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/raid1/www/Hosts/bankrupt/CAR_Public/041108.mbx C L A S S A C T I O N R E P O R T E R Monday, November 8, 2004, Vol. 6, No. 221 Headlines ASSOCIATED ESTATES: Seeks Summary Judgment For OH Consumer Suit AZTAR CORPORATION: Faces Suits Over October 2003 Garage Collapse BELLSOUTH CORPORATION: Racial Discrimination Suit Pending in GA BELLSOUTH CORPORATION: Securities Fraud Lawsuits Pending in GA BELLSOUTH CORPORATION: Faces Consolidated ERISA Suit in N.D. GA BELLSOUTH CORPORATION: NY Antitrust Lawsuit Dismissal Appealed CAESARS ENTERTAINMENT: NV Visitors Sue Over Norovirus Outbreak CLECO CORPORATION: LA Court To Approve Antitrust Suit Dismissal CORDELIA LIGHTING: Recalls 1.4T Light Fixtures Due To Burn Risk DIET SUPPLEMENTS: FDA Issues Warning V. Actra-Rx, Yilishen Drugs DOWNEY SAVINGS: Parties in CA Wage Lawsuit Agree To Mediation FEDERATED INVESTORS: Shareholders Launch Mutual Fund Fraud Suits FINOVA CAPITAL: Shareholders File Suits Over Thaxton Loans in SC FREMONT INVESTMENT: SEC Brings Settled Action V. Firm, Officers GEORGIA: King & Spalding Lodges Federal Suit V. Forced Jail Fees HOUSEHOLD INTERNATIONAL: Settlement Hearing Set November 22,2004 INFORMATION HOLDINGS: Settles DE Thomson Corporation Merger Suit INTERNATIONAL TRADING: Recalls Luncheon Meat For Underprocessing KINDER MORGAN: Seeks Arbitration For NM Oil and Gas Leases Suit KINDER MORGAN: Preliminary Discovery Proceeds in TX Fraud Suit KINDER MORGAN: Faces Gas Pricing Antitrust Lawsuit in AR Court KINDER MORGAN: Working To Resolve City of Fallon Injury Lawsuits KINDER MORGAN: Trial in TX Gas Royalties Suits Set January 2005 LEARN WATERHOUSE: SEC Obtains Injunction in $24.5M Ponzi Scheme MORGAN STANLEY: Agrees To SEC Issuance Of Cease-And-Desist Order NEW YORK: Gas Station Owners File Price-Fixing Suit V. Oil Firms NORTEL NETWORKS: Plaintiffs Lodge Statement Of Claim in NY Court NORVERGENCE INC.: NC A.G. Cooper Lodges Consumer Fraud Lawsuit PEMBRIDGE GROUP: SEC Lodges Fraud Charges V. Firm, Founder in MA PEROT SYSTEMS: Plaintiffs Appeal Energy Antitrust Lawsuit in CA PEROT SYSTEMS: TX Court Dismisses Consolidated Securities Suit PETIT BATEAU: Recalls 2.7T Children's Bathrobe Due To Burn Risk PRESSTEK INC.: Plaintiffs Appeal NH Ruling For Securities Suit SONIC AUTOMOTIVE: Subsidiaries Oppose Certification For TX Suits SPECTRASITE BUILDING: Asks NY Court To Dismiss Winstar Lawsuit ST. PAUL TRAVELERS: Wolf Haldenstein Lodges Suit Over Payments STILLWATER MINING: MT Court Mulls Dismissal of Securities Suit TALX CORPORATION: MO Court Approves Securities Suit Settlement TRIBUNE COMPANY: Circulation Fiasco Triggers IL Shareholder Suit UNITED STATES: ACLU Presents Arguments For Suit V. No-Fly Lists VALVOLINE COMPANY: Recalls 2.8M Brake Cleaners Due To Defects WACHOVIA CORPORATION: Agrees To SEC Injunction, $37Mil Penalty WHOLE FOODS: Recalls Chicken Products For Listeria Contamination W.R. GRACE: Employees Lodge Suit To Recover $40M in Lost Profits New Securities Fraud Cases AUTOBYTEL INC.: Lasky & Rifkind Lodges Securities Suit in CA AUTOBYTEL INC.: Schatz & Nobel Files Securities Fraud Suit in CA AXT INC.: Miller Shea Lodges Securities Fraud Lawsuit in N.D. CA CONVERIUM HOLDING: Zwerling Schachter Lodges NY Securities Suit DOBSON COMMUNICATIONS: Lasky & Rifkind Lodges OK Securities Suit INTELLIGROUP INC.: Goodkind Labaton Lodges Securities Suit in NJ SOURCECORP INC.: Brian M. Felgoise Lodges Securities Suit in TX SOURCECORP INC.: Lasky & Rifkind Lodges Securities Suit in TX ********* ASSOCIATED ESTATES: Seeks Summary Judgment For OH Consumer Suit --------------------------------------------------------------- Associated Estates Realty Corporation asked the Franklin County, Ohio Court of Common Pleas to grant summary judgment in its favor in the class action filed against it, seeking undetermined damages and injunctive relief, relating to the Company's Suredeposit program. This program allows cash short prospective residents to purchase a bond in lieu of paying a security deposit. The bond serves as a fund to pay those resident obligations that would otherwise have been funded by the security deposit. Plaintiffs allege that the non-refundable premium paid for the bond is a disguised form of security deposit, which is otherwise required to be refundable in accordance with Ohio's Landlord- Tenant Act. Plaintiffs further allege that certain nonrefundable pet deposits and other nonrefundable charges required by the Company are similarly security deposits that must be refundable in accordance with Ohio's Landlord-Tenant Act. On January 15, 2004, the Plaintiffs filed a motion for class certification. The Company subsequently filed a motion for summary judgment. Both motions are pending before the Court. AZTAR CORPORATION: Faces Suits Over October 2003 Garage Collapse ---------------------------------------------------------------- Aztar Corporation and its affiliates Adamar of New Jersey, Inc. and the Tropicana Casino and Resort face several lawsuits over the accident that occurred on the site of the construction of the parking-garage component of the expansion of the Atlantic City Tropicana on October 30, 2003. The accident resulted in a loss of life and serious injuries, as well as extensive damage to the facilities under construction. One suit is pending in the Court of Common Pleas in Philadelphia County, Pennsylvania. The Plaintiff, Scannicchio's Restaurant, is located in the vicinity of the garage collapse. The lawsuit purports to be a class action on behalf of Scannicchio's Restaurant and all neighboring businesses for damages to buildings and loss of business. The action seeks compensatory and punitive damages in unspecified amounts for negligence and for private and public nuisance. This action was dismissed without prejudice to the Plaintiff filing in New Jersey. The Company and the Tropicana Casino and Resort in Atlantic City were named as Defendants to an action brought by Govathlay Givens in the Superior Court of New Jersey in Atlantic County. The action also arises out of the garage collapse. Between June 15, 2004 and October 11, 2004, thirty-six additional complaints were filed by other Plaintiffs for wrongful death for individuals who were killed in the collapse and for compensatory and punitive damages of unspecified amounts in connection with personal injuries suffered in the collapse. Also named as Defendants in one or more of these complaints are various companies involved with the project, including: (1) the Company's affiliate Adamar of New Jersey, Inc.; (2) Keating Building Corporation; (3) Wimberly, Allison, Tong & Goo; (4) SOSH Architects; (5) DeSimone Consulting Engineers; (6) Mid-State Filigree Systems; (7) Site-Blauvelt Engineers; (8) Fabi Construction, Inc.; (9) Pro Management Group, Inc.; (10) Liberty Mutual Insurance Co.; and (11) Mitchell Bar Placement, Inc. The Court is handling these cases in a coordinated fashion as the Tropicana Parking Garage Collapse Litigation and has issued a Case Management Order governing various matters concerning complaints, answers and cross-claims, as well as discovery and mediation. Mediation is anticipated to begin in early 2005. BELLSOUTH CORPORATION: Racial Discrimination Suit Pending in GA --------------------------------------------------------------- BellSouth Corporation continues to face a racial discrimination class action filed in the United States District Court for the Northern District of Alabama, styled "Gladys Jenkins et al. v. BellSouth Corporation." Five of the Company's African-American employees filed the suit, alleging that the Company discriminated against current and former African-American employees with respect to compensation and promotions in violation of Title VII of the Civil Rights Act of 1964 and 42 USC Section 1981. Plaintiffs purport to bring the claims on behalf of two classes: a class of all African-American hourly workers employed by BellSouth at any time since April 29, 1998, and a class of all African-American salaried workers employed by BellSouth at any time since April 29, 1998 in management positions at or below Job Grade 59/Level C. The Plaintiffs are seeking unspecified amounts of back pay, benefits, punitive damages and attorneys' fees and costs, as well as injunctive relief. BELLSOUTH CORPORATION: Securities Fraud Lawsuits Pending in GA -------------------------------------------------------------- BellSouth Corporation continues to face the consolidated securities class action filed in the United States District Court for the Northern District of Georgia, captioned "In re BellSouth Securities Litigation." Pursuant to the provisions of the Private Securities Litigation Reform Act of 1995, the Court has appointed a Lead Plaintiff. The consolidated suit also names three of the Company's officers and four outside directors as additional Defendants. The complaint alleges that during the period November 7, 2000 through February 19, 2003, the Company: (1) overstated the unbilled receivables balance of its advertising and publishing subsidiary; (2) failed to properly implement SAB 101 with regard to its recognition of advertising and publishing revenues; (3) improperly billed CLECs to inflate revenues, (4) failed to take a reserve for refunds that ultimately came due following litigation over late payment charges and (5) failed to properly write down goodwill of its Latin American operations. The Plaintiffs are seeking an unspecified amount of damages, as well as attorneys' fees and costs. At this time, the likely outcome of the case cannot be predicted, nor can a reasonable estimate of loss, if any, be made. In February 2003, a similar complaint was filed in the Superior Court of Fulton County, Georgia on behalf of participants in BellSouth's Direct Investment Plan alleging violations of Section 11 of the Securities Act. Defendants removed this action to Federal Court pursuant to the provisions of the Securities Litigation Uniform Standards Act of 1998. On July 3, 2003, the Federal Court issued a ruling that the case should be remanded to Fulton County Superior Court. The Plaintiffs are seeking an unspecified amount of damages, as well as attorneys' fees and costs. BELLSOUTH CORPORATION: Faces Consolidated ERISA Suit in N.D. GA --------------------------------------------------------------- Plaintiffs filed a consolidated class action against BellSouth Corporation, its directors, three of its senior officers and other individuals in the United States District Court for the Northern District of Georgia, alleging violations of the Employee Retirement Income Security Act (ERISA). The Plaintiffs, who seek to represent a putative class of participants and beneficiaries of BellSouth's 401(k) plans (the "Plans"), allege in the Consolidated Complaint that the Company and the individual Defendants breached their fiduciary duties in violation of ERISA, by among other things: (1) failing to provide accurate information to the Plans' participants and beneficiaries; (2) failing to ensure that the Plans' assets were invested properly; (3) failing to monitor the Plans' fiduciaries; (4) failing to disregard Plan directives that the Defendants knew or should have known were imprudent and (5) failing to avoid conflicts of interest by hiring independent fiduciaries to make investment decisions. The Plaintiffs are seeking an unspecified amount of damages, injunctive relief, attorneys' fees and costs. Certain underlying factual allegations regarding BellSouth's advertising and publishing subsidiary and its Latin American operation are substantially similar to the allegations in the putative securities class action captioned In re BellSouth Securities Litigation described above. BELLSOUTH CORPORATION: NY Antitrust Lawsuit Dismissal Appealed -------------------------------------------------------------- Plaintiffs appealed the dismissal of a consumer class action filed against BellSouth Corporation and other telecommunications firms, alleging antitrust violations of Section 1 of the Sherman Antitrust Act. The suit, captioned "William Twombley, et al v. Bell Atlantic Corp., et al," is pending in the United States District Court for the Southern District of New York. The suit also names as Defendants Verizon, SBC and Qwest. The complaint alleged that Defendants conspired to restrain competition by "agreeing not to compete with one another and otherwise allocating customers and markets to one another." The Plaintiffs are seeking an unspecified amount of treble damages and injunctive relief, as well as attorneys' fees and expenses. In October 2003, the District Court dismissed the complaint for failure to state a claim and the case is now on appeal. CAESARS ENTERTAINMENT: NV Visitors Sue Over Norovirus Outbreak -------------------------------------------------------------- More than two-dozen Las Vegas visitors are suing Caesars Entertainment because they claim that no one warned them in October about the hotel's norovirus outbreak, the KVBC, NV reports. Norovirus causes gastroenteritis and other flu-like symptoms and usually lasts about 36 hours. Hotel officials say there's more than two dozen signs hanging up to warn guests about the outbreak, but one man who checked into the Flamingo just recently claims that in a big, busy casino, the signs are easy to miss. Officials further point out that in addition to the signs informing guests about the norovirus, there are notes in each of the 3500 rooms. A Seattle-based law firm is now representing Martin McCurdy and two dozen others in a class action lawsuit against Caesers Entertainment. "We had no idea. There was nothing posted in the lobby that we could see. The hotel really needs to inform their guests so the guests have an opportunity to leave the hotel," according to the Plaintiffs. Hotel officials responded to these comments by saying that they did inform them and that they continue to do so. Those suing say they wanted a verbal warning. If they were told when they first walked in, they would have immediately walked out. "It was pretty awful. It was pretty much two to two and a half days of being really sick," added Mr. McCurdey. To date, 1,252 employees and guests of the Flamingo reported having norovirus symptoms, the majority of them sick during the third week of October. CLECO CORPORATION: LA Court To Approve Antitrust Suit Dismissal --------------------------------------------------------------- The 27th Judicial District Court, Parish of St. Landry, State of Louisiana will hear the motion to approve the dismissal of a petition filed by several Cleco Power customers against Cleco Corporation and: (1) Cleco Power, (2) Midstream, (3) Marketing & Trading, (4) Evangeline, (5) Acadia, and (6) Westar The Plaintiffs seek class action status on behalf of all Cleco Power's retail customers, and their petition centers around Cleco's trading activities first disclosed by Cleco in November 2002. The Plaintiffs allege, among other things, that the Defendants' conduct was in violation of Louisiana antitrust law. On July 6, 2004, Cleco Corporation announced that it had reached a preliminary settlement regarding these issues, as well as the issues raised in the pending fuel audit by the Louisiana Public Service Commission (LPSC). On July 14, 2004, Cleco, the LPSC Staff and these Plaintiffs entered into a settlement in connection with the LPSC settlement of the fuel audit and related trading issues. On July 21, 2004, the LPSC issued an order approving the settlement. To become effective, the settlement and dismissal still need approval by the Court. A hearing to have the Court approve the dismissal has been set for November 15, 2004. CORDELIA LIGHTING: Recalls 1.4T Light Fixtures Due To Burn Risk --------------------------------------------------------------- Cordelia Lighting, of Rancho Dominguez, California and the Expo Design Center, a division of The Home Depot, of Atlanta, Georgia is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling about 1,400 Hampton Bayr halogen light fixtures. The decorative metal rings on the ends of the lamp fixtures can detach. Consumers could suffer minor burns if they touch the hot rings. Five reports of incidents involving in-store displays have been reported by store associates. No injuries have been reported. The recall involves the Hampton Bayr three-head, flush-mount, halogen light fixture with silver metal rings on the lamp fixtures. It is 15.75-inches wide by 6 inches high. The lights have frosted glass shades. The position of the three lamps on the fixture can be adjusted by turning and bending the lamp heads. A clear label on the fixture reads "MADE IN CHINA," and "E91785." Manufactured in China, the light fixtures were sold at all Expo Design Center stores from February 2004 to August 2004 for about $40. Customers should stop using the light fixtures and return them to the nearest Expo Design Center store for a refund. For more details, contact Home Depot toll-free at (800) 553-3199 between 9 a.m. and 5 p.m. ET Monday through Friday or contact: Jean Osta, Public Relations, The Home Depot, at (770) 384-3407. DIET SUPPLEMENTS: FDA Issues Warning V. Actra-Rx, Yilishen Drugs ---------------------------------------------------------------- The Food and Drug Administration warns consumers not to purchase or to consume Actra-Rx or Yilishen, two products promoted and offered for sale on Web sites as "dietary supplements" for treating erectile dysfunction and enhancing sexual performance for men. These products in fact contain an active prescription drug ingredient. FDA has also issued an Import Alert instructing FDA field personnel to stop the importation of "Actra-Rx" and "Yilishen." A research letter published in the Journal of the American Medical Association described the results of a chemical analysis of Actra-Rx, finding that each capsule analyzed contained prescription-strength quantities of sildenafil. Sildenafil is the active drug ingredient in Viagra, a Pfizer prescription drug product approved in the United States for the treatment of erectile dysfunction. FDA conducted its own tests of Actra-Rx and found that the product contained prescription-strength sildenafil. An interaction between sildenafil and certain prescription drugs containing nitrates (such as nitroglycerin) or nitrates found in illicit substances (such as amyl nitrate) may cause a significant lowering of blood pressure to an unsafe level. Consumers with diabetes, high blood pressure, high cholesterol, or heart disease often take nitrates. Because erectile dysfunction can be a common problem in individuals with these conditions, these consumers may take Actra-Rx or Yilishen and risk experiencing serious adverse effects. Anyone experiencing erectile dysfunction should seek guidance from their health care provider before purchasing a product to treat that condition. Consumers who have taken Actra-Rx or Yilishen should stop taking it and consult with their health care providers regarding erectile dysfunction treatment. Consumers who are seeking treatment for erectile dysfunction should not take Actra-Rx or Yilishen as either can be dangerous to their health and even life-threatening. For more details contact the Food and Drug Administration - Media Inquiries: 301-827-6242 or Consumer Inquiries: 888-INFO-FDA DOWNEY SAVINGS: Parties in CA Wage Lawsuit Agree To Mediation ------------------------------------------------------------- Parties in the class action filed against Downey Savings and Loan Association in the Los Angeles Superior Court in California agreed to participate in mediation in early 2005. On July 23, 2004, two former in-store banking employees brought an action against the Bank, styled "Michelle Cox and Mary Ann Tierra et al. v. Downey Savings and Loan Association, Case No. BC318964." The complaint seeks unspecified damages for alleged unpaid overtime wages, inadequate meal and rest breaks, and other unlawful business practices and related claims. The Plaintiffs also seek class action status to represent all other current and former California employees who held the position of branch manager or assistant manager at the in-store branches who were treated as exempt and not paid overtime between July 23, 2000 and November 2002 and allegedly received inadequate meal/rest periods since October 1, 2000. With the Court's approval, the parties have reached an informal agreement to participate in mediation in early 2005 and to stay the lawsuit, including discovery, until the completion of the mediation. FEDERATED INVESTORS: Shareholders Launch Mutual Fund Fraud Suits ---------------------------------------------------------------- Federated Investors, Inc. faces several class action and shareholder derivative lawsuits filed on behalf of certain alleged shareholders in various Federated-sponsored mutual funds. During the period October 2003 through September 2004, the Company was named as a Defendant in 21 class action or derivative lawsuits. Fourteen of these actions have been transferred to a multi-district litigation (MDL) panel of judges sitting in the U.S. District Court for the District of Maryland for consolidated pre-trial proceedings. On September 29, 2004, two amended consolidated complaints were filed in these proceedings. The first asserts claims on behalf of the shareholders of certain Federated mutual funds; the second asserts derivative claims on behalf of the Federated mutual funds. Both complaints premise their claims primarily on allegations that Federated permitted improper trading practices, including market timing and late trading in concert with certain institutional traders. Four additional cases, alleging excessive advisory, Rule 12b-1 and other fees on behalf of certain Federated mutual funds, have been filed in or transferred to the U.S. District Court for the District of Western Pennsylvania. One additional case alleging improper and excessive fees has been filed in the Western District of Tennessee. Two cases have been dismissed voluntarily. All of these lawsuits seek unquantified damages, attorneys’ fees and expenses. Federated intends to defend this litigation. The potential impact of these recent lawsuits and future potential similar suits is uncertain. It is possible that an unfavorable determination will cause a material adverse impact on Federated’s financial position, results of operations or liquidity in the period in which the effect becomes reasonably estimable. FINOVA CAPITAL: Shareholders File Suits Over Thaxton Loans in SC ---------------------------------------------------------------- FINOVA Capital Corporation faces five lawsuits that relate to its loan to The Thaxton Group Inc. and several related entities (collectively the "Thaxton Entities"). Under its loan agreement, FINOVA has a senior secured loan to the Thaxton Entities of approximately $108 million at December 31, 2003. The Thaxton Entities were declared in default under their loan agreement with FINOVA after they advised FINOVA that they would have to restate earnings for the first two fiscal quarters of 2003, and had suspended payments on their subordinated notes. As a result of the default, FINOVA exercised its rights under the loan agreement, and accelerated the indebtedness. The Thaxton Entities then filed a petition for bankruptcy protection under chapter 11 of the federal bankruptcy code in the United States Bankruptcy Court for the District of Delaware on October 17, 2003, listing assets of approximately $206 million and debts of $242 million. The first lawsuit, a complaint captioned "Earle B. Gregory, et al, v. FINOVA Capital Corporation, James T. Garrett, et al.," was filed in the Court of Common Pleas of Lancaster County, South Carolina, case no. 2003-CP-29-967, and was served on FINOVA on October 17, 2003. An amended complaint was served on November 5, 2003, prior to the deadline for FINOVA to answer, plead, or otherwise respond to the original complaint. The Gregory action was properly removed to the United States District Court for the District of South Carolina on November 17, 2003, pursuant to 28 U.S.C. 1334 and 1452. The Plaintiffs filed a motion to remand the case to state Court, but the U.S. District Court denied this motion in an order dated December 18, 2003. The second Thaxton-related complaint, captioned "Tom Moore, Anna Nunnery, et al., v. FINOVA Capital Corporation, Moore & Van Allen PLLC, and Cherry, Bekaert & Holland LLP, case No. 8:03- 372413," was filed in the United States District Court for the District of South Carolina on November 25, and was served on FINOVA on December 2, 2003. The third complaint, captioned "Sam Jones Wood and Kathy Annette Wood, et al., v. FINOVA Capital Corporation, Moore & Van Allen PLLC, and Cherry, Bekaert & Holland LLP," was filed in the Superior Court for Gwinnett County, Georgia, case no. 03-A13343- B, and was served on FINOVA on December 9, 2003. The fourth complaint, captioned "Grant Hall and Ruth Ann Hall, et al., v. FINOVA Capital Corporation, Moore & Van Allen PLLC, and Cherry, Bekaert & Holland LLP, case no. 03CVS20572," was filed in the Mecklenberg County, North Carolina, Superior Court, and was also served on FINOVA on December 9, 2003. The fifth complaint, captioned "Charles Shope, et al., v. FINOVA Capital Corporation, Moore & Van Allen PLLC, and Cherry, Bekaert & Holland LLP, case No. C 204022," was filed in the United States District Court for the Southern District of Ohio, Eastern Division, and was served on FINOVA on January 13, 2004. Each of the five Thaxton-related lawsuits are styled as class actions, purportedly brought on behalf of certain defined classes of people who had purchased subordinated notes from the Thaxton Entities. The complaints by the subordinated noteholders allege claims of fraud, securities fraud, and various other civil conspiracy and business torts in the sale of the subordinated notes. Each of the complaints seeks an unspecified amount of damages, among other remedies. In addition to FINOVA, the complaints each name as co-Defendants Thaxton's accountants and attorneys, and in the Gregory case, several officers of the Thaxton Entities. FREMONT INVESTMENT: SEC Brings Settled Action V. Firm, Officers --------------------------------------------------------------- The Securities and Exchange Commission filed settled administrative proceedings against San Francisco-based mutual fund adviser Fremont Investment Advisors, Inc. (Fremont) and former President and CEO Nancy Tengler. The Commission also brought litigated administrative and cease-and-desist proceedings against former Vice President of Institutional Sales Larry Adams. The Commission found Fremont entered into improper and undisclosed agreements allowing favored large investors to engage in rapid in-and-out securities trading known as market timing and charged Tengler and Adams for their role in Fremont's misconduct. In addition to the market timing charges, the Commission charged Fremont for allowing mutual fund trades to be placed after the 4:00 p.m. market close. Without admitting or denying the Commission's findings, Fremont has agreed to pay $4.146 million, including disgorgement of $2.146 million and a civil penalty of $2 million, to settle the Commission's charges. The Commission anticipates distributing the recovered money to investors of the mutual funds affected by the market timing. According to the Commission's order, Fremont's mutual fund prospectus prohibited market timing, and the firm enforced this policy by employing a "timing cop" to monitor and block excessive trading. Notwithstanding this policy, Fremont entered into undisclosed agreements in 2001 and 2002 allowing certain large investors to engage in market timing in Fremont's Global and U.S. Micro-Cap Funds. The Commission's order found that one of these agreements included a requirement that the investor place a multimillion-dollar long-term investment (or "sticky asset") in another Fremont fund, one recently established and co-managed by then-CEO Nancy Tengler. The Commission alleges that Sales VP Adams crafted the agreement, and finds that Tengler allowed the arrangement to go forward. The improper market timing arrangements generated additional fees of at least $170,000 for Fremont between 2001 and 2002, while allowing significant growth in the size of the fund founded by Tengler. The Commission also found that a Fremont employee improperly authorized a brokerage firm to place mutual fund orders after the 4:00 p.m. Eastern Time market close, while still receiving the current day's price. This arrangement conferred an unfair advantage upon the broker's customers, allowing them the opportunity to profit from post-market close information and stale prices at the expense of other Fremont shareholders. The Order against Fremont finds that Fremont willfully violated Sections 206(1) and 206(2) of the Investment Advisers Act and Sections 17(d) and 34(b) of the Investment Company Act and Rules 17d-1 and 22c-1 thereunder. Fremont has agreed to undertake certain remedial actions and to cease and desist from similar violations in the future. The Order against Tengler finds that Tengler willfully violated Section 206(2) of the Investment Advisers Act and Section 34(b) of the Investment Company Act and caused Fremont's violation of Section 17(d) of the Investment Company Act and Rule 17d-1 thereunder. Nancy Tengler has agreed, without admitting or denying the Commission's findings, to cease and desist from committing or causing violations of those provisions in the future. Tengler also has agreed to pay disgorgement of $27,000 and a civil penalty of $100,000, and has consented to an order suspending her from associating with an investment adviser or investment Company for 6 months. Finally, the Commission instituted litigated administrative and cease-and-desist proceedings against former Vice President of Institutional Sales Larry Adams, alleging that he negotiated an improper market timing agreement on behalf of Fremont and charging him with willfully aiding and abetting and causing Fremont's violations of the Investment Advisers Act. GEORGIA: King & Spalding Lodges Federal Suit V. Forced Jail Fees ---------------------------------------------------------------- Attorneys from King & Spalding LLP, a leading international law firm, and the Southern Center for Human Rights filed a federal class action lawsuit on behalf of individuals who are being forced to pay for their "room and board" at the Clinch County Jail in Homerville, Georgia. King & Spalding is representing the Plaintiffs pro bono. The action was filed on November 2, 2004, and the federal Judge hearing the case has scheduled a preliminary injunction hearing on last Friday, November 5 at 9:30am. The Defendants named in the suit are Clinch County, Georgia; Winston Peterson, Sheriff of Clinch County; and Sissy Suggs, Deputy Sheriff of Clinch County. Without any legal authority, Defendants force inmates at the Clinch County Jail to pay $18 per day, resulting in fees of more than $4,000 in some cases. Prior to being released, inmates are required to sign a contract agreeing to pay this fee regardless of whether they have been convicted of a crime or whether they have the ability to pay. If they do not pay, they may be picked up and incarcerated again. "It's like a debtors prison. They charge people who have not been convicted of any crime and are presumed innocent -- and throw them back in jail if they don't pay. This is simply an abuse of authority and something that needs to be stopped," said Courtland Reichman, the King & Spalding partner leading the firm's representation of the Plaintiffs. "By bringing this lawsuit, we hope to help the victims of this unlawful practice - - many of whom cannot afford the fees -- recoup the money they were wrongly forced to pay." One of the Plaintiffs, Willie Williams, was in the Clinch County Jail for nine months. Despite having posted bond and being free to leave under the law, Mr. Williams was not allowed to leave until he signed a promissory note agreeing to pay the jail $4,608 and had his mother show up with an initial payment of $100 in cash. Mr. Williams, who has held a job as a forklift operator for the past 10 years, currently brings home $75 per week after paying his child support obligations. Yet he is expected to pay $20 per week towards his jail bill. To date, Mr. Williams has not been convicted of any crime. The other Plaintiff, Mickle Jackson, spent three months in the jail. He was charged $1,415 for his stay there. Mr. Jackson lives on a fixed income of $562 per month in Supplemental Security Income. His mother, also on SSI, has paid hundreds of dollars towards her son's jail bill. Mr. Jackson, like Mr. Williams, has not been convicted of any crime. The experiences of Mr. Williams and Mr. Jackson are not isolated instances. It is the jail's policy and practice to charge inmates -- including pre-trial detainees -- for the cost of room and board. "Many of the people affected by this practice have not been convicted of any crime; most are living well below the poverty level," states Sarah Geraghty, attorney at the Southern Center for Human Rights who is representing the Plaintiffs. "What the Sheriff is doing is illegal. He has no authority to charge this fee, and he certainly cannot throw people in jail for failing to pay it." For more details, contact the Southern Center for Human Rights by Phone: 404/688-1202 or visit their Web site: http://www.schr.org HOUSEHOLD INTERNATIONAL: Settlement Hearing Set November 22,2004 ---------------------------------------------------------------- The United States District Court for the Northern District of Illinois - Eastern Division will hold a fairness hearing for the proposed $46.5 million settlement of the class action, In re: Household International ERISA Litigation (No. 02C7921, U.S. District Court, N.D. Illinois). The suit was originally filed on behalf of participants in the Company's Tax Reduction Investment Plan and whose individual accounts the Plan purchased and/or held interests in the Company's Common Stock Fund at any time during the period July 23, 2001 through and including March 28, 2003, or the beneficiary of such a participant or former participant. The Court will hold a fairness hearing on November 22, 2004 in the United States District Court for the Northern District of Illinois - Eastern Division Courthouse. For more details, visit http://www.kellersettlements.comor http://www.ssbny.com INFORMATION HOLDINGS: Settles DE Thomson Corporation Merger Suit ---------------------------------------------------------------- Information Holdings, Inc. reached a settlement for the purported class action filed against it, its directors and The Thomson Corporation in the Court of Chancery of the State of Delaware in and for New Castle County, styled "Myszkowski v. Information Holdings Inc. et al., C.A. No. 537-N." The complaint alleges, among other things, that: (1) approval of the merger with Thomson by the Company's directors amounted to a breach of fiduciary duty, (2) the $28.00 cash consideration per share to be received by the Company's stockholders in the merger does not represent the true value of IHI and (3) there were relationships among Thomson, Warburg Pincus LLC, a New York limited liability Company that manages Warburg, Pincus Ventures L.P., and some of the Company's directors that created conflicts of interest preventing these directors from acting in the best interest of the Company's stockholders. The complaint asks for an injunction against the merger and damages as well as awarding the Plaintiffs the costs and disbursements of this Class Action, including attorneys' and Experts' fees. The Plaintiff and the Defendants have negotiated a settlement to dismiss the action with prejudice, subject to: (i) the drafting and execution of the settlement documents and the other agreements necessary to effectuate the terms of the proposed settlement; (ii) the completion by the Plaintiff and his counsel of appropriate confirmatory discovery in the action sufficient to satisfy the Plaintiff's counsel that the proposed settlement is fair and reasonable; (iii) final Court approval of the settlement and dismissal of the action with prejudice and without awarding costs to any party, except as agreed by the parties; and (iv) consummation of the merger, provided, that this condition shall be deemed to have been satisfied if the merger is not consummated due to the merger not receiving the requisite vote of holders of outstanding shares of IHI common stock or circumstances that give rise to the right of Thomson to receive from IHI a termination fee pursuant to the terms of the Merger Agreement. As part of the memorandum of understanding, which is subject to certain conditions, setting forth the terms of a negotiated settlement, the Company agreed to provide the additional disclosure set forth in the proxy statement supplement filed with the SEC on August 6, 2004, and to pay fees and expenses of the Plaintiff's counsel in the amount of $280,000. Additionally, Thomson agreed to reduce from $20 million to $18.5 million the termination fee to which it is entitled if the Merger Agreement is terminated under certain circumstances as described in the Merger Agreement and the Proxy Statement. INTERNATIONAL TRADING: Recalls Luncheon Meat For Underprocessing ---------------------------------------------------------------- International Trading Co., a Houston, Texas, firm, is voluntarily recalling approximately 10,910 pounds of turkey luncheon meat due to possible underprocessing, the U.S. Department of Agriculture's Food Safety and Inspection Service (FSIS) announced. The product being recalled is 12 oz. cans of "PICNIC Turkey Luncheon Meat." Each can bears the message "Best if Used by Date 062407" on the top, and the codes "40434 03 EST P7220A" and "1764 PTW" on the bottom. The meat was produced on June 24, 2004, and distributed to wholesale and retail establishments in Puerto Rico. The problem was discovered by a wholesale customer who notified the Company. FSIS has received no reports of illnesses from consumption of the product. Media with questions about the recall may contact Director of Media Relations Gary Mickelson at 479-290-6111. Consumers with questions can call Consumer Representative Maricela De La Torre at 1-866-658-0019. Consumers with food safety questions can phone the toll-free USDA Meat and Poultry Hotline at 1-800-535-4555. The hotline is available in English and Spanish and can be reached from l0 a.m. to 4 p.m. (Eastern Time) Monday through Friday. Recorded food safety messages are available 24 hours a day. KINDER MORGAN: Seeks Arbitration For NM Oil and Gas Leases Suit --------------------------------------------------------------- Kinder Morgan CO2 Company, L.P. moved to compel arbitration in the class action filed against it in the 8th Judicial District Court, Union County, New Mexico, styled "J. Casper Heimann, Pecos Slope Royalty Trust and Rio Petro LTD, individually and on behalf of all other private royalty and overriding royalty owners in the Bravo Dome Carbon Dioxide Unit, New Mexico similarly situated v. Kinder Morgan CO2 Company, L.P., No. 04- 26-CL." The suit alleges the Company has failed to pay the full royalty and overriding royalty on the true and proper settlement value of compressed carbon dioxide produced from the Bravo Dome Unit. The complaint purports to assert claims for violation of the Unfair Practices Act, Constructive Fraud, Breach of Contract and of the Covenant of Good Faith and Fair Dealing, Breach of the Implied Covenant to Market, and claims for an Accounting, Unjust Enrichment and Injunctive Relief. The purported class is alleged to be comprised of current and former owners, during the period January 2000 to the present, who have private property Royalty Interests burdening the oil and gas leases held by the Defendant, excluding the Commissioner of Public Lands, the United States of America, and those private Royalty Interests that are not unitized as part of the Bravo Dome Unit. The Plaintiffs allege that they were members of a class previously certified as a class action by the United States District Court for the District of New Mexico in the matter Doris Feerer, et al. v. Amoco Production Company, et al., USDC N.M. Civ. No. 95-0012 (the "Feerer Class Action"). Plaintiffs allege that Defendant's method of paying Royalty Interests is contrary to the methodology established in the previous settlement of the Feerer Class Action. The Company moved to compe arbitration of this matter pursuant to the arbitration provisions contained in the Feerer Class Action Settlement Agreement, which motion is currently pending. KINDER MORGAN: Preliminary Discovery Proceeds in TX Fraud Suit -------------------------------------------------------------- Preliminary discovery is proceeding in the class action filed against Kinder Morgan Texas Pipeline, L.P. and Kinder Morgan Energy Partners, L.P. in the District Court for Wharton County, Texas, styled "Maher et ux. v. Centerpoint Energy, Inc. d/b/a Reliant Energy, Incorporated, Reliant Energy Resources Corp., Entex Gas Marketing Company, Kinder Morgan Texas Pipeline, L.P., Kinder Morgan Energy Partners, L.P., Houston Pipeline Company, L.P. and AEP Gas Marketing, L.L.C., No. 30875." The suit was later amended to add as Defendants Kinder Morgan G.P., Inc., Kinder Morgan Tejas Pipeline GP, Inc., Kinder Morgan Texas Pipeline GP, Inc., Tejas Gas, LLC and HPL GP, LLC. The amended complaint purports to bring a class action on behalf of those Texas residents who purchased natural gas for residential purposes from the so-called "Reliant Defendants" in Texas at any time during the period encompassing "at least the last ten years." The Complaint alleges that Reliant Energy Resources Corporation, by and through its affiliates, has artificially inflated the price charged to residential consumers for natural gas that it allegedly purchased from the non-Reliant Defendants, including the above-listed Kinder Morgan entities. The complaint further alleges that in exchange for Reliant Energy Resources Corp.'s purchase of natural gas at above market prices, the non-Reliant Defendants, including the above-listed Kinder Morgan entities, sell natural gas to Entex Gas Marketing Company at prices substantially below market, which in turn sells such natural gas to commercial and industrial consumers and gas marketers at market price. The Complaint purports to assert claims for fraud, violations of the Texas Deceptive Trade Practices Act, and violations of the Texas Utility Code against some or all of the Defendants, and civil conspiracy against all of the Defendants, and seeks relief in the form of, among other things, actual, exemplary and statutory damages, civil penalties, interest, attorneys' fees and a constructive trust ab initio on any and all sums which allegedly represent overcharges by Reliant and Reliant Energy Resources Corp. On November 18, 2002, the Kinder Morgan Defendants filed a Motion to Transfer Venue and, Subject Thereto, Original Answer to the First Amended Complaint. KINDER MORGAN: Faces Gas Pricing Antitrust Lawsuit in AR Court -------------------------------------------------------------- Several Kinder Morgan entities were named as Defendants in a class action filed in the Circuit Court of Miller County, Arkansas, styled "Weldon Johnson and Guy Sparks, individually and as Representative of Others Similarly Situated v. Centerpoint Energy, Inc. et. al., No. 04-327-2." The suit includes as Defendants: (1) Kinder Morgan Texas Pipeline L.P.; (2) Kinder Morgan Energy Partners, L.P.; (3) Kinder Morgan G.P., Inc.; (4) KM Texas Pipeline, L.P.; (5) Kinder Morgan Texas Pipeline G.P., Inc.; (6) Kinder Morgan Tejas Pipeline G.P., Inc.; (7) Kinder Morgan Tejas Pipeline, L.P.; (8) Gulf Energy Marketing, LLC; (9) Tejas Gas, LLC; and (10) Midcon Corporation The Complaint was filed on behalf of those who purchased natural gas from the Centerpoint Defendants from October 1, 1994 to the date of class certification. The Complaint alleges that the Centerpoint Energy, Inc., by and through its affiliates, has artificially inflated the price charged to residential consumers for natural gas that it allegedly purchased from the non- Centerpoint Defendants, including the above-listed Kinder Morgan entities. The Complaint further alleges that in exchange for Centerpoint's purchase of such natural gas at above market prices, the non- Centerpoint Defendants, including the above-listed Kinder Morgan entities, sell natural gas to Centerpoint's non-regulated affiliates at prices substantially below market, which in turn sells such natural gas to commercial and industrial consumers and gas marketers at market price. The Complaint purports to assert claims for fraud, unlawful enrichment and civil conspiracy against all of the Defendants, and seeks relief in the form of actual, exemplary and punitive damages, interest, and attorneys' fees. KINDER MORGAN: Working To Resolve City of Fallon Injury Lawsuits ---------------------------------------------------------------- Kinder Morgan Energy Partners L.P. is working for the resolution or dismissal of several class actions filed against it, over an alleged leukemia cluster that developed in the City of Fallon, Nevada. The suits are: (1) Marie Snyder, et al v. City of Fallon, United States Department of the Navy, Exxon Mobil Corporation, Kinder Morgan Energy Partners, L.P., Speedway Gas Station and John Does I-X, No. cv-N-02-0251-ECR-RAM, filed in the United States District Court, District of Nevada ("Snyder"); (2) Frankie Sue Galaz, et al v. United States of America, City of Fallon, Exxon Mobil Corporation, Kinder Morgan Energy Partners, L.P., Berry Hinckley, Inc., and John Does I-X, No. cv-N-02-0630-DWH-RAM, filed in the United States District Court, District of Nevada ("Galaz I"); (3) Frankie Sue Galaz, et al v. City of Fallon, Exxon Mobil Corporation, Kinder Morgan Energy Partners, L.P., Kinder Morgan G.P., Inc., Kinder Morgan Las Vegas, LLC, Kinder Morgan Operating Limited Partnership "D", Kinder Morgan Services LLC, Berry Hinkley and Does I-X, No. CV03-03613, filed in the Second Judicial District Court, State of Nevada, County of Washoe ("Galaz II); (4) Frankie Sue Galaz, et al v. The United States of America, the City of Fallon, Exxon Mobil Corporation, Kinder Morgan Energy Partners, L.P., Kinder Morgan G.P., Inc., Kinder Morgan Las Vegas, LLC, Kinder Morgan Operating Limited Partnership "D", Kinder Morgan Services LLC, Berry Hinkley and Does I-X, No.CVN03- 0298-DWH-VPC, filed in the United States District Court, District of Nevada ("Galaz III) On July 9, 2002, the Company was served with a purported Complaint for Class Action in the Snyder case, in which the Plaintiffs, on behalf of themselves and others similarly situated, assert that a leukemia cluster has developed in the City of Fallon, Nevada. The Complaint alleges that the Plaintiffs have been exposed to unspecified "environmental carcinogens" at unspecified times in an unspecified manner and are therefore "suffering a significantly increased fear of serious disease." The Plaintiffs seek a certification of a class of all persons in Nevada who have lived for at least three months of their first ten years of life in the City of Fallon between the years 1992 and the present who have not been diagnosed with leukemia. The Complaint asserts causes of action for nuisance and "knowing concealment, suppression, or omission of material facts" against all Defendants, and seeks relief in the form of "a Court- supervised trust fund, paid for by Defendants, jointly and severally, to finance a medical monitoring program to deliver services to members of the purported class that include, but are not limited to, testing, preventative screening and surveillance for conditions resulting from, or which can potentially result from exposure to environmental carcinogens," incidental damages, and attorneys' fees and costs. The Defendants responded to the Complaint by filing Motions to Dismiss on the grounds that it fails to state a claim upon which relief can be granted. On November 7, 2002, the United States District Court granted the Motion to Dismiss filed by the United States, and further dismissed all claims against the remaining Defendants for lack of Federal subject matter jurisdiction. Plaintiffs filed a Motion for Reconsideration and Leave to Amend, which was denied by the Court on December 30, 2002. Plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the 9th Circuit. On March 15, 2004, the 9th Circuit affirmed the dismissal of this case. On December 3, 2002, Plaintiffs filed an additional Complaint for Class Action in the Galaz I matter asserting the same claims in the same Court on behalf of the same purported class against virtually the same Defendants, including the Kinder Morgan Defendants. On February 10, 2003, the Defendants filed Motions to Dismiss the Galaz I Complaint on the grounds that it also fails to state a claim upon which relief can be granted. This motion to dismiss was granted as to all Defendants on April 3, 2003. Plaintiffs have filed a Notice of Appeal to the United States Court of Appeals for the 9th Circuit. On November 17, 2003, the 9th Circuit dismissed the appeal, upholding the District Court's dismissal of the case. On June 20, 2003, Plaintiffs filed an additional Complaint for Class Action (the "Galaz II" matter) asserting the same claims in Nevada State trial Court on behalf of the same purported class against virtually the same Defendants, including the Kinder Morgan Defendants (and excluding the United States Department of the Navy). On September 30, 2003, the Kinder Morgan Defendants filed a Motion to Dismiss the Galaz II Complaint along with a Motion for Sanctions. On April 13, 2004, Plaintiffs' counsel voluntarily stipulated to a dismissal with prejudice of the entire case in State Court. The Court has accepted the stipulation and the parties are awaiting a final order from the Court dismissing the case with prejudice. Also on June 20, 2003, the Plaintiffs in the Galaz matters filed yet another Complaint for Class Action in the United States District Court for the District of Nevada (the "Galaz III" matter) asserting the same claims in United States District Court for the District of Nevada on behalf of the same purported class against virtually the same Defendants, including the Kinder Morgan Defendants. The Kinder Morgan Defendants filed a Motion to Dismiss the Galaz III matter on August 15, 2003. On October 3, 2003, the Plaintiffs filed a Motion for Withdrawal of Class Action, which voluntarily drops the class action allegations from the matter and seeks to have the case proceed on behalf of the Galaz family only. On December 5, 2003, the District Court granted the Kinder Morgan Defendants' Motion to Dismiss, but granted Plaintiffs leave to file a second Amended Complaint. Plaintiff filed a Second Amended Complaint on December 13, 2003, and a Third Amended Complaint on January 5, 2004. The Kinder Morgan Defendants filed a Motion to Dismiss the Third Amended Complaint on January 13, 2004. The Motion to Dismiss was granted with prejudice on April 30, 2004. On May 7, 2004, Plaintiffs filed a Notice of Appeal in the United States Court of Appeals for the 9th Circuit, which appeal is currently pending. KINDER MORGAN: Trial in TX Gas Royalties Suits Set January 2005 --------------------------------------------------------------- Trial in the remaining lawsuits filed against Kinder Morgan CO2 Company L.P., Kinder Morgan G.P., Inc., and Cortez Pipeline Company in the Statutory Probate Court, Denton County, Texas is set for January 2005. The suits are styled: (1) Shores, et al. v. Mobil Oil Corp., et al., No. GC-99- 01184 and (2) First State Bank of Denton, et al. v. Mobil Oil Corp., et al., No. 8552-01 These cases involve claims brought on behalf of classes of overriding royalty interest owners (Shores) and royalty interest owners (Bank of Denton) for underpayment of royalties on carbon dioxide produced from the McElmo Dome Unit. The Plaintiffs' claims include claims for breach of contractual duties and covenants, breach of agency duties, civil conspiracy, and declaratory relief. In addition to their claims for actual damages, Plaintiffs seek an equitable accounting, imposition of a constructive trust over the Defendants' interests, and punitive damages. After the trial Court certified classes in both cases, the Fort Worth Court of Appeals reversed and vacated the trial Court's class certification order in Shores because the trial Court lacked jurisdiction to certify a class. The Court of appeals also ruled that most of the named Plaintiffs in Shores could not establish proper venue in Denton County and dismissed those parties' claims. The trial Court's class certification order in Bank of Denton is currently on appeal to the Fort Worth Court of Appeals, but the Plaintiffs have filed a motion with the trial Court to vacate its class certification order, which was unopposed by the Defendants. This motion was granted in May 2004. The remaining claims in the Shores and Bank of Denton cases are currently scheduled to go to trial in January 2005. On May 13, 2004, William Armor, one of the former Plaintiffs in the Shores matter whose claims were dismissed for improper venue by the Court of Appeals, filed a new case alleging the same claims against the same Defendants as he had previously asserted in the Shores case, styled "Armor v. Shell Oil Company, et al, No. 04-03559 (14th Judicial District, Dallas County Court)." Defendants filed their answers and special exceptions on June 4, 2004. Trial, if necessary, has been scheduled for July 25, 2005. LEARN WATERHOUSE: SEC Obtains Injunction in $24.5M Ponzi Scheme --------------------------------------------------------------- The Securities and Exchange Commission obtained a preliminary injunction in a multi-million dollar securities fraud scheme perpetrated by five Defendants: Learn Waterhouse, Inc. (LWI), a Texas corporation based in Jacksonville, Florida and Tyler, Texas; Randall T. Treadwell, 46, of Savannah, Georgia; Rick D. Sluder, 47, of Tyler, Texas; Larry C. Saturday, 57, of Savannah, Georgia; and Arnulfo M. Acosta, 41, of Edinburg, Texas. The Defendants have raised at least $24.5 million from the offer and sale of fictitious "prime bank" instruments. The Honorable Thomas J. Whelan, United States District Judge for the Southern District of California, also granted additional relief that the Commission sought, including orders freezing assets, appointing a permanent receiver over LWI, and requiring the Defendants to repatriate assets from abroad. The Commission's complaint, filed on October 12 in Federal Court in San Diego, alleges that the Defendants raised at least $24.5 million from 1700 investors nationwide by conducting a fraudulent prime bank scheme. According to the complaint, LWI pooled investor funds to engage in "buy/sell" transactions in a "secret," "invitation only" bank trading program that generated investor returns ranging from 5% to 50% per month. The Defendants represented that one such trading program purportedly earned investors 500% in just 60 days. The Defendants also represented that an investor's principal was secured by a "pre- funded, cash-back instrument" issued by a top U.S. bank, which purportedly restricted LWI's bank trading program to completely risk-free transactions. According to the complaint, these representations were false. The Defendants instead were promoting a fictitious prime bank trading program and operating a Ponzi scheme. At least $8.2 million, or 46.9%, of the returns paid to investors came from investor funds. The Defendants also misappropriated at least $2.5 million in investor funds to support themselves and finance other businesses. The complaint also alleges that there was no bank trading program, nor were investor funds secured by a "pre- funded, cash-back instrument"; rather, the bank trading program and the extraordinary returns promised by the Defendants were part of a prime bank investment fraud. In its lawsuit, the Commission obtained an order freezing each of the Defendants' assets, an order appointing Thomas Lennon as a permanent receiver over LWI, an order requiring the Defendants to repatriate assets from abroad, and a preliminary injunction prohibiting all the Defendants from future violations of the securities registration and antifraud provisions - Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the relief already granted by the Court, the Commission will seek permanent injunctions, disgorgement and civil penalties against all Defendants. The action is titled, SEC v. Learn Waterhouse, Inc.; Randall T. Treadwell; Rick D. Sluder; Larry C. Saturday; and Arnulfo M. Acosta, Civil Action No. 04-CV-2037 W (LSP) SDCA (LR-18959) MORGAN STANLEY: Agrees To SEC Issuance Of Cease-And-Desist Order ---------------------------------------------------------------- The Securities and Exchange Commission issued an Order Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist Order Pursuant to Section 21C of the Securities Exchange Act of 1934 (the "Order") against Morgan Stanley. In its Order, the Commission found that Morgan Stanley violated financial reporting, record-keeping, and internal controls provisions of the federal securities laws as a result of its conduct related to its valuation of certain aircraft in its aircraft leasing business in late 2001, late 2002, and early 2003, as well as certain bonds in its high-yield bond portfolio in late 2000. Specifically, regarding its aircraft valuations, Morgan Stanley undervalued impairments taken on certain of its aircraft in late 2001, late 2002 and early 2003, which resulted in Morgan Stanley filing financial reports with the Commission that overstated earnings for certain reporting periods in a manner not in conformity with Generally Accepted Accounting Principals ("GAAP"). Regarding its high-yield bond portfolio, Morgan Stanley overvalued certain bonds in the portfolio in 2000, which resulted in the Company filing a financial report with the Commission that understated losses it had incurred on these bonds in a manner not in conformity with GAAP. Morgan Stanley also failed to maintain sufficient underlying documentation supporting its valuations and the Company's internal controls failed to ensure that it valued both its aircraft and bond positions in accordance with GAAP. Without admitting or denying the Commission's findings, Morgan Stanley consented to the issuance of the Order, which orders Morgan Stanley to cease and desist from committing or causing violations of, and committing or causing any future violations of, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13. (Rel. 34-50632; AAE Rel. 2132; File No. 3-11725) NEW YORK: Gas Station Owners File Price-Fixing Suit V. Oil Firms ---------------------------------------------------------------- Four New York gas station owners have initiated a lawsuit seeking class-action status against Shell, ChevronTexaco and Saudi Refining, part of Aramco, three of the world's largest suppliers, claiming that they fixed prices for fuel sold at 20,000 service stations, according to Court sources, Agence France Presse reports. Seeking to allow tens of thousands of other retailers to join in, the suit claims that Shell and Texaco met and entered into an agreement to raise, fix, peg and stabilize the price of motor fuel sold to Shell and Texaco dealers. It also charges that Shell and Texaco created two joint ventures, Equilon Enterprises and Motiva Enterprises, as a guise to overcharge the stations for gasoline. The four gas station owners, which include the Bedford Village Service Station in Westchester County outside New York City, T and C Service Station on Long Island, the Fort Schuyler Quick Stop and Ralph's Food Mart, both in New York City, said they brought the case on behalf of US dealers of the Shell and Texaco brand franchises who purchased fuel from Equilon and Motiva between July 1, 1998 and February 28, 2002. On June 1, a Federal Court in California allowed a similar case against the companies. That ruling came the same day as the US Government Accountability Office reported a study indicating the two joint ventures may have led to higher gas prices in some US cities. NORTEL NETWORKS: Plaintiffs Lodge Statement Of Claim in NY Court ---------------------------------------------------------------- In a new statement of claim filed as part of a class action lawsuit against Nortel Networks, Plaintiffs alleged that former executives of the Company have routinely engaged in questionable financial practices to get millions of dollars in bonuses, the CBC News Online reports. The expanded class action suit, which has been filed with the U.S. District Court for the Southern District of New York, is being led by two pension funds - the Ontario Teachers' Pension Fund and the New Jersey Division of Investment. The suit, whose allegation have not yet been proven in Court, now names members of the audit committee of Nortel's Board of Directors as Defendants, including John Cleghorn, former CEO of the Royal Bank. The suit's allegations include testimony from nine former Nortel finance executives in Canada, the U.S., Europe and Asia who are now co-operating with the lawsuit. The executive's testimonies claim that during the Company's huge restructuring in 2002, Nortel senior executives held back hundreds of millions of dollars in reserve, money they then reported as income in 2003 to make the Company appear more profitable, which according to the lawsuit was done in a way that amounted to a violation of good corporate governance rules. According to a claim in the lawsuit, "The improper inflation of reserves for later use was such an accepted practice at Nortel that executives gave the existence of cookie jar reserves its own name: hardness." However, Ross Healy, an analyst with the Strategic Analysis Corp. told CBC Business News that the practice of setting up rainy day "cookie jar" reserves is commonly done to smooth out the ups and downs of the business cycle. He further stated that it is perfectly legitimate and that he doesn't necessarily see anything sinister about what Nortel did this time or what [former Nortel CEO] Frank Dunn did this time around." The lawsuit claims the motive for the alleged financial mismanagement was money, specifically a bonus plan set up by former CEO Frank Dunn in mid-2002 and approved by the board. The incentive was millions of dollars in management bonuses if the Company returned to profitability in 2003. NORVERGENCE INC.: NC A.G. Cooper Lodges Consumer Fraud Lawsuit -------------------------------------------------------------- North Carolina Attorney General Roy Cooper launched a complaint against NorVergence, Inc., a Company that allegedly deceived small businesses and other consumers into purchasing telecommunications contracts and then failed to deliver services. "NorVergence convinced small businesses, churches and non- profits across our state that it could give them a good deal on phone service," said AG Cooper. "But the deal quickly turned sour as NorVergence left consumers without service and locked into paying on long-term contracts." In a complaint filed in Wake County Superior Court, AG Cooper accused the Company of Newark, New Jersey of making unfair and deceptive representations to consumers in order to get them to sign agreements and make payments for telecommunications services. AG Cooper has asked the Court to bar NorVergence from collecting money from past North Carolina customers and to permanently block the Company and its employees from doing business in North Carolina. In addition, the suit seeks cancellation of all contracts, refunds for consumers, and civil penalties. The Federal Trade Commission also filed suit against NorVergence. According to AG Cooper's complaint, NorVergence marketed telecommunications services to small businesses, non-profit organizations and churches. The Company offered local, long distance, wireless, and high-speed Internet services and falsely claimed that it was affiliated with recognized telecommunications companies. As alleged in the complaint, NorVergence told small businesses that it could provide them dramatic savings and free minutes by installing its revolutionary "black box" at the business to route telecommunications. Businesses had to sign a rental agreement for the black box, obligating them to make monthly payments of $200 to $2,300 for five years for a total of $12,000 to more than $138,000 per business. NorVergence then sold these rental agreements to various finance companies. In reality, the "black box" is a standard router used to connect telephone equipment to a long distance provider's lines. It is widely available, retails for $500 to $1,500 and is not related to wireless services or to lower long distance rates. According to the 34 small businesses and other customers who filed complaints with Cooper about NorVergence, the Company told them that they would continue to get free unlimited calls for five years as long as they paid the monthly rental fee and their local telephone bill, even if anything happened to NorVergence. However, NorVergence did not have a commitment from any telecommunications carrier to provide services to these customers if NorVergence folded. Once the Company had sold a number of rental agreements, it ceased operations. Customers no longer got the telecommunications services they had paid for, but certain finance companies that had purchased the agreements have continued to try to collect monthly payments. Cooper is investigating the role of these finance companies in the scam. Other North Carolina businesses and consumers that may have done business with NorVergence are encouraged to file a complaint with the Attorney General's Office by Phone: 1-877-5-NO-SCAM, or contact Noelle Talley, Public Information Officer, N.C. Department of Justice by Phone: (919) 716-6484 or (919) 716-6413 by Fax: (919) 716-0803 or by E-mail: ntalley@ncdoj.com. PEMBRIDGE GROUP: SEC Lodges Fraud Charges V. Firm, Founder in MA ---------------------------------------------------------------- The Securities and Exchange Commission filed civil fraud charges against Treyton L. Thomas, a resident of Boston, Massachusetts, and a Company he founded, Pembridge Group, Ltd., for engaging in a scheme to manipulate the securities of Imagis Technologies, Inc., a Canadian software Company quoted on the OTC-Bulletin Board. In a complaint filed in U.S. District Court in Boston the SEC alleges that from at least 1999 through 2002, Thomas generated several false press releases in which he claimed to be the chairman of Pembridge, a purported multi-faceted investment firm that managed several hundred million dollars and provided growth capital to formative companies. In fact, it is alleged, Pembridge had no such assets under management and instead was simply a front that Thomas used to gain credibility and further his fraudulent scheme. The Commission charges that, after several of the false press releases were disseminated, Thomas manipulated the stock of Imagis by causing Pembridge to propose a fraudulent cash tender offer for all of Imagis' outstanding stock. On March 6, 2002, Pembridge publicly announced the proposed tender offer with a potential offer price of over $4.00 per share (almost double the price at which Imagis' stock was trading in previous months). Pembridge's March 6 announcement sent the price of Imagis' stock up to a 52-week high of $3.40. As alleged, neither Thomas nor Pembridge controlled or had access to hundreds of millions of dollars let alone the resources necessary to buy out Imagis' shareholders. The SEC further alleges in the complaint that prior to announcing the false tender proposal, Thomas had arranged for an offshore entity - known as Indo Sakura Trust - to acquire over 100,000 warrants of Imagis stock. Shortly before the fraudulent March 6 tender offer announcement, Indo Sakura converted 70,000 warrants to shares and, a few days after the bogus release, Indo Sakura exercised its remaining 35,000 warrants. Pembridge also acquired warrants to purchase 50,000 shares of Imagis stock at $2.20 (CDN) a share. In addition, Thomas advised purported clients to purchase Imagis stock. The Defendants' illicit scheme artificially inflated the value of Indo Sakura's Imagis stock, as well as the securities held directly by Pembridge and its purported clients. The SEC alleges Thomas and Pembridge violated Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, by their fraudulent scheme to manipulate the market in Imagis stock. The Commission further alleges that the Defendants violated Section 14(e) of the Exchange Act, and Rule 14e-8 thereunder by their false and fraudulent communication of the tender offer. The relief sought in the complaint as to each of the Defendants includes permanent injunctions from further violations of the general and tender offer antifraud provisions of the federal securities laws, disgorgement of ill-gotten gains with prejudgement interest, civil monetary penalties, penny stock bars, and a permanent bar prohibiting Thomas from serving as an officer or director of a public Company. The action is titled, SEC v. Treyton L. Thomas, et al., Civil Action No. 04-12315 (PBS) D.MA] (LR-18957). PEROT SYSTEMS: Plaintiffs Appeal Energy Antitrust Lawsuit in CA --------------------------------------------------------------- Plaintiffs appealed the Superior Court for the County of Sacramento, California's dismissal with prejudice of the class action filed against Perot Systems Corporation, styled "Art Madrid v. Perot Systems Corporation, et al." The suit alleges the Company conspired with energy traders to manipulate the California energy market. The Plaintiffs are seeking unspecified damages, treble damages, restitution, punitive damages, interest, costs, attorneys' fees and declaratory relief. In September 2003, the Company filed a demurrer to the complaint and an alternative motion to strike all claims for monetary relief. In January 2004, the Court granted the Company's demurrer and did not grant the Plaintiffs leave to amend their complaint. PEROT SYSTEMS: TX Court Dismisses Consolidated Securities Suit -------------------------------------------------------------- The United States District Court for the Northern District of Texas, Dallas Division dismissed without prejudice the consolidated class action filed against Perot Systems Corporation, Ross Perot and Ross Perot, Jr., styled "Vincent Milano v. Perot Systems Corporation." The suit alleges violations of Rule 10b-5, and, in some of the cases, common law fraud. It also alleges the Company's filings with the Securities and Exchange Commission contained material misstatements or omissions of material facts with respect to its activities related to the California energy market. The Plaintiffs are seeking unspecified monetary damages, interest, attorneys' fees and costs. PETIT BATEAU: Recalls 2.7T Children's Bathrobe Due To Burn Risk --------------------------------------------------------------- Petit Bateau, of Millburn, New Jersey is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling about 2,700 Children's bathrobes. These robes fail to meet the children's sleepwear flammability standards, posing a risk of burn injury to children due to the possible ignition of the garment. The bathrobes are made of terrycloth, 90 percent cotton and 10 percent polyester, with a hood, long sleeves and two front patch pockets. They were sold in sizes 12M, 18M, 2YR, 3YR, 4YR, 6YR, 8YR and 10YR. Colors of the bathrobes include white with pink trimming, white with blue trimming, white with beige trimming, cream with pink trimming, cream with blue trimming, and blue with white trimming. The bathrobes are labeled, "Petit Bateau" on the center-back neck edge. Manufacture in either Tunisia or France, the bathrobes were sold at all Petit Bateau retail stores and other outlets nationwide from February 2002 through June 2004 for about $65. Return the recalled bathrobes to Petit Bateau USA Inc., 45 Essex Street, Suite 200, Millburn, N.J. 07041 to receive a full refund including postage and a special gift. Consumer Contact: Contact Petit Bateau at (888) 897-2872 between 8:30 a.m. and 5:30 p.m. ET Monday through Friday or log onto the Company's Web site at http://www.petit-bateau.comfor instructions on returning the bathrobes OR FDA Media Contact: Martin Brown at (973) 379-5703 PRESSTEK INC.: Plaintiffs Appeal NH Ruling For Securities Suit -------------------------------------------------------------- Plaintiffs in the purported securities class action lawsuit brought against Presstek, Inc., its former Chief Executive Officer Robert W. Hallman, and its former Chief Financial Officer Neil Rossen, have filed an appeal of the U.S. District Court's recent dismissal of the suit. The lawsuit was allegedly brought on behalf of purchasers of Presstek's common stock during the period from December 10, 1999 through July 16, 2001, and was filed in June 2003 in the United States District Court for the District of New Hampshire. In October 2004, in a 47-page decision granting Presstek's motion to dismiss, Judge Steven McAuliffe of the U.S. District Court, found that each of the claims brought by the Plaintiffs failed to allege a claim on which the Court could grant relief and the case was dismissed. SONIC AUTOMOTIVE: Subsidiaries Oppose Certification For TX Suits ---------------------------------------------------------------- Sonic Automotive Inc. is opposing class certification for three lawsuits filed against some of its Texas dealership subsidiaries, the Texas Automobile Dealers Association (TADA) and other new vehicle dealerships in Texas that are members of the TADA. Approximately 630 Texas dealerships are named as Defendants in two of the actions, and approximately 700 Texas dealerships are named as Defendants in the other action. The three actions allege that since January 1994, Texas automobile dealerships have deceived customers with respect to a vehicle inventory tax and violated federal antitrust and other laws. In two of the actions, the Texas State Court certified two classes of consumers on whose behalf the actions would proceed. The Texas Court of Appeals has affirmed the trial Court's order of class certification in the state actions, and the Texas Supreme Court issued an order for the second time in September 2004 stating that it would not hear the merits of the Defendant' appeal on class certification. The Federal Trial Court conditionally certified a class of consumers in the federal antitrust case, but on appeal by the Defendant dealerships, the U.S. Court of Appeals for the Fifth Circuit reversed the certification of the Plaintiff class in October 2004 and remanded the case back to the federal trial Court for further proceedings not inconsistent with the Fifth Circuit's ruling. The Plaintiffs may appeal this ruling by the Fifth Circuit. SPECTRASITE BUILDING: Asks NY Court To Dismiss Winstar Lawsuit -------------------------------------------------------------- SpectraSite Building Group, Inc. and other Defendants asked the United States District Court for the Southern District of New York to dismiss the class action filed against them by Winstar Communications, LLC and Winstar of New York, LLC. The suit names as Defendants more than 800 owners and managers of commercial real estate properties that have entered into leases or other arrangements with Winstar. The Defendants include real estate investment trusts, privately held commercial real estate companies, the Building Owners and Managers Association of New York (BOMA) and the Company. The suit asserts claims for violations of federal and state antitrust law, and federal communications law, and seeks an unspecified amount of monetary damages and specific performance. The claims are premised upon the allegations, among others, that the Defendants, through BOMA and other rooftop managers including SpectraSite Building Group, Inc., conspired to fix rental prices of building access for telecommunications services by disseminating non-public pricing information among the Defendants that stabilized building access rates for competitive telecommunications providers such as Winstar. The motion to dismiss the suit, filed on August 13, 2004, remains pending. ST. PAUL TRAVELERS: Wolf Haldenstein Lodges Suit Over Payments -------------------------------------------------------------- The New York law firm of Wolf Haldenstein Adler Freeman & Herz initiated a class action lawsuit in U.S. District Court in Minneapolis against St. Paul Travelers Cos., accusing it of making false and misleading statements regarding commission payments, the Associated Press reports. The suit alleges that St. Paul Travelers, which is the nation's second-largest insurer of businesses paid hundreds of millions of dollars in "bribes or kick-backs, known as 'contingent commissions,' in return for insurance brokers steering them business and shielding them from competition" from 2000 to 2004. Furthermore, the suit also alleges that the Company's actions artificially inflated the price of the Company's common stock and that the Company's "revenues and earnings would have been significantly less had the Company not engaged in such unlawful practices." In the wake of insurance industry investigations led by New York's attorney general, lawyers have filed similar lawsuits against several insurance companies and brokers across the country, including American Insurance Group and Ace Ltd. The New York and Connecticut attorneys general have subpoenaed St. Paul Travelers and many other insurance companies, seeking information regarding their compensation to brokers and bids made through brokers, legal experts though point out that the subpoenas do not necessarily mean a Company is suspected of wrongdoing. According to Joan Palm, a spokeswoman for St. Paul Travelers, "We believe this suit is totally without merit and we intend to defend against it vigorously." STILLWATER MINING: MT Court Mulls Dismissal of Securities Suit -------------------------------------------------------------- The United States District Court for the District of Montana is still hearing the motion to dismiss the consolidated securities class action filed against Stillwater Mining Company and certain of its senior officers. The consolidated suit was filed on behalf of a class of all persons who purchased or otherwise acquired common stock of the Company from April 20, 2001 through and including April 1, 2002. The suit asserts claims against the Company and certain of its officers under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Plaintiffs challenge the accuracy of certain public disclosures made by the Company regarding its financial performance and, in particular, its accounting for probable ore reserves. Plaintiffs filed an amended consolidated complaint in September 2002. In October2002, Defendants moved to dismiss the complaint and to transfer the case to Federal District Court in New York to the federal district Court in Montana. The motion to transfer the case was granted on May 9, 2003, and the case is now pending in the federal district Court in Montana. On January 30, 2004, the Court held a status conference at which time the Plaintiffs were given until March 30, 2004 to file a second amended complaint, which the Plaintiffs subsequently filed. Pursuant to a briefing schedule set by the Court, Defendants filed a motion to dismiss Plaintiffs' second amended complaint on May 14, 2004, and Plaintiffs filed their opposition on June 14, 2004. Defendants filed their reply on June 28, 2004. The hearing on the motion to dismiss has been continued from July 22, 2004 to February 3, 2005. TALX CORPORATION: MO Court Approves Securities Suit Settlement -------------------------------------------------------------- The United States District Court for the Eastern District of Missouri granted final approval of the settlement of the consolidated securities class action against TALX Corporation, certain of its officers and directors and its underwriters. On December 26, 2001, a purported class action lawsuit was filed in the United States District Court for the Eastern District of Missouri (Civil Action No. 4:01CV02014DJS) by Matt L. Brody, an alleged shareholder of the Company, against the Company, certain of our executive officers and directors (William W. Canfield, Craig N. Cohen and Richard F. Ford) and two underwriters (Stifel, Nicolaus & Company, Incorporated and A.G. Edwards & Sons, Inc.) in the Company's August 2001 secondary common stock offering. The case purportedly is brought on behalf of all persons who purchased or otherwise acquired shares of Company common stock between July 18, 2001 and October 1, 2001, including as part of the Secondary Offering. The complaint alleges, among other things, that certain statements in the registration statement and prospectus for the Secondary Offering, as well as other statements made by us and/or the Individual Defendants during the Putative Class Period, were materially false and misleading because they allegedly did not properly account for certain software and inventory, did not reflect certain write-offs, and did not accurately disclose certain business prospects. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against TALX and the Individual Defendants, violations of Section 11 of the Securities Act of 1933 against TALX, the Individual Defendants and the underwriters, and violation of Section 15 of the Securities Act of 1933 against Mr. Canfield. Three additional purported class action lawsuits were filed in the same Court, against the same Defendants and making substantially the same allegations: on January 8, 2002 by Donald Metzger (Civil Action No. 4:02CV00031DJS); on January 9, 2002 by Anna Goodman (Civil Action No. 4:02CV00033DJS); and on January 30, 2002 by Al Hinton (Civil Action No. 4:02CV00168DJS) each of whom allegedly were shareholders of TALX during the Putative Class Period. On February 15, 2002, these three lawsuits were consolidated with and into the Brody lawsuit (Civil Action No. 4:01CV02014DJS) for all purposes. The Consolidated Complaint seeks, among other things, an award of unspecified money damages, including interest, for all losses and injuries allegedly suffered by the putative class members as a result of the Defendants' alleged conduct and unspecified equitable/injunctive relief as the Court deems proper. On May 5, 2004, the Company reached an agreement with the Plaintiffs to settle all pending class action lawsuits. The settlement called for payment of $5.75 million, which was made by the Company's insurance carriers. On October 6, 2004, the Court entered a Final Judgment and Order of Dismissal with Prejudice, approving the proposed settlement in all respects. The Court simultaneously issued an Order Approving Allocation of Settlement Proceeds. The Court's Final Judgment provides that the claims of the named Plaintiffs and all members of the class are dismissed with prejudice; that any claims that were or could have been alleged by the named Plaintiffs or members of the class are released and forever discharged; and that the action is dismissed subject to the Court's continuing jurisdiction with regard to implementation of the settlement and distribution of the settlement fund to the class. TRIBUNE COMPANY: Circulation Fiasco Triggers IL Shareholder Suit ---------------------------------------------------------------- The Tribune Company recently learned that a shareholder lawsuit has been filed against it and the Board of Directors in relation to the circulation scandals at Newsday and Hoy in New York, New York Newsday reports. Responding to questions from a Newsday reporter, Company spokeswoman Christine Hennessey described the case as a "shareholder derivative lawsuit" filed against Tribune and its board of directors. According to her, "The lawsuit alleges that the directors violated fiduciary duties owed to Tribune's shareholders in connection with the circulation irregularities at Newsday and Hoy, New York. Tribune will seek to dismiss the lawsuit." It was unclear whether the suit, filed Oct. 14 in Cook County Superior Court in Illinois, involved a single shareholder or a group. The only named Plaintiff is David Jaroslawicz, a Manhattan lawyer involved in several class action suits, including ones against Northrop Grumman, Livent and the City of New York. The scandal, which stems from revelations by Newsday that its circulation had been overstated by up to 100,000 copies daily, has resulted in multiple suits by advertisers against it. Newsday's actual sales from September 2002 through March 2004 were 480,000 to 490,000 copies daily, which were clearly far below the 580,000, Newsday admits. Tribune also admitted to circulation overstatements at Hoy, its Spanish language daily now published in Chicago and Los Angeles, as well as New York City. The Hoy sales inflation happened only in New York City. UNITED STATES: ACLU Presents Arguments For Suit V. No-Fly Lists --------------------------------------------------------------- Lawyers for the American Civil Liberties Union recently presented arguments in a motion involving the first nationwide class action lawsuit challenging the government's controversial No-Fly lists, which is a part of the Secure Flight plan, FCW.com reports. Reginald T. Shuford, an ACLU senior staff attorney and lead counsel in the case argued during the hearing that "as a result of flawed and ineffective No-Fly lists, innocent passengers are being singled out virtually every time they fly and subjected to delays, interrogations and even detentions." The hearing came in response to a request for dismissal by attorneys for the Transportation Security Administration and the Homeland Security Department, who don't want the case being heard in the U.S. District Court for Western Washington, claiming that the district Court lacks jurisdiction to review the case. ACLU officials argued that the motion is actually an attempt by federal officials to prevent the case from going forward. Aaron Caplan, a staff attorney with the ACLU of Washington even states, "The government is saying that American trial Courts have no power to review TSA policies. The is an attempt to avoid any meaningful judicial review of government practices." Originally filed by ACLU officials in April, the class action lawsuit was initially against the Transportation Security Administration over its use of the former Computer Assisted Passenger Prescreening System (CAPPS) II, which has since been revamped and renamed Secure Flight. The lawsuit charges that a substantial percentage of employees for the 15 domestic airlines have access to a list of people deemed terrorist threats to air travel. Airport officials, border and immigration agents, law enforcement officials and those with access to other security databases may view the so- called No-Fly list. Critics have said that the list ranks civil liberties groups because scrutinized individuals cannot confirm if they are on the list, making it difficult to correct errors. According to the ACLU, individuals named as representative Plaintiffs in the class-action lawsuit include: (1) John Shaw, 75, a retired Presbyterian minister, from Sammamish, Washington; (2) Michelle D. Green, 36, a Master Sgt. in the U.S. Air Force; (3) David Nelson, 35, an attorney from Belleville, Ill.; (4) David C. Fathi, 41, a senior staff attorney with the ACLU National Prison Project in Washington, D.C.; (5) Mohamed Ibrahim, 51, a coordinator for an immigrants' rights project with the American Friends Service Committee in Philadelphia; (6) Alexandra Hay, 22, a student at Middlebury College in Vt.; and (7) Sarosh Syed, 27, a graduate student at Georgetown University in Washington, D.C.; VALVOLINE COMPANY: Recalls 2.8M Brake Cleaners Due To Defects ------------------------------------------------------------- The Valvoline Company, a Division of Ashland Inc., of Lexington, Kentucky is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling about 2.8 million cans of Pyroilr Brake Parts Cleaner and NAPAr Brake Cleaners. The affected aerosol cans contain a defective spray valve that might stick when depressed, possibly emptying the can's flammable contents. Valvoline has received nine complaints about sticking spray valves. One consumer was injured when the product sprayed into his eye. The recall involves 13-ounce cans of Pyroilr Non-Chlorinated Brake Parts Cleaner and NAPAr Non-Chlorinated Brake Cleaner. This product is used by professional mechanics as well as "do- it-yourself" consumers who perform brake repairs on their own vehicles. The recalled cans contain one of the following four digits in their date codes, which are found on the bottom of the cans: Pyroil (Part No. 4003) C014, C024, C184, C194, C304, D024, D034, D214, D224, D264, E104, F074, F084, F094, F104, F234, F244, F284, G134, G144, G194, G294, H034, H194 NAPA (Part No. 4800) C024, C094, C184, C194, C224, C234, C304, C314, D014, D034, D054, E054, E064, E144, E244, E254, F174, F184, G284, H124, H304, H314, I074, I084 Manufactured in the United States, the brake cleaners were sold at all auto parts retail stores nationwide from March 2004 through September 2004 for about $2. Consumers should stop using the recalled aerosol cans immediately and contact Valvoline for a free replacement. Consumer Contact: For more information, consumers should call Valvoline at (800) 255-3533 between 8:30 a.m. and 5:30 p.m. ET Monday through Friday. WACHOVIA CORPORATION: Agrees To SEC Injunction, $37Mil Penalty -------------------------------------------------------------- The Securities and Exchange Commission initiated a settled civil action in the U.S. District Court for the District of Columbia against Wachovia Corporation (Wachovia) for violations of proxy disclosure laws and other reporting rules involving the 2001 merger between First Union Corporation (First Union) and Old Wachovia Corporation (Old Wachovia). The complaint alleges that Old Wachovia and First Union failed to disclose in quarterly reports and in a joint proxy statement- prospectus filed in connection with the merger the total number of shares of First Union common stock (FTU) that Old Wachovia intended to and did purchase during the period when First Union and SunTrust Corporation (SunTrust) were engaged in a hostile takeover battle for Old Wachovia. Without admitting or denying the allegations in the complaint, Wachovia consented to entry of a judgment enjoining it from violating the Sections 13(a) and 14(a) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-13 and 14a-9 thereunder and to pay a civil penalty of $37 million. The action is titled, SEC v. Wachovia Corporation, Civil Action No. 041910 (D.D.C.). WHOLE FOODS: Recalls Chicken Products For Listeria Contamination ---------------------------------------------------------------- Whole Foods Mid-Atlantic Kitchen, a Landover, Maryland firm, is voluntarily recalling approximately 1,275 pounds of chicken products that may be contaminated with Listeria monocytogenes, the U.S. Department of Agriculture's Food Safety and Inspection Service announced. The products subject to recall are: (1) 12 oz."WHOLE FOODS CHICKEN POT PIE." Each package contains a best if used by date of "11/02/04." (2) 10 lb. bags of "WHOLE FOODS Classic Chicken Salad." Each bag has a use by date of "11/01/04." (3) 15 oz. containers of "WHOLE FOODS CHICKEN NOODLE SOUP, SMALL." Each container has a sell by date of "11/04/04." (4) 30 oz. containers of "WHOLE FOODS CHICKEN NOODLE SOUP, LARGE." Each container has a sell by date of "11/04/04." All products bear the establishment number "P-18768" inside the USDA seal of inspection. The chicken pot pie and chicken noodle soup were produced on October 28, 2004. The chicken salad was produced on October 27, 2004. All products were distributed to retail stores in the District of Columbia, Kentucky, Maryland, New Jersey, Pennsylvania and Virginia. The problem was discovered through routine FSIS sampling. FSIS has received no reports of illnesses associated with consumption of these products. Consumption of food contaminated with Listeria monocytogenes can cause listeriosis, an uncommon but potentially fatal disease. Healthy people rarely contract listeriosis. Listeriosis can cause high fever, severe headache, neck stiffness, and nausea. Listeriosis can also cause miscarriages and stillbirths, as well as serious and sometimes fatal infections in those with weak immune systems - infants, the frail or elderly, and persons with chronic disease, with HIV infection, or taking chemotherapy. Media and consumers with questions about the recall may contact Company Director of Marketing Sarah Kenney by Phone: (301) 984- 3737, ext. 2020. Consumers with food safety questions can phone the toll-free USDA Meat and Poultry Hotline at 1-800-535-4555. The hotline is available in English and Spanish and can be reached from 10 a.m. to 4 p.m. (Eastern Time) Monday through Friday. Recorded food safety messages are available 24 hours a day. W.R. GRACE: Employees Lodge Suit To Recover $40M in Lost Profits ---------------------------------------------------------------- Employees of W. R. Grace & Co. (NYSE: GRA) initiated a class action against the firm to recover $40 million in profits lost by the class in their personal retirement accounts. The employees claim that Grace and its investment advisors forced the employees to sell their Grace stock at a distressed price of $3.50 per share. Soon after the sale, the stock value tripled but the employees got nothing. The 300% profit -- nearly $40 million -- was taken from the Grace employees and pocketed or diverted to others by State Street Bank & Trust of Boston, the Plan's investment advisor, according to the federal Court complaint filed by the employees. The employees and the class members are represented by Waite, Schneider, Bayless & Chesley of Cincinnati, Ohio, a nationally known business litigation law firm. "This case is corporate arrogance at its worst -- Grace just walked all over its employees and destroyed their life savings," said Stan Chesley, one of the employees' trial attorneys. According to the lawsuit, Grace purposely set up the retirement plan so the personal savings of the employees could be used to buy the Company's stock. In early 2004, Grace hired State Street Bank & Trust of Boston to rapidly liquidate all of the employees' Grace stock investment at an artificially low sales price. Grace ignored the protests and objections of the employees, the lawsuit says. The employees were even instructed by Grace to have no communication with State Street, their retirement plan's advisor. The case will be heard by Judge David Bunning of the U.S. District Court in Covington, Kentucky. As part of the early stages of the case, the employees' attorneys are investigating the unusual relationship among Grace, State Street and others involved in the transactions, according to Jim Cummins, the employees' other principal trial attorney. For more details, contact Stanley M. Chesley, Esq. by Phone: 513-621-0267 OR James R. Cummins, Esq. by Phone: 513-621-0267 New Securities Fraud Cases AUTOBYTEL INC.: Lasky & Rifkind Lodges Securities Suit in CA ------------------------------------------------------------ The law firm of Lasky & Rifkind, Ltd. initiated a lawsuit in the United States District Court for the Central District of California, on behalf of persons who purchased or otherwise acquired publicly traded securities of Autobytel Inc. ("Autobytel" or the "Company") (NASDAQ:ABTL) between July 24, 2003 and October 20, 2004, inclusive, (the "Class Period"). The lawsuit was filed against Autobytel, Michael Fuchs, Jeffrey Schwartz and Hoshi Printer ("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 or misrepresented that Autobytel inappropriately recognized some unapplied credits, that as a result, the Company's financial results were inflated by approximately $900,000, and that the Company's financial results were not presented in accordance with Generally Accepted Accounting Principles ("GAAP"). On October 21, 2004, Autobytel announced partial third quarter 2004 financial results, and that it would postpone its earnings webcast. Moreover, the Company announced that the Audit Committee of the Board of Directors of the Company was conducting an internal review of the accounting treatment of certain unapplied credits that were recognized as revenue during the four quarters ended March 31, 2004. Shares of Autobytel reacted negatively to the news, falling $1.93 per share, or approximately 21.9%, to close at $6.80 per share. For more details, contact Lasky & Rifkind, Ltd. by Phone: 800-495-1868 or visit their Web site: investorrelations@laskyrifkind.com AUTOBYTEL INC.: Schatz & Nobel Files Securities Fraud Suit in CA ---------------------------------------------------------------- The law firm of Schatz & Nobel, PC initiated a lawsuit seeking class action status in the United States District Court for the Central District of California on behalf of all persons who purchased the securities of Autobytel Inc. (Nasdaq: ABTL) ("Autobytel") from July 24, 2003 to October 20, 2004 (the "Class Period"). The Complaint alleges that during the Class Period, Autobytel violated federal securities laws by making materially false or misleading public statements. On October 21, 2004, Autobytel announced partial third quarter 2004 financial results and stated that it would reschedule its earnings conference call which had been scheduled for that afternoon. Autobytel further announced that its Audit Committee was directing an internal review of the accounting treatment of certain unapplied credits that were recognized as revenue during the four quarters ended March 31, 2004. On this news, Autobytel stock fell $1.93 per share, or 22%, on October 21, 2004, to close at $6.80 per share. For more details, contact Wayne T. Boulton or Nancy Kulesa by Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit their Web site: http://www.snlaw.net AXT INC.: Miller Shea Lodges Securities Fraud Lawsuit in N.D. CA ---------------------------------------------------------------- The law firm of Miller Shea, PC initiated a securities class action lawsuit in the United States District Court for the Northern District of California on behalf of shareholders who purchased the common stock of AXT, Inc. ("AXT" or the "Company") (Nasdaq:AXTI), between February 6, 2001 and April 27, 2004, inclusive (the "Class Period"). AXT manufactures semiconductor parts for a variety of electronic products, including telecommunications and consumer electronics. The Complaint alleges that Defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of AXT securities. On May 24, 2004, AXT disclosed to the SEC that an investigation by AXT's Audit Committee confirmed that the Company had "not followed requirements for testing of products and provision of testing data and information relating to customer requirements for certain shipments made over the past several years." The Company further disclosed that during the first quarter of 2004, AXT increased its reserve for sales returns "related to our failure to follow certain testing requirements and provision of testing data and information to certain customers." No class has yet been certified in the above action. For more details, contact Jayson E. Blake, Esq. or Marc L. Newman of Miller Shea, P.C. by Mail: 950 West University Drive, Suite 300, Rochester, MI 48307 by Phone: (248) 841-2200 or visit their Web site: http://www.millershea.com CONVERIUM HOLDING: Zwerling Schachter Lodges NY Securities Suit --------------------------------------------------------------- The law firm of Zwerling, Schachter & Zwerling, LLP ("Zwerling Schachter") initiated a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all persons and entities who purchased securities (ADSs) of Converium Holding AG ("Converium" or the "Company") (NYSE: CHR) between December 11, 2001 and July 20, 2004, inclusive (the "Class Period"). The deadline to file a motion seeking to be appointed lead Plaintiff is December 3, 2004. The complaint charges that Converium and two of its officers, Dirk Lohmann, and Martin Kauer, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, it alleges that the Defendants failed to disclose and misrepresented the following material adverse facts which were known to Defendants or recklessly disregarded by them: (1) that Converium maintained inadequate loss reserves in its Converium North America subsidiary; (2) that the Company did not, as it had announced, establish adequate loss reserves to cover claims by Converium North America policy holders; (3) that reserve increases announced by the Company during the Class Period were materially insufficient; and (4) as a consequence of the understatement of loss reserves, Converium's earnings and assets were materially overstated during the Class Period. On July 20, 2004, the Company announced that its second quarter results would be impacted by a reserve strengthening for US casualty business and subsequent asset impairments on the balance sheet of Converium North America. On this disclosure, shares of Converium collapsed $11.12 per share, or approximately 44 percent, on July 20, 2004, to close at $13.90 per share. For more details, contact Shaye J. Fuchs, Esq. or Jayne Nykolyn of Zwerling Schachter by Phone: 1-800-721-3900 by E-mail: sfuchs@zsz.com or jnykolyn@zsz.com or visit their Web site: http://www.zsz.com DOBSON COMMUNICATIONS: Lasky & Rifkind Lodges OK Securities Suit ---------------------------------------------------------------- The law firm of Lasky & Rifkind, Ltd., initiated a lawsuit in the United States District Court for the Western District of Oklahoma, on behalf of persons who purchased or otherwise acquired publicly traded securities of Dobson Communications Corporation ("Dobson" or the "Company") (NASDAQ:DCEL) between May 19, 2003 and August 9, 2004, inclusive, (the "Class Period"). The lawsuit was filed against Dobson and Everett R. Dobson, Russell L. Dobson, Stephen T. Dobson, Douglas B. Stephens, Bruce R. Knooihuizen and Richard D. Sewell Jr.("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 or misrepresented that Defendants knew or disregarded the fact that the Company's growth in roaming minutes was slowing, that it was missing sales quotas, as upgrade costs were rapidly increasing, and that large equity holders in the Company wanted to dispose of their interests. On February 17, 2004 Dobson reported results for the fourth quarter ended December 31, 2003, which disappointed investors. The weak results were attributed by the Company due to anemic growth in roaming minutes and a substantial reduction in guidance. Shares of Dobson reacted negatively to the news, shedding $2.65 per share, representing a price decline of 36.6%. On August 9, 2004, the Company reported a net loss to shareholders of $0.12 per share., for the second quarter ended June 30, 2004. Dobson continued to fall, dropping an additional $1.30 per share, representing a decline of approximately 54%. For more details, contact Lasky & Rifkind, Ltd. by Phone: 800- 495-1868 or visit their Web site: investorrelations@laskyrifkind.com INTELLIGROUP INC.: Goodkind Labaton Lodges Securities Suit in NJ ---------------------------------------------------------------- The law firm of Goodkind Labaton Rudoff & Sucharow LLP initiated a class action lawsuit in the United States District Court for the District of New Jersey, on behalf of persons who purchased or otherwise acquired publicly traded securities of Intelligroup Inc. ("Intelligroup" or the "Company") (Nasdaq:ITIG) between May 1, 2001 and September 24, 2004, inclusive, (the "Class Period"). The lawsuit was filed against Intelligroup, Arjun Valluripalli, Nicholas Visco and David J. Distel ("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 throughout the Class Period, Intelligroup publicly touted its strong financial performance. In reality however, the complaint alleges, that the Company's revenues, net income and earnings were materially misstated as a direct result of Intelligroup's improper accounting practices and inadequate internal controls. On August 11, 2004, Intelligroup announced that its independent auditors, Deloitte & Touche LLP had resigned from serving as the Company's independent auditor. Then on September 24, 2004, Intelligroup announced that it intended to restate its financial results for the years ended December 31, 2003, 2002 and 2001. Intelligroup shares reacted negatively to the news, falling 32% to close at $1.13 per share. For more details, contact Christopher Keller, Esq. by Phone: 800-321-0476 or visit their Web site: http://www.glrslaw.com/get/?case=intelligroup SOURCECORP INC.: Brian M. Felgoise Lodges Securities Suit in TX --------------------------------------------------------------- The law offices of Brian M. Felgoise, PC initiated a securities class action on behalf of shareholders who acquired SOURCECORP Incorporated (NASDAQ: SRCP) securities between May 7, 2003 and October 26, 2004, inclusive (the Class Period). The case is pending in the United States District Court for the Northern District of Texas, against the Company and certain key officers and directors. The action charges that Defendants violated the federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities. No class has yet been certified in the above action. For more details, contact Brian M. Felgoise, Esq. by Mail: 261 Old York Road, Suite 423, Jenkintown, PA 19046 by Phone: (215) 886-1900 or by E-mail: FelgoiseLaw@aol.com SOURCECORP INC.: Lasky & Rifkind Lodges Securities Suit in TX ------------------------------------------------------------- The law firm of Lasky & Rifkind, Ltd., initiated a lawsuit in the United States District Court for the Northern District of Texas, on behalf of persons who purchased or otherwise acquired publicly traded securities of SOURCECORP Inc. ("SOURCECORP" or the "Company") (NASDAQ:SRCP) between May 7, 2003 and October 27, 2004, inclusive, (the "Class Period"). The lawsuit was filed against SOURCECORP and certain officers and directors ("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, during the Class Period, Defendants issued numerous false and misleading statements with respect to the Company's financial results. More specifically, these statements were false and misleading because they failed to disclose and misrepresented that the Company had improperly and prematurely recognized revenue before delivering contractually required output to a certain customer, that it also improperly recognized revenues for services that were delivered to customers that were in excess of contractual volume limits and that the Company lacked adequate internal controls. On October 27, 2004, SOURCECORP announced that the Audit Committee of its board of directors had concluded that the Company's previously issued financial statements for the year ended December 31, 2003 and its quarterly reports for March 31, and June 30, 2004 should no longer be relied upon. Specifically, the Company indicated that one of its divisions had improperly and prematurely recognized revenues. Due to this improper revenue recognition, the Company will adjust its revenues and earnings per share by at least $5.4 million and $0.19 respectively. In reaction to this news, shares of SOURCECORP fell $5.96 per share, or approximately 30% to close at $16.25 per share on very heavy trading volume. For more details, contact Lasky & Rifkind, Ltd. by Phone: 800-495-1868 or visit their Web site: investorrelations@laskyrifkind.com ********* A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the Class Action Reporter. Submissions via e-mail to carconf@beard.com are encouraged. 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