/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/041109.mbx C L A S S A C T I O N R E P O R T E R Tuesday, November 9, 2004, Vol. 6, No. 222 Headlines ALLSTATE CORPORATION: Arguments on Appeal of Certification Heard ALLSTATE CORPORATION: Continues To Face Auto Policy Fraud Suits ANDRX CORPORATION: Named As Defendant in NY City Medicaid Suit ANDRX CORPORATION: Seeks Resolution For Cardizem Antitrust Suits ANDRX CORPORATION: Plaintiffs File Consolidated Suit in S.D. FL ANDRX CORPORATION: FL Court Grants Approval To Stock Suit Pact AOL TIME: Asks TX Court To Dismiss Securities Violations Lawsuit AUSTRALIA: Court Approves $32Mil Esso Compensation For Gas Blast CALIFORNIA: Police Adopt New Policy To Partially Settle Lawsuit CITIGROUP: NY District Judge Approves $2.6B WorldCom Settlement CONVERSION MARKETING: Suit Filed For Fraud, Telemarketing Scam ELI LILLY: Uses "Tolling Agreements" To Limit Zyprexa Lawsuits ELECTRONIC ARTS: Workers Launch Overtime Wage Suits in CA Court ETHICON INC.: Trial in WV VICRYL Sutures Injury Suit Adjourned EXPRESS SCRIPTS: Plaintiffs Appeal Dismissal of CA PBM Lawsuit EXPRESS SCRIPTS: Faces Retail Drug Prices Lawsuit in CA Court EXPRESS SCRIPTS: Faces Deceptive Trade Practices Lawsuit in NY EXPRESS SCRIPTS: Shareholders Lodge Stock Fraud Suits in E.D. MO EXPRESS SCRIPTS: Faces Lawsuit For ERISA Violations in S.D. NY EXPRESS SCRIPTS: Health Plans Launch IL Breach of Contract Suits FAX.COM: Idaho Obtains Consent Judgment Over Unsolicited Faxes FIRST AMERICAN: Reaches Settlement For FTC Violations Complaint FIRST DATA: NY Court Grants Final Approval To Consumer Suit Pact FIRST DATA: Asks TN Court To Dismiss Concord Shareholders Suit FIRST DATA: ATM Cardholders Commence Antitrust, Fraud Lawsuits FPL GROUP: FL Court Grants Summary Judgment in Land Owners' Suit INTERNATIONAL RESEARCH: FTC Commences Consumer Fraud, Spam Suit INVISION TECHNOLOGIES: Dropped From 9-11 Product Lawsuits in NY INVISION TECHNOLOGIES: Reaches Settlement For CA Securities Suit INVISION TECHNOLOGIES: CA Orders Securities Suits Consolidated JOHNSON & JOHNSON: Working To Settle PROPULSID Injury Litigation JOHNSON & JOHNSON: Certification Sought For Racial Bias Lawsuit MONSANTO CO.: Court Hears Appeal of MO Suit Certification Denial MONSANTO CO.: Agent Orange Litigation Still Pending in NY Court MONSANTO CO.: Korean Court Mulls Herbicide Suit Dismissal Appeal NEW JERSEY: Proposes More Stringent Regulations On Gas Meters NOVASTAR FINANCIAL: Faces Securities Fraud, Derivative Lawsuits PFIZER INC.: Merchant Law Lodges Suit V. Celebrex's Side Effects PRAXAIR CORPORATION: Faces Injury Lawsuits Over Welding Fumes QUALCOMM: Continues To face Overtime Wage Lawsuits in CA Court QUALCOMM: Continues To Face Various Cellular Phones Injury Suits QUANTUM CORPORATION: CA Court To Hear Certification For Lawsuit SALTON INC.: AG Donates Part of Settlement To IN Organizations SERVICE CORPORATION: Acquires Court Approval For $35M Settlement STATE FARM: Files Suit Seeking To End Growers' Representation TIME WARNER: Plaintiffs Appeal Dismissal of CA Securities Suit TIME WARNER: Faces Consolidated Securities Fraud Lawsuit in NV TIME WARNER: Continues to Face Stock Fraud, ERISA Lawsuits in NY TIME WARNER: Asks CA Court To Dismiss Shareholder Fraud Lawsuit UNITED STATES: AFGE Wins Policy Reversal On Leave For Reservists New Securities Fraud Cases AXIS CAPITAL: Murray Frank Lodges Securities Fraud Suit in NY AXIS CAPITAL: Schiffrin & Barroway Lodges Securities Suit in NY CHIRON CORPORATION: Murray Frank Lodges Securities Suit in CA EMBARCADERO TECHNOLOGIES: Schiffrin & Barroway Lodges Suit in CA FANNIE MAE: Spector Roseman Lodges Securities Fraud Suit in DC INTERACTIVECORP: Bernstein Liebhard Lodges Securities Suit in NY JAKKS PACIFIC: Lerach Coughlin Files Securities Fraud Suit in NY MARSH & MCLENNAN: Brian M. Felgoise Lodges Securities Suit in NY MARSH & MCLENNAN: Wolf Haldenstein Lodges ERISA Suit in S.D. NY NEW YORK: Murray Frank Lodges Securities Fraud Suit in E.D. NY SOURCECORP INC.: Brian M. Felgoise Lodges Securities Suit in TX SOURCECORP INC.: Milberg Weiss Files Securities Fraud Suit in TX STAR GAS: Finkelstein Thompson Files Securities Fraud Suit in CT SWIFT TRANSPORTATION: Milberg Weiss Lodges Securities Suit in AZ TRIPATH TECHNOLOGY: Schiffrin & Barroway Lodges Stock Suit in CA ********* ALLSTATE CORPORATION: Arguments on Appeal of Certification Heard ---------------------------------------------------------------- The United States Eleventh Circuit Court of Appeals heard oral arguments in the appeal of class certification for the lawsuits filed against Allstate Corporation, regarding its specification of after-market (non-original equipment manufacturer) replacement parts in the repair of insured vehicles. One of these suits alleges that the specification of such parts constitutes breach of contract and fraud, and this suit mirrors to a large degree lawsuits filed against other carriers in the industry. These plaintiffs allege that after-market parts are not "of like kind and quality" as required by the insurance policy, and they are seeking actual and punitive damages. In the second lawsuit, plaintiffs allege that Allstate and three co-defendants have violated federal antitrust laws by conspiring to manipulate the price of auto physical damage coverages in such a way that not all savings realized by the use of aftermarket parts are passed on to the policyholders. The plaintiffs seek actual and treble damages. In November 2002, a nationwide class was certified in this case. The defendants filed a petition to appeal the certification. The parties are now awaiting a decision on the appeal. ALLSTATE CORPORATION: Continues To Face Auto Policy Fraud Suits --------------------------------------------------------------- Allstate Corporation continues to face several statewide and nationwide class action lawsuits, alleging that its failure to pay "inherent diminished value" to insureds under the collision, comprehensive, uninsured motorist property damage, or auto property damage liability provisions of auto policies constitutes breach of contract and fraud. Plaintiffs define "inherent diminished value" as the difference between the market value of the insured automobile before an accident and the market value after repair. Plaintiffs allege that they are entitled to the payment of inherent diminished value under the terms of the policy. To a large degree, these lawsuits mirror similar lawsuits filed against other carriers in the industry. These lawsuits are pending in various state and federal Courts, and they are in various stages of development. Classes have been certified in only two cases. Both are multi-state class actions. A trial in one of these multi-state class action cases involving collision and comprehensive coverage concluded on April 29, 2004, with a jury verdict in favor of the Company. The plaintiffs made a motion for a new trial, which was denied, and have now filed an appeal from the judgment. In the other certified class action lawsuit, which involves uninsured motorist property damage coverage, the appellate Court has granted the Company's petition for review of the order of certification. The Company has been vigorously defending all of these lawsuits and, since 1998, has been implementing policy language in more than 40 states reaffirming that its collision and comprehensive coverages do not include diminished value claims, the Company stated in a regulatory filing. The outcome of these disputes is currently uncertain. ANDRX CORPORATION: Named As Defendant in NY City Medicaid Suit -------------------------------------------------------------- Andrx Corporation was named as a defendant in the action filed by the City of New York in the U.S. District Court for the Southern District of New York. The suit names as defendants 44 drug makers, including the Company and alleged that they overcharged Medicaid for prescription medications. The Company is not required to respond to this complaint until after decisions on Motions to Dismiss are determined in a related case. Press reports and other sources indicate that the attorneys general for the states of Massachusetts, Florida and Pennsylvania, as well as others, are also investigating and/or pursuing legal action against drug makers, charging the industry has inflated prices. ANDRX CORPORATION: Seeks Resolution For Cardizem Antitrust Suits ---------------------------------------------------------------- Andrx Corporation is working to settle several antitrust class actions filed in relation to its product Cardizem CD in various federal Courts. Beginning in August 1998, several putative class action lawsuits were filed against the Company and Aventis (formerly Hoechst Marion Roussel, Inc.) arising from a 1997 stipulation entered into between Andrx and Aventis in connection with a patent infringement suit brought by Aventis with regard to Cardizem CD. The actions pending in federal Court have been consolidated for multi-district litigation purposes in the U.S. District Court for the Eastern District of Michigan, with one of the cases filed by a group of direct purchasers having recently been remanded back to the U.S. District Court for the Southern District of Florida. The complaint in each action alleges that Andrx and Aventis, by way of the 1997 stipulation, have engaged in alleged state antitrust and other statutory and common law violations that allegedly have given Aventis and Andrx a near monopoly in the U.S. market for Cardizem CD and a generic version of that pharmaceutical product. Each complaint seeks compensatory damages on behalf of each class member in an unspecified amount and, in some cases, treble damages, as well as costs and counsel fees, disgorgement, injunctive relief and other remedies. In June 2000, the U.S. District Court for the Eastern District of Michigan granted summary judgment to plaintiffs finding that the 1997 stipulation was a per se violation of antitrust laws. On June 13, 2003, the U.S. Court of Appeals for the Sixth Circuit affirmed the district Court's decision. On October 12, 2004, the U.S. Supreme Court declined to review this case. Essentially reiterating the claims asserted against Andrx in the aforementioned Cardizem CD antitrust class action litigation and seeking the same relief sought in that litigation are: (1) the May 14, 2001 complaint filed by the attorneys general for the states of New York and Michigan, joined by 13 additional states and the District of Columbia, on behalf of their government entities and consumers resident in their jurisdictions, which was subsequently amended to add 12 additional states and Puerto Rico to the action; (2) the July 26, 2001 complaint filed by Blue Cross Blue Shield of Michigan, joined by three other Blue Cross Blue Shield plans; (3) two actions pending in state Courts in Florida, and (4) two actions pending in state Courts in Kansas On November 26, 2002, the U.S. District Court for the Eastern District of Michigan approved a settlement between the direct purchasers and Andrx and Aventis. In October 2003, the U.S. District Court for the Eastern District of Michigan approved a settlement between the indirect purchasers and Andrx and Aventis. Although that order is currently on appeal, Andrx does not believe the appeal has merit, or even if successful, would ultimately change the settlement in any material respect. In April 2004, the Company settled its litigation with the four Blue Cross Blue Shield plaintiffs who opted-out of the settlement with the indirect purchasers. The Company has also agreed with all remaining plaintiffs, consisting of the direct purchaser groups that opted out of the settlement with the direct purchaser class, upon a methodology for disposing of the claims asserted by that group after receiving such guidance as the U.S. Supreme Court may give on the issues raised. As a result of that methodology, and the U.S. Supreme Court's determination that it will not review the decision of the Court of Appeals for the Sixth Circuit, the parties have settled this matter and are in the process of dismissing this case. ANDRX CORPORATION: Plaintiffs File Consolidated Suit in S.D. FL --------------------------------------------------------------- Plaintiffs filed a consolidated amended class action against Andrx Corporation and certain of its current and former officers and directors in the United States District Court for the Southern District of Florida. Several suits were initially filed against the Company for alleged material misrepresentations regarding the expiration dating for the Company's s generic versions of Wellbutrin SR/Zyban and that the Company knew that its products would not receive timely FDA approval. All of these cases were consolidated and on October 20, 2003, the plaintiffs filed a consolidated amended class action complaint, against the Company and Richard J. Lane, its former Chief Executive Officer, alleging a class period from March 1, 2002 through March 4, 2003. After the Court granted the Company's motion to dismiss this complaint, the plaintiffs further amended their complaint to assert that the Company knew, when it filed its ANDAs, that the products would not be approved by the FDA because of their expiration dating. ANDRX CORPORATION: FL Court Grants Approval To Stock Suit Pact -------------------------------------------------------------- The United States District Court for the Southern District of Florida granted final approval to the settlement of the consolidated securities class action filed against Andrx Corporation and certain of its current and former officers and directors. Several securities fraud class action complaints were filed in March 2002, alleging that the Company and certain of its current and former officers and directors engaged in securities fraud and/or made material misrepresentations regarding the regulatory status of the Company's ANDA for a generic version of Tiazac. The amended class action complaint sought a class period for those persons or institutions that acquired Andrx common stock from April 30, 2001, through February 21, 2002. In November 2002, the Court granted in part the Company's motion to dismiss the amended consolidated class action complaint and determined that all but one of the statements allegedly made in violation of the federal securities laws should be dismissed as a matter of law. The Court's decision reduced the class period to six weeks commencing January 9, 2002, and ending February 21, 2002. The Court also later granted the Company's motion to strike all allegations of insider trading from the complaint. In December 2003, defendant's motion for summary judgment was granted and a final judgment was entered in favor of the defendants. The plaintiffs have filed a notice of appeal of the motion to dismiss and the summary judgment orders. On August 6, 2004, the Court entered a final judgment and granted final approval of the settlement stipulation entered by the defendants and the class members. AOL TIME: Asks TX Court To Dismiss Securities Violations Lawsuit ---------------------------------------------------------------- AOL Time Warner, Inc. asked the District Court of Cass County, Texas to dismiss the lawsuit, styled "McClure et al. v. AOL Time Warner Inc. et al.," filed on behalf of several purchasers of Company stock. The suit names as defendants the Company and certain of its current and former officers, directors and employees. Plaintiffs allege that the Company made material misrepresentations in its registration statements in violation of Sections 11 and 12 of the Securities Act of 1933. Plaintiffs also allege breach of fiduciary duty and common law fraud. Plaintiffs seek unspecified compensatory damages. The Company has filed a general denial and a motion to dismiss for improper venue. Also, all named individual defendants moved to dismiss the complaint for lack of personal jurisdiction. AUSTRALIA: Court Approves $32Mil Esso Compensation For Gas Blast ---------------------------------------------------------------- The protracted legal battle to win compensation for Victorian businesses affected by the 1998 Longford gas explosion, in the state's southeast, has finally come to a conclusion, the ABC Online, Australia reports. The Supreme Court approved a $32 million package for 500 businesses to be compensated for property damage during the two- week gas shutdown, which would officially end more or less six years of Court action against Esso. According to Lisa Nichols from law firm Slater and Gordon, the settlement is a significant outcome and describes it as possibly the largest class action in Australian legal history. Furthermore she states, that it took them six years to reach this point and that it's been a very hard fought battle that "has resulted in Esso, which is possibly the largest corporation in the world, paying over money to claimants who have sued it in civil litigations." Chris Welberry, Esso public affairs manager expressed the Company's elation at reaching the settlement by stating, "In February 2003 the Court ruled that economic loss as a result of the accident in 1998 was not claimable. But the Court did allow a number of limited claims for what was termed physical damage, where there was spoilage and so forth as a result of the gas stoppage. Today's settlement finalizes those claims." CALIFORNIA: Police Adopt New Policy To Partially Settle Lawsuit --------------------------------------------------------------- The Oakland, California police department has agreed to stop using wooden or rubber bullets, Taser stun guns, pepper spray and motorcycles to break up crowds, as part of a settlement in a class action lawsuit, alleging that police violated activists' First Amendment rights to freedom of speech and assembly during an anti-war protest at the Port of Oakland on April 7, 2003, KTVU.com reports. About 60 people have accused the police of firing non-lethal projectiles into the crowd with no warning, while others stated that police on motorcycles bumped them hard. The new policy followed 10 months of discussions involving Oakland police, the city attorney's office and plaintiffs in the case. Under the new policy, police are expected to respect protesters' First Amendment right to demonstrate and that if the protesters break laws, police would try to negotiate with leaders and give audible orders to the crowd to disperse before making arrests. The guidelines also required the police officers to use tear gas only if demonstrators still refuse to comply, and then only on the edge of the crowd. They would also be able to push back at protesters, but not strike them. The plaintiffs are still seeking monetary damages in the case with a trial slated in January unless they are settled beforehand. CITIGROUP: NY District Judge Approves $2.6B WorldCom Settlement --------------------------------------------------------------- U.S. District Judge Denise Cote recently approved Citigroup's $2.6 billion settlement with WorldCom investors who lost billions when an accounting scandal forced the telecommunications Company to seek bankruptcy protection, Reuters reports. By gaining approval for the settlement, Citigroup, the world's largest financial services company, which had set aside reserves for the settlement, has actually managed to resolve one of the biggest class-action lawsuits resulting from a string of corporate scandals over recent years. Under the settlement, which originally called for Citigroup to pay $2.65 billion to WorldCom stockholders and bondholders, the Company will now be made to pay a total of $2.58 billion, or equal to just less than half of Citigroup's profit in its third quarter. While investors, who were primarily seeking tens of billions of dollars, will also receive $51 million in interest. Though considered to be the second-largest settlement in a securities class action case, it does not necessarily mean that litigation by WorldCom investors is over, according to legal observers. Even U.S. District Judge Denise Cote, who had hailed the Citigroup settlement as "historic," noted that "this litigation is far from over." Upon approval of the settlement, New York State Comptroller Alan Hevesi, the trustee for the New York State Common Retirement Fund, the lead plaintiff in the suit described it as an excellent settlement and further described it as "a fair recompense to the class that was victim of the acts taken by WorldCom and the underwriters." The class action lawsuit, which represents hundreds of thousands of investors, accused Citigroup, and other investment banks that underwrote WorldCom bonds of failing to conduct due diligence before bringing the securities to market. The lawsuit also concentrated on the role played by Jack Grubman, once a star telecommunications analyst at Citigroup's Salomon Smith Barney unit, who investors accused of touting WorldCom publicly while knowing his statements were inaccurate. A Citigroup representative, meanwhile, said, "We are pleased the settlement process took this important step toward conclusion," Reuters states. CONVERSION MARKETING: Suit Filed For Fraud, Telemarketing Scam -------------------------------------------------------------- The Federal Trade Commission charged that a telemarketing operation promised "free samples," then debited consumer's accounts without their authorization in violation of federal law. The FTC alleges that the defendants withdrew fees from consumers' credit and debit card accounts, and enrolled them in automatic programs to keep the products coming without their knowledge or authorization. The FTC's complaint names Conversion Marketing, Inc., doing business as National Health Support Center, Natural Bright, and Pounds Off Patch, and Adam Tyler MacDonald d/b/a Fast White, all based in Santa Ana, California.; and Drsharp, Inc., d/b/a Oratech, LC, Fast White, and Product Design Corporation, and David R. Sharp, all based in North Salt Lake, Utah. According to the FTC, the operation uses telemarketing, television, radio, and Internet ads to induce consumers to try a "free" sample of Fast White tooth-whitening product or the Pounds Off Patch weight-loss patch. Regardless of whether they accept the defendants' offer, consumers later discover that they have been charged for the "free" sample, and then assessed additional, unauthorized charges for shipments they never requested. According to the complaint, prior to November 2003, MacDonald began telemarketing Fast White through a now-bankrupt Company called Test Marketing Group, LLC (TMG). TMG's telemarketers made outbound calls to consumers and represented that they could get a "free trial" or a "free sample" of the tooth-whitening kit at no cost or obligation. The telemarketers did not ask for consumers' financial information. They already had the consumers' debit and credit account information they had improperly obtained from third parties. When consumers agreed to receive the kit, they were unaware of this fact. After TMG filed for bankruptcy, its operations were transferred to Conversion Marketing. The FTC alleges that defendants MacDonald and Conversion Marketing used telemarketing, radio, the Internet, and television ads to market the Pounds Off Patch weight-loss patch. During the telemarketing calls, some consumers were asked if they would like to participate in a "study" during which they would receive free samples of the patch and were told that all they had to pay were shipping costs. Other consumers were told that if they bought one set of patches they would receive a second set at "half off." Consumers were asked for their financial account information. The FTC alleges that these defendants, in both instances, placed unauthorized charges on consumers' accounts, and enrolled them in programs where the consumers would automatically receive additional unauthorized shipments (known as "continuity plans"). The FTC's complaint charges MacDonald and his companies with falsely representing that the products were "free" or part of trial offers. The complaint also charges as unfair the practice of enrolling consumers in continuity plans and imposing unauthorized charges. In addition, MacDonald and his companies are charged with violating the Telemarketing Sales Rule by: (1) Engaging in unauthorized billing; (2) Misrepresenting a material aspect of a negative option feature (e.g., the fact that consumers' accounts will be charged unless the consumers take affirmative actions to avoid charges, or failing to inform consumers of the specific steps they must take to avoid the charges); (3) Failing to disclose the total cost of the products; and (4) Receiving unencrypted account information. In addition, the complaint charges David Sharp and his company Drsharp with providing substantial assistance or support to MacDonald and his companies while knowing that MacDonald was violating the federal laws. The FTC alleges that Sharp and his Company sold products to MacDonald, shipped products to consumers, and provided some telephonic customer service for Fast White customers. The complaint charges that Sharp was either aware or should have been aware that MacDonald and his companies routinely assessed unauthorized charges against consumers bank or debit accounts. On October 29, 2004, the FTC obtained a temporary restraining order and asset freeze against MacDonald and Conversion Marketing to halt the business practices the FTC has alleged are illegal. The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court, Central District of California, on October 29, 2004. For more details, contact FTC's Consumer Response Center by Mail: Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 or visit the Website: http://www.ftc.gov. For more details, also contact Brenda Mack, Office of Public Affairs by Phone: 202-326-2182 or Jeffrey Klurfeld or Raymond McKown, FTC's Western Region - Los Angeles by Phone: 310-824-4343 ELI LILLY: Uses "Tolling Agreements" To Limit Zyprexa Lawsuits -------------------------------------------------------------- Indianapolis drugmaker Eli Lilly and Co. is now using a new legal tactic that is aimed at limiting cases that come to trial over its best-selling drug Zyprexa, according to the Company's most recent federal securities filing, the Indianapolis Star reports. Though already facing 125 lawsuits over Zyprexa, Eli Lilly has recently negotiated deals with trial lawyers that could delay the filing of lawsuits on behalf of more than 1,800 other potential claimants. According to Curt G. Oltmans, associate general counsel for Lilly, they are pursuing the so-called "tolling agreements" for the first time in any product-liability cases against the Company because it sees legal benefits by using them. Mr. Oltmans points out that the "tooling agreements" would require prospective plaintiffs to file any lawsuit against Lilly in one federal Court, rather than the hundreds of state Courts. He states that by consolidating Zyprexa cases in federal Court Lilly's legal fees will be reduced, since pre-trial discovery of evidence is done once and shared with all plaintiffs. Plaintiffs must also agree not to ask for personal injury claims if they sign a tolling agreement, Eli Lilly's associate general counsel said. In return for signing the agreement, Eli Lilly agrees to a lifting of the state-set statutes of limitation deadline for when a person must file a product-liability case against a manufacturer, which actually ranges from one to four years after the time the alleged injury occurs. The Company expects some of the 1,800 people whose lawyers have signed tolling agreements with Lilly will never file lawsuits. Zyprexa lawsuits began to mount about a year ago, after studies showed that the antipsychotic is linked to higher rates of diabetes, weight gain and high blood pressure in users. Eli Lilly now faces about 125 Zyprexa lawsuits, 72 of which are consolidated for pre-trial purposes in federal Court in the Eastern District of New York. Attorneys have asked U.S. District Judge Jack Weinstein in New York to declare the case a class action, which would allow anyone to join the litigation, who thinks that he or she was harmed by Zyprexa. Eli Lilly is fighting the class action request and expects to cite in its defense a recent decision by another federal judge to reject class action status in lawsuits over a rival antipsychotic, Seroquel, made by AstraZeneca Pharmaceuticals. The mass lawsuits are part of an increasingly litigious environment for all drugmakers over side effects of some of their best-selling drugs. ELECTRONIC ARTS: Workers Launch Overtime Wage Suits in CA Court --------------------------------------------------------------- Electronic Arts, Inc. faces a class action filed in the Superior Court in San Mateo, California, styled "Kirschenbaum v. Electronic Arts Inc." The complaint alleges the Company improperly classified "Image Production Employees" in California as exempt employees and seeks injunctive relief, unspecified monetary damages, interest and attorneys' fees. ETHICON INC.: Trial in WV VICRYL Sutures Injury Suit Adjourned -------------------------------------------------------------- Trial in the litigation against Ethicon, Inc. over its VICRYL sutures in West Virginia has been adjourned and not reset. The Johnson & Johnson subsidiary faces lawsuits that allege that the sterility of VICRYL sutures was compromised by inadequacies in the Company's systems and controls, causing patients who were exposed to these sutures to incur infections which would not otherwise have occurred. The Company on several occasions recalled batches of VICRYL sutures in light of questions raised about sterility but does not believe any contamination of suture products in fact occurred, it stated in a disclosure to the Securities and Exchange Commission. In November 2003, a trial judge in West Virginia certified for class treatment all West Virginia residents who had VICRYL sutures implanted during Class I or II surgeries from May 1, 1994 to December 31, 1997. The certification is subject to later challenge following the conclusion of discovery. EXPRESS SCRIPTS: Plaintiffs Appeal Dismissal of CA PBM Lawsuit -------------------------------------------------------------- Plaintiffs appealed the United States District Court for the Central District of California's dismissal of the class action filed against Express Scripts, Inc. and other pharmacy benefit management companies, styled "Jerry Beeman, et al. v. Caremark, et al. Cause No. 021327." The complaint, filed by several California pharmacies as a putative class action, alleged that the Company, and the other defendants, failed to comply with statutory obligations under California Civil Code Section 2527 to provide our California clients with the results of a bi-annual survey of retail drug prices. On July 12, 2004, the case was dismissed with prejudice on the grounds that the plaintiffs lacked standing to bring the action. EXPRESS SCRIPTS: Faces Retail Drug Prices Lawsuit in CA Court ------------------------------------------------------------- Express Scripts, Inc. and several other pharmacy benefit management companies face a class action styled "Anthony Bradley, et al v. First Health Services Corporation, et al. (Cause No. BC319292), filed in the Superior Court for the State of California, County of Los Angeles. The complaint, filed by several California pharmacies as a putative class action, alleged rights to sue as a private attorney general under California law. The complaint alleged that the Company, and the other defendants, failed to comply with statutory obligations under California Civil Code Section 2527 to provide its California clients with the results of a bi- annual survey of retail drug prices. Plaintiffs request injunctive relief, unspecified monetary damages and attorney's fees. EXPRESS SCRIPTS: Faces Deceptive Trade Practices Lawsuit in NY -------------------------------------------------------------- Express Scripts, Inc. faces a class action filed in the Supreme Court for the State of New York, County of Albany, styled "Correction Officers' Benevolent Association of the City of New York, et al v. Express Scripts, Inc. (Cause No. 04-602517)." The complaint alleges that certain business practices violate duties owed to the class members including fiduciary duties, breach of covenant of good faith and fair dealing, deceptive trade practices, breach of contract, and unjust enrichment. The complaint purports to be a class action filed on behalf of all non-Employee Retirement Income Security Act (ERISA) health plans with members who are employees of the City of New York and the members of those plans. Plaintiffs request unspecified compensatory and punitive damages, equitable relief and attorney's fees. EXPRESS SCRIPTS: Shareholders Lodge Stock Fraud Suits in E.D. MO ---------------------------------------------------------------- Express Scripts, Inc. faces several securities class actions filed in the United States District Court for the Eastern District of Missouri. The suits are styled: (1) Sylvia Childress, et al v. Express Scripts, Inc., et al, Cause No. 04-CV-01191, (2) Lidia Garcia, et al v. Express Scripts, Inc., et al., Cause No. 04-CV-1009, (3) Robert Espriel, et al v. Express Scripts, Inc., et al., Cause No. 04-CV-01084, (4) Raymond Hoffman, et al v. Express Scripts, Inc., et al (Cause No. 04-CV-01054), (5) John R. Nicholas, et al v. Express Scripts, Inc., et al (Cause No. 04-CV-1295), (6) John Keith Tully, et al v. Express Scripts, Inc., et al (Cause No. 04-CV-01338), All of these suits are brought against the Company and certain of its officers alleging violations of federal securities law. The complaints allege that ESI failed to disclose certain alleged improper business practices and issued false and misleading statements. The complaints allege that they are brought on behalf of purchasers of Express Scripts stock during the period October 29, 2003 to August 3, 2004. The complaints request unspecified compensatory damages, equitable relief and attorney's fees. EXPRESS SCRIPTS: Faces Lawsuit For ERISA Violations in S.D. NY -------------------------------------------------------------- Express Scripts, Inc. and the National Prescription Administrators, Inc. (NPA) face a class action filed in the United States District Court for the Southern District of New York, styled "United Food and Commercial Workers Unions and Employers Midwest Health Benefits Fund, et al v. National Prescription Administrators, Inc., et al (Cause No. 04-CV-7472). The complaint alleges that certain of our business practices violate duties to the class members including duties under the Employee Retirement Income Security Act (ERISA), state common law and state consumer protection statutes. The complaint purports to be a class action filed on behalf of all current former self-funded ERISA and non-ERISA funds for which ESI or NPA served as the PBM. Plaintiffs request unspecified compensatory damages, equitable relief and attorney's fees. EXPRESS SCRIPTS: Health Plans Launch IL Breach of Contract Suits ---------------------------------------------------------------- Express Scripts, Inc. faces a class action filed in the Twentieth Judicial Circuit Court, St. Clair County, Illinois, styled "Central Laborers' Welfare Fund, et al v. Express Scripts, Inc., et al (Cause No. 04-L-554)." The suit also names the National Prescription Administrators, Inc. (NPA) as defendant. The complaint alleges that certain of the Company's business practices constitute a breach of contract, breach of covenant of good faith and fair dealing, breach of fiduciary duty and unjust enrichment. The complaint purports to be a class action filed on behalf of all former and current self-funded private and governmental health plans that contracted with ESI or NPA since January 1, 1997. Plaintiffs request unspecified compensatory damages, equitable relief and attorney's fees. FAX.COM: Idaho Obtains Consent Judgment Over Unsolicited Faxes -------------------------------------------------------------- Fax.com, believed to be the largest volume "fax-spammer" in the United States, has been permanently enjoined from doing business in Idaho, state Attorney General Lawrence Wasden announced in a statement. During a news conference in Boise, AG Wasden said that his office has obtained a consent judgment against the California- based Company. "The Idaho Consumer Protection Act and the Idaho Telephone Solicitations Act prohibit sending unsolicited faxes," Attorney General Lawrence Wasden said. "The laws are clear and do not contain exceptions. This is not a situation where you have to tell the sender to stop. Anytime you receive an unsolicited ad by fax, the sender has violated the law." The Attorney General filed a lawsuit against Fax.com in December 2003 alleging that the Company sent hundreds of unsolicited fax advertisements to Idaho consumers. The complaint alleged that Fax.com used auto-dialers to locate active fax numbers, which Fax.com compiled into a computer database. Fax.com contracted with other businesses and sent unsolicited advertisements to the active fax machines on behalf of those businesses. Although consumers could call an "unsubscribe" number to remove their fax number from Fax.com's database, consumers often continued to receive advertisements. As of September 2004, Fax.com claimed its database contained more than 16 million fax numbers. During the past three years, the Attorney General's Office received 278 complaints from individuals, businesses, and government agencies that received unwanted faxed advertisements for diet pills, vacations, work-at-home offers, health care plans, stock tips, and other goods and services. "Unsolicited fax advertisements are both annoying and expensive to Idaho consumers and businesses," Attorney General Lawrence Wasden said. "They're annoying because you don't want this stuff in the first place and they're expensive because they use your paper, toner and electricity while tying up your phone line." Along with enjoining Fax.com from sending faxes into Idaho, the agreement requires Fax.com to pay the Attorney General's Office a $5,000 civil penalty and $2,997.00 in attorney fees and costs. The agreement also subjects Fax.com to liquidated damages of up to $5,000 for each unsolicited fax it sends into Idaho in the future. "My office will vigorously enforce the terms of this consent order," Attorney General Wasden said. "In addition, we are taking steps toward building cases against other fax-spammers. While it's not realistic to think that we can completely stop illegal faxes, I encourage Idaho consumers and businesses who receive unsolicited fax advertisements to continue filing complaints with my office." For more details, contact Bob Cooper by Phone: (208) 334-4112. FIRST AMERICAN: Reaches Settlement For FTC Violations Complaint --------------------------------------------------------------- First American Payment Processing, Inc., two related corporations, and their principals are banned from processing any payments for outbound telemarketers as part of a settlement with the Federal Trade Commission. The FTC had charged the defendants with assisting fraudulent telemarketers by electronically debiting consumers' bank accounts in violation of the Telemarketing Sales Rule (TSR) and the FTC Act. The settlement announced today prohibits the defendants from engaging in the types of practices alleged in the complaint and requires them to pay redress in the amount of $1,580,739. In January 2004, the FTC filed a complaint in federal district Court against First American Payment Processing, Inc.; CET Corporation; Check Processing Center, LLC; Carl E. Towner; and Matthew Robinson alleging that they knowingly processed electronic payments for telemarketers who deceptively sold advance-fee credit cards or who engaged in other deceptive or abusive telemarketing practices. The FTC alleged that the defendants violated the TSR by providing substantial assistance and support to numerous telemarketing clients whom they knew or should have known were engaging in deceptive or abusive telemarketing practices. The FTC further alleged that the defendants violated the law by processing these consumer payments through the Automated Clearing House (ACH) Network on behalf of merchants engaged in outbound telemarketing to consumers. According to the FTC, the defendants' payment processing activities breached rules governing the ACH Network (NACHA Rules) - rules to which they were contractually bound. The FTC also sued the wives of Messrs. Towner and Robinson as relief defendants. The proposed stipulated permanent injunction and final order bans the defendants from processing payments for outbound telemarketers, regardless of the nature of the relationship between the telemarketer and consumer. The ban permanently prohibits the defendants from processing payments through any mechanism - not just through the ACH Network - for outbound telemarketers. The proposed order allows the defendants to continue their legitimate payment processing activities, such as processing for clients whose business depends on consumer- initiated calls, so long as the business is not violating the TSR, the NACHA Rules, or the FTC Act. In addition, the proposed order prohibits the defendants from violating any provision of the TSR, including assisting deceptive and abusive telemarketers. The proposed order specifically prohibits the defendants from providing substantial assistance to clients who the defendants know, or consciously avoid knowing, are violating the TSR by: (1) inducing consumers to pay for goods or services using false or misleading statements; (2) selling advance-fee credit cards; or (3) engaging in unauthorized billing of consumers' accounts The proposed order requires the defendants to investigate the business practices of each of the companies for which they process transactions, and obtain written documents demonstrating that these companies' business practices comply with the NACHA Rules regarding consumer authorization of debits. If the defendants learn that a client's business practices violate the TSR, the NACHA Rules, or the FTC Act, the settlement prohibits them from processing payments for the client. Finally, the settlement contains various provisions to assist the FTC in monitoring the defendants' compliance. The Commission vote to authorize the staff to file the stipulated permanent injunction and final order proposed order was 5-0. The stipulated permanent injunction and final order was filed in the U.S. District Court, District of Arizona, Phoenix Division, on November 2, 2004 and requires the Court's approval to become final. For more details, contact FTC's Consumer Response Center by Mail: Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 or visit the Website: http://www.ftc.gov. For more details, also contact Brenda Mack, Office of Public Affairs by Phone: 202-326-2182 FIRST DATA: NY Court Grants Final Approval To Consumer Suit Pact ---------------------------------------------------------------- The United States District Court for the Eastern District of New York granted final approval to the settlement of the consolidated class action filed against First Data Corporation and its subsidiary Western Union Financial Services, Inc. The suit asserts claims on behalf of a putative worldwide class (excluding members of the settlement class of similar actions previously filed against the Company and its subsidiaries) The plaintiffs claim that the Company, Western Union and Orlandi Valuta impose an undisclosed "charge" when they transmit consumers' money by wire either from the United States to international locations or from international locations to the United States, in that the exchange rate used in these transactions is less favorable than the exchange rate that Western Union and Orlandi Valuta receive when they trade currency in the international money market. Plaintiffs further assert that Western Union's failure to disclose this "charge" in the transactions violates 18 U.S.C. section 1961 et seq. and state deceptive trade practices statutes, and also asserts claims for civil conspiracy. The plaintiffs seek injunctive relief, compensatory damages in an amount to be proven at trial, treble damages, punitive damages, attorneys' fees, and costs of suit. The parties to this action reached a proposed settlement of all claims that includes: (1) Western Union (and, with respect to money transfer transactions from the U.S. other than California to Mexico, Orlandi Valuta) will issue coupons for discounts on future international money transfer transactions to customers who transferred money from the U.S. to certain countries other than Mexico between January 1, 1995 and approximately June 30, 2000 (for certain services, Western Union will issue coupons for transactions conducted as late as December 31, 2001), from anywhere in the U.S. other than California to Mexico between September 1, 1999 and June 30, 2000 (again, for certain services, Western Union will issue coupons for transactions conducted as late as December 31, 2001), from countries other than Canada to the U.S. between January 1, 1995 and June 30, 2000, and from Canada to the U.S. between January 1, 1995 and approximately July 31, 2002; (2) injunctive relief requiring Western Union and Orlandi Valuta to make additional disclosures regarding their foreign exchange practices; and (3) reasonable attorneys' fees, expenses and costs as well as the costs of settlement notice and administration. A small number of class members filed objections to or requests for exclusion from the proposed settlement. The Court held a fairness hearing on April 9, 2004 and granted final approval of the settlement on October 19, 2004. The time period during which objectors may appeal has not yet expired. If an appeal is taken and the approval of the settlement is reversed on appeal, the Company intends to vigorously defend this action. FIRST DATA: Asks TN Court To Dismiss Concord Shareholders Suit -------------------------------------------------------------- First Data Corporation asked the Shelby County Circuit Court for the State of Tennessee to dismiss the consolidated class action filed against it, its subsidiary Concord EFS, Inc. and certain of Concord's current and former officers and directors. On April 3 and 4, 2003 two purported class action complaints were filed on behalf of the public holders of Concord's common stock (excluding shareholders related to or affiliated with the individual defendants). The defendants in those actions were certain current and former officers and directors of Concord. The complaints generally alleged breaches of the defendants' duty of loyalty and due care in connection with the defendants' alleged attempt to sell Concord without maximizing the value to shareholders in order to advance the defendants' alleged individual interests in obtaining indemnification agreements related to the securities litigation discussed above and other derivative litigation. The complaints sought class certification, injunctive relief directing the defendants' conduct in connection with an alleged sale or auction of Concord, reasonable attorneys' fees, experts' fees and other costs and relief the Court deems just and proper. On April 2, 2003 an additional purported class action complaint was filed by Barton K. O'Brien. The defendants were Concord, certain of its current and former officers and directors, and the Company. The Company subsequently was dismissed from the action. This complaint contained allegations regarding the individual defendants' alleged insider trading and alleged violations of securities and other laws and asserted that this alleged misconduct reduced the consideration offered to Concord shareholders in the proposed merger between Concord and a subsidiary of the Company. The complaint sought class certification, attorneys' fees, experts' fees, costs and other relief the Court deems just and proper. Moreover, the complaint also sought an order enjoining consummation of the merger, rescinding the merger if it is consummated and setting it aside or awarding rescissory damages to members of the putative class, and directing the defendants to account to the putative class members for unspecified damages. These complaints were consolidated in a second amended consolidated complaint filed September 19, 2003 into one action, styled "In re Concord EFS, Inc. Shareholder Litigation," in the Shelby County Circuit for the State of Tennessee. On October 15, 2003, the plaintiffs moved for leave to file a third amended consolidated complaint similar to the previous complaints but also alleging that the proxy statement disclosures relating to the antitrust regulatory approval process were inadequate. On October 17, 2003, the plaintiffs filed a motion for preliminary injunction to enjoin the shareholder vote on the proposed merger and/or the merger itself. The Court denied the plaintiffs' motion on October 20, 2003 but ordered deposition discovery on an expedited basis. On October 27, 2003 the plaintiffs filed a renewed motion to enjoin the shareholder vote, which was denied by the Court the same day. A motion to dismiss was filed on June 22, 2004 alleging that the claims should be denied and are moot since the merger has occurred. FIRST DATA: ATM Cardholders Commence Antitrust, Fraud Lawsuits -------------------------------------------------------------- First Data Corporation, its subsidiary Concord EFS, Inc. and various financial institutions face several antitrust class actions, charging they conspired to artificially inflate foreign ATM fees that were ultimately charged to ATM cardholders. On July 2, 2004, Pamela Brennan, Terry Crayton, and Darla Martinez filed a class action complaint on behalf of themselves and all others similarly situated in the United States District Court for the Northern District of California against the Company, its subsidiary Concord EFS, Inc., and various financial institutions. Plaintiffs seek a declaratory judgment, injunctive relief, compensatory damages, attorneys' fees, costs and such other relief as the nature of the case may require or as may seem just and proper to the Court. Five similar suits were filed in July, August and October 2004, two in the Central District of California (Los Angeles), two in the Southern District of New York, and one in the Western District of Washington. The Plaintiffs have sought to refer these cases to the Panel on Multidistrict Litigation (MDL) for a determination of where they should go forward. While the MDL panel has not yet ruled on this referral, the Court in New York has ordered that the two cases filed in that jurisdiction should be transferred to the Northern District of California. FPL GROUP: FL Court Grants Summary Judgment in Land Owners' Suit ---------------------------------------------------------------- Florida circuit Court granted summary judgment in favor of FPL Group in the class action filed on behalf of all property owners in Florida. In 2001, J. W. and Ernestine M. Thomas, Chester and Marie Jenkins (since substituted for by Hazel and Lamar Jenkins), and Ray Norman and Jack Teague, as Co-Personal Representatives on behalf of the Estate of Robert L. Johns, served FPL Group, FPL, FPL FiberNet, FPL Group Capital and FPL Investments, Inc. (FPL Investments) as defendants in a civil action filed in the Florida circuit Court. This action is purportedly on behalf of all property owners in Florida (excluding railroad and public rights of way) whose property is encumbered by easements in favor of FPL, and on whose property defendants have installed or intend to install fiber-optic cable which defendants currently lease, license or convey or intend to lease, license or convey for non-electric transmission or distribution purposes. The lawsuit alleges that FPL's easements do not permit the installation and use of fiber-optic cable for general communication purposes. The plaintiffs have asserted claims for unlawful detainer, unjust enrichment and constructive trust and seek injunctive relief and compensatory damages. In May 2002, plaintiffs filed an amended complaint, adding allegations regarding the installation of wireless communications equipment on some easements, and adding a claim for declaratory relief. Defendants filed an answer and affirmative defenses to the amended complaint in August 2002. Motions for summary judgment by FPL Group, FPL Group Capital and FPL Investments have been granted, and they have been dismissed from this lawsuit. INTERNATIONAL RESEARCH: FTC Commences Consumer Fraud, Spam Suit --------------------------------------------------------------- The Federal Trade Commission (FTC) has asked a U.S. district Court judge to shut down an operation that used illegal spam to make deceptive claims about an "automotive fuel saver" that doesn't save fuel. The FTC charges that the spam violates the CAN-SPAM Act and the deceptive claims violate the FTC Act. The agency will ask the Court to permanently bar the law violations and order the defendants to provide redress for consumers. An FTC complaint filed in U.S. District Court in Chicago alleges that Anthony Renda and International Research and Development Corporation manufacture and market a "magnetic device" under the names FuelMAX and Super FuelMAX. They claim that when the device is attached to an automobile's fuel line, it will fracture gasoline hydrocarbon chains through magnetic resonance and: (1) Increase mileage by up to 27%; (2) Reduce Fuel Consumption; (3) Reduce Emissions; (4) Provide Accelerated Combustion; and (5) Burn Fuel That is Normally Exhausted as Un-burned Pollution In November 2001, the FTC issued a warning that these product claims and advertising were false, lacked substantiation, and likely violated the FTC Act. Other defendants, acting as Super FuelMAX resellers, set up Web sites, including www.fuelsaverpro.com to sell the magnetic devices under the pseudonym Fuel Saver Pro. The Web sites made claims such as: (1) Increase gas mileage 27%+ by helping fuel burn better; (2) Reduce emissions by 43%; (3) Smoother engine; (4) pays for itself FAST!!!! (5) Gives an extra 10% more horsepower; and (6) Based on the size of your gas tank you will save from $8 for a typical 15 gallon gas tank, but larger V8 SUVs and trucks will save up to $20 per tank. The defendant resellers used spam that made deceptive claims to drive traffic to their Web sites. According to the FTC, the spam contained the names of innocent third parties in the "from" or "reply to" fields - a practice known as spoofing - and did not contain a valid physical postal address. The FTC alleges that the magnetic "fuel saver" doesn't save fuel, doesn't increase gas mileage, and doesn't reduce emissions. According to the complaint, the claims are false and misleading and violate the FTC Act. The agency also alleges that by providing promotional materials with the false claims to distributors, resellers, and affiliates, the defendants have provided them with the means and instrumentalities to violate the FTC Act. The agency also alleges that the spoofing and failure to provide a valid physical postal address violate the CAN-SPAM Act. The FTC charges that consumers throughout the country have suffered substantial monetary loss and the defendants have been unjustly enriched. It has asked the Court to halt the deceptive claims, bar future violations of the CAN-SPAM Act, and order redress for consumers. The FTC's complaint names International Research and Development Corporation of Nevada; Anthony Renda; Net Marketing Group, LLC; Micro System Technologies; Floyd J. Tassin, Jr; Marcia Tassin; Diverse Marketing Group, Inc.; Diverse Marketing Group, LLC; Mark C. Ayoub; and Epro2000, Inc. as defendants. For more details, contact the FTC's Consumer Response Center by Mail: Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 or visit the Website: http://www.ftc.gov,or contact Claudia Bourne Farrell, Office of Public Affairs by Phone: 202-326-2181 or Steven Baker or Steven M. Wernikoff, FTC Midwest Region by Phone: 312-960-5634. INVISION TECHNOLOGIES: Dropped From 9-11 Product Lawsuits in NY --------------------------------------------------------------- InVision Technologies, Inc. and its subsidiary, Quantum Magnetics have been dropped as defendants in the coordinated litigation filed in the United States District Court for the Southern District of New York, styled "In re: September 11 Litigation, 21 MC 97 (AKH)." The two companies, together with other entities, were named as defendants in approximately 156 product liability lawsuits by individual plaintiffs seeking damages for wrongful death in connection with the terrorist acts of September 11, 2001. The Company and Quantum Magnetics have been served with 103 complaints. Each complaint with which InVision and Quantum Magnetics have been served alleges that defendants have breached a duty to airplane passengers and others by failing to properly screen passengers and carry-on baggage for dangerous weapons. In a regulatory filing, the Company said the plaintiffs' claims lack merit, especially in light of the fact that it and Quantum Magnetics did not, as of September 11, 2001, have any passenger or carry-on baggage screening equipment at security checkpoints in any of the airports from which the hijacked airplanes departed. By Court order, the plaintiffs were required to file and serve Amended Master Complaints and Appendices by March 31, 2004 to reflect all defendants and causes of action in the litigation that had been added since their original Master Complaints were filed. The Company and Quantum Magnetics were not included in the plaintiffs' Amended Master Complaints and their Appendices. Since these Amended Master Complaints are controlling over the individual complaints filed by the plaintiffs, all plaintiffs in the "In re: September 11 Litigation" have effectively dismissed their claims against the Company and Quantum Magnetics. Notices of dismissals or dismissal orders have been received in all of the individual complaints. In September 2004, new complaints alleging personal injury and property damages were filed in the In re: September 11 Litigation." None of these complaints name the Company and Quantum Magnetics as defendants. As a result of the filing of these new complaints, the new deadline for the named defendants to assert cross-claims and third party claims is March 31, 2005. INVISION TECHNOLOGIES: Reaches Settlement For CA Securities Suit ---------------------------------------------------------------- InVision Technologies, Inc. reached a settlement for the consolidated securities class action filed in the California Superior Court for the County of Alameda, styled "Waltman, et al. v. InVision Technologies, Inc., et al., Lead Case No. RG04146722." On March 19, 2004, two alleged holders of the Company's common stock filed purported class action lawsuits against the Company and each of its directors. The complaints allege that, in pursuing the transaction with General Electric Company (GE) and approving the merger agreement, the directors violated their fiduciary duties to the holders of InVision common stock by, among other things, failing to obtain the highest price reasonably available, tailoring the terms of the transaction to meet GE's needs, engaging in self-dealing and obtaining personal financial benefits not shared equally by the plaintiffs and other stockholders. The complaints also allege that the merger agreement resulted from a flawed process designed to ensure a sale to one buyer. The lawsuits were later consolidated by stipulation of the parties. On May 3, 2004, InVision and three directors filed a demurrer to the consolidated complaint on the grounds that the plaintiffs failed to allege sufficient facts to state a cause of action. The remaining five directors filed a motion to quash the service of summons because they are not California residents, and, therefore, the Court lacks jurisdiction over them. On May 25, 2004, in response to the demurrer, the plaintiffs filed a consolidated amended class action complaint asserting similar causes of action, thereby rendering the demurrer moot. The plaintiffs served initial written discovery requests and following the May 26, 2004 Initial Complex Case Management Conference, the plaintiffs were permitted limited expedited discovery for the purpose of a bringing a motion for a preliminary injunction. On June 17, 2004, prior to the filing of any motion for a preliminary injunction, the parties entered into a memorandum of understanding to settle the consolidated class action suit. Under the terms of the memorandum, the Company and the plaintiffs to the consolidated action have agreed, subject to approval by the Court, to enter into a settlement with respect to all claims raised by the plaintiffs to the consolidated action. The terms of the settlement contemplated by the memorandum required that additional disclosures be made concerning the merger. Those disclosures were made available in the June 18, 2004 joint press release issued by GE Infrastructure and InVision. The parties also agreed that the plaintiffs may seek attorneys' fees and costs in the amount of $450,000 that InVision will pay, if the attorney's fees and costs are granted by the Court. There will be no other settlement payment by InVision, GE or any of the members of InVision's board of directors, who were also named as defendants in the lawsuits. On September 16, 2004, the Court permitted plaintiffs to file a second amended complaint. The second amended complaint added a purported derivative claim against the individual defendants and alleged that they had permitted, or failed to prevent, the activities that gave rise to the internal investigation into possible offers of improper payments by InVision's distributors in connection with foreign sales activities. By agreement of the parties and order of the Court, no responsive pleading is due pending the Court's consideration of the proposed settlement. If the Court approves the settlement contemplated in the memorandum, the lawsuits, as amended, will be dismissed. INVISION TECHNOLOGIES: CA Orders Securities Suits Consolidated -------------------------------------------------------------- The United States District Court for the Northern District of California ordered consolidated the securities class actions filed against InVision Technologies, Inc. On August 4, 2004, an alleged holder of InVision common stock filed a purported class action lawsuit, captioned Engelken, Individually and On Behalf of All Others Similarly Situated, v. InVision Technologies, Inc., et al. The complaint also names as defendants: (1) Giovanni Lanzara, the Chairman of InVision's Board of Directors, (2) Sergio Magistri, InVision's Chief Executive Officer and a director, and (3) Ross Mulholland, Senior Vice President and Chief Financial Officer of InVision The complaint alleges InVision and the individual defendants failed to disclose that the Company's foreign distributors had made improper payments in connection with foreign sales activities, that InVision had improperly accounted for such payments, that InVision's improper accounting for such payments allowed it to enter into a definitive merger agreement with GE, that InVision and the individual defendants made related misrepresentations, and that these alleged nondisclosures and misrepresentations violated Section 10(b) of the Exchange Act and Rule 10b-5. A substantially identical lawsuit was filed on August 9, 2004. On October 13, 2004, the Court granted a motion by The Glazer Funds to consolidate the actions and to be appointed lead plaintiff. On October 29, 2004 the parties submitted a proposed scheduling order to the Court that contemplates the filing of a consolidated amended complaint on or before December 9, 2004, and a hearing on any motions to dismiss on March 29, 2005. The disposition of the proposed scheduling order is uncertain. JOHNSON & JOHNSON: Working To Settle PROPULSID Injury Litigation ---------------------------------------------------------------- Johnson & Johnson is working to settle litigation relating to its subsidiary Janssen Pharmaceutica, Inc.'s product PROPULSID, which was withdrawn from general sale and restricted to limited use in 2000. In the wake of publicity about those events, numerous lawsuits have been filed against Janssen, which is a wholly owned subsidiary of the Company, and the Company regarding PROPULSID, in state and federal Courts across the country. There are approximately 429 such cases currently pending, including the claims of approximately 5,900 plaintiffs. In the active cases, 415 individuals are alleged to have died from the use of PROPULSID. These actions seek substantial compensatory and punitive damages and accuse Janssen and the Company of inadequately testing for and warning about the drug's side effects, of promoting it for off-label use and of over promotion. In addition, Janssen and the Company have entered into agreements (tolling agreements) with various plaintiffs' counsel halting the running of the statutes of limitations with respect to the potential claims of a significant number of individuals while those attorneys evaluate whether or not to sue Janssen and the Company on their behalf. In September 2001, the first ten plaintiffs in the Rankin case, which comprises the claims of 155 PROPULSID plaintiffs, went to trial in state Court in Claiborne County, Mississippi. The jury returned compensatory damage verdicts for each plaintiff in the amount of $10 million, for a total of $100 million. The trial judge thereafter dismissed the claims of punitive damages. On March 4, 2002, the trial judge reduced these verdicts to a total of $48 million, and denied the motions of Janssen and the Company for a new trial. On May 13, 2004, the Supreme Court of Mississippi reversed the verdicts against Janssen and the Company, and remanded the case to the trial Court. The Supreme Court found the joint trial of multiple plaintiffs' cases against Janssen was prejudicial and directed the trial Court to return the cases of the individual plaintiffs for separate trials to their home counties. A motion for rehearing was denied on August 5, 2004. In April 2002, a state court judge in New Jersey denied plaintiffs' motion to certify a national class of PROPULSID users for purposes of medical monitoring and refund of the costs of purchasing PROPULSID. An effort to appeal that ruling has been denied. In June 2002, the federal judge presiding over the PROPULSID Multi-District Litigation in New Orleans, Louisiana similarly denied plaintiffs' motion there to certify a national class of PROPULSID users. Plaintiffs in the Multi-District Litigation have said they are preserving their right to appeal that ruling, and other complaints filed against Janssen and the Company include class action allegations, which could be the basis for future attempts to have classes certified. On February 5, 2004, Janssen announced that it had reached an agreement in principle with the Plaintiffs Steering Committee (PSC), of the PROPULSID Federal Multi-District Litigation (MDL), to resolve federal lawsuits related to PROPULSID. There are approximately 4,000 individuals included in the Federal MDL of whom approximately 300 are alleged to have died from use of the drug. The agreement becomes effective once 85 percent of the death claims, and 75 percent of the remainder, agree to the terms of the settlement. In addition, 12,000 individuals who have not filed lawsuits, but whose claims are the subject of tolling agreements suspending the running of the statutes of limitations against those claims, must also agree to participate in the settlement before it will become effective. Those agreeing to participate in the settlement will submit medical records to an independent panel of physicians who will determine whether the claimed injuries were caused by PROPULSID and otherwise meet the standards for compensation. If those standards are met, a Court-appointed special master will determine compensatory damages. If the agreement becomes effective, Janssen will pay as compensation a minimum of $69.5 million and a maximum of $90 million, depending upon the number of plaintiffs who enroll in the program. Janssen will also establish an administrative fund not to exceed $15 million, and will pay legal fees to the PSC up to $22.5 million, subject to Court approval. With respect to all the various PROPULSID actions against them, Janssen and the Company dispute the claims in those lawsuits and are vigorously defending against them except where, in their judgment, settlement is appropriate. Janssen and the Company believe they have adequate self-insurance accruals and third party product liability insurance with respect to these cases. In communications to the Company, the excess insurance carriers have raised certain defenses to their liability under the policies and to date have declined to reimburse Janssen and the Company for PROPULSID-related costs despite demand for payment. However, in the opinion of the Company, those defenses are pro forma and lack substance and the carriers will honor their obligations under the policies either voluntarily or after litigation. In March 2004, the Company commenced arbitration against Allianz Underwriters Insurance Company, which issued the first layer of applicable excess insurance coverage, to obtain reimbursement of PROPULSID-related costs. JOHNSON & JOHNSON: Certification Sought For Racial Bias Lawsuit --------------------------------------------------------------- Plaintiffs moved for the certification of a class action filed against Johnson & Johnson, alleging the Company discriminated against its African-American and Hispanic employees. Plaintiffs moved to certify a class of all African American and Hispanic salaried employees of the Company and its affiliates in the United States, who were employed at any time from November 1997 to the present. Plaintiffs seek monetary damages for the period 1997 through the present (including punitive damages) and equitable relief. The Company is expected to file its response to plaintiffs' class certification motion in the first quarter of 2005. A decision by the district Court is not expected before late 2005. MONSANTO CO.: Court Hears Appeal of MO Suit Certification Denial ---------------------------------------------------------------- The United States Eighth Circuit Court of Appeals heard plaintiffs' appeal of the denial of class certification for the antitrust claims in the consolidated class action filed against Monsanto Co. Two purported class action lawsuits by farmers concerning the Company's biotechnology trait products have been consolidated in the U.S. District Court for the Eastern District of Missouri. The suits were initially filed against the former Monsanto Company by two groups of farmers: one on December 14, 1999, in the U.S. District Court for the District of Columbia, which complaint was amended in March 2001 to add Pioneer Hi-Bred International, Inc., Syngenta Seeds, Syngenta Crop Protection, and Bayer CropScience as defendants; and the other on February 14, 2002, in the U.S. District Court for the Southern District of Illinois. The complaints included both tort and antitrust allegations. The tort claims included alleged violations of unspecified international laws through patent license agreements, alleged breaches of an implied warranty of merchantability, and alleged violations of unspecified consumer fraud and deceptive business practices laws, all in connection with the sale of genetically modified seed. The antitrust claims included allegations of violations of various antitrust laws, including allegations of a conspiracy among defendants to fix seed prices in the United States in violation of federal antitrust laws. Plaintiffs sought declaratory and injunctive relief in addition to antitrust, treble, compensatory and punitive damages, and attorneys' fees. On September 22, 2003, the District Court granted the Company's motion for summary judgment on all tort claims and denied the plaintiffs' motion to allow the tort claims to proceed as a class action. On September 30, 2003, the District Court for the Eastern District of Missouri denied the plaintiffs' motion to allow their antitrust claims to proceed as a class action. The plaintiffs appealed this decision, and on September 13, 2004, the U.S. Court of Appeals for the Eighth Circuit heard oral argument on its review of the District Court's decision denying class certification of the plaintiffs' antitrust claims. MONSANTO CO.: Agent Orange Litigation Still Pending in NY Court --------------------------------------------------------------- Monsanto Company continues to face litigation alleging personal injury due to exposure to herbicides used by the U.S. armed services during the Vietnam War, more prominently the chemical called Agent Orange. Various manufacturers of the herbicides, including the former Monsanto Company, have been parties to lawsuits filed on behalf of veterans and others alleging injury from exposure to the herbicides. In the United States, this litigation has been assigned to Judge Weinstein of the U.S. District Court for the Eastern District of New York, as part of In re Agent Orange Product Liability Litigation, MDL 381 (MDL), a multidistrict litigation proceeding established in 1977 to coordinate Agent Orange-related litigation in the United States. In 1984, a settlement in the MDL proceeding concluded all class action litigation filed on behalf of U.S. and certain other groups of plaintiffs. Approximately 30 suits filed by individual U.S. veterans contesting the denial of their claims subsequent to the class action settlement have been consolidated in the MDL and are currently pending in the District Court. On June 9, 2003, the U.S. Supreme Court allowed two claims (Isaacson and Stephenson) to proceed notwithstanding the 1984 class action settlement. On February 9, 2004, the District Court granted defendants' motion for summary judgment on all claims made in the Isaacson and Stephenson cases on the basis of the government contractor defense. The Court, however, stayed entry of that judgment and granted plaintiffs' request for an additional six months to conduct further discovery solely relating to the government contractor defense. On March 18, 2004, the District Court ordered that all other plaintiffs in all other lawsuits currently pending before the Court in this matter were to adhere to the same schedule, unless they specifically requested not to be so bound. On February 5, 2004, a putative class action suit was filed in the U.S. District Court for the Eastern District of New York by certain citizens of Vietnam alleging that the manufacturers of Agent Orange conspired with the United States government to commit war crimes and crimes against humanity in connection with the spraying of Agent Orange. This case has also been assigned to Judge Weinstein. MONSANTO CO.: Korean Court Mulls Herbicide Suit Dismissal Appeal ---------------------------------------------------------------- The Seoul High Court in Korea will hear the appeal of the dismissal of a lawsuit filed by certain Korean veterans of the Vietnam War against Monsanto Company and The Dow Chemical Company. Plaintiffs allege that they were exposed to herbicides, and that they suffered injuries or their children suffered birth defects as a result. Three separate complaints filed in October 1999 are being handled collectively and currently involve approximately 16,700 plaintiffs. The complaints seek damages of 300 million won (approximately US$260,000) per plaintiff. On May 23, 2002, the Seoul District Court ruled in favor of the manufacturers and dismissed all claims of the plaintiffs on the basis of lack of causation and statutes of limitations. Plaintiffs have filed an appeal de novo with the Seoul High Court and the parties have engaged in the briefing process required by that Court. The Seoul High Court has held three preparatory hearings to address issues on the appeal and has indicated that it will hold a formal hearing on the appeal in December 2004. Other ancillary actions are also pending in Korea, including a request for provisional relief pending resolution of the main action. NEW JERSEY: Proposes More Stringent Regulations On Gas Meters ------------------------------------------------------------- The state of New Jersey has proposed new regulations that would toughen safety rules for gas meters near homes and hold utility companies liable for damage caused by ruptures in lines, the Newsday, NY reports. The result of an explosion that happened two years ago, which was caused by a ruptured meter in the driveway of a home in Mount Laurel, the Division of Consumer Affairs proposed the new rules. The explosion led to two lawsuits, including one filed on behalf of residents of Springwood Village in Mount Laurel, where a driver lost control of her car on an icy driveway in February 2003. The crash led to an explosion that destroyed three townhouses and damaged 24 others. No one was hurt. The lawsuit, which Public Service Electric & Gas settled earlier this year claimed that placing exposed gas meters so close to driveways was a hazard. The Company also agreed to protect or relocate some meters as part of that settlement. The other suit was a class action filed by a Gibbsboro woman in September on behalf of her and other South Jersey Gas customers who have unprotected meters or gas pipes near their driveways or garages. According to state sources, the new regulations that were proposed would require gas companies to register the location of all gas meters that are near residences and unprotected. Gas companies would also be required to install shut-off valves on the meters and add protective barriers. A spokesman for the Bureau of Public Utilities said the agency was working with Consumer Affairs on the regulations and hoped to have them in place by early next year. NOVASTAR FINANCIAL: Faces Securities Fraud, Derivative Lawsuits --------------------------------------------------------------- NovaStar Financial, Inc. and several of its executive officers and directors face number of substantially similar class action lawsuits and three derivative lawsuits (now consolidated into a single case) filed in the United States District Court in Kansas City and in Missouri and Maryland state Courts. The complaints generally claim that the defendants are liable for making or failing to prevent alleged misstatements or omissions in the Company's public disclosures. The securities suits were allegedly filed on behalf of purchasers NovaStar Financial, Inc.'s, (NYSE: NFI) common stock during the period of October 28, 2003 through April 12, 2004, inclusive, seeking to pursue remedies under the Securities Exchange Act of 1934. The suits allege that defendants violated certain provisions of the Securities Exchange Act of 1934. PFIZER INC.: Merchant Law Lodges Suit V. Celebrex's Side Effects ---------------------------------------------------------------- The Saskatchewan-based Merchant Law Group launched a class- action suit against Celebrex's maker, Pfizer Inc. alleging that the arthritis drug causes cardiovascular-related side-effects, ranging from high blood pressure to heart attacks, the CBC British Columbia reports. Though maintaining that the drug is well established and its safe-use is supported by extensive clinical studies, Health Canada has given Pfizer until mid-November to provide additional proof of the drug's safety. According to Dr. Katherine Siminovitch, a rheumatoligist at Toronto's Mount Sinai hospital, who supports Celebrex, "Considering the large number of patients that are on the medication and [those that] have been studied in various trials, it looks like this medication may be safe." Twenty Canadians have died while taking Celebrex. Health Canada is investigating six of those deaths. There is no evidence showing that those deaths were associated to Celebrex use. PRAXAIR CORPORATION: Faces Injury Lawsuits Over Welding Fumes ------------------------------------------------------------- Praxair Corporation and many other companies face 635 lawsuits alleging personal injury caused by manganese contained in welding fumes. The cases were pending in state and federal Courts in Iowa, Illinois, Mississippi, Missouri, Texas, Louisiana, Georgia, West Virginia, Ohio, Arkansas, Indiana, Utah, Pennsylvania, Minnesota and Alabama. There were a total of 9,817 individual claimants in these cases. One case is a class action that has not been certified. The suits allege that exposure to manganese contained in welding fumes caused neurological injury. In a regulatory filing, the Company asserted that it has never manufactured welding consumables. The Company further stated that a predecessor Company manufactured such products prior to 1985. All of the cases filed in or removed to federal Courts have been (or are in the process of being) transferred by the Judicial Panel for Multidistrict Litigation to the U.S. District Court for the Northern District of Ohio for coordinated pretrial proceedings. The plaintiffs seek unspecified compensatory and, in most instances, punitive damages. QUALCOMM: Continues To face Overtime Wage Lawsuits in CA Court -------------------------------------------------------------- QUALCOMM continues to face litigation filed by its former employees, alleging violations of the Labor Code and age discrimination in the United States District Court for the Southern District of California. On February 2, 2000, three former employees filed a putative class action against the Company, ostensibly on behalf of themselves and those former employees of ours whose employment was terminated in April 1999. Virtually all of the purported class of plaintiffs received severance packages at the time of the termination of their employment, in exchange for a release of claims, other than federal age discrimination claims, against the Company. The complaint purports to state 10 causes of action including breach of contract, age discrimination, violation of Labor Code Section 200, violation of Labor Code Section 970, unfair business practices, intentional infliction of emotional distress, unjust enrichment, breach of the covenant of good faith and fair dealing, declaratory relief and undue influence. The complaint seeks an order accelerating all unvested stock options for the members of the class, plus economic and liquidated damages of an unspecified amount. On June 27, 2000, the case was ordered transferred from Los Angeles County Superior Court to San Diego County Superior Court. On July 3, 2000, the Company removed the case to the United States District Court for the Southern District of California, and discovery commenced. On May 29, 2001, the Court dismissed all plaintiffs' claims except for claims arising under the federal Age Discrimination in Employment Act. On July 16, 2001, the Court granted conditional class certification on the remaining claims, to be revisited by the Court at the end of the discovery period. On April 15, 2003, the Court granted the Company's summary judgment motions as to all remaining class members' disparate impact claims. On June 18, 2003, the Court ordered decertification of the class and dismissed the remaining claims of the opt-in plaintiffs without prejudice. Plaintiffs have filed an appeal. On June 20, 2003, 76 of the opt-in plaintiffs filed an action in Federal District Court for the Southern District of California, alleging violations of the Age Discrimination in Employment Act as a result of their layoffs in 1999. To date, the complaint has not been served. QUALCOMM: Continues To Face Various Cellular Phones Injury Suits ---------------------------------------------------------------- QUALCOMM is working to resolve purported class action lawsuits (In re Wireless Telephone Frequency Emissions Products Liability Litigation, United States District Court for the District of Maryland), and several individually filed actions, seeking personal injury, economic and/or punitive damages arising out of the Company's sale of cellular phones. The suits also name as defendants other manufacturers of wireless phones, wireless operators and industry-related organizations. On March 5, 2003, the Court granted the defendants' motions to dismiss five of the consolidated cases (Pinney, Gimpleson, Gillian, Farina and Naquin) on the grounds that the claims were preempted by federal law. On April 2, 2003, the plaintiffs filed a notice of appeal of this order and the Court's order denying remand. All remaining cases filed against the Company allege personal injury as a result of their use of a wireless telephone. Those cases have been remanded to the Washington, D.C. Superior Court. The Courts that have reviewed similar claims against other companies to date have held that there was insufficient scientific basis for the plaintiffs' claims in those cases. QUANTUM CORPORATION: CA Court To Hear Certification For Lawsuit --------------------------------------------------------------- The Superior Court for the County of San Francisco, California will hear class certification motions for the lawsuit filed against Quantum Corporation in January 2005. The suit also names as defendants Hitachi Maxell, Ltd., Maxell Corporation of America, Fuji Photo Film Co., Ltd., and Fuji Photo Film U.S.A. The plaintiff, Franz Inc., alleges violation of California antitrust law, violation of California unfair competition law, and unjust enrichment. Franz Inc. charges, among other things, that the defendants entered into agreements and conspired to monopolize the market and fix prices for data storage tape compatible with DLT tape drives. Franz seeks an order that the lawsuit be maintained as a class action and that defendants be enjoined from continuing the violations alleged in the complaint. Franz also seeks compensatory damages, treble damages, statutory damages, attorneys' fees, costs, and interest. SALTON INC.: AG Donates Part of Settlement To IN Organizations -------------------------------------------------------------- Indiana Attorney General Steve Carter recently delivered a $14,391.59 amount, which came from a class action settlement, to three organizations, Meals on Wheels of Northwest Indiana, Northwest Indiana Community Action Corp. and HHS of Porter County on behalf of Salton Inc., which was accused of engaging in improper pricing, the Gary Post Tribune reports. The suit against the makers of the George Foreman line of cooking utensils alleged that Salton required retail outlets that sold the George Foreman grill to sell only those grills, thereby forcing people who purchased them to pay a higher price than if there were also others from which to choose. However, instead of going to trial, Salton decided to settle with the 45 states that entered into the lawsuit for $8 million, of which Indiana received $170,000. AG Carter then decided that since the money comes from a food-producing Company, the money should then go to organizations that help people get the nutrition they need. SERVICE CORPORATION: Acquires Court Approval For $35M Settlement ---------------------------------------------------------------- Service Corporation International (NYSE: SCI), the world's largest funeral and cemetery Company, recently received Court approval of the settlement of the securities class action lawsuit pending against the Company and certain of its current and former officers since January 1999. The terms of the settlement agreement, reached in April 2004, called for a $65 million payment in settlement of these claims. The Company's insurance carriers agreed to make a payment of $30 million towards the settlement resulting in net payments by the Company of approximately $35 million. The Company reserved amounts for this claim in the first quarter of 2004 and deposited the required funds into escrow in the second quarter of 2004. For more details, contact Debbie Young - Director of Investor Relations by Phone: (713) 525-9088 OR Terry Hemeyer - Managing Director / Corporate Communications by Phone: (713) 525-5497 STATE FARM: Files Suit Seeking To End Growers' Representation ------------------------------------------------------------- State Farm Fire & Casualty Co. recently filed a case in U.S. District Court asking a judge to declare North Idaho bluegrass farmers Clarence Haeg and Philip Lampert of Plummer are on their own when it comes to complaints about agricultural burning, the Bonner County Daily Bee reports. According to the insurance suit, "State Farm has no duty to defendants ... for any claims arising out of the practice of burning their fields." The insurance company states that two cases that it shouldn't have to defend have already gone in the farmers' favor. In one case, the Idaho Supreme Court ruled the state law exempting agricultural burning from claims of nuisance and trespass is constitutional. After that ruling, a class action case filed against farmers on behalf of people with breathing difficulties was dismissed in Idaho's 1st District Court. Mr. Haeg and Mr. Lampert were among dozens of farmers who were defendants in lawsuits in State and Federal Court seeking to halt field burning, which is a practice that some North Idaho bluegrass farmers do, wherein they burn straw and stubble after seed harvest to prepare the fields for the next year's crop. According to the farmers, it promotes early plant growth and enhances seed yields. At least two other insurance companies are claiming in state Courts that their policies don't cover claims about field smoke. TIME WARNER: Plaintiffs Appeal Dismissal of CA Securities Suit -------------------------------------------------------------- Plaintiffs appealed the United States District Court for the Central District of California's dismissal of a class action filed by the California State Teachers' Retirement System on behalf of a putative class of purchasers of stock in Homestore.com, Inc. Plaintiff alleges that Homestore engaged in a scheme to defraud its shareholders in violation of Section 10(b) of the Exchange Act. Time Warner, Inc. and two former employees of its America Online division were named as defendants in the amended consolidated complaint because of their alleged participation in the scheme through certain advertising transactions entered into with Homestore. Motions to dismiss filed by the Company and the two former employees were granted on March 7, 2003, and a final judgment of dismissal was entered on March 8, 2004. On April 7, 2004, plaintiff filed a notice of appeal in the Ninth Circuit Court of Appeals. On July 26, 2004, plaintiff filed its opening appellate brief. The Company anticipates that defendants' briefs will be filed during November 2004, the Company said in a regulatory filing. TIME WARNER: Faces Consolidated Securities Fraud Lawsuit in NV -------------------------------------------------------------- Time Warner, Inc. and four of its former officers and employees face a consolidated securities class action filed in the U.S. District Court for the District of Nevada on behalf of a putative class of purchasers of stock in PurchasePro.com, Inc. Plaintiffs allege that PurchasePro engaged in a scheme to defraud its shareholders in violation of Section 10(b) of the Exchange Act. The Company and four former officers and employees were added as defendants in the second amended complaint and are alleged to have participated in the scheme through certain advertising transactions entered into with PurchasePro. Three similar putative class actions had previously been filed against the Company, America Online and certain former officers and employees in the U.S. District Court for the Southern District of New York. On June 9, 2004, defendants filed a motion to transfer these three actions to Nevada for consolidation, and on June 16, 2004, this motion was granted. TIME WARNER: Continues to Face Stock Fraud, ERISA Lawsuits in NY ---------------------------------------------------------------- Time Warner, Inc. continues to face litigation in the United States District Court for the Southern District of New York, alleging violations of federal securities laws and the Employee Retirement Income Security Act (ERISA), on behalf of its shareholders. As of November 1, 2004, 30 shareholder class action lawsuits have been filed naming as defendants the Company, certain current and former executives of the Company and, in several instances, America Online, Inc. (America Online). These lawsuits were filed in U.S. District Courts for the Southern District of New York, the Eastern District of Virginia and the Eastern District of Texas. The complaints purport to be made on behalf of certain shareholders of the Company and allege that the Company made material misrepresentations and/or omissions of material fact in violation of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. Plaintiffs claim that the Company failed to disclose America Online's declining advertising revenues and that the Company and America Online inappropriately inflated advertising revenues in a series of transactions. Certain of the lawsuits also allege that certain of the individual defendants and other insiders at the Company improperly sold their personal holdings of Time Warner stock, that the Company failed to disclose that the America Online Historic TW Merger was not generating the synergies anticipated at the time of the announcement of the merger and, further, that the Company inappropriately delayed writing down more than $50 billion of goodwill. The lawsuits seek an unspecified amount in compensatory damages. All of these lawsuits have been centralized in the U.S. District Court for the Southern District of New York for coordinated or consolidated pretrial proceedings (along with the federal derivative lawsuits and certain lawsuits brought under the Employee Retirement Income Security Act (ERISA)) under the caption "In re AOL Time Warner Inc. Securities and ERISA Litigation." Additional lawsuits filed by individual shareholders have also been consolidated for pretrial proceedings. The Minnesota State Board of Investment (MSBI) has been designated lead plaintiff for the consolidated securities actions and filed a consolidated amended complaint on April 15, 2003, adding additional defendants including additional officers and directors of the Company, Morgan Stanley & Co., Salomon Smith Barney Inc., Citigroup Inc., Banc of America Securities LLC and JP Morgan Chase & Co. Plaintiffs also added additional allegations, including that the Company made material misrepresentations in its Registration Statements and Joint Proxy Statement-Prospectus related to the America Online Historic TW Merger and in its registration statements pursuant to which debt securities were issued in April 2001 and April 2002, allegedly in violation of Section 11 and Section 12 of the Securities Act of 1933. On July 14, 2003, the defendants filed a motion to dismiss the consolidated amended complaint. On May 5, 2004, the district Court granted in part the defendants' motion, dismissing all claims with respect to the registration statements pursuant to which debt securities were issued in April 2001 and April 2002 and certain other claims against other defendants, but otherwise allowing the remaining claims against the Company and certain other defendants to proceed. On August 11, 2004, the Court granted MSBI's motion to file a second amended complaint. On July 30, 2004, defendants filed a motion for summary judgment on the basis that plaintiffs cannot establish loss causation for any of their claims, and thus plaintiffs do not have any recoverable damages. As of November 1, 2004, three putative class action lawsuits have been filed alleging violations of ERISA in the U.S. District Court for the Southern District of New York on behalf of current and former participants in the AOL Time Warner Savings Plan, the AOL Time Warner Thrift Plan and/or the TWC Savings Plan. Collectively, these lawsuits name as defendants the Company, certain current and former directors and officers of the Company and members of the Administrative Committees of the Plans. The lawsuits allege that the Company and other defendants breached certain fiduciary duties to plan participants by, inter alia, continuing to offer Time Warner stock as an investment under the Plans, and by failing to disclose, among other things, that the Company was experiencing declining advertising revenues and that the Company was inappropriately inflating advertising revenues through various transactions. The complaints seek unspecified damages and unspecified equitable relief. The ERISA actions have been consolidated as part of the "In re AOL Time Warner Inc. Securities and "ERISA" Litigation." On July 3, 2003, plaintiffs filed a consolidated amended complaint naming additional defendants, including America Online, Inc., certain current and former officers, directors and employees of the Company and Fidelity Management Trust Company. On September 12, 2003, the Company filed a motion to dismiss the consolidated ERISA complaint and that motion is pending. On September 26, 2003, the Court granted the Company's motion for a limited stay of discovery in the ERISA actions. On July 1, 2003, "Stichting Pensioenfonds ABP v. AOL Time Warner Inc. et al." was filed in the U.S. District Court for the Southern District of New York against the Company, current and former officers, directors and employees of the Company and Ernst & Young LLP. Plaintiff alleges that the Company made material misrepresentations and/or omissions of material fact in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, Section 11, Section 12, Section 14(a) and Rule 14a-9 promulgated thereunder, Section 18 and Section 20(a) of the Exchange Act. The complaint also alleges common law fraud and negligent misrepresentation. The plaintiff seeks an unspecified amount of compensatory and punitive damages. This lawsuit has been consolidated for coordinated pretrial proceedings under the caption "In re AOL Time Warner Inc. Securities and ERISA Litigation." On July 16, 2004, plaintiff filed an amended complaint adding certain institutional defendants, including Historic TW, and certain current directors of the Company. On November 11, 2002, Staro Asset Management, LLC filed a putative class action complaint in the U.S. District Court for the Southern District of New York on behalf of certain purchasers of Reliant 2.0% Zero-Premium Exchangeable Subordinated Notes for alleged violations of the federal securities laws. Plaintiff is a purchaser of subordinated notes, the price of which was purportedly tied to the market value of Time Warner stock. Plaintiff alleges that the Company made misstatements and/or omissions of material fact that artificially inflated the value of Time Warner stock and directly affected the price of the notes. Plaintiff seeks compensatory damages and/or rescission. This lawsuit has been consolidated for coordinated pretrial proceedings under the caption "In re AOL Time Warner Inc. Securities and "ERISA" Litigation." On May 23, 2003, "Treasurer of New Jersey v. AOL Time Warner Inc. et al., was filed in the Superior Court of New Jersey, Mercer County, naming as defendants the Company, certain current and former officers, directors and employees of the Company, Ernst & Young LLP, Citigroup Inc., Salomon Smith Barney, Morgan Stanley, JP Morgan Chase and Banc of America Securities. The complaint is brought by the Treasurer of New Jersey and purports to be made on behalf of the State of New Jersey, Department of Treasury, Division of Investments and certain funds administered by the Division. Plaintiff alleges that the Company made material misrepresentations in its registration statements in violation of Sections 11 and 12 of the Securities Act of 1933. Plaintiff also alleges violations of New Jersey state law for fraud and negligent misrepresentation. Plaintiffs seek an unspecified amount of damages. On October 29, 2003, the Company moved to stay the proceedings or, in the alternative, dismiss the complaint. Also on October 29, 2003, all named individual defendants moved to dismiss the complaint for lack of personal jurisdiction. The parties have agreed to stay this action and to coordinate discovery proceedings with the "In re AOL Time Warner Inc. Securities and ERISA Litigation." As of November 1, 2004, 11 shareholder derivative lawsuits have been filed naming as defendants certain current and former directors and officers of the Company, as well as the Company as a nominal defendant. Three have been filed in New York State Supreme Court for the County of New York, four have been filed in the U.S. District Court for the Southern District of New York and four have been filed in the Court of Chancery of the State of Delaware for New Castle County. The complaints allege that defendants breached their fiduciary duties by causing the Company to issue corporate statements that did not accurately represent that America Online had declining advertising revenues, that the America Online Historic TW Merger was not generating the synergies anticipated at the time of the announcement of the merger, and that the Company inappropriately delayed writing down more than $50 billion of goodwill, thereby exposing the Company to potential liability for alleged violations of federal securities laws. The lawsuits further allege that certain of the defendants improperly sold their personal holdings of Time Warner securities. The lawsuits request that: (1) all proceeds from defendants' sales of Time Warner common stock, (2) all expenses incurred by the Company as a result of the defense of the shareholder class actions discussed above and (3) any improper salaries or payments, be returned to the Company. The four lawsuits filed in the Court of Chancery for the State of Delaware for New Castle County have been consolidated under the caption, "In re AOL Time Warner Inc. Derivative Litigation." A consolidated complaint was filed on March 7, 2003 in that action, and on June 9, 2003, the Company filed a notice of motion to dismiss the consolidated complaint. On December 9, 2002, the Company moved to dismiss the three lawsuits filed in New York State Supreme Court for the County of New York on forum non conveniens grounds. On May 2, 2003, the motion to dismiss was granted. On March 5, 2004, plaintiffs filed a notice of motion for enlargement of time in which to perfect their appeal of the Court's dismissal of these lawsuits. This motion was denied on April 27, 2004. The four lawsuits pending in the U.S. District Court for the Southern District of New York have been centralized for coordinated or consolidated pre-trial proceedings with the securities and ERISA lawsuits described above under the caption "In re AOL Time Warner Inc. Securities and ERISA Litigation." On February 24, 2004, "Commonwealth of Pennsylvania Public School Employees Retirement System et al. v. Time Warner Inc. et al." was filed in the Court of Common Pleas of Philadelphia County naming as defendants the Company, certain current and former officers, directors and employees of the Company, America Online, Historic TW, Morgan Stanley & Co., Inc., Citigroup Global Markets Inc., Banc of America Securities LLC, J.P. Morgan Chase & Co and Ernst & Young LLP. Plaintiffs had previously filed a request for a writ of summons notifying defendants of commencement of an action. Plaintiffs allege that the Company made material misrepresentations in its registration statements in violation of Sections 11 and 12 of the Securities Act of 1933. Plaintiffs also allege violations of Pennsylvania Law, breach of fiduciary duty and common law fraud. The plaintiffs seek unspecified compensatory and punitive damages. The parties have agreed to stay this action and to coordinate discovery proceedings with the securities and ERISA lawsuits under the caption "In re AOL Time Warner Inc. Securities and "ERISA" Litigation." TIME WARNER: Asks CA Court To Dismiss Shareholder Fraud Lawsuit --------------------------------------------------------------- Time Warner, Inc. asked the California Superior Court for the County of Los Angeles to dismiss the claims in a coordinated class action filed against it, certain current and former officers, directors and employees of the Company, Ernst & Young LLP, Citigroup Inc., Salomon Smith Barney Inc. and Morgan Stanley & Co. On April 14, 2003, "Regents of the University of California et al. v. Parsons et al.," was filed in California Superior Court, County of Los Angeles, alleging that the Company made material misrepresentations in its registration statements related to the America Online Historic TW Merger and stock option plans in violation of Sections 11 and 12 of the Securities Act of 1933. The complaint also alleges common law fraud and breach of fiduciary duties under California state law. Plaintiffs seek disgorgement of alleged insider trading proceeds and restitution for their stock losses. Three related cases have been filed in California Supreme Court and have been coordinated in the County of Los Angeles. On January 26, 2004, the Company filed a motion to stay the California Actions on forum non conveniens and comity grounds and certain individuals filed motions to dismiss for lack of personal jurisdiction. On September 10, 2004, the Company filed a motion to dismiss plaintiffs' complaints and certain individual defendants (who had not previously moved to dismiss plaintiffs' complaints for lack of personal jurisdiction) filed a motion to dismiss plaintiffs' complaints. UNITED STATES: AFGE Wins Policy Reversal On Leave For Reservists ---------------------------------------------------------------- The American Federation of Government Employees (AFGE) won a major Court of Appeals case forcing a policy reversal by the Office of Personnel Management (OPM) on the charging of leave for National Guard training for federal employees. The reversal makes thousands of current and former federal employees eligible for annual leave adjustments or other compensation. AFGE sent a letter to OPM offering assistance in developing and implementing a claims process to expedite compensation. Under federal law, federal employees who are reservist are allowed 15 days of military leave each year to be charged only for reserve training conducted on scheduled work days. Prior to the OPM policy reversal, announced in a memo dated October 13, 2004, OPM improperly instructed agencies to incorrectly deducted military leave from employees even if reserve training occurred on a scheduled day off. As a result of the former policy, employees quickly depleted their military leave and were forced to use annual leave or leave without pay in order to fulfill their National Guard training responsibilities. "There are thousands of potential claimants in this case," said Joe Goldberg, AFGE Assistant General Counsel. "AFGE won a major victory for all federal employees/reservists in the Butterbaugh case. AFGE is working to ensure that every federal employee, current or former, who unjustly lost leave or pay as a result of OPM's incorrect interpretation of the law is rightfully compensated. OPM has admitted its mistake, and we will hold every federal agency to its legal responsibility." The OPM policy change is in direct response to the Court of Appeals for the Federal Circuit decision in Butterbaugh v. Department of Justice. AFGE initially filed a class action suit with the Merit Systems Protection Board to secure compensation for all employees unjustly charged leave under the old OPM policy. The MSPB denied the request for a class action suit, both initially and on appeal, and ruled that AFGE should instead move forward with claims on an individual basis. Following an unfavorable MSPB decision, AFGE moved forward in the U.S. Court of Appeals with claims for four Department of Justice employees. On July 24, 2003 the Court ruled against the former OPM military leave policy. AFGE is now moving forward to secure compensation for the thousands of federal employees who were adversely impacted by the old OPM policy. AFGE send a letter to OPM proposing a coordinated effort to develop the fastest and most efficient method of identifying claimants and processing compensation claims. The American Federation of Government Employees is the largest federal employee union, representing 600,000 workers in the federal government and the government of the District of Columbia. New Securities Fraud Cases AXIS CAPITAL: Murray Frank Lodges Securities Fraud Suit in NY ------------------------------------------------------------- The law firm of Murray, Frank & Sailer LLP initiated a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of AXIS Capital Holdings Limited ("AXIS") (NYSE:AXS) during the period between August 6, 2003 and October 14, 2004 (the "Class Period"). The complaint charges AXIS, Michael A. Butt, Andrew Cook, and John R. Charman with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that AXIS entered into illegal "contingent commission agreements" with insurance companies to pay so- called "contingent commissions"; (2) that AXIS concealed these "contingent commissions" and such "contingent commission agreements," thereby subjecting defendants to various violations of applicable principles of fiduciary law, and (3) that as a result of this illegal scheme, defendants, throughout the Class Period, materially overstated and artificially inflated AXIS' earnings, income, and earnings per share. On October 14, 2004, New York Attorney General Eliot Spitzer announced that he had charged several of the nation's largest insurance companies and the largest broker with bid rigging and payoffs that he claimed violated fraud and competition laws. On this news, shares of AXIS fell $1.69 per share, or 6.53 percent, to close at $24.20 per share on unusually high trading volume on October 14, 2004. For more details, contact Eric J. Belfi or Aaron D. Patton of Murray, Frank & Sailer LLP by Phone: (800) 497-8076 or (212) 682-1818 by Fax: (212) 682-1892 or by E-mail: info@murrayfrank.com AXIS CAPITAL: Schiffrin & Barroway Lodges Securities Suit in NY --------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP initiated a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all securities purchasers of AXIS Capital Holdings Limited (NYSE: AXS) ("AXIS" and the "Company") from August 6, 2003 through October 14, 2004, inclusive (the "Class Period"). The complaint charges AXIS, Michael A. Butt, Andrew Cook, and John R. Charman with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that AXIS entered into illegal "contingent commission agreements" with insurance companies to pay so- called "contingent commissions"; (2) that AXIS concealed these "contingent commissions" and such "contingent commission agreements," thereby subjecting defendants to various violations of applicable principles of fiduciary law, and (3) that as a result of this illegal scheme, defendants, throughout the Class Period, materially overstated and artificially inflated AXIS' earnings, income, and earnings per share. On October 14, 2004, New York Attorney General Eliot Spitzer announced that he had charged several of the nation's largest insurance companies and the largest broker with bid rigging and payoffs that he claimed violated fraud and competition laws. On this news, shares of AXIS fell $1.69 per share, or 6.53 percent, to close at $24.20 per share on unusually high trading volume on October 14, 2004. For more details, contact Marc A. Topaz, Esq. or Darren J. Check, Esq. of Schiffrin & Barroway, LLP by Phone: 1-888-299-7706 or 1-610-667-7706 or by E-mail: info@sbclasslaw.com CHIRON CORPORATION: Murray Frank Lodges Securities Suit in CA ------------------------------------------------------------- The law firm of Murray, Frank & Sailer LLP initiated a class action lawsuit in the United States District Court for the Northern District of California on behalf of all purchasers of Chiron Corporation securities ("Chiron") (Nasdaq:CHIR) during the period between July 23, 2003 through October 5, 2004 (the "Class Period"). The complaint alleges that since August 2003, Chiron has supplied approximately half of the flu vaccines administered in the United States. Chiron manufactures its flu vaccine ("Fluvirin") in Liverpool, England, in a plant it acquired in July, 2003. In 2003, Fluvirin sales accounted for approximately 12% of the Company's overall revenues. During the Class Period, defendants reported impressive revenue growth, driven in material part by sales of Fluvirin during the 2003-2004 flu season. Chiron was under contract to provide its flu vaccine to the United States for the 2004-2005 flu season and represented that it would provide the U.S. market with more Fluvirin in 2004 than in 2003, as it increased production at the Liverpool plant. Unbeknownst to investors, however, serious problems at the Liverpool plant threatened Chiron's ability to provide the vaccine for the 2004-2005 flu season. Problems with the plant had been documented since 2000 by the Food and Drug Administration ("FDA"). In June 2003, the FDA documented "systemic quality-control issues" at the Liverpool plant and found high levels of bacteria in unfinished vaccines. These, and other problems, which were known to or recklessly disregarded by defendants, signaled to defendants that the plant suffered from serious issues that could lead to unsafe vaccines and/or a serious disruption in the Company's ability to produce the vaccine for the U.S. market. The complaint details additional reasons why the Company's Class Period statements were materially false and misleading. On October 5, 2004, Chiron announced that "the UK regulatory body, the Medicines and Healthcare Products Regulatory Agency has today temporarily suspended the Company's license to manufacture Fluvirin(r) influenza virus vaccine in its Liverpool facility, preventing the Company from releasing any of the product during the 2004-2005 influenza season." In reaction to this disclosure, the price of Chiron common stock plummeted from a closing price of $45.42 per share on October 4, 2004, to a closing price of $37.98 per share on October 5, 2004, a one day drop of 16.3% on unusually heavy trading volume of over 25 million shares. The Company's last-minute announcement that it would be unable to deliver Fluvirin sparked widespread concern of a U.S. flu pandemic. Numerous articles on the matter reported that significant problems at the Liverpool plant were documented by the FDA in 2000 and June 2003, while the plant was owned by another pharmaceutical Company. On October 12, 2004, Chiron received a grand jury subpoena from the U.S. Attorney's office for the Southern District of New York, seeking documents and materials relating to the growing scandal. On October 13, 2004, the Wall Street Journal reported that the SEC has initiated an informal investigation of Chiron, "to determine if the Company failed to adequately disclose the extent of problems at the Liverpool, England, facility that made its influenza vaccines." For more details, contact Eric J. Belfi or Aaron D. Patton of Murray, Frank & Sailer LLP by Phone: (800) 497-8076 or (212) 682-1818 by Fax: (212) 682-1892 or by E-mail: info@murrayfrank.com EMBARCADERO TECHNOLOGIES: Schiffrin & Barroway Lodges Suit in CA ---------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP initiated a class action lawsuit in the United States District Court for the Northern District of California on behalf of all securities purchasers of Embarcadero Technologies, Inc. (Nasdaq: EMBT) ("Embarcadero Technologies" or the "Company") from April 20, 2004 through October 27, 2004, inclusive (the "Class Period"). The complaint charges Embarcadero Technologies, Stephen Wong, and Raj Sabhlok with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company had materially overstated its net income and earnings per share; (2) that defendants prematurely recognized revenue in its UK subsidiary, Embarcadero Europe Ltd.; (3) that the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times. On October 27, 2004 Embarcadero Technologies, after the market closed, announced that it was delaying the release of its financial results for the third quarter ended September 30, 2004. The Company also announced that its Audit Committee this week commenced an investigation of the revenue recognition practices of its UK subsidiary, Embarcadero Europe Ltd. (Embarcadero Europe), as a result of recent discoveries relating to Embarcadero Europe's resellers. News of this shocked the market. Shares of Embarcadero Technologies fell $2.29 per share, or 23.20 percent, by noon on October 28, 2004. For more details, contact Marc A. Topaz, Esq. or Darren J. Check, Esq. of Schiffrin & Barroway, LLP by Phone: 1-888-299-7706 or 1-610-667-7706 or by E-mail: info@sbclasslaw.com FANNIE MAE: Spector Roseman Lodges Securities Fraud Suit in DC -------------------------------------------------------------- The law firm of Spector, Roseman & Kodroff, P.C. initiated a securities class action lawsuit in the United States District Court for the District of Columbia, on behalf of purchasers of the common stock of Federal National Mortgage Association ("Fannie Mae" or the "Company") (NYSE: FNM) between October 11, 2000 through September 22, 2004, inclusive (the "Class Period"). The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period thereby artificially inflating the price of Fannie Mae securities. It is specifically alleged that throughout the Class Period the defendants failed to disclose or misrepresented the following adverse facts that were known to defendants or were recklessly disregarded by them: (1) that Fannie Mae applied accounting methods and practices that do not comply with Generally Accepted Accounting Principles ("GAAP") in accounting for the enterprise's derivatives transactions and hedging activities; (2) that Fannie Mae had materially understated its accrued cost-of-access liability by $50-$80 million; (3) that Fannie Mae used "cookie jar" accounting wherein it arbitrarily distributed current gains to subsequent quarters in a bid to keep its revenue and earning growth steady; (4) that Fannie Mae deferred expenses to achieve bonus compensation targets; (5) that Fannie Mae had insufficient and inadequate internal controls; and (6) that as a result, the value of the Company's net income and financial results was materially misstated at all relevant times. On September 22, 2004, Fannie Mae revealed that over a year ago the Office of Federal Housing Enterprise Oversight ("OFHEO") began a special examination of Fannie Mae's accounting policies and practices, and that the report of that examination - delivered to Fannie Mae on September 20, 2004 - concluded that Fannie Mae: (i) applied accounting methods and practices that do not comply with GAAP in accounting for the enterprise's derivatives transactions and hedging activities; (ii) employed an improper "cookie jar" reserve in accounting for amortization of deferred price adjustments under GAAP; (iii) tolerated related internal control deficiencies; (iv) in at least one instance deferred expenses apparently to achieve bonus compensation targets; and (v) maintained a corporate culture that emphasized stable earnings at the expense of accurate financial disclosures. Fannie Mae also disclosed that the Securities and Exchange Commission has been conducting an informal inquiry that includes issues raised in the OFHEO report. Following this disclosure, on September 22 shares of Fannie Mae fell $4.96 per share, or 6.56 percent, to close at $70.69 per share on unusually high trading volume. On September 23, shares of Fannie Mae fell an additional $3.54 per share, or 5.01 percent, to close at $67.15 per share. For more details, contact Robert M. Roseman by Phone: 888-844-5862 by E-mail: classaction@srk-law.com or visit their Web site: http://www.srk-law.com INTERACTIVECORP: Bernstein Liebhard Lodges Securities Suit in NY ---------------------------------------------------------------- The law firm of Bernstein Liebhard & Lifshitz, LLP initiated a securities class action lawsuit in the United States District Court for the Southern District of New York, on behalf of all persons who purchased or acquired IAC/Interactive Corporation (NASDAQ: IACI) (formerly, USA Interactive) ("IAC" or the "Company") securities (the "Class") between March 19, 2003 and August 4, 2004, inclusive (the "Class Period"). The Complaint alleges that during the Class Period defendants artificially inflated the price of IAC securities by issuing press releases and other statements touting the strength of the Company's business, its rise to the status of an Internet commerce power house and its ability to continue to grow its business successfully in 2004 and beyond. Such statements were materially false and misleading because they failed to disclose that: (1) the Company's Expedia.com and Hotels.com businesses were inaccurately representing to customers that hotel rooms were sold out, when, in fact, rooms were available, albeit at lower profit margins to IAC. These misrepresentations led to confrontations between IAC and hotel chains that Expedia.com and Hotels.com depended on; (2) the Company had been charging consumers service fees that were not fully identified. At least one of IAC's hotel-chain partners requested that IAC detail all of its fees to consumers, which IAC refused to do, thereby (unbeknownst to investors) jeopardizing an important revenue stream; (3) certain hotel chains and airlines had threatened to, and did, decrease the number of rooms made available to IAC because of the Company's unscrupulous practices, thereby jeopardizing the Company's business; (4) hotel chains were aggressively pushing their own booking sites and encouraging potential customers to book directly through them rather than through Expedia.com or Hotels.com, thereby posing a serious threat to IAC's business; and (5) given the unsustainable nature of the Company's practices and/or the inevitable consequences of those practices, the Company's statements with respect to its growth prospects were lacking in any reasonable basis when made. On August 4, 2004, the Company issued its Q2 2004 earnings release disclosing that its Q2 2004 net income fell 24% from the same quarter in 2003 and that it was cutting its forecast for full-year operating profits, admitting that it was being provided less airline seats and hotel rooms to sell. On this news the Company's stock plummeted on extremely high volume of almost 90 million shares. The Company's stock price dropped precipitously from its Class Period high of $42.74 per share on July 7, 2003, to close at $22.80 per share on August 4, 2004, erasing over $10 billion in market capitalization. For more details, contact the Shareholder Relations Department of Bernstein Liebhard & Lifshitz, LLP by Mail: 10 East 40th Street, New York, NY 10016 by Phone: (800) 217-1522 or (212) 779-1414 by E-mail: IACI@bernlieb.com or http://www.bernlieb.com JAKKS PACIFIC: Lerach Coughlin Files Securities Fraud Suit in NY ---------------------------------------------------------------- The law firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP ("Lerach Coughlin") initiated a class action lawsuit in the United States District Court for the Southern District of New York on behalf of purchasers of JAKKS Pacific, Inc. ("JAKKS") (NASDAQ:JAKK) common stock during the period between February 17, 2004 and October 19, 2004 (the "Class Period"). The complaint charges JAKKS and certain of its officers and directors with violations of the Securities Exchange Act of 1934. JAKKS describes itself as a multi-line, multi-brand toy Company that designs, develops, produces and markets toys and related products. The complaint alleges that, throughout the Class Period, defendants issued numerous positive statements concerning the increasing sales of JAKKS's products licensed through the World Wrestling Entertainment Inc. ("WWE"). As alleged in the complaint, these statements were materially false and misleading because defendants knew, but failed to disclose: (1) that the WWE was contending that the WWE licenses had been obtained through a pattern of commercial bribery; (2) that the Company's relationship with the WWE was being negatively impacted by the WWE's contention that the licenses it had granted to the Company were improperly obtained; and (6) given the foregoing, the Company was subject to the heightened risk that the WWE would seek some modification to its WWE licensing agreements or complete nullification of those agreements, which would negatively impact the Company's future financial results. On October 19, 2004, JAKKS issued a press release announcing that it was "engaged in discussions with WWE concerning the restructuring of its toy license and with WWE and THQ with respect to the restructuring of the JAKKS THQ Joint Venture video games license agreement with WWE." In response to the announcement of the problems with the WWE licenses, the price of JAKKS stock declined from $24.15 per share to $18.81 per share. Then, after the market closed for trading, it was reported that the WWE had just filed a lawsuit against JAKKS which alleged that the videogame license and certain toy licenses that the WWE previously granted to JAKKS were obtained through a pattern of racketeering and commercial bribery and seeking, among other things, that the licensing agreements be declared void. Following this announcement, on the next day of trading, the price of JAKKS common stock continued to fall to close at $12.96 per share on extremely heavy trading volume. For more details, contact Samuel H. Rudman or David A. Rosenfeld of Lerach Coughlin by Phone: 800/449-4900 or by E-mail: wsl@lerachlaw.com or visit their Web site: http://www.lerachlaw.com/cases/jakks/ MARSH & MCLENNAN: Brian M. Felgoise Lodges Securities Suit in NY ---------------------------------------------------------------- The law offices of Brian M. Felgoise, PC initiated a securities class action on behalf of shareholders who acquired Marsh & McLennan Companies, Inc. (NYSE: MMC) securities between October 15, 1999 and October 14, 2004, inclusive (the Class Period). The case is pending in the United States District Court for the Southern District of New York, 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 Phone: 261 Old York Road, Suite 423, Jenkintown, PA 19046 by Phone: (215) 886-1900 or by E-mail: FelgoiseLaw@aol.com MARSH & MCLENNAN: Wolf Haldenstein Lodges ERISA Suit in S.D. NY --------------------------------------------------------------- The law firm of Wolf Haldenstein Adler Freeman & Herz LLP initiated a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of all participants and beneficiaries of the Marsh & McLennan Putnam Investments Profit Sharing Retirement Plan and the Marsh & McLennan Companies Stock Investment Plan (the "Plans") of Marsh & McLennan Companies, Inc. ("MMC" or the "Company") [NYSE: MMC], between November 1, 1998 and the present, inclusive (the "Class Period"), against defendant Marsh & McLennan Companies, Inc. and certain officers and directors of the Company. The Complaint alleges that during the Class Period, Plan fiduciaries knew or should have known, that the Company was paying illegal and concealed "contingent commissions" pursuant to illegal "contingent commission agreements;" that violated applicable principles of fiduciary law, subjecting the Company to enormous fines and penalties totaling potentially tens -- if not hundreds -- of millions of dollars. Plan fiduciaries knew, or should have known, that this business practice was improper and unsustainable and that the value of the Company's stock, and thus the value of the Plan, was based on financial results dependent on these unsustainable business practices. By no later than November 1, 1998, Marsh & McLennan Companies, Inc. and the Individual Defendants knew, or should have known, that Marsh & McLennan Companies, Inc.'s stock was a highly inappropriate investment for a long-term retirement savings plan such as the Plan because of the financial issues described above and other questionable business practices. Despite this, Defendants continued to offer Marsh & McLennan Companies, Inc.'s stock as a Plan investment alternative, continued to cause Marsh & McLennan Companies, Inc. matching contributions to be invested in Marsh & McLennan Companies, Inc. stock, and failed to impute their full knowledge of the Company's operations on Plan participants so that the Plan participants could make an informed decision concerning their Plan investments in Company stock. For more details, contact Fred Taylor Isquith, Esq., Mark C. Rifkin, Esq. or Gustavo Bruckner, Esq. of Wolf Haldenstein Adler Freeman & Herz LLP by Mail: 270 Madison Avenue, New York, NY 10016 by Phone: (800) 575-0735 or (212) 545-4600 by E-mail: classmember@whafh.com or visit their Website: http://www.whafh.com NEW YORK: Murray Frank Lodges Securities Fraud Suit in E.D. NY -------------------------------------------------------------- The law firm of Murray, Frank & Sailer LLP initiated a class action lawsuit in the Eastern District of New York on behalf of a class (the "Class") consisting of all persons who purchased or otherwise acquired the securities of New York Community Bancorp Inc. ("NYB" or the "Company") (NYSE:NYB) between June 27, 2003 and May 9, 2004, inclusive (the "Class Period"). The complaint charges NYB, Joseph R. Ficalora, and Michael P. Puorro with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that defendants manipulated the Company's financial results in order to appear more attractive for potential merger deals; (2) that this was accomplished through leveraged growth funded by short-term funding; (3) the Company's projections about growth and interest rate sensitivity were lacking in any reasonable basis when made; and (4) that the Company's financial results were materially inflated at all relevant times. On Sunday, May 9, 2004, NYB announced that its Board of Directors had authorized the Company's management team to engage Bear Stearns & Co., Inc., Citigroup Global Markets, Inc., and Sandler O'Neill & Partners, L.P. to assist the Company in undertaking a review of its strategic alternatives, including remaining independent. Commenting on the announcement, defendant Ficalora stated: "We have always been a Company that has focused on shareholder value, and this review is consistent with that focus." News of the engagement of Bear Stearns & Co., Inc., Citigroup Global Markets, Inc., and Sandler O'Neill & Partners, L.P. shocked the market. For months, and in numerous interviews, filings, and press releases, defendant Ficalora maintained that, given the nature of the Company's business, assets, and liabilities, NYB would not only do better than its rivals in its sector, but even thrive in an environment of rising interest rates. Furthermore, Ficalora stated that NYB's predictions were based on lower interest rates, and that an interest rate increase would be good for the Company. However, the sudden engagement of three financial firms to "review strategic alternatives" was the market's and investors' first indication that NYB's strategy may not be working as planned or advertised. Following NYB's announcement, in intra-day trading on Monday, May 10, 2004, NYB dropped over $2.53 per share from its previous close, on May 7, 2004, of $24.13 per share, or 10.5%, to close at a low of $21.60 per share. At the close of trading, NYB had fallen $1.33 per share, or 5.5%, to close at $21.80 per share on volume of 9 million shares -- nearly three times its usual volume. For more details, contact Eric J. Belfi or Aaron D. Patton of Murray, Frank & Sailer LLP by Phone: (800) 497-8076 or (212) 682-1818 by Fax: (212) 682-1892 or by E-mail: info@murrayfrank.com 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 Phone: 261 Old York Road, Suite 423, Jenkintown, PA 19046 by Phone: (215) 886-1900 or by E-mail: FelgoiseLaw@aol.com SOURCECORP INC.: Milberg Weiss Files Securities Fraud Suit in TX ---------------------------------------------------------------- The law firm of Milberg Weiss Bershad & Schulman LLP initiated a class action lawsuit on behalf of purchasers of the securities of Sourcecorp, Inc. ("Sourcecorp" or the "Company") (NASDAQ: SRCP) between May 7, 2003 and October 27, 2004 inclusive, (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). The action is pending in the United States District Court for the Northern District of Texas against defendants Sourcecorp, Inc., Ed H. Bowman (President and CEO) and Barry Edwards (Executive VP and CFO). The complaint alleges that throughout the Class Period, Sourcecorp, Ed H. Bowman, Jr. and Barry L. Edwards violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the Complaint alleges that the Defendants failed to disclose and misrepresented the following material adverse facts which were known to them or recklessly disregarded by them: (1) that the Company had materially overstated its net income and earnings per share; (2) that defendants prematurely recognized revenue in its Information Management and Distribution Division; (3) that the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times. On October 27, 2004, the Company announced its need to restate its previously certified financial results. As a result of the restatement, the Company will have to adjust its revenues and diluted EPS for 2003 by at least $5.4 million or $0.19 per share. For the six months ending June 30, 2004, the adjustment may amount to $2.8 million or $0.10 per share. Immediately following this announcement, Sourcecorp's stock plummeted $5.95 per share, or almost 30%, on usually high trading volume of 833,200 shares, from its closing price of $22.21 on October 26, 2004, to a closing price of $16.25 on October 27, 2004. For more details, contact Steven G. Schulman by Mail: One Pennsylvania Plaza, 49th fl., New York, NY 10119-0165 by Phone: (800) 320-5081 or by E-mail: sfeerick@milbergweiss.com OR Maya Saxena or Joseph E. White by Mail: 5355 Town Center Road, Suite 900, Boca Raton, FL 33486 by Phone: (561) 361-5000 or by E-mail: msaxena@milbergweiss.com or jwhite@milbergweiss.com STAR GAS: Finkelstein Thompson Files Securities Fraud Suit in CT ---------------------------------------------------------------- The law firm of Finkelstein, Thompson & Loughran initiated a securities fraud class action lawsuit in the United States District Court for the District of Connecticut, on behalf of investors who purchased or otherwise acquired the securities of Star Gas Partners, L.P. ("Star Gas Partners" or the "Company") (NYSE: SGU) during the period from December 4, 2003 through October 18, 2004, inclusive (the "Class Period"). The complaint alleges that, throughout the Class Period, defendants misrepresented and omitted material facts concerning Star Gas Partners' business operations and finances. Specifically, Plaintiff alleges that defendants misrepresented and concealed the facts that: (1) the Company was experiencing massive delays in the centralization of its dispatch system and causing its customers to flee to competitors; (2) the Company's Petro heating oil division's business process improvement program was faltering and not generating the benefits claimed by defendants; (3) contrary to defendants' earlier indications, the Company was not able to increase or even maintain profit margins in its heating oil segment; (4) the Company's second quarter 2004 claimed profit margins were an aberration and not indicative of the Company's success or ability to pass on the heating oil price increase because the Company had earlier acquired heating oil (sold in the second quarter) at a much lower cost; and (5) defendants were facing imminent bankruptcy and would no longer be able to service the Company's debt, all of which would halt the Company's ability to maintain the Company's credit rating and/or obtain future financing. On October 18, 2004, Star Gas Partners shocked the market by revealing for the first time that it "has recently advised its Petro heating oil division bank lenders of a substantial expected decline in earnings for this division for the fiscal year that ended on September 30, 2004, and a further projected decline in earnings for the fiscal year ending September 30, 2005, which will not permit Petro to meet the borrowing conditions under its working capital line ... Star anticipates that because of the requirements of Star's current and potential lenders, it will not be permitted to make any distributions on its Common Units. Star believes that with the support of its existing lenders, which cannot yet be assured, it can manage the extraordinary challenges arising from current energy prices and other factors. However, without that support, Star may be forced to seek interim financing on extremely disadvantageous terms or even to seek to restructure its debts under the protection of the bankruptcy Courts." In response to this announcement, the price of Star Gas Partners common units dropped precipitously, falling 80% in one day, from a closing price of $21.60 per unit on October 15, 2004, to a closing price of $4.32 per share on October 18, 2004, on extraordinarily high trading volume. For more details, contact Donald J. Enright or Karen J. Marcus of Finkelstein, Thompson & Loughran's Washington, DC office, by Phone: (866) 592-1960 by E-mail: dje@ftllaw.com or kjm@ftllaw.com or visit their Web site: http://www.ftllaw.com SWIFT TRANSPORTATION: Milberg Weiss Lodges Securities Suit in AZ ---------------------------------------------------------------- The law firm of Milberg Weiss Bershad & Schulman LLP initiated a class action lawsuit on behalf of purchasers of the securities of Swift Transportation Co., Inc. ("Swift" or the "Company") (NASDAQ: SWFT) between October 16, 2003 and October 1, 2004, inclusive, (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). The action is pending in the United States District Court for the District of Arizona against defendants Swift, Gary R. Enzor (CFO), Patrick J. Farley (Exec. VP), Jerry C. Moyes (CEO and Chair) and William F. Riley (Sr. VP). The complaint alleges that Swift, a Nevada holding Company, together with its wholly-owned subsidiaries, is a national truckload carrier operating throughout the United States. At all relevant times, defendant Moyes and entities controlled by him owned approximately 34% of the Company's outstanding shares and those shares were at all relevant times, pledged to an undisclosed lending institution as collateral for margin loans. The complaint alleges that defendants issued materially false and misleading statements to prop up and otherwise manipulate the price of Swift securities so as to prevent a margin call on Moyes's shares and to engage in improper inside trading on the basis of material nonpublic information. Specifically, the Company made materially false and misleading statements with respect to its U.S. Department of Transportation safety rating, the impact of recently enacted DOT regulations on the Company's operations, the extent to which the Company was offsetting rising costs with customer rate increases, the depreciation of its fleet, and the integrity of the Company's internal controls and reported financial statements. On September 15, 2004, the Company announced that third-quarter profit would lag analyst estimates because the Company was unable to raise rates as fuel costs increased. On news of the earnings shortfall, the Company's share price dropped from a closing price of $18.27 on September 15, 2004 to as low as $16.09 on September 16, 2004. The Class Period ends on October 1, 2004. On that date, the Company disclosed that an informal inquiry into certain stock trades by the Company and Moyes had been elevated to a formal investigation. On this news, the Company's shares, which closed at $17.49 on October 1, 2004, fell to a low of $16.54 on October 4, 2004, the next trading day. For more details, contact Steven G. Schulman, Peter E. Seidman or Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl., New York, NY 10119-0165 by Phone: (800) 320-5081 or by E-mail: sfeerick@milbergweiss.com TRIPATH TECHNOLOGY: Schiffrin & Barroway Lodges Stock Suit in CA ---------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP initiated a class action lawsuit in the United States District Court for the Northern District of California on behalf of all securities purchasers of Tripath Technology Inc. (Nasdaq: TRPH) ("Tripath" or the "Company") from January 29, 2004 through October 22, 2004, inclusive (the "Class Period"). The complaint charges Tripath, Adya Tripathi, and David Eichler with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company improperly recognized revenue from sales of product that was eventually returned to the distributor; (2) that as a result of this, the Company had to increase its sales return reserve for the third quarter and had to take a charge of approximately $4.0 - $4.5 million for excess inventory; (3) that the Company's financial results were in violation of Generally Accepted Accounting Principles ("GAAP"); (4) that the Company lacked adequate internal controls, especially the ability to adequately estimate distributor sales returns in accordance with SFAS no. 48; and (5) that as a result of the above, the Company's financial results were materially inflated at all relevant times and the defendants lacked a reasonable basis for their statements regarding the Company. On October 22, 2004, Tripath announced that net revenues for the third quarter of 2004 would be significantly below prior guidance of $4 - $4.5 million. Moreover, Tripath announced that it may have to restate its revenue for the quarter ended June 30, 2004. In addition, Tripath planed to take a charge of approximately $4.0 - $4.5 million for excess inventory. News of this shocked the market. Shares of Tripath fell $.75 per share, or 49.34 percent, on October 25, 2004, to close at $.77 per share. For more details, contact Marc A. Topaz, Esq. or Darren J. Check, Esq. of Schiffrin & Barroway, LLP by Phone: 1-888-299-7706 or 1-610-667-7706 or by E-mail: info@sbclasslaw.com ********* A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the Class Action Reporter. Submissions via e-mail to carconf@beard.com are encouraged. Each Friday's edition of the CAR includes a section featuring news on asbestos-related litigation and profiles of target asbestos defendants that, according to independent researches, collectively face billions of dollars in asbestos-related liabilities. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Glenn Ruel Se�orin, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2004. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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