintiff.
The First Amended Consolidated Class Action, filed on June 30,
2003, alleges that during the purported class period, the
Company and the named defendants misrepresented the Company's
historical financial condition, results of operations and its
future prospects, and failed to disclose facts that could have
indicated an impending decline in the Company's revenues. The
Consolidated Complaint seeks unspecified damages, interest,
fees, costs and rescission. The class period alleged in the
Consolidated Complaint is January 21, 1999 through November 18,
2002.
The Company and the individual defendants filed a motion to
dismiss the Consolidated Complaint. In response, on December
15, 2003, the Court dismissed, without prejudice, Gregory
Derkacht, the Company's President and Chief Executive
Officer, as a defendant, but denied the motion to dismiss with
respect to the remaining defendants, including the Company. On
February 6, 2004, the Court entered a mediation reference order
requiring the parties to mediate before a private mediator. The
parties held a mediation session on March 18, 2004, which did
not result in a settlement of the matter. Discovery has
commenced and is in the early stages.
WESTWOOD GROUP: DE Court Suspends Briefing in Securities Lawsuit
----------------------------------------------------------------
The Court of Chancery in the State of Delaware suspended
briefing in the class action filed against Westwood Group, Inc.
and its board of directors by a stockholder of the Company,
seeking to enjoin the proposed reverse stock split on the basis
that is not fair to the stockholders and that the proxy
statement omits information alleged to be "material."
On March 18, 2003, one day prior to the scheduled meeting to
approve the proposed 1,500-to-1 reverse stock split, the Company
received an Administrative Complaint and Ex Parte Motion for a
Temporary Order to Cease and Desist from the Securities
Division. The Administrative Complaint claimed that
the Company failed to disclose certain information to the
stockholders in the prior proxy statement, which the Securities
Division alleged to be "material."
Specifically, the Securities Division alleged that the Company
failed to disclose:
(1) the existence of loans from the principal of Alouette
Capital to the Company and Mr. Sarkis;
(2) that Alouette Capital was not a registered broker
dealer, and
(3) the extent of the Company's lobbying activities with
respect to the passage of gaming legislation.
The stockholders' meeting scheduled for March 19, 2003 to
approve the proposed going private transaction was adjourned in
order to permit the Company to address this matter, and the
stockholders' vote was never taken.
As a result of the Administrative Complaint filed by the
Securities Division, the proposed 1,500-to-1 reverse stock split
was indefinitely suspended. On April 8, 2003, the Company filed
an answer in response to the Securities Division's complaint,
which denied each of the allegations set forth in the complaint,
and between April and June 2003, the Company and the Securities
Division negotiated a settlement.
On June 17, 2003, the Company filed a Motion to Dismiss the
Court of Chancery class action on the grounds the previously
proposed going private transaction was never completed. On
October 23, 2003, the same plaintiffs filed a supplemented and
amended complaint with the Court alleging that the proposed
reverse stock split described in this proxy statement is not
fair to the stockholders of the Company and that the proxy
statement omits information that the plaintiffs allege to be
"material."
The plaintiffs amended the complaint to include Mr. Cassin, as a
co-defendant. The plaintiffs allege that:
(i) the $4.00 pre share price valuation of the Company's
Common Stock and Class B Common Stock being paid to
stockholders being redeemed in the proposed reverse
stock split is not fair and allege that the fair value
of the Company's Common Stock exceeds $5.00 per share;
(ii) the Board of Directors of the Company breached its
fiduciary duties to the stockholders; and
(iii) the Company is violating Delaware corporate law by
proposing to issue fractional shares to some
stockholders and paying other stockholders cash in lieu
of fractional shares.
In addition, the plaintiffs allege that this proxy statement
fails to disclose all material facts regarding the description
of the Company's real estate, the RM Bradley appraisal reports,
the lobbying expenses and the reasons for the proposed 500-for-1
stock split. The plaintiffs are seeking an injunction that
would prevent the Company from completing the proposed reverse
stock split and damages.
The Company disputes all of the allegations set forth in the
complaint, and on November 10, 2003, it filed a Motion to
Dismiss for failure to state a claim. The Company's opening
brief in support of its Motion to Dismiss was filed on
February 3, 2004, and the plaintiffs' answering brief in
opposition to the Motion to Dismiss was filed on March 1, 2004.
The Court of Chancery has suspended briefing in this case until
the proxy statement is finalized and filed with the Securities
and Exchange Commission.
New Securities Fraud Cases
BALLY TOTAL: Schiffrin & Barroway Files Securities Suit in IL
-------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a securities
class action in the United States District Court for the
Northern District of Illinois, Eastern Division on behalf of
purchasers of Bally Total Fitness Holding Corporation (NYSE:
BFT) publicly traded securities during the period between August
3, 1999 and April 28, 2004, inclusive.
The complaint charges Bally, Paul A. Tobak, Lee S. Hillman, and
John W. Dwye violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 by issuing a series of materially false and
misleading statements to the public which described the
Company's increasing financial performance. As alleged in the
complaint, these statements were materially false and misleading
because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(1) that the Company had violated Generally Accepted
Accounting Principles ("GAAP") and its own internal
policies by prematurely recognizing revenue on certain
non-obligatory prepaid membership dues;
(2) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(3) that, as a result, the value of the Company's reported
revenues during the Class Period was materially
overstated.
On April 28, 2004, the Company issued a press release announcing
that its Chief Financial Officer and Director, John W. Dwyer,
had resigned and that the Division of Enforcement of the
Securities & Exchange Commission had commenced an investigation
in connection with the Company's announced restatement regarding
the timing of recognition of certain prepaid dues. The Company
also stated that it had modified its existing internal controls
structure, which it believes is now effective. In response to
these disclosures, shares of the Company's stock fell
approximately 17%, to close at $4.50 per share, on extremely
heavy trading volume.
For more details, contact Schiffrin & Barroway, LLP (Marc A.
Topaz, Esq. or Stuart L. Berman, Esq.) by Mail: Three Bala Plaza
East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706
or 1-610-667-7706 or by E-Mail: info@sbclasslaw.com
BALLY TOTAL: Milberg Weiss Lodges Securities Lawsuit in N.D. IL
---------------------------------------------------------------
The law firm of Milberg Weiss Bershad & Schulman LLP initiated a
class action lawsuit on May 27, 2004, on behalf of purchasers of
the securities of Bally Total Fitness Holding Corporation (NYSE:
BFT) between August 3, 1999 and April 28, 2004, inclusive,
seeking to pursue remedies under the Securities Exchange Act of
1934.
The action is pending in the United States District Court for
the Northern District of Illinois, Eastern Division against
defendants Bally, Paul A. Toback, Lee S. Hillman and John W.
Dwyer.
The complaint alleges that during the Class Period defendants'
publicly disseminated results of Bally's operations and
financial condition contained artificially inflated revenues,
income, and earnings per share. Specifically, Bally improperly
accelerated the recognition of revenues from prepaid membership
dues throughout the Class Period. Bally's reported results were
not prepared or reported in accordance with Generally Accepted
Accounting Principles and deceived investors as to the Company's
true performance, thereby artificially inflating the price of
Bally securities during the Class Period. On April 28, 2004,
after the close of ordinary trading, the Company announced that
defendant Dwyer had resigned as the Company's CFO and that the
SEC was investigating the Company in connection with a
restatement involving recognition of revenues from prepaid
memberships. In response to this announcement, the price of
Bally common stock fell sharply, from $5.40 per share on April
28, 2004, to $4.50 per share on April 29, a one day drop of
16.6% on unusually heavy trading volume.
For more details, contact Steven G. Schulman, Peter E. Seidman
or Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl., New
York, NY 10119-0165 by Phone: (800) 320-5081 by E-Mail:
sfeerick@milbergweiss.com or visit their Web Site:
http://www.milbergweiss.com
IDACORP INC.: Glancy Binknow Lodges Securities Fraud Suit in ID
---------------------------------------------------------------
The law firm of Glancy Binkow & Goldberg LLP initiated a
securities class action in the United States District Court for
the District of Idaho on behalf of a class (the "Class")
consisting of all persons who purchased or otherwise acquired
securities of Idacorp, Inc. ("Idacorp" or the "Company")
(NYSE:IDA) between February 1, 2002 and June 4, 2002, inclusive
(the "Class Period").
The Complaint charges Idacorp and certain of the Company's
executive officers with violations of federal securities laws.
Plaintiff claims that defendants' omissions and material
misrepresentations concerning Idacorp's financial outlook
artificially inflated the Company's stock price, inflicting
damages on investors. The complaint alleges that defendants
failed to disclose and/or misrepresented the following adverse
facts:
(1) that the Company failed to appreciate the negative
impact that lower volatility and reduced pricing
spreads in the Western wholesale energy market would
have on its marketing subsidiary, Idacorp Energy;
(2) that the Company was forced to limit its origination
activities to shorter-term transactions due to
increasing regulatory uncertainty and continued
deterioration of credit-worthy counter parties;
(3) that the Company failed to discount for the fact that
Idaho Power may not recover from the lingering effects
of last year's regional drought; and
(4) as a result of the foregoing, that defendants lacked a
reasonable basis for their earnings projections and
positive statements about the Company.
On June 4, 2002, Idacorp, citing stagnant wholesale energy
markets and the continued pressure of drought, lowered its 2002
earnings guidance to a range between $1.35 and $1.70 per share.
News of this shocked the market, Idacorp's share price plummeted
$5.80 or 17.26%, to close at $27.80 per share on June 4, 2002.
For more details, contact Lionel Z. Glancy or Michael Goldberg
of Glancy Binkow & Goldberg LLP by Phone: (310) 201-9150 or
(888) 773-9224 by E-Mail: info@glancylaw.com or visit their Web
Site: www.glancylaw.com
KRISPY KREME: Murray Frank Lodges Securities Lawsuit in M.D. NC
---------------------------------------------------------------
Murray, Frank & Sailer LLP initiated a securities class action
on behalf of purchasers of the securities of Krispy Kreme
Doughnuts, Inc. (NYSE:KKD) between August 21, 2003 and May 7,
2004, inclusive. The action is for remedies under the
Securities Exchange Act of 1934. The action is pending in the
United States District Court for the Middle District of North
Carolina against defendants Krispy Kreme, Randy S. Casstevens,
Scott A. Livengood, Michael C. Phalen and John W. Tate.
The complaint alleges that Krispy Kreme is a specialty retailer
of doughnuts and charges Krispy Kreme and certain of its
officers and directors with violations of the Securities
Exchange Act of 1934. The complaint further alleges that, during
the Class Period, Krispy Kreme touted its strong operational
growth, reporting substantial increases in revenues, income,
earnings per share, and representing that the Company would
continue to grow. Moreover, the complaint also details
allegations that unbeknownst to investors, defendants failed to
disclose that, as a result of the trend toward low-fat, low
carbohydrate diets (the South Beach and Atkins diets, for
example), Krispy Kreme had been suffering from increasingly poor
sales performance.
The complaint alleges there were also other undisclosed reasons
for the Company's poor performance: While the opening of new
Krispy Kreme stores created initial consumer excitement and a
corresponding surge in sales, sales at those newly-opened stores
quickly tapered off. This was especially damaging to the Company
in smaller markets with a limited number of potential new
customers. Rather than cultivate a base of steady customers, the
Company instead attempted to capitalize on Krispy Kreme's "fad
appeal" and adopted a business model and strategy for increasing
sales that was predicated on the perpetual addition of new
stores and the hyping of the Company's entry into new markets-a
tactic that resulted in unsustainable surges in sales and fell
off once the hype ceased and the novelty of the new store wore
off. The complaint further alleges that the Company's strategy
of offsetting slowing retail sales with wholesale shipments to
supermarkets was not working because the Company's wholesale
business was more expensive to operate and, therefore, resulted
in a lower profit margin than in-store sales.
Additionally, the Company's wholesale business was saturating
the market with Krispy Kreme products, cannibalizing the
Company's retail operations, perhaps undermining them as well,
and decreasing the Company's overall profit margin.
On May 7, 2004, defendants issued a news release in which they
announced that Krispy Kreme's expected fiscal 2005 diluted
earnings per share from continuing operations, excluding
charges, to be 10% lower than previously announced, and that
Krispy Kreme was closing certain company-owned stores and
reducing plans to open new ones. Krispy Kreme also announced
that it was closing its Montana Mills bread stores, an operation
that it had bought a year ago, and that it was going to write-
off as much as $40 million on the venture; as recently as mid-
April, defendants had said they intended to refine and expand
the operation.
On this news, shares of Krispy Kreme fell $9.29, or 29%, to
close at $22.51, a new 52-week low, and more than 50% below
Krispy Kreme's 52-week high of $49.74. The trading volume was
20.5 million shares, the largest ever for Krispy Kreme, and
amounted to a third of the shares outstanding.
For more details, contact Eric J. Belfi or Aaron D. Patton of
Murray, Frank & Sailer LLP by Phone: (800) 497-8076 or
(212) 682-1818 by Fax: (212) 682-1892 by E-Mail:
info@murrayfrank.com
LEXAR MEDIA: Lasky & Rifkind Lodges Securities Suit in N.D. CA
--------------------------------------------------------------
The law firm of Lasky & Rifkind, Ltd. initiated a class action
lawsuit in the United States District Court for the Northern
District of California, on behalf of persons who purchased or
otherwise acquired publicly traded securities of Lexar Media
Inc. ("Lexar" or the "Company") (NASDAQ:LEXR) between July 17,
2003 and April 16, 2004, inclusive, (the "Class Period"). The
lawsuit was filed against Lexar, Eric Stang, and Brian McGee
("Defendants").
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
the Company failed to disclose and misrepresented several
material adverse facts including that the Company underestimated
the impact of the timing of competitive pricing moves in the
flash memory market, that the Company's preferential supply
relationship with Samsung would not protect it from fluctuations
in pricing and availability of flash memory, and that the
Company lacked sufficient royalty income to thwart gross margin
pressure.
On April 15, 2004, Lexar reported financial results for the
first quarter ended March 31, 2004. Following several quarters
of stable flash memory pricing, pricing began to fall off and
occurred sooner than the Company had expected. Lexar reacted
negatively to the news, falling $5.03 per share, or nearly 33%,
to close at $10.42 per share the following trading day.
For more details, contact Lasky & Rifkind, Ltd., by Phone:
(800) 495-1868 by E-Mail: investorrelations@laskyrifkind.com or
visit their Web Site: http://laskyrifkind.com/contact.htm
LEXAR MEDIA: Lerach Coughlin Lodges Securities Suit in N.D. CA
--------------------------------------------------------------
Lerach Coughlin Stoia & Robbins LLP initiated a securities class
action in the United States District Court for the Northern
District of California on behalf of purchasers of Lexar Media,
Inc. (NASDAQ:LEXR) publicly traded securities during the period
between July 17, 2003 and April 15, 2004.
The complaint charges Lexar and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Lexar designs, develops, manufactures and markets high-
performance digital media that the Company markets as digital
film, as well as other flash-based storage products for consumer
markets that utilize flash memory for the capture and retrieval
of digital content for the digital photography, consumer
electronics, industrial and communications markets.
The complaint alleges that during the Class Period, defendants
issued a series of materially false and misleading statements to
the investing public regarding Lexar's business prospects. On
April 15, 2004, the Company issued a press release reporting its
financial statements for the first quarter of 2004 and stating
that "after several quarters of relatively stable average
selling prices, second quarter price declines will be sizeable.
These declines are occurring a quarter sooner than anticipated
given the current supply environment in the flash industry." On
this revelation, the Company's shares plummeted by nearly a
third to close at $10.42 per share on April 16, 2004.
According to the complaint, the true facts, which were known by
each of the defendants but concealed from the investing public
during the Class Period, were as follows:
(1) that the Company was experiencing widespread and
massive gross margin declines, and in fact, between
December 31, 2003 and March 31, 2004, the Company's
gross margin declined from 23.9% to 17.6%;
(2) that at the retail end, retailers had been stuffed with
inventory which would result in future decreasing sales
making defendants' projections unachievable; and
(3) that the cost of "price protection" associated with
Lexar's Asia and European sales together with a
material decline in the Company's average selling
prices would drastically erode the Company's margins
and EPS.
As a result of the defendants' false statements, Lexar's stock
traded at inflated levels during the Class Period, increasing to
as high as $23.99 per share on November 6, 2003, whereby the
Company's top officers and directors sold more than $16 million
worth of their own shares.
For more details, contact William Lerach or Darren Robbins of
Lerach Coughlin Stoia & Robbins LLP by Phone: 800/449-4900 or by
E-Mail: wsl@lcsr.com or visit their Web Site:
http://www.lcsr.com/cases/lexar/
MERRILL LYNCH: Stull Stull Lodges Securities Lawsuit in S.D. NY
---------------------------------------------------------------
Stull, Stull & Brody initiated a securities class action in the
United States District Court for the Southern District of New
York, on behalf of all persons who purchased or otherwise
acquired shares or other ownership units of any of the mutual
funds carrying the "Merrill Lynch" brand name (the "MLIM Funds")
through Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S") acting as broker between May 20, 1999 and May 19,
2004 (the "Class Period") and who were damaged thereby, seeking
to pursue remedies under the Securities Exchange Act of 1934.
The MLIM Funds, and the symbols for the respective MLIM Funds
named below, are as follows:
(1) ML Aggregate Bond Index Fund (Sym: MDABX, MAABX)
(2) ML Balanced Capital Fund, Inc. (Sym: MDCPX, MBCPX,
MCCPX)
(3) ML Basic Value Fund, Inc. (Sym: MDBAX, MBBAX, MCBAX)
(4) ML Bond Fund, Inc. -- Core Bond Portfolio (Sym: MDHQX,
MBHQX, MCHQX)
(5) ML Bond Fund, Inc. -- High Income Portfolio (Sym:
MDHIX, BHIX, MCHIX, MAHIX)
(6) ML Bond Fund, Inc. -- Intermediate Term (Sym: MDCTX,
MBCTX, MCCTX, MACTX)
(7) ML California Insured Municipal Bond Fund (Sym: MDCMX,
MBCMX, MCCMX, MACMX)
(8) ML Developing Capital Markets Fund, Inc. (Sym: MDDCX,
MBDCX, MCDCX, MADCX)
(9) ML Disciplined Equity Fund, Inc. (Sym: MDDGX, MBDGX,
MCDGX, MADGX)
(10) ML Dragon Fund, Inc. (Sym: MDDRX, MBDRX, MCDRX, MADRX)
(11) ML Equity Dividend Fund (Sym: MDDVX, MBDVX, MCDVX,
MADVX)
(12) ML EuroFund (Sym: MDEFX, MBEFX, MCEFX, MAEFX)
(13) ML Florida Municipal Bond Fund (Sym: MDFMX, MBFMX,
MAFMX)
(14) ML Focus Twenty Fund, Inc. (Sym: MDFOX, MBFOX, MCFOX,
MAFOX)
(15) ML Focus Value Fund, Inc. (Sym: MDPNX, MBPNX, MCPNX,
MAPNX)
(16) ML Fundamental Growth Fund, Inc. (Sym: MDFGX, MBFGX,
MCFGX, MAFGX)
(17) ML Global Allocation Fund, Inc. (Sym: MDLOX, MBLOX,
MCLOX, MALOX)
(18) ML Global Balanced Fund (Sym: MDGNX, MBGNX, MCGNX,
MAGNX)
(19) ML Global Financial Services Fund, Inc. (Sym: MDFNX,
MBFNX, MCFNX, MAFNX)
(20) ML Global Growth Fund, Inc. (Sym: MDGGX, MBGGX, MCGGX,
MAGGX)
(21) ML Global SmallCap Fund, Inc. (Sym: MDGCX, MBGCX,
MCGCX, MAGCX)
(22) ML Global Technology Fund, Inc. (Sym: MDGTX, MBGTX,
MCGTX, MAGTX)
(23) ML Global Value Fund, Inc. (Sym: MDVLX, MBVLX, MCVLX,
MAVLX)
(24) ML Healthcare Fund, Inc. (Sym: MDHCX, MBHCX, MCHCX,
MAHCX)
(25) ML International Equity Fund (Sym: MDIEX, MBIEX,
MCIEX, MAIEX)
(26) ML International Fund (Sym: MDILX, MBILX, MCILX,
MAILX)
(27) ML International Index Fund (Sym: MAIIX)
(28) ML International Value Fund (Sym: MDIVX, MBIVX, MCIVX,
MAIVX)
(29) ML Internet Strategies Fund (Sym: MANTX, MBNTX, MCNTX,
MDNTX)
(30) ML Large Cap Core Fund (Sym: MDLRX, MBLRX, MCLRX,
MALRX)
(31) ML Large Cap Growth Fund (Sym: MDLHX, MBLHX, MCLHX,
MALHX)
(32) ML Large Cap Value Fund (Sym: MDLVX, MBLVX, MCLVX,
MALVX)
(33) ML Latin America Fund, Inc. (Sym: MDLTX, MBLTX,
MCLTX, MALTX)
(34) ML Low Duration Fund (Sym: MDDUX, MBDUX, MCDUX, MADUX)
(35) ML Mid Cap Value Fund (Sym: MDRFX, MBRFX, MCRFX,
MARFX)
(36) ML Municipal Bond Fund, Inc. -- Insured (Sym: MDMIX,
MBMIX, MCMIX, MAMIX)
(37) ML Municipal Bond Fund, Inc. -- Limited Maturity (Sym:
MDLMX, MBLMX, MCLMX, MALMX)
(38) ML Municipal Bond Fund, Inc. -- National (Sym: MDNLX,
MBNLX, MCNLX, MANLX)
(39) ML Municipal Intermediate Term Fund (Sym: MDMTX,
MBMTX, MCMTX, MAMTX)
(40) ML Resources Trust (Sym: MDGRX, MBGRX, MCGRX, MAGRX)
(41) ML New Jersey Municipal Bond Fund (Sym: MDNJX, MBNJX,
MCNJX, MANJX)
(42) ML New York Municipal Bond Fund (Sym: MDNKX, MBNKX,
MCNKX, MANKX)
(43) ML Pacific Fund, Inc. (Sym: MDPCX, MBPCX, MCPCX,
MAPCX)
(44) ML Pan-European Growth Fund (Sym: MDPEX, MBPEX, MCPEX,
MAPEX)
(45) ML Pennsylvania Municipal Bond Fund (Sym: MDPYX,
MBPYX, MCPYX, MAPYX)
(46) ML S&P 500 Index Fund MDSRX (Sym: MASRX, MDUGX)
(47) ML Short Term U.S. Government Fund, Inc. (Sym: MDAJX,
MBUGX, MBAJX, MCUGX, MCAJX)
(48) ML Small Cap Growth Fund (Sym: MRUSX, MBSWX, MCSWX,
MASWX)
(49) ML Small Cap Index Fund (Sym: MDSKX, MASKX)
(50) ML Small Cap Value Fund, Inc. (Sym: MDSPX, MBSPX,
MCSPX, MASPX)
(51) ML Strategy All-Equity Fund (Sym: MDAEX, MBAEX,
MCAEX, MAAEX)
(52) ML Strategy Growth and Income Fund (Sym: MDTGX, MBTGX,
MCTGX, MATGX)
(53) ML Strategy Long-Term Growth Fund (Sym: MDYLX, MBYLX,
MCYLX, MAYLX)
(54) ML U.S. Government Mortgage Fund (Sym: MDFSX, MBFSX,
MCFSX, MAFSX)
(55) ML U.S. High Yield Fund, Inc. (Sym: MDCHX, MBCHX,
MCCHX, MACHX)
(56) ML Utilities and Telecommunications Fund (Sym: MDGUX,
MBGUX, MCGUX, MAGUX)
(57) ML World Income Fund, Inc. (Sym: MDWIX, MBWIX, MCWIX,
MAWIX)
The Complaint charges defendants Merrill Lynch & Co. ("ML&Co."),
Merrill Lynch Pierce Fenner & Smith Incorporated ("MLPF&S") and
Merrill Lynch Investment Managers L.P. ("MLIM LP") with engaging
in an unlawful and deceitful course of conduct designed to
improperly financially advantage defendants to the detriment of
plaintiffs and other members of the Class. As part and parcel of
defendants' unlawful conduct, defendants, in contravention of
their disclosure obligations, fiduciary responsibilities and
National Association of Securities Dealers ("NASD") Rules,
failed to properly disclose that defendants systematically
applied incentives and demerits to induce and compel MLPF&S's
mid-level managers to maximize sales of mutual funds carrying
the MLIM brand name.
In turn, these mid-level managers - Regional Directors,
Directors and Resident Managers - brought intense pressure to
bear on the Financial Advisors under their supervision to steer
the Financial Advisors' clients away from mutual funds owned and
managed by other entities and into MLIM Funds. By investing in
the MLIM Funds, plaintiffs and other members of the Class
received a return on their investment that was substantially
less than the return on investment that they would have received
had they invested the same dollars in a comparable fund.
MLPF&S's undisclosed plan and scheme has operated as a wrongful
and deceptive exploitation of the misplaced trust of its
clients.
For more details, contact Aaron Brody, Esq. at Stull, Stull &
Brody by Mail: Stull, Stull & Brody, 6 East 45th Street, New
York, NY 10017 by Phone: 1-800-337-4983 Fax: 212/490-2022 by E-
Mail: SSBNY@aol.com or visit their website: www.ssbny.com
MUTUAL BENEFITS: Two Firms Lodge Securities Suit in S.D. FL
-----------------------------------------------------------
Hanzman & Criden, P.A. and Podhurst, Orseck, Josefsberg,
initiated a securities class action in the United States
District Court, Southern District of Florida on behalf of all
persons who purchased Viatical or Life Settlement Contracts or
otherwise invested through Mutual Benefits Corporation ("MBC")
between 1994 and the present ("Class Period"). The class is
defined as "all persons who purchased, between 1994 and the
present, interest in discounted life insurance policies known as
viatical settlements from Mutual Benefits Corporation ("MBC")
and were damaged thereby."
The complaint alleges Mutual Benefits and certain related
parties sold unregistered securities through offering materials
that failed to disclose to the class material facts regarding
their investments, and failed to disclose material facts
necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading. The
Complaint alleges that Mutual Benefits, together with the
assistance of others, then improperly commingled and dissipated
the investors' funds. Named as Defendants in the multi-count
complaint are:
(1) Viatical Benefactors, LLC ("VBLLC")
(2) Viatical Services, Inc. ("VSI")
(3) Kensington Management, Inc. ("Kensington")
(4) Rainy Consulting Corp. ("Rainy")
(5) Twin Groves Investments, Inc. ("Twin Groves")
(6) P.J.L. Consulting, Inc. ("P.J.L.")
(7) SKS Consulting Inc. ("SKS")
(8) Camden Consulting, Inc.("Camden")
(9) Joel Steinger a/k/a Joel Steiner ("J. Steinger")
(10) Leslie Steinger a/ka. Leslie Steiner ("L. Steinger")
(11) Peter Lombardi ("Lombardi")
(12) Clark C. Mitchell ("Mitchell")
(13) Edgar Escobar ("Escobar")
(14) Anthony Lamarca ("Lamarca")
(15) A.M. Livoti, Jr., P.A.; A.M. Livoti, Jr. (collectively
"Livoti")
(16) Citibank, N.A. ("Citibank")
(17) Union Planters, N.A. ("Union Planters")
(18) RBC Centura ("RBC")
(19) First Southern Bank ("First Southern").
Each is alleged to have played a role in the Mutual Benefits
fraud.
For more details, contact Michael Hanzman, Esq. of Hanzman &
Criden, P.A. by Phone: 1-800-579-1896 by E-Mail:
mhanzman@hanzmancriden.com or Victor Diaz, Esq. of Podhurst,
Orseck et. al. by Phone: (305) 358-2800 or by E-Mail:
vdiaz@podhurst.com
NOVASTAR FINANCIAL: Pomerantz Haudek Files Securities Suit in MO
----------------------------------------------------------------
Pomerantz Haudek Block Grossman & Gross LLP initiated a
securities class action filed in the United States District
Court for the Western District of Missouri (Western Division)
against Novastar Financial, Inc. (NYSE:NFI) and three of the
Company's senior officers, on behalf of investors who purchased
the securities of Novastar during the period between October 29,
2003 through April 8, 2004, inclusive.
The lawsuit alleges Novastar issued false and misleading
statements misrepresenting the growth of the Company and its
branch offices. In particular, it is alleged that throughout the
Class Period defendants reported record growth in the Company's
earnings, production, securities portfolio as well as
highlighting the increasing number of Novastar branch offices.
The Company reported that in 2003, it had doubled the number of
branch offices in operation as well as achieved record earnings
growth. However, it is alleged that Novastar failed to maintain
regulatory compliance with its operations. Instead of disclosing
that several Novastar branches were operating illegally,
defendants continued to tout Novastar's accomplishments, thereby
artificially inflating the price of the Company's stock.
Defendant's perpetuated the illusion of impressive growth to
sell $110 million worth of the company's equities to the
investing public.
On April 12, 2004, The Wall Street Journal reported that the
Company grossly overstated the actual number of branch offices
Novastar had in operation, as well as stating that Novastar
operated numerous offices illegally in multiple states.
Following this announcement, the price of Novastar shares fell
almost 31%, from $54.18 to $37.50 per share.
For more details, contact Andrew G. Tolan, Esq. of Pomerantz
Haudek Block Grossman & Gross LLP by Phone: 888-476-6529
((888) 4-POMLAW) or by E-Mail: agtolan@pomlaw.com
SALTON INC.: Schiffrin & Barroway Lodges Securities Suit in IL
--------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a securities
class action in the United States District Court for the
Northern District of Illinois on behalf of all purchasers of the
securities of Salton, Inc. (NYSE: SFP) from November 11, 2002
through May 11, 2004, inclusive.
The complaint charges that Salton, Leonhard Dreimann and David
M. Mulder violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
More specifically, the Complaint alleges the Company failed to
disclose and misrepresented the following material adverse
facts, which were known to defendants or recklessly disregarded
by them:
(1) the Company's core competency, the marketing and
distribution of grills under the Foreman brand name,
was severely undermined by the antitrust lawsuits that
precluded the Company from continuing with its
profitable, but illegal, pricing scheme;
(2) as a result of the foregoing the Company's historically
profitable domestic business continued to erode,
forcing Salton to incur an additional $8 million in
retailer advertising and promotional expenses, which
were required to secure and regain shelf space; and
(3) due to the deterioration of its' business model Salton
violated the Company's debt agreements.
On May 10, 2004, Salton, after the close of trading, announced
that Salton was performing much worse than the Company had led
investors to believe, that the Company was in violation of its
senior secured revolving credit facility for the month ended
March 27, 2004, and that defendants anticipated near-term non-
compliance with certain financial covenants. Shares of Salton
fell $3.34 per share or 49.93 percent on May 10, 2004 to close
at $3.35 per share.
For more details, contact Schiffrin & Barroway, LLP (Marc A.
Topaz, Esq. or Stuart L. Berman, Esq.) by Mail: Three Bala Plaza
East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706
or 1-610-667-7706 or by E-Mail: info@sbclasslaw.com
SALTON INC.: Lasky & Rifkind Lodges Securities Suit in N.D. IL
--------------------------------------------------------------
The law firm of Lasky & Rifkind, Ltd. initiated a securities
class action in the United States District Court for the
Northern District of Illinois, Eastern Division, on behalf of
persons who purchased or otherwise acquired publicly traded
securities of Salton Inc. ("Salton" or the "Company") (NYSE:SFP)
between November 11, 2002 and May 11, 2004, inclusive, (the
"Class Period"). The lawsuit was filed against Salton, Leonhard
Dreimann and David M. Mulder ("Defendants").
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
Salton's statements concerning its financials were materially
false and misleading because they failed to disclose that the
Foreman Grill had reached its market saturation point and that
further meaningful revenue growth would be unattainable, that
without anticompetitive practices to support the price of this
product line, Salton could not maintain its market position, and
that throughout the Class Period, the Company was in violation
of its covenants in its debt agreements.
On May 10, 2004, Salton announced that its operating performance
was much worse than expected, and that it was in violation of
the covenants of its secured revolving credit facility. In
response to this announcement, Salton shares plummeted, falling
50% to $3.35 per share in heavy trading volume.
For more details, contact Lasky & Rifkind, Ltd., by Phone:
(800) 495-1868 by E-Mail: investorrelations@laskyrifkind.com or
visit their Web Site: http://laskyrifkind.com/contact.htm
UICI: Murray Frank Commences Securities Fraud Lawsuit in N.D. TX
----------------------------------------------------------------
Murray, Frank & Sailer LLP initiated a securities class action
in the United States District Court for the Northern District of
Texas, Dallas Division on behalf of purchasers of UICI
(NYSE:UCI) common stock during the period between January 17,
2000 and July 21, 2003. The complaint charges UICI and certain
of its officers and directors with violations of the Securities
Exchange Act of 1934.
The complaint alleges that during the Class Period, the
defendants, who controlled and were senior officers of UICI,
engaged in a scheme to conceal UICI's badly flagging Academic
Management Services Corp. ("AMS") division to prevent a decline
in the UICI's stock price. UICI's actual financial results and
the true status of its operations were concealed by defendants,
which artificially inflated or maintained the market price of
UICI shares during the Class Period. Each of the statements
issued during the Class Period was false and misleading and
misrepresented and/or failed to disclose the following material
adverse information:
(1) that defendants knowingly tolerated UICI's inadequate
internal accounting controls and consequently lacked
any reasonable basis for the financial results reported
by them;
(2) that UICI's reported income was materially overstated
by in excess of $65 million;
(3) that only through UICI's accounting fraud had UICI
achieved the earnings reported by defendants;
(4) that the AMS division was not successful and its
fundamentals and prospects were deteriorating; and
(5) that UICI had failed to account for costs associated
with liabilities resulting from its AMS program and its
reserves were materially understated.
On July 21, 2003, UICI revealed that it would record a charge of
at least $65 million. This revelation caused trading in UICI
stock to be halted on the New York Stock Exchange and ultimately
to plummet to less than $12 per share, a decline of 45% from its
Class Period high of $21.22 per share.
For more details, contact Eric J. Belfi or Aaron D. Patton of
Murray, Frank & Sailer LLP by Phone: (800) 497-8076 or
(212) 682-1818 by Fax: (212) 682-1892 or by E-Mail:
info@murrayfrank.com
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Copyright 2004. All rights reserved. ISSN 1525-2272.
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