/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/050103.mbx C L A S S A C T I O N R E P O R T E R Monday, January 3, 2005, Vol. 7, No. 1 Headlines AIRGATE PCS: Plaintiffs File Amended Securities Suit in N.D. GA AMERIGAS PROPANE: Court Allows Additional Class Members in Suit ARIBA INC.: Asks NY Court To Approve Stock Lawsuits Settlements ARIBA INC.: CA Court Hears Motion To Dismiss Securities Lawsuit ARIBA INC.: To Ask DE Court To Dismiss FreeMarkets Merger Suit ARIBA INC.: Limited Discovery Taken in FreeMarkets Stock Lawsuit CANADA: Truckers Commence Bias Suit Over Meal Allowance in B.C. COMDISCO INC.: Plaintiffs Seek Certification For Suit V. Execs FRANKLIN RESOURCES: Faces Shareholder Fraud Lawsuits Filed in MD FRANKLIN RESOURCES: Faces Breach of Fiduciary Duty Suits in IL FRANKLIN RESOURCES: Mutual Fund Lawsuits Filed in Various Courts HMO LITIGATION: FL Court Moves Racketeering Trial To Sept. 2005 INTEGRATED ELECTRICAL: TX Court Orders Stock Suits Consolidated IRVINE SENSORS: CA Court Approves Securities Lawsuit Settlement MET-RX SUBSTRATE: Faces Suit Over Pro-hormone Supplements in CA MET-RX USA: Asks FL Court To Junk Pro-Hormone Supplements Suit MICROMUSE INC.: Asks CA Court To Dismiss Securities Fraud Suit NASSDA CORPORATION: To Ask CA Court To Dismiss Securities Suit NASSDA CORPORATION: Faces Shareholder Fraud Lawsuit in DE Court NASSDA CORPORATION: Shareholders Launch Fraud Suit in CA Court NATIONAL AUTO: Working To Settle Shareholder Lawsuits in DE, NY NBTY INC.: Plaintiffs To File Consolidated Securities Suit in NY NETWORK ENGINES: MA Court Refuses To Dismiss Securities Lawsuit NETWORK ENGINES: Asks NY Court To Approve Stock Suit Settlement PEOPLES ENERGY: Asks IL Court To Dismiss Consumer Fraud Lawsuit PFIZER INC.: IL Consumer Launch Injury Suit Over Arthritis Drug RESOURCE AMERICA: Discovery Proceeds in NY Property Owners Suit REXALL SUNDOWN: Trial in Nutrition Bars Litigation Set Jan. 2005 STAR GAS: Shareholders Commence Securities Fraud Lawsuits in CT STRATOS LIGHTWAVE: Asks NY Court To Approve Lawsuit Settlement TYCO INTERNATIONAL: NH Court Dismisses Securities Suit in Part VISTACARE INC.: Shareholders Launch Securities Fraud Suits in AZ VITAMIN WORLD: Discovery Proceeds in NY Hormone Supplement Suit New Securities Fraud Cases CHARLOTTE RUSSE: Class Period in Securities Fraud Suit Expanded CONEXANT SYSTEMS: Milberg Weiss Launches Securities Suit in NJ JAKKS PACIFIC: Lerach Couglin Updates NY Securities Fraud Suit PFIZER INC.: Emerson Poynter Launches Securities Suit in S.D. NY SOURCECORP INC.: Schiffrin & Barroway File Securities Suit in TX SOURCECORP INC.: Lerach Coughlin Updates TX Securities Lawsuit TRI-PATH TECHNOLOGY: Schiffrin & Barroway Files Stock Suit in CA ********* AIRGATE PCS: Plaintiffs File Amended Securities Suit in N.D. GA --------------------------------------------------------------- Plaintiffs filed a consolidated amended class action against Airgate PCS, Inc. and certain of its officers in the United States District Court for the Northern District of Georgia. In May 2002, putative class action complaints were filed against the Company and: (1) Thomas M. Dougherty, (2) Barbara L. Blackford, (3) Alan B. Catherall, (4) Credit Suisse First Boston, (5) Lehman Brothers, (6) UBS Warburg LLC, (7) William Blair & Company, (8) Thomas Wiesel Partners LLC and (9) TD Securities The complaints do not specify an amount or range of damages that the plaintiffs are seeking. The complaints seek class certification and allege that the prospectus used in connection with the secondary offering of Company stock by certain former stockholders of iPCS, a former subsidiary of the Company, on December 18, 2001 contained materially false and misleading statements and omitted material information necessary to make the statements in the prospectus not false and misleading. The alleged omissions included: (i) failure to disclose that in order to complete an effective integration of iPCS, drastic changes would have to be made to the Company's distribution channels, (ii) failure to disclose that the sales force in the acquired iPCS markets would require extensive restructuring and (iii) failure to disclose that the "churn" or "turnover" rate for subscribers would increase as a result of an increase in the amount of sub-prime credit quality subscribers the Company added from its merger with iPCS. On July 15, 2002, certain plaintiffs and their counsel filed a motion seeking appointment as lead plaintiffs and lead counsel. Subsequently, the court denied this motion without prejudice and two of the plaintiffs and their counsel filed a renewed motion seeking appointment as lead plaintiffs and lead counsel. On September 12, 2003, the court again denied that motion without prejudice and on December 2, 2003, certain plaintiffs' and their counsel filed a modified renewed motion seeking appointment as lead plaintiffs and lead counsel. On August 17, 2004 the court granted the plaintiff's motion. Pursuant to a consent scheduling order agreed to by the parties, lead plaintiffs filed a consolidated amended class action complaint on October 15, 2004 (the "Consolidated Complaint"). As did the original complaints filed in these actions, the Consolidated Complaint alleges that the Company's registration statement and prospectus relating to the December 2001 offering misrepresented and/or omitted adverse facts regarding the anticipated effects of the Company's acquisition of iPCS. The Consolidated Complaint also asserts that the registration statement/prospectus was false and misleading in certain other respects not previously alleged. The legal claims asserted in the Consolidated Complaint remain the same as those in the original complaints, i.e., the registration statement/prospectus violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. In addition, the class that lead plaintiffs seek to represent remains the same, and the named defendants remain the same. In the event that any defendant moves to dismiss, lead plaintiffs are to serve their opposition by January21, 2005, and defendants' reply briefs are due on or before February22, 2005. No further dates have been set in the case. AMERIGAS PROPANE: Court Allows Additional Class Members in Suit --------------------------------------------------------------- The Circuit Court of Monongalia County, West Virginia allowed plaintiffs in the class action filed against AmeriGas Propane LP to include customers acquired from Columbia Propane in August 2001 as additional potential class members, and to amend their complaint to name additional parties consistent with such ruling. In July 2001, a suit was filed agains the Company styled "Swiger, et al. v. UGI/AmeriGas, Inc. et al., Civil Action No. 98-C-298." Plaintiffs Samuel and Brenda Swiger and their son sustained personal injuries and property damage as a result of a fire that occurred when propane that leaked from an underground line ignited. The suit sought to recover an unspecified amount of compensatory and punitive damages and attorney's fees, for themselves and on behalf of persons in West Virginia for whom the defendants had installed propane gas lines, allegedly resulting from the defendants' failure to install underground propane lines at depths required by applicable safety standards. The court recently granted the plaintiffs' motion to include customers acquired from Columbia Propane in August 2001 as additional potential class members, and to amend their complaint to name additional parties consistent with such ruling. In 2003, the defendants settled the individual personal injury and property damage claims of the Swigers. Class counsel has indicated that the class is seeking compensatory damages in excess of $12 million plus punitive damages, civil penalties and attorneys' fees. ARIBA INC.: Asks NY Court To Approve Stock Lawsuits Settlements --------------------------------------------------------------- Ariba, Inc. asked the United States District Court for the Southern District of New York to grant preliminary approval to the settlement of the securities class actions filed against it and FreeMarkets, Inc., which the Company acquired. Between March 20, 2001 and June 5, 2001, a number of purported shareholder class action complaints were filed against the Company, certain of its former officers and directors and three of the underwriters of our initial public offering. These actions purport to be brought on behalf of purchasers of the Company's common stock in the period from June 23, 1999, the date of the Ariba IPO, to December 23, 1999 (in some cases, to December 5 or 6, 2000), and make certain claims under the federal securities laws, including Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act, relating to the Ariba IPO. In addition, since July 31, 2001, a number of purported shareholder class action complaints were filed in the United States District Court for the Southern District of New York against FreeMarkets, Inc., certain of its officers and directors (the "FreeMarkets Individual Defendants") and the underwriters of FreeMarkets' initial public offering (the "FreeMarkets IPO"). These actions purport to be brought on behalf of purchasers of FreeMarkets' common stock in the period from December 9, 1999, the date of the FreeMarkets IPO, to December 6, 2000 (in some cases, to July 30, 2001), and make claims relating to the FreeMarkets IPO similar to the claims made in the Ariba IPO actions. On June 26, 2001, the Ariba IPO actions were consolidated into a single action bearing the title "In re Ariba, Inc. Securities Litigation, 01 CIV 2359." Similarly, the FreeMarkets IPO actions were consolidated into a single action bearing the title "Steffey v. FreeMarkets, Inc. et al., 01 CIV 7039." On August 9, 2001, those consolidated actions were further consolidated (for pretrial purposes), with cases brought against additional issuers (who numbered in excess of 300) and their underwriters that made similar allegations regarding the IPOs of those issuers. On February 14, 2002, the parties signed and filed a stipulation dismissing the consolidated action without prejudice against the Company, FreeMarkets and certain Individual Defendants, which the Court approved and entered as an order on March 1, 2002. On April 19, 2002, the plaintiffs filed an amended complaint in which they dropped their claims against Ariba, FreeMarkets and all of the Ariba Individual Defendants and the FreeMarkets Individual Defendants under Sections 11 and 15 of the Securities Act, but elected to proceed with their claims against such defendants under Sections 10(b) and 20(a) of the Exchange Act. The amended consolidated complaint alleges that the prospectuses pursuant to which shares of common stock were sold in the Ariba IPO and the FreeMarkets IPO, which were incorporated in registration statements filed with the SEC, contained certain false and misleading statements or omissions regarding the practices of the Company's and FreeMarkets' underwriters with respect to their allocations to their customers of shares of common stock in the IPOs and their receipt of commissions from those customers related to such allocations. The complaint further alleges that the underwriters provided positive analyst coverage of Ariba and FreeMarkets after their respective IPOs, which had the effect of manipulating the market for Company stock and FreeMarkets' stock, respectively. Plaintiffs contend that such statements and omissions from the prospectuses and the alleged market manipulation by the underwriters through the use of analysts caused the post-IPO stock prices of Ariba and FreeMarkets to be artificially inflated. Plaintiffs seek compensatory damages in unspecified amounts as well as other relief. On July 15, 2002, Ariba, FreeMarkets and the Ariba Individual Defendants and the FreeMarkets Individual Defendants, along with other issuers and their related officer and director defendants, filed a joint motion to dismiss based on common issues. On November 18, 2002, during the pendency of the motion to dismiss, the Court entered as an order a stipulation by which all of the Individual Defendants were dismissed from the case without prejudice in return for executing a tolling agreement. On February 19, 2003, the Court rendered its decision on the motion to dismiss, granting a dismissal of the remaining Section 10(b) claims against Ariba and FreeMarkets without prejudice. Plaintiffs have indicated that they intend to file an amended complaint. On June 24, 2003, a special litigation committee of the Ariba Board of Directors approved a Memorandum of Understanding (the "MOU") reflecting a settlement in which the plaintiffs agreed to dismiss the case against Ariba with prejudice in return for the assignment by Ariba of claims that it might have against its underwriters. No payment to the plaintiffs by Ariba was required under the MOU. On June 25, 2003, a special litigation committee of the FreeMarkets Board of Directors approved a substantively identical MOU with respect to FreeMarkets. After further negotiations, the essential terms of the MOUs were formalized in a Stipulation and Agreement of Settlement, which has been executed on Ariba's and FreeMarkets' behalf and on behalf of the Ariba Individual Defendants and the FreeMarkets Individual Defendants. The settling parties filed formal motions seeking preliminary approval of the proposed settlement on June 25, 2004. The underwriter defendants, who are not parties to the proposed settlement, filed a brief objecting to the settlement's terms on July 14, 2004. In the meantime, the plaintiffs and underwriters have continued to litigate the consolidated action. The litigation is proceeding through the class certification phase by focusing on six cases chosen by the plaintiffs and underwriters. Neither Ariba nor FreeMarkets is a focus case. The Court issued an order on October 13, 2004 certifying classes in each of the six focus cases. ARIBA INC.: CA Court Hears Motion To Dismiss Securities Lawsuit --------------------------------------------------------------- The United States District Court for the Northern District of California heard Ariba, Inc.'s motion to dismiss the consolidated securities class action filed against it and certain of its current and former officers and directors. Beginning January 21, 2003, a number of purported shareholder class action complaints were filed, all purporting to be brought on behalf of a class of purchasers of the Company's common stock in the period from January 11, 2000 to January 15, 2003. The complaints bring claims under the federal securities laws, specifically Sections 10(b) and 20(a) of the Exchange Act, relating to the Company's announcement that it would restate certain of its consolidated financial statements, and also, in the case of two complaints, relating to its acquisition activity and related accounting. Specifically, these actions allege that certain of the company's prior consolidated financial statements contained false and misleading statements or omissions relating to its failure to properly recognize expenses and other financial items, as reflected in the then proposed restatement. Plaintiffs contend that such statements or omissions caused Company stock price to be artificially inflated. Plaintiffs seek compensatory damages as well as other relief. On July 11, 2003, the Court entered two orders that consolidated the cases for all purposes into a single action captioned "In re Ariba, Inc. Securities Litigation, Case No. C-03-00277 JF," appointed a lead plaintiff, and approved the lead plaintiff's selection of counsel. On September 15, 2003, the lead plaintiff filed a Consolidated Amended Complaint, which restated the allegations and claims described above and added a claim pursuant to Section 14(a) of the Exchange Act, based on the allegation that the Company failed to disclose certain payments and executive compensation items in the Company's January 24, 2002 Proxy Statement. Prior to the hearing on defendants' motion to dismiss the consolidated complaint, the parties stipulated that plaintiff would withdraw its complaint and file a further amended complaint by April 16, 2004. Plaintiffs' allegations of wrongdoing in this further amended complaint are limited to the Company's alleged failure to disclose certain payments and executive compensation items. Defendants' motion to dismiss plaintiff's further amended complaint was filed on June 18, 2004. A hearing on the motion took place on October 29, 2004, and the motion is now under submission. The suit is styled "In re Ariba, Inc. Securities Litigation, 5:03-cv-00277," filed in the United States District Court for the Northern District of California under Judge Jeremy Fogel. Lawyers for the defendants are Jeffrey S. Facter, Raymond A. Just of Shearman & Sterling, 555 California Street, Suite 2000 San Francisco, CA 94104, Phone: 415-616-1100 or E-mail: jfacter@shearman.com or rjust@sherman.com; and Bruce B. Kelson, Shearman & Sterling LLP, 525 Market Street, 15th Floor, San Francisco, CA 94105, Phone: 415-616-1100, Fax: 415-616-1199, E- mail: bkelson@shearman.com. Lawyers for the plaintiffs are: (1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E. 40th Street, 22nd Floor, New York, NY, 10016, Phone: 800.217.1522, E-mail: info@bernlieb.com; (2) Cauley Geller Bowman Coates & Rudman LLP (Little Rock, AR), P.O. Box 25438, Little Rock, AR, 72221-5438, Phone: 501.312.8500, Fax: 501.312.8505, (3) Charles J. Piven, World Trade Center-Baltimore, 401 East Pratt Suite 2525, Baltimore, MD, 21202, Phone: 410.332.0030, E-mail: pivenlaw@erols.com (4) Emerson Poynter LLP, P.O. Box 164810, Little Rock, AR, 72216-4810, Phone: 800.663.981, E-mail: tanya@emersonfirm.com (5) Glancy and Binkow, 1801 Avenue of the Stars, suite 311, Los Angelos, CA, 90067, Phone: 310-201-9150, E-mail: info@glancylaw.com (6) Green & Jigarjian LLP, 235 Pine Street, 15th Floor, San Francisco, CA, 94104, Phone: 415.477.6700, Fax: 415.477.6710, (7) Marc S. Henzel, 210 West Washington Square, Third Floor, Philadelphia, PA, 19106, Phone: 215.625.9999, Fax: 215.440.9475, e-mail: Mhenzel182@aol.com (8) Milberg, Weiss, Bershad, Hynes & Lerach LLP (San Diego, CA), 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101, Phone: 800.449.4900, E-mail: support@milberg.com (9) Murray, Frank & Sailer LLP, 275 Madison Ave 34th Flr, New York, NY, 10016, Phone: 212.682.1818, Fax: 212.682.1892, E-mail: email@rabinlaw.com (10) Schatz & Nobel, P.C., 330 Main Street, Hartford, CT, 06106, Phone: 800.797.5499, Fax: 860.493.6290, E-mail: sn06106@AOL.com (11) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E- mail: info@sbclasslaw.com (12) Scott & Scott LLC, P.O. Box 192, 108 Norwich Avenue, Colchester, CT, 06415, Phone: 860.537.5537, Fax: 860.537.4432, E-mail: scottlaw@scott-scott.com (13) Stull, Stull & Brody (Los Angeles), 10940 Wilshire Boulevard - Suite 2300, Los Angeles, CA, 90024, Phone: 310.209.2468, (14) Weiss & Yourman (Los Angeles, CA), 10940 Wilshire Blvd - 24th Floor, Los Angeles, CA, 90024, Phone: 310.208.2800, Fax: 310.209.2348, E-mail: info@wyca.com ARIBA INC.: To Ask DE Court To Dismiss FreeMarkets Merger Suit -------------------------------------------------------------- Ariba, Inc. intends to ask the Delaware Chancery Court to dismiss the shareholder class action filed against it and the former FreeMarkets, Inc. board members. The suit was filed on behalf of stockholders who held FreeMarkets common stock from January 23, 2004 through July 1,2004. The complaint alleges various breaches of fiduciary duty and a violation of the Delaware General Corporation Law on the part of the former FreeMarkets board members in connection with the Company's merger with FreeMarkets, which was consummated on July 1, 2004. The plaintiff in this action contends, among other things, the FreeMarkets board members breached their fiduciary duties to FreeMarkets' common stockholders by: (1) negotiating the merger with the Company so as to provide themselves with downside protection against a decline in the Company's market price through a beneficial option exchange formula while failing to provide the common stockholders protection in the event of a drop in the price of the Company's stock, (2) contractually obligating themselves to recommend unanimously that FreeMarkets' stockholders approve the merger, (3) failing to disclose to FreeMarkets' stockholders certain material information before the merger closed, and (4) breaching their duties of loyalty to the common stockholders in various other respects. As FreeMarkets' corporate successor, the Company is alleged to be liable for the FreeMarkets board member's violation of the Delaware General Corporation Law. Plaintiff seeks disgorgement of benefits by the individual defendants, as well as monetary and rescissory damages from all of the defendants, jointly and severally. The defendants' Motion to Dismiss the complaint is due to be submitted to the Delaware Chancery Court on January 14, 2005. ARIBA INC.: Limited Discovery Taken in FreeMarkets Stock Lawsuit ---------------------------------------------------------------- Limited discovery has been taken in the consolidated securities class action filed against FreeMarkets, Inc. and two of its executive officers in the United States District Court in Pittsburgh, Pennsylvania. Ariba, Inc. has acquired FreeMarkets, Inc. Beginning in April 2001, eleven securities fraud class action complaints were filed, all of which assert the same claims, stem from FreeMarkets' announcement on April 23, 2001 that, as a result of discussions with the SEC, it was considering amending its fiscal year 2000 financial statements for the purpose of reclassifying fees earned by FreeMarkets under a service contract with Visteon. All of the cases have been consolidated into a single proceeding. On October 30, 2001, FreeMarkets filed a motion seeking to dismiss all of the cases in their entirety. On January 17, 2003, the Court denied the motion to dismiss. On March 10, 2004, the Court certified the case as a class action. The certification order is now on appeal to the United States Court of Appeals for the Third Circuit. CANADA: Truckers Commence Bias Suit Over Meal Allowance in B.C. --------------------------------------------------------------- The Canadian federal government faces a multi-billion dollar class action filed in Kelowna Supreme Court in British Columbia, on behalf of truckers and others who travel to make a living, the Penticton Western reports. Lawyer Tom Johnston filed the suit, alleging that the government favored its own employees over ordinary truckers, by granting them a larger meal allowance than others. The suit alleges that the government paid their own employees $73.10/day, while allowing only a maximum of $22.50/day for other workers. "It is about fairness and equality," Mr. Johnston told Penticton Western. "It is similar to the same-sex marriage cases, only this is economic equality." The $50 dollar difference in wages allegedly amounts to an "undeclared perk" for civil servants and politicians, Mr. Johnston asserted, adding that it is a waste of government money comparable to the federal sponsorship scandal and the lavish travel budget for Governor-General Adrienne Clarkson. Ron Smith, owner-operator of Smitty's Income Tax Service in Penticton and one of 11 plaintiffs listed, told Penticton Western that $22.50 is not enough to cover meal expenses incurred on the road. About 1,900 people are part of the suit, Mr. Johnston said, adding some 300,000 workers would be impacted if the suit is successful. The economic impact would also be considerable, he told Penticton Western. "If we are successful, it will put tons of money back in the economy where it should be instead of in the hands of the government," he said. "It is a waste." COMDISCO INC.: Plaintiffs Seek Certification For Suit V. Execs -------------------------------------------------------------- Plaintiffs asked the United States District Court for the Northern District of Illinois, Eastern Division to grant class certification to the lawsuit filed against two of Comdisco, Inc.'s officers, alleging violations of federal securities laws. On February 7, 2001, a purported class action complaint was filed against the Company, Nicholas K. Pontikes, and John J. Vosicky, alleging violations of Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as amended. The suit is styled "Blitzer v. Comdisco, et al., No. 01-C-0874." Nicholas K. Pontikes is a former chief executive officer and director of Comdisco, Inc.; John J. Vosicky formerly served as a director, executive vice president, and chief financial officer of Comdisco, Inc. In addition, fourteen other similar purported class action lawsuits were filed against the same defendants in the same court. Those individual class action lawsuits, along with the first-filed Blitzer case, were dismissed and the complaints were combined into a single action, captioned "In re: Comdisco Securities Litigation, No. 01-C-2110." In connection with the confirmation process for the Plan for Comdisco, Inc., the lead plaintiff in the consolidated action agreed to dismiss the action with respect to Comdisco, Inc., but maintained all rights, if any, against Nicholas K. Pontikes, John Vosicky, and any person not released from liability by the Plan. This resolution was made effective pursuant to a stipulation and agreed order dated June 13, 2002. On November 15, 2002, the lead plaintiff in the consolidated lawsuit filed an Amended Class Action Complaint under Master File No. 01 C 2110. The Company was not named as a defendant in the Amended Complaint, which included claims against only Nicholas K. Pontikes and John J. Vosicky. On December 10, 2002, Mr. Pontikes and Mr. Vosicky filed a motion to dismiss the Amended Complaint. The court denied that motion on March 31, 2003. Since that time, the parties have been engaged in discovery. On November 5, 2004, the lead plaintiff filed a Motion for Class Certification. Discovery regarding class certification is underway. FRANKLIN RESOURCES: Faces Shareholder Fraud Lawsuits Filed in MD ---------------------------------------------------------------- Franklin Resources, Inc., certain of its subsidiaries, certain Franklin Templeton mutual funds, current and former officers, employees, and directors have been named in multiple lawsuits in different federal courts in Nevada, California, Illinois, New York, and Florida, alleging violations of various federal securities laws and seeking, among other things, monetary damages and costs. Specifically, the lawsuits claim breach of duty with respect to alleged arrangements to permit market timing and/or late trading activity, or breach of duty with respect to the valuation of the portfolio securities of certain Templeton Funds managed by Company subsidiaries, resulting in alleged market timing activity. The lawsuits are styled as class actions, or derivative actions on behalf of either the named Funds or the Company. Additionally, Franklin Templeton Investments Corporation ("FTIC") was recently served with a class action market timing complaint in Quebec, Canada, entitled "Huneault v. AGF Funds, Inc., et al., Case No. 500-06-000256-046," filed on October 25, 2004 in the Superior Court for the Province of Quebec, District of Montreal. To date, more than 240 similar lawsuits against at least 19 different mutual fund companies have been filed in federal district courts throughout the country. Because these cases involve common questions of fact, the Judicial Panel on Multidistrict Litigation (JPMDL) ordered the creation of a multidistrict litigation in the United States District Court for the District of Maryland, entitled "In re Mutual Funds Investment Litigation" (the "MDL"). The Judicial Panel then transferred similar cases from different districts to the MDL for coordinated or consolidated pretrial proceedings. As of December 13, 2004, the following lawsuits are pending against the Company (and in some instances, against certain of the Funds) and have been transferred to the MDL: (1) Kenerley v. Templeton Funds, Inc., et al., Case No. 03-770 GPM, filed on November 19, 2003 in the United States District Court for the Southern District of Illinois; (2) Cullen v. Templeton Growth Fund, Inc., et al., Case No. 03-859 MJR, filed on December 16, 2003 in the United States District Court for the Southern District of Illinois and transferred to the United States District Court for the Southern District of Florida on March 29, 2004; (3) Jaffe v. Franklin AGE High Income Fund, et al., Case No. CV-S-04-0146-PMP-RJJ, filed on February 6, 2004 in the United States District Court for the District of Nevada; (4) Lum v. Franklin Resources, Inc., et al., Case No. C 04 0583 JSW, filed on February 11, 2004 in the United States District Court for the Northern District of California; (5) Fischbein v. Franklin AGE High Income Fund, et al., Case No. C 04 0584 JSW, filed on February 11, 2004 in the United States District Court for the Northern District of California; (6) Beer v. Franklin AGE High Income Fund, et al., Case No. 8:04-CV-249-T-26 MAP, filed on February 11, 2004 in the United States District Court for the Middle District of Florida; (7) Bennett v. Franklin Resources, Inc., et al., Case No. CV-S-04-0154-HDM-RJJ, filed on February 12, 2004 in the United States District Court for the District of Nevada; (8) Dukes v. Franklin AGE High Income Fund, et al., Case No. C 04 0598 MJJ, filed on February 12, 2004, in the United States District Court for the Northern District of California; (9) McAlvey v. Franklin Resources, Inc., et al., Case No. C 04 0628 PJH, filed on February 13, 2004 in the United States District Court for the Northern District of California; (10) Alexander v. Franklin AGE High Income Fund, et al., Case No. C 04 0639 SC, filed on February 17, 2004 in the United States District Court for the Northern District of California; (11) Hugh Sharkey IRA/RO v. Franklin Resources, Inc., et al., Case No. 04 CV 1330, filed on February 18, 2004 in the United States District Court for the Southern District of New York; (12) D'Alliessi, et al. v. Franklin AGE High Income Fund, et al., Case No. C 04 0865 SC, filed on March 3, 2004 in the United States District Court for the Northern District of California; (13) Marcus v. Franklin Resources, Inc., et al., Case No. C 04 0901 JL, filed on March 5, 2004 in the United States District Court for the Northern District of California; (14) Banner v. Franklin Resources, Inc., et al., Case No. C 04 0902 JL, filed on March 5, 2004 in the United States District Court for the Northern District of California; (15) Denenberg v. Franklin Resources, Inc., et al., Case No. C 04 0984 EMC, filed on March 10, 2004 in the United States District Court for the Northern District of California; (16) Hertz v. Burns, et al., Case No. 04 CV 02489, filed on March 30, 2004 in the United States District Court for the Southern District of New York Plaintiffs in the MDL filed consolidated amended complaints on September 29, 2004. It is anticipated that defendants will file motions to dismiss in the coming months. FRANKLIN RESOURCES: Faces Breach of Fiduciary Duty Suits in IL -------------------------------------------------------------- Various subsidiaries of Franklin Resources, Inc., as well as certain Templeton Funds, have been named in multiple lawsuits filed in state courts in Illinois, alleging breach of fiduciary duty with respect to the valuation of the portfolio securities of certain Templeton Funds managed by such subsidiaries. The suits are styled: (1) Bradfisch v. Templeton Funds, Inc., et al., Case No. 2003 L 001361, filed on October 3, 2003 in the Circuit Court of the Third Judicial Circuit, Madison County, Illinois; (2) Woodbury v. Templeton Global Smaller Companies Fund, Inc., et al., Case No. 2003 L 001362, filed on October 3, 2003 in the Circuit Court of the Third Judicial Circuit, Madison County, Illinois; (3) Kwiatkowski v. Templeton Growth Fund, Inc., et al., Case No. 03 L 785, filed on December 17, 2003 in the Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois; (4) Parise v. Templeton Funds, Inc., et al., Case No. 2003 L 002049, filed on December 22, 2003 in the Circuit Court of the Third Judicial Circuit, Madison County, Illinois These lawsuits are state court actions and are not subject to the MDL. FRANKLIN RESOURCES: Mutual Fund Lawsuits Filed in Various Courts ---------------------------------------------------------------- Franklin Resources, Inc. certain of its current and former officers, employees, and directors face multiple lawsuits alleging violations of various securities laws and pendent state law claims relating to the disclosure of directed brokerage payments and/or payment of allegedly excessive advisory, commission, and distribution fees. These lawsuits are styled as class actions and derivative actions brought on behalf of certain Funds. The suits are styled: (1) Stephen Alexander IRA v. Franklin Resources, Inc., et al., Case No. 04-982 JLL, filed on March 2, 2004 in the United States District Court for the District of New Jersey; (2) Strigliabotti v. Franklin Resources, Inc., et al., Case No. C 04 0883 SI, filed on March 4, 2004 in the United States District Court for the Northern District of California; (3) Tricarico v. Franklin Resources, Inc., et al., Case No. CV-04-1052 JAP, filed on March 4, 2004 in the United States District Court for the District of New Jersey; (4) Miller v. Franklin Mutual Advisors, LLC, et al., Case No. 04-261 DRH, filed on April 16, 2004 in the United States District Court for the Southern District of Illinois and transferred to the United States District Court for the District of New Jersey on August 5, 2004 (plaintiffs voluntarily dismissed this action, without prejudice, on October 22, 2004); (5) Wilcox v. Franklin Resources, Inc., et al., Case No. 04-2258 WHW, filed on May 12, 2004 in the United States District Court for the District of New Jersey; (6) Bahe, Custodian CGM Roth Conversion IRA v. Franklin/Templeton Distributors, Inc. et al., Case No. 04-11195 PBS, filed on June 3, 2004 in the United States District Court for the District of Massachusetts The United States District Court for the District of New Jersey consolidated for pretrial purposes three of the above lawsuits (Stephen Alexander IRA, Tricarico, and Wilcox) into a single action, entitled "In re Franklin Mutual Funds Fee Litigation." Plaintiffs in those three lawsuits filed a consolidated amended complaint on October 4, 2004. HMO LITIGATION: FL Court Moves Racketeering Trial To Sept. 2005 --------------------------------------------------------------- United States District Court in Miami, Florida judge Federico Moreno postponed the trial in the racketeering class action filed against seven major health maintenance organizations, after appeals of his earlier rulings delayed certain activities leading to trial, the Florida Sun-Sentinel reports. The suit, styled "In Re Humana Inc. Managed Care Litigation, MDL 1334," names as defendants Humana, Inc., Aetna, Inc., Aetna- USHC, Inc., Cigna, Health Net, Inc., Human Health Plan, Inc., Pacificare Health Systems, Inc., Prudential Insurance Company of America, United Health Group, United Health Care and Wellpoint Health Networks, Inc. Two earlier defendants, Cigna and Aetna, have entered settlements with the plaintiffs in pacts collectively valued at $1.1 billion. A group of physicians filed the suit, alleging violations of the federal racketeering act, Racketeer Influenced and Corrupt Organizations (RICO), conspiracy to violate RICO and aiding and abetting a scheme to violate RICO. In addition to these RICO claims, the complaint includes counts for breach of contract, violations of various state prompt payment laws and equitable claims for unjust enrichment and quantum meruit, an earlier Class Action Reporter story (November 23,2004) states. The lawsuit alleges that the HMOs conspired to violate the federal Racketeer Influenced and Corrupt Organizations Act by systematically denying, diminishing or delaying payments to doctors through the use of computer claims-processing programs. Trial was initially set for March 2005, but Judge Moreno ruled that he will start the case on September 6, after taking of depositions, providing witness lists and handling procedural motions have caused delays in certain milestones leading to trial. Last September, the 11th U.S. Circuit Court of Appeals in Atlanta upheld class-action status and in November, upheld the judge's ruling in November that HMOs cannot force arbitration of claims brought on behalf of the 600,000 to 700,000 physicians who form the class. The companies, except for two not covered under the arbitration ruling, have appealed to the U.S. Supreme Court, but are preparing for trial at the same time, Kent Jarrell, a spokesman for the defendants told the Sun-Sentinel. "The burden of proof under the racketeering statues is much higher," and that could work to the HMOs' advantage, Mr. Jarrell told the Sun-Sentinel. But the so-called RICO statutes are a two-edged sword, he said, because they call for treble damages if the defendants lose. Lawyers for the doctors are working "around the clock" to meet the judge's deadlines, co-lead counsel Archie Lamb told the Sun- Sentinel. "We have to have all of our work done by May," he said. A pretrial conference is scheduled for June 7, followed by a summer hiatus. The suit is styled "In Re Humana Inc. Managed Care Litigation, MDL 1334," filed in the United States District Court for the Southern District of Florida, Miami Division, under Judge Federico Moreno. The suit names as defendants Humana, Inc., Aetna, Inc., Aetna-USHC, Inc., Cigna, Health Net, Inc., Human Health Plan, Inc., Pacificare Health Systems, Inc., Prudential Insurance Company of America, United Health Group, United Health Care and Wellpoint Health Networks, Inc. Cigna and Aetna have entered settlements with the plaintiffs. Lead Plaintiffs' Attorneys are Barry Meadow of Podhurst, Orseck, et al., Harley Tropin of Kozyak, Tropin & Throckmorton and Archie Lamb. INTEGRATED ELECTRICAL: TX Court Orders Stock Suits Consolidated --------------------------------------------------------------- The United States District Court for the Southern District of Texas ordered consolidated the securities class actions filed against Integrated Electrical Services, Inc. and certain of its officers and directors. On August 20, 2004, August 23, 2004, September 10, 2004, September 15, 2004, and October 4, 2004, Corinne Orem, Elaine English, Park Partners, L.P., Jack Zimny, and James Elmore, respectively, each filed a putative class action complaint, alleging that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and seeking a class determination for purchasers of IES stock between November 10, 2003 and August 13, 2004. The plaintiffs seek unspecified amounts of compensatory damages, interest and costs, including legal fees. On November 19, 2004, these cases were consolidated. A motion to appoint a lead plaintiff is pending before the court, and once an appointment is made plaintiff will have sixty days to file a consolidated amended complaint. Defendants will have sixty days from the filing of this consolidated amended complaint to respond. The suits are filed in the United States District Court for the Southern District of Texas, under Judge David Hittner. The suits are styled: (1) Park Partners LLP v. Integrated Electrical Services Inc et al, 4:04-cv-03558, (2) Zimny v. Integrated Electrical Services Inc et al, 4:04-cv-03602, (3) Elmore v. Integrated Electrical Services Inc et al, 4:04-cv-03842, (4) Orem v. Integrated Electrica, et al, 4:04-cv-03342, (5) English v. Integrated Electrica, et al, 4:04-cv-03352 The plaintiff firms in this litigation are: (i) Brian Felgoise, 230 South Broad Street, Suite 404, Philadelphia, PA, 19102, Phone: 215.735.6810, Fax: 215/735.5185, (ii) Brodsky & Smith, LLC, 11 Bala Avenue, Suite 39, Bala Cynwyd, PA, 19004, Phone: 610.668.7987, Fax: 610.660.0450, E-mail: esmith@Brodsky-Smith.com, (iii) Charles J. Piven, World Trade Center-Baltimore, 401 East Pratt Suite 2525, Baltimore, MD, 21202, Phone: 410.332.0030, E-mail: pivenlaw@erols.com, (iv) Cohen, Milstein, Hausfeld & Toll, P.L.L.C. (Washington, DC), 1100 New York Avenue, N.W., Suite 500, West Tower, Washington, DC, 20005, Phone: 202.408.4600, Fax: 202.408.4699, E-mail: lawinfo@cmht.com, (v) Federman & Sherwood, 120 North Robinson, Suite 2720, Oklahoma City, OK, 73102, Phone: 405-235-1560, E-mail: wfederman@aol.com, (vi) Hoeffner & Bilek, LLP, 440 Louisiana - Suite 720, Houston, TX, 77002, Phone: 713.227.7720, (vii) Milberg Weiss Bershad & Schulman LLP (New York), One Pennsylvania Plaza, 49th Floor, New York, NY, 10119, Phone: 212.594.5300, Fax: 212.868.1229, E-mail: info@milbergweiss.com, (viii) Schatz & Nobel, P.C., 330 Main Street, Hartford, CT, 06106, Phone: 800.797.5499, Fax: 860.493.6290, E-mail: sn06106@AOL.com, (ix) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA 19004, Phone: 610.667.7706, Fax: 610.667.7056, E- mail: info@sbclasslaw.com IRVINE SENSORS: CA Court Approves Securities Lawsuit Settlement --------------------------------------------------------------- The United States District Court for the Central District of California approved the settlement of the consolidated class action filed against Irvine Sensors Corporation, certain of its current and former officers and directors, and an officer and director of its former subsidiary Silicon Film Technologies, Inc. The amended complaint alleged that defendants made false and misleading statements about the prospects of Silicon Film during the period January 6, 2000 to September 15, 2001, inclusive. The amended complaint asserted claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and SEC Rule 10b-5, and sought damages of an unspecified amount. Defendants' time to answer or otherwise respond to the amended complaint was September 2002, at which time the Company filed a motion to dismiss the amended complaint. This motion was heard on May 5, 2003, at which time the Court dismissed the amended complaint, but granted the plaintiffs leave to further amend their complaint within 20 days. The plaintiffs filed a second amended complaint on May 27, 2003, reasserting the claims made previously, primarily on the basis of purported greater particularity. The defendants filed a motion to dismiss the second amended complaint on June 24, 2003. This motion was denied on September 22, 2003, and the defendants filed their answer to the second amended complaint on October 6, 2003, denying all of the substantive allegations of that complaint. In January 2004, the lead plaintiffs and defendants entered into a memorandum of understanding to settle the litigation for a monetary payment, without admissions as to the merits of either defendants' or plaintiffs' position. MET-RX SUBSTRATE: Faces Suit Over Pro-hormone Supplements in CA --------------------------------------------------------------- Met-Rx Substrate Technology, Inc., a subsidiary of Rexall Sundown, Inc., faces a putative consumer class action filed in California state court, claiming that the advertising and marketing of certain pro-hormone supplements were false and misleading, or alternatively, that the pro-hormone products contained ingredients that were controlled substances under California law. Plaintiffs seek equitable and monetary relief. On June 18, 2004, this case was coordinated with several other cases brought against other companies relating to the sale of products containing androstenediol, one of the pro-hormones contained in the Met-Rx products. The coordinated proceedings have recently been assigned to a coordination judge for further proceedings. No trial date has been set, and the Court has not yet certified a class. In March 2004, a putative class action lawsuit was filed in New Jersey against the Company, claiming that the advertising and marketing of certain pro-hormone supplements were false and misleading and that plaintiff and the putative class of New Jersey purchasers of these products were entitled to damages and injunctive relief. Because these allegations are virtually identical to allegations made in the putative nationwide class action previously filed in California, the Company moved to dismiss or stay the New Jersey action pending the outcome of the California action. The motion was granted, and the New Jersey action is stayed at this time. MET-RX USA: Asks FL Court To Junk Pro-Hormone Supplements Suit -------------------------------------------------------------- MET-Rx USA, Inc., a subsidiary of Rexall Sundown, Inc., asked Florida state court to dismiss the class action filed against it, alleging that the advertising and marketing of certain pro- hormone supplements were false and misleading, that the products were ineffective, and alternatively, that the products were anabolic steroids whose sale violated Florida law. The Company has moved to dismiss the complaint for failure to state a cause of action. Plaintiff seeks equitable and monetary relief. Because this action is in its early stages, no determination can be made at this time as to its final outcome, nor can its materiality be accurately ascertained, the Company said in a disclosure to the Securities and Exchange Commission. MICROMUSE INC.: Asks CA Court To Dismiss Securities Fraud Suit -------------------------------------------------------------- Micromuse, Inc. asked the United States District Court for the Northern District of California to dismiss the consolidated securities class action filed against it and certain of its current and former directors. Between January 12, 2004 and March 5, 2004, seven securities class action complaints were filed. In July 2004, the District Court consolidated the various actions, named Massachusetts Laborer's Pension Fund as lead plaintiff and appointed the law firm of Berman, DeValerio, Pease, Tabacco, Burt & Pucillo as lead plaintiff's counsel. In September 2004, lead plaintiff Massachusetts Laborer's Pension Fund filed a consolidated amended complaint on behalf of a purported class of purchasers of the Company's common stock. The alleged class period is January 18, 2001 through May 18, 2004. The consolidated amended complaint seeks an unspecified amount of damages and asserts causes of action for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, arising out of the Company's restatement of its previously issued financial statements for the fiscal years ended September 30, 2001 and 2002 and for the quarters ended December 31, 2000 through June 30, 2003, and the Company's adjustment of its preliminary consolidated financial statement information for the quarter and fiscal year ended September 30, 2003, as initially announced on October 29, 2003, and the Company's adjustment of preliminary financial information for the quarter ended December 31, 2003, as announced on February 10, 2004. The lead complaint is styled "Michele Ghyselink, individually and on behalf of all other similar situated v. Micromuse, Inc., et al., case no. CV 04-00136," under Judge Saundra Brown Armstrong. The plaintiff firms in this litigation are: (1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E. 40th Street, 22nd Floor, New York, NY, 10016, Phone: 800.217.1522, E-mail: info@bernlieb.com (2) Brian Felgoise, 230 South Broad Street, Suite 404 , Philadelphia, PA, 19102, Phone: 215.735.6810, Fax: 215/735.5185, (3) Brodsky & Smith, LLC, 11 Bala Avenue, Suite 39, Bala Cynwyd, PA, 19004, Phone: 610.668.7987, Fax: 610.660.0450, E-mail: esmith@Brodsky-Smith.com (4) Cauley Geller Bowman Coates & Rudman, LLP (New York), 200 Broadhollow, Suite 406, Melville, NY, 11747, Phone: 631.367.7100, Fax: 631.367.1173, (5) Charles J. Piven, World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202, Phone: 410.332.0030, E-mail: pivenlaw@erols.com (6) Federman & Sherwood, 120 North Robinson, Suite 2720, Oklahoma City, OK, 73102, Phone: 405-235-1560, E-mail: wfederman@aol.com (7) Glancy and Binkow, 1801 Avenue of the Stars, suite 311, Los Angeles, CA, 90067, Phone: 310-201-9150, E-mail: info@glancylaw.com (8) Kaplan Fox & Kilsheimer, LLP (New York, NY), 805 Third Avenue, 22nd Floor, New York, NY, 10022, Phone: 212.687.1980, Fax: 212.687.7714, E-mail: info@kaplanfox.com (9) Milberg Weiss Bershad Hynes & Lerach, LLP (New York, NY), One Pennsylvania Plaza, New York, NY, 10119-1065, Phone: 212.594.5300, (10) Milberg, Weiss, Bershad, Hynes & Lerach, LLP (S.F., CA), 100 Pine Street - Suite 2600, San Francisco, CA, 94111, Phone: 415.288.4545, Fax: 415.288.4534, (11) Murray, Frank & Sailer LLP, 275 Madison Ave 34th Flr, New York, NY, 10016, Phone: 212.682.1818, Fax: 212.682.1892, E-mail: email@rabinlaw.com (12) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270 Madison Avenue, New York, NY, 10016, Phone: 212.545.4600, Fax: 212.686.0114, E-mail: newyork@whafh.com Representing the company is Dale E. Barnes, Jr., McCutchen Doyle Brown & Enersen LLP, Three Embaracadero Center, San Francisco, CA 94111-4067, Phone: 415-393-2000, E-mail: dbarnes@mdbe.com. NASSDA CORPORATION: To Ask CA Court To Dismiss Securities Suit -------------------------------------------------------------- Nassda Corporation intends to ask the United States District Court for the Northern District of California to dismiss the amended securities class action filed against it and certain of its officers and directors. The first suit, filed in July 2004, asserts claims against the company, Sang S. Wang, An-Chang Deng, Tammy Shu-Hua Liu and Yen- Son Huang on behalf of a putative class of persons who purchased Company stock between December 13, 2001 and June 11, 2004. The class action alleges that the named defendants violated certain provisions of the Securities Exchange Act of 1934 by making materially false and misleading representations in press releases and financial statements filed with the SEC relating to our financial results. The complaint's allegations derive from allegations contained in the complaint concerning the 053 Patent. A second class action was filed on September 9, 2004 in the United States District Court for the Northern District of California. On September 27, 2004, one plaintiff moved for lead plaintiff status in the first filed class action. These two cases were consolidated on October 7, 2004. On November 4, 2004, the judge granted the motion of NECA-IBEW Pension Fund (The Decatur Plan) for appointment as lead plaintiff. Plaintiff must file a consolidated complaint by January 14, 2005, and defendants' motion to dismiss is currently due January 28, 2005. NASSDA CORPORATION: Faces Shareholder Fraud Lawsuit in DE Court --------------------------------------------------------------- Nassda Corporation and certain of its officers and directors face a class action complaint filed in the Court of Chancery of the State of Delaware. This complaint, brought by Robert Israel, alleges that defendants entered into the merger agreement with Synopsys for inadequate consideration. The complaint also alleges that the merger agreement was an unlawful plan to shield the Company's board of directors and certain members of its management from liability to Synopsys in the State Court Action and Federal Court Actions, and to shield them from liability to the company for claims asserted by the plaintiff in the pending derivative action. Plaintiff seeks to enjoin the proposed merger, or alternatively seeks damages if the proposed merger is consummated. NASSDA CORPORATION: Shareholders Launch Fraud Suit in CA Court -------------------------------------------------------------- Nassda Corporation and certain of its officers and directors face a stockholder class action filed in the Superior Court of California, Santa Clara County, by stockholder Frank A. Lettieri arising out of defendants' conduct in selling the company to Synopsys at an allegedly inadequate and unfair price. Defendants allegedly arrived at an unfair price so that at least two of its directors could avoid or significantly reduce their exposure in a pending lawsuit. As a result of this conduct, defendants allegedly breached fiduciary duties. Defendants allegedly structured the terms of the proposed merger to fit the needs of Synopsys, instead of seeking to obtain the highest price reasonably available to the Company. The complaint seeks an injunction of the acquisition, and the implementation of a procedure to ensure the highest possible price for stockholders. The complaint also seeks to direct the individual defendants to exercise their fiduciary duties to obtain a transaction in the best interest of the stockholders at the highest price. The complaint seeks to rescind the proposed merger and to impose a constructive trust upon any benefits improperly received by defendants as a result of improper conduct. NATIONAL AUTO: Working To Settle Shareholder Lawsuits in DE, NY --------------------------------------------------------------- National Auto Credit, Inc. (NAC) is working on the settlement of the shareholder complaints filed against it in Delaware and New York courts, alleging the Company's directors breached their fiduciary duty to shareholders. On July 31, 2001, NAC received a derivative complaint filed by Academy Capital Management, Inc., a shareholder of NAC, with the Court of Chancery of Delaware. The company was named as a nominal defendant, and named as defendants James J. McNamara, John A. Gleason, William S. Marshall, Henry Y.L. Toh, Donald Jasensky, Peter T. Zackaroff, Mallory Factor, and Thomas F. Carney, Jr. The Academy Complaint principally seeks: (1) a declaration that the Director Defendants breached their fiduciary duties to NAC, (2) a judgment voiding an employment agreement with James J. McNamara and rescinding a stock exchange agreement in which NAC acquired ZoomLot Corporation, (3) a judgment voiding the grant of stock options and the award of director fees allegedly related thereto, (4) an order directing the Director Defendants to account for alleged damages sustained and profits obtained by the Director Defendants as a result of the alleged various acts complained of, (5) the imposition of a constructive trust over monies or other benefits received by the Director Defendants and (6) an award of costs and expenses On August 16, 2001, NAC received a complaint filed by Levy Markovich ("Markovich"), a shareholder of NAC, with the Delaware Chancery Court on or about August 16, 2001, against James J. McNamara, John A. Gleason, William S. Marshall, Henry Y. L. Toh, Donald Jasensky, Peter T. Zackaroff, Mallory Factor, and Thomas F. Carney, Jr. and NAC as a nominal defendant. The Markovich Complaint principally seeks: (i) a declaration that the Director Defendants have breached their fiduciary duties to NAC, (ii) a judgment voiding an employment agreement with James J. McNamara and rescinding a stock exchange agreement in which NAC acquired ZoomLot Corporation, (iii) a judgment voiding the grant of options and the award of directors fees allegedly related thereto, (iv) an order directing the Director Defendants to account for alleged damages sustained and alleged profits obtained by the Director Defendants as a result of the alleged various acts complained of, (v) the imposition of a constructive trust over monies or other benefits received by the directors, and (vi) an award of costs and expenses On August 31, 2001, NAC received a complaint filed by Harbor Finance Partners ("Harbor"), a shareholder of NAC, with the Delaware Chancery Court on or about August 31, 2001, against Thomas F. Carney, Jr., Mallory Factor, John A. Gleason, Donald Jasensky, William S. Marshall, James J. McNamara, Henry Y. L. Toh, Peter T. Zackaroff, Ernest C. Garcia, and ZoomLot Corporation as Defendants and NAC as a nominal defendant. The Harbor Complaint principally seeks: (a) a judgment requiring the Director Defendants to promptly schedule an annual meeting of shareholders within thirty (30) days of the date of the Harbor Complaint; (b) a judgment declaring that the Director Defendants breached their fiduciary duties to NAC and wasted its assets; (c) an injunction preventing payment of monies and benefits to James J. McNamara under his employment agreement with NAC and requiring Mr. McNamara to repay the amounts already paid to him thereunder; (d) a judgment rescinding the agreement by NAC to purchase ZoomLot and refunding the amounts it paid; (e) a judgment rescinding the award of monies and options to the directors on December 15, 2000 and requiring the directors to repay the amounts they received allegedly related thereto; (f) a judgment requiring the defendants to indemnify NAC for alleged losses attributable to their alleged actions; and (g) a judgment awarding interest, attorney's fees, and other costs, in an amount to be determined On October 12, 2001, NAC received a derivative complaint filed by Robert Zadra, a shareholder of NAC, with the Supreme Court of the State of New York on or about October 12, 2001 against James J. McNamara, John A. Gleason, William S. Marshall, Henry Y. L. Toh, Donald Jasensky, Peter T. Zackaroff, Mallory Factor, Thomas F. Carney, Jr., and NAC as Defendants. On May 29, 2002 the complaint was amended to include class action allegations (the "Zadra Amended Complaint"). The Zadra Amended Complaint contains allegations similar to those in the Delaware actions concerning the Board's approval of the employment agreement with James McNamara, option grants and past and future compensation to the Director Defendants, and the ZoomLot transaction. The Amended Complaint seeks a declaration that as a result of approving these transactions the Director Defendants breached their fiduciary duties to NAC; a judgment enjoining defendants from proceeding with or exercising the option agreements; rescission of the option grants to defendants, if exercised; an order directing the Director Defendants to account for alleged profits and losses obtained by the Director Defendants as a result of the alleged various acts complained of; awarding compensatory damages to NAC and the class, together with prejudgment interest, and an award of costs and expenses. By order of the Delaware Chancery Court on November 12, 2001, the Academy, Markovich and Harbor Complaints were consolidated under the title "In re National Auto Credit, Inc. Shareholders Litigation," Civil Action No. 19028 NC (Delaware Chancery Court) ("Delaware Consolidated Action") and the Academy Complaint was deemed the operative complaint. The parties in the New York action thereafter engaged in settlement negotiations and the parties entered into a stipulation of settlement in December 2002, proposing to settle all class and derivative claims. In January 2003, the New York Supreme Court entered an order which, among other things, conditionally certified a class of shareholders for settlement purposes, approved the form of notice of the proposed settlement, and scheduled a hearing to approve the settlement. Notice of the proposed settlement was given to the shareholders of the Company and members of the class as per the court's order in January and February 2003. Hearings on the proposed settlement were held on May 13, 2003 and October 15, 2003. One of the Plaintiffs in the Delaware Consolidated Action, and several other shareholders, appeared and objected to the terms of the settlement, but all of these objections were denied by the New York Supreme Court, which, after hearing all the evidence, found that the settlement was fair, reasonable and in the best interests of the Company, the class and the Company's shareholders, and approved the terms of the proposed settlement in a written Order and Judgment entered January 8, 2004 ("the January 2004 Order"). The provisions of the settlement have not been implemented since Objectors have filed an appeal of the January 2004 Order with the Appellate Division of the New York Supreme Court, First Division (the "NY Appellate Court"). The NY Appellate Court scheduled a preliminary conference in September 2004 to review the appeal. The appeal has been noticed for the January 2005 term of the NY Appellate Court. Oral argument on the appeal is expected to be heard in February or March 2005 and a decision is expected to be rendered by the NY Appellate Court later in 2005. A motion to dismiss the Delaware Consolidated Action was filed in 2002 but was denied by the Delaware Chancery Court in January 2003. The Delaware Chancery Court then stayed further proceedings in the Delaware Consolidated Action pending issuance of the New York Supreme Court's decision on the settlement. In January 2004, NAC re-filed a motion to dismiss the Delaware Consolidated Action, asserting that the New York Supreme Court's January 2004 Order, approving the settlement of the class and derivative action, precluded further proceedings in Delaware. In a decision rendered in August 2004, the Delaware Chancery Court determined that because the New York Supreme Court's January 2004 Order conditioned entry of a final judgment in New York upon the dismissal of the Consolidated Derivative Action, the January 2004 Order was not a final judgment for claim preclusion purposes. NBTY INC.: Plaintiffs To File Consolidated Securities Suit in NY ---------------------------------------------------------------- Plaintiffs intend to file a consolidated securities class action against NBTY, Inc. and certain of its officers and directors in the United States District Court for the Eastern District of New York. During the period from June 24, 2004 through September 3, 2004, six separate shareholder class actions were filed against the Company and certain of its officers and directors on behalf of shareholders who purchased shares of the Company's common stock between February 9, 2004 and July 22, 2004. The actions allege that the Company failed to disclose material facts during the Class Period that resulted in a decline in the price of the Company's stock after June 16, 2004 and July 22, 2004, respectively. These actions are stayed pending the Court's decision on the unopposed motions, filed in August 2004, to consolidate the six class actions and to appoint lead plaintiffs and lead counsel for the plaintiffs. The Company, officers and directors intend to file a motion to dismiss the actions once consolidated. NETWORK ENGINES: MA Court Refuses To Dismiss Securities Lawsuit --------------------------------------------------------------- The United States District Court of Massachusetts refused to dismiss the consolidated securities class action filed against Network Engines, Inc. and certain individual Network Engines defendants. The suit generally concerns the timing of the announcement of an amendment to the Company's agreement with EMC Corporation regarding the resale of EMC-approved Fibre Channel HBAs. In its March 17, 2004 order, the court selected Wing Kam Yu, Blake Kunkel, and Thomas Cunningham as lead plaintiffs and appointed Milberg Weiss Bershad Hynes & Lerach LLP (now Milberg Weiss Bershad & Schulman LLP) as plaintiffs' lead counsel. The lead plaintiffs filed an amended consolidated complaint on June 4, 2004. The defendants on August 13, 2004 filed a motion to dismiss the amended consolidated complaint. The plaintiffs on October 12, 2004 filed an opposition to the defendants' motion to dismiss. The defendants filed a reply to the plaintiff's opposition on November 12, 2004. The court on November 22, 2004 denied the Company's motion to dismiss the amended consolidated complaint. The suit is styled "Morgan v. Network Engines Inc. et al., case no. 1:03-cv-12529-JLT," filed in the United States District Court in Massachusetts, under Judge Joseph L. Tauro. Lawyers for the defendants are Robin L. Alperstein of Wilmer Cutler Pickering Hale and Dorr LLP, 399 Park Avenue, New York, NY 10022, Phone: 212-230-8800, Fax: 212-230-8888; and Daniel W. Halston and John A. Litwinski, Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, MA 02109, Phone: 617-526-6654, Fax: 617-526-5000, E-mail: daniel.halston@wilmerhale.com or john.litwinski@wilmerhale.com. Lead counsel for the plaintiffs are Rachel S. Fleishman and Carlos F. Ramirez of Milberg Weiss Bershad & Schulman LLP, One Pennsylvania Plaza, New York, NY 10119-0165, Phone: 212-594-5300. NETWORK ENGINES: Asks NY Court To Approve Stock Suit Settlement --------------------------------------------------------------- Network Engines, Inc. asked the United States District Court for the Southern District of New York to grant preliminary approval to the settlement of the consolidated securities class action filed against it, Lawrence A. Genovesi (the Company's Chairman and former Chief Executive Officer), Douglas G. Bryant (the Company's Chief Financial Officer and Vice President of Finance and Administration), and the following underwriters of our initial public offering: (1) FleetBoston Robertson Stephens, Inc., (2) Credit Suisse First Boston Corp., (3) Goldman Sachs & Co., (4) Lehman Brothers, Inc. and (5) Salomon Smith Barney, Inc. An amended class action complaint, captioned In re Network Engines, Inc. Initial Public Offering Securities Litigation, 01 Civ. 10894 (SAS), was filed on April 20, 2002. The suit alleges that the defendants violated the federal securities laws by issuing and selling securities pursuant to the Company's initial public offering in July 2000, or IPO, without disclosing to investors that the underwriter defendants had solicited and received excessive and undisclosed commissions from certain investors. The suit also alleges that the underwriter defendants entered into agreements with certain customers whereby the underwriter defendants agreed to allocate to those customers shares of the Company's common stock in the offering, in exchange for which the customers agreed to purchase additional shares of common stock in the aftermarket at pre- determined prices. The suit alleges that such tie-in arrangements were designed to and did maintain, distort and/or inflate the price of our common stock in the aftermarket. The suit further alleges that the underwriter defendants received undisclosed and excessive brokerage commissions and that, as a consequence, the underwriter defendants successfully increased investor interest in the manipulated IPO securities and increased the underwriter defendants' individual and collective underwritings, compensation and revenues. The suit seeks damages and certification of a plaintiff class consisting of all persons who acquired shares of the Company's common stock between July 13, 2000 and December 6, 2000. In July 2002, Network Engines, Lawrence A. Genovesi and Douglas G. Bryant joined in an omnibus motion to dismiss challenging the legal sufficiency of plaintiffs' claims. The motion was filed on behalf of hundreds of issuer and individual defendants named in similar lawsuits. Plaintiffs opposed the motion, and the court heard oral argument on the motion in November 2002. On February 19, 2003, the court issued an opinion and order denying the motion as to Network Engines. In addition, in October 2002, Lawrence A. Genovesi and Douglas G. Bryant were dismissed from this case without prejudice. On July 9, 2003, a Special Committee of our Board of Directors authorized Network Engines to negotiate a settlement of the pending claims substantially consistent with a memorandum of understanding negotiated among class plaintiffs, all issuer defendants and their insurers. The Company negotiated the settlement, which provides, among other things, for a release of Network Engines and the individual defendants for the conduct alleged in the amended complaint to be wrongful. The company would agree to undertake other responsibilities under the settlement, including agreeing to assign, or not assert, certain potential claims that the Company may have against the underwriters. The suit is styled " In re Network Engines, Inc. Initial Public Offering Securities Litigation, 01 Civ. 10894 (SAS)," filed in relation to "IN re IPO Securities Litigation, 21-MC-92 (Sas)," in the United States District Court for the Southern District of New York, under Judge Shira A. Scheindlin. The plaintiff firms in this litigation are: (i) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E. 40th Street, 22nd Floor, New York, NY, 10016, Phone: 800.217.1522, E-mail: info@bernlieb.com (ii) Milberg Weiss Bershad Hynes & Lerach, LLP (New York, NY), One Pennsylvania Plaza, New York, NY, 10119-1065, Phone: 212.594.5300, (iii) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E- mail: info@sbclasslaw.com (iv) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New York, NY, 10005, Phone: 888.759.2990, Fax: 212.425.9093, E-mail: Info@SirotaLaw.com (v) Stull, Stull & Brody (New York), 6 East 45th Street, New York, NY, 10017, Phone: 310.209.2468, Fax: 310.209.2087, E-mail: SSBNY@aol.com (vi) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270 Madison Avenue, New York, NY, 10016, Phone: 212.545.4600, Fax: 212.686.0114, E-mail: newyork@whafh.com PEOPLES ENERGY: Asks IL Court To Dismiss Consumer Fraud Lawsuit --------------------------------------------------------------- Peoples Energy Corporation asked an Illinois state court to dismiss the amended class action filed against it and its subsidiary The Peoples Gas and Light Coke Company, by a Peoples Gas customer alleging, among other things, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act related to matters at issue in Peoples Gas' gas reconciliation proceedings. The suit seeks unspecified compensatory and punitive damages. On September 22, 2004, the Court granted a motion to dismiss all counts against Peoples Gas. On October 21, 2004, the plaintiffs filed an amended complaint against the Company. On November 22, 2004, the Company filed a motion to dismiss the amended complaint. PFIZER INC.: IL Consumer Launch Injury Suit Over Arthritis Drug --------------------------------------------------------------- Pfizer, Inc. faces a class action filed in Madison County Circuit Court in Illinois, over its popular arthritis drug Celebrex, The Belleville News-Democrat reports. The suit is believed to be the first of its kind. In the past two weeks, the United States Food and Drug Administration has advocated limiting the use of Celebrex after a study found it may cause an increased risk of heart attacks when used in high doses. The Company has stopped its ad campaign for the pain reliever, which is one of its top-selling drugs. Granite City, Illinois resident Patricia A. Morris, represented by the St. Louis law firm Marker Armstrong LLP and the Kansas City, Mo., law firm Davis, Bethune & Jones LLC, filed the suit, alleging that Celebrex can cause serious side effects, including increased risk of heart damage and strokes. The suit alleges that the Company negligently ". marketed Celebrex despite the fact that the risk and the effect thereof on the body were so unreasonably high and severe that no reasonable pharmaceutical company, exercising due care, would have done so," the News-Democrat reports. The suit seeks medical monitoring for the class members to enable early detection and treatment of any injury or disease and "such other and further relief as the nature of the case may require or as may be determined to be just, equitable and proper by this court." The lawsuit also states that a question for the court is whether Pfizer is liable for punitive damages. For now, the only plaintiff in the case is Morris. The plaintiff attorneys are asking the court to certify the case as a class action that would include all Illinoisans who have taken Celebrex but have not had any physical injury. A spokesman for Pfizer did not immediately return a call Wednesday from a reporter, the News-Democrat states. In a statement issued after the Celebrex study was released, Pfizer chairman and CEO Hank McKinnel said, "Pfizer is taking immediate steps to fully understand the results and rapidly communicate the new information to regulators, physicians and patients around the world." McKinnel added that the study results contradicted results from other studies on Celebrex. RESOURCE AMERICA: Discovery Proceeds in NY Property Owners Suit --------------------------------------------------------------- Discovery is proceeding in the class action filed against Resource America, Inc. in the New York Supreme Court, Chautauqua County, by individuals, putatively on their own behalf and on behalf of similarly situated individuals, who leased property to the Company. The complaint alleges that the Company is not paying landowners the proper amount of royalty revenues derived from the natural gas produced from the wells on leased property. The complaint seeks damages in an unspecified amount for the alleged difference between the amount of royalties actually paid and the amount of royalties that allegedly should have been paid. Plaintiffs were certified as a class in December 2003; an appeal of that certification is pending. REXALL SUNDOWN: Trial in Nutrition Bars Litigation Set Jan. 2005 ---------------------------------------------------------------- Trial in the class action filed against Rexall Sundown, Inc. and certain of its subsidiaries over various nutrition bars is set for January 25,2005 in California State Court. The suits were filed in 2002 on behalf of all California consumers who bought various nutrition bars. Plaintiffs allege misbranding of nutrition bars and violations of California unfair competition statues, misleading advertising and other similar causes of action. Plaintiffs seek restitution, legal fees and injunctive relief. STAR GAS: Shareholders Commence Securities Fraud Lawsuits in CT --------------------------------------------------------------- Star Gas Partners LP, several of its subsidiaries, officers and directors face several securities class actions filed in the United States District Court for the District of Connecticut on behalf of a purported class of unitholders. The suits are pending under Judge Janet Bond Atherton and are styled: (1) Carter v. Star Gas Partners, L.P., et al, No 3:04-cv- 01766-IBA, et. al, (2) Feit v. Star Gas, et al, Civil Action No. 04-1832 (filed on 10/29/2004), (3) Lila Gold v. Star Gas, et al, Civil Action No. 04-1791 (filed on 10/22/2004), (4) Jagerman v. Star Gas, et al, Civil Action No. 04-1855 (filed on 11/3/2004), (5) McCole, et al v. Star Gas, et al, Civil Action No. 04- 1859 (filed on 11/3/2004), (6) Prokop v. Star Gas, et al, Civil Action No. 04-1785 (filed on 10/22/2004), (7) Seigle v. Star Gas, et al, Civil Action No. 04-1803 (filed on 10/25/3004), (8) Strunk v. Star Gas, et al, Civil Action No. 04-1815 (filed on 10/27/2004), (9) Harriette S. & Charles L. Tabas Foundation v. Star Gas, et al, Civil Action No. 04-1857 (filed on 11/3/2004), (10) Weiss v. Star Gas, et al, Civil Action No. 04-1807 (filed on 10/26/2004), (11) White v. Star Gas, et al, Civil Action No. 04-1837 (filed on 10/9/2004), (12) Wood v. Star Gas, et al, Civil Action No. 04-1856 (filed on 11/3/2004) (13) Yopp v. Star Gas, et al, Civil Action No. 04-1865 (filed on 11/3/2004), (14) Kiser v. Star Gas, et al, Civil Action No. 04-1884 (filed on 11/9/2004), and (15) Lederman v. Star Gas, et al, Civil Action No. 04-1873 (filed on 11/5/2004) The plaintiffs generally allege that the Partnership violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Securities and Exchange Commission Rule 10b-5 promulgated thereunder, by purportedly failing to disclose, among other things: (i) problems with the restructuring of Star Gas's dispatch system and customer attrition related thereto; (ii) that Star Gas's heating oil division's business process improvement program was not generating the benefits allegedly claimed; (iii) that Star Gas was struggling to maintain its profit margins in its heating oil division; (iv) that Star Gas's second quarter 2004 profit margins were not representative of its ability to pass on heating oil price increases; and (v) that Star Gas was facing an inability to pay its debts and that, as a result, its credit rating and ability to obtain future financing was in jeopardy. The plaintiffs seek an unspecified amount of compensatory damages including interest against the defendants jointly and severally and an award of reasonable costs and expenses. STRATOS LIGHTWAVE: Asks NY Court To Approve Lawsuit Settlement -------------------------------------------------------------- Stratos Lightwave, Inc. asked the United States District Court for the Southern District of New York to grant preliminary approval to the settlement of the consolidated securities class action filed against it, certain of its directors and executive officers and the underwriters of its initial public offering. Several suits were initially filed, the first of which was captioned "Kucera v. Stratos Lightwave, Inc. et.al. No.01 CV 6821." Three other similar lawsuits have also been filed against the Company and certain of its directors and executive officers. The complaints are substantially identical to numerous other complaints filed against other companies that went public during the time of the Company's IPO. The complaints generally allege, among other things, that the registration statement and prospectus from the Company's June 26, 2000 initial public offering failed to disclose certain alleged actions by the underwriters for the offering. The complaints charge the Company and two or three of its directors and executive officers with violations of Sections 11 and 15 of the Securities Act of 1933, as amended, and/or Section 10(b) and Section 20(a) to the Security Exchange Act of 1934, as amended. The complaints also allege claims solely against the underwriting defendants under Section 12(a)(2) of the Securities Act of 1933, as amended. In 2003, the Company agreed to a Memorandum of Understanding, which reflects a settlement of these class actions as between the purported class action plaintiffs, the Company and the defendant officers and directors, and the Company's liability insurer. Under the terms of the Memorandum of Understanding, the Company's liability insurers will pay certain sums to the plaintiffs, with the amount dependent upon the plaintiffs' recovery from the underwriters in the IPO class actions as a whole. The plaintiffs will dismiss with prejudice their claims against the Company and its officers and directors, and the Company will assign to the plaintiffs certain claims that it may have against the underwriters. The plaintiffs have filed with the court a motion for preliminary approval of the settlement, which, if granted, will lead to the mailing of class-wide notices of the settlement and a hearing date for approval of the settlement. The issuers filed a statement joining in the plaintiffs' motion for preliminary approval of the settlement. The underwriter defendants have opposed the motion, and the court has not ruled on it. The suit is styled "In Re Stratos Lightwave, Inc. Initial Public Offering Securities Litigation, Case No. 01 Civ. 6821 (Sas) (Ro)," filed in relation to "IN re IPO Securities Litigation, 21-MC-92 (Sas)," in the United States District Court for the Southern District of New York, under Judge Shira A. Scheindlin. The plaintiff firms in this litigation are: (1) Bernstein Liebhard & Lifshitz LLP (New York, NY), 10 E. 40th Street, 22nd Floor, New York, NY, 10016, Phone: 800.217.1522, E-mail: info@bernlieb.com (2) Milberg Weiss Bershad Hynes & Lerach, LLP (New York, NY), One Pennsylvania Plaza, New York, NY, 10119-1065, Phone: 212.594.5300, (3) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E- mail: info@sbclasslaw.com (4) Sirota & Sirota, LLP, 110 Wall Street 21st Floor, New York, NY, 10005, Phone: 888.759.2990, Fax: 212.425.9093, E-mail: Info@SirotaLaw.com (5) Stull, Stull & Brody (New York), 6 East 45th Street, New York, NY, 10017, Phone: 310.209.2468, Fax: 310.209.2087, E-mail: SSBNY@aol.com (6) Wolf, Haldenstein, Adler, Freeman & Herz LLP, 270 Madison Avenue, New York, NY, 10016, Phone: 212.545.4600, Fax: 212.686.0114, E-mail: newyork@whafh.com TYCO INTERNATIONAL: NH Court Dismisses Securities Suit in Part -------------------------------------------------------------- The United States District Court in New Hampshire granted in part Tyco International, Inc.'s motion to dismiss the consolidated securities class actions filed against it and certain of its former directors and officers. More than two dozen securities class actions were initially filed, and now been transferred to the United States District Court for the District of New Hampshire by the Judicial Panel on Multidistrict Litigation for coordinated or consolidated pretrial proceedings. In eight of the actions, plaintiffs have moved to have their cases remanded to state courts. On January 28, 2003, the court-appointed lead plaintiffs in the New Hampshire securities actions filed "In Re Tyco International Securities Litigation," a Consolidated Securities Class Action Complaint against the Company certain of the Company's former directors and officers and its former auditors in the United States District Court for the District of New Hampshire. As to the Company and certain of its former directors and officers, the complaint asserts causes of action under Section 10(b) of the Securities Exchange Act of 1934 and Rule10b-5 promulgated thereunder, and Section 14(a) of that Act and Rule 14a-9 promulgated thereunder, as well as Sections 11 and 12(a)(2) of the Securities Act of 1933. Claims against the Company's former directors and officers are also asserted under Sections 20(a) and 20A of the Securities Exchange Act of 1934 and Section 15 of the Securities Act of 1933. The complaint asserts that the Tyco defendants violated the securities laws by making materially false and misleading statements and omissions concerning, among other things: (1) Tyco's mergers and acquisitions and the accounting therefor, as well as allegedly undisclosed acquisitions; (2) misstatements of Tyco's financial results; (3) the impact of a new accounting standard (SAB 101, promulgated in 1999) on the Company's earnings performance; (4) compensation of certain of our former executives; (5) their improper use of our funds for personal benefit and their improper self-dealing real estate transactions; (6) their sales of Tyco shares; (7) payment of $20 million to one of the Company's former directors and a charity of which he is a trustee; and (8) the criminal investigation of the Company's former Chief Executive Officer The plaintiffs seek class certification, compensatory damages, rescission, disgorgement and attorneys' fees and expenses. On March 31, 2003, Tyco made a motion to dismiss the consolidated class action complaint. The other defendants moved to dismiss shortly thereafter. On October 14, 2004, the Court granted Tyco's motion, in part, and denied it in part. The Court granted Tyco's motion to dismiss Count II of the Consolidated Amended Complaint alleging a violation of Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder against all defendants. The Court denied Tyco's motion to dismiss Count I alleging a violation of Section10(b) of the Securities Exchange Act of 1934 and Rule10b- 5 promulgated thereunder, as well as Counts V and VI alleging violations of Sections 11 and 12(a)(2) of the Securities Act of 1933. In addition, the Court granted former director Michael Ashcroft's motion to dismiss Count I alleging a violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, Counts III and IV alleging a violation of Sections 20(a) and 20A of the Securities Exchange Act of 1934, respectively, and Count VII alleging a violation of Section14 of the Securities Act of 1933. VISTACARE INC.: Shareholders Launch Securities Fraud Suits in AZ ---------------------------------------------------------------- Vistacare, Inc. and two of its officers face several securities class actions filed in the United States District Court for the District of Arizona on behalf of persons who purchased publicly traded securities of VistaCare, Inc. (Nasdaq:VSTA), between November 6, 2003, and August 5, 2004, inclusive. The suits allege violations of the federal securities laws arising out of recent declines in the Company's stock price. Specifically, the complaints allege claims in connection with various statements and purported omissions to the public and to the securities markets relating to the Company's August 2004 announcement of its decision to accrue an increased amount for the quarter ended June 30, 2004 as a reserve for potential liability due to the Medicare per-beneficiary Cap on reimbursement for hospice services. VITAMIN WORLD: Discovery Proceeds in NY Hormone Supplement Suit --------------------------------------------------------------- Discovery is proceeding in the class action filed against Vitamin World, Inc. in New York State Court, alleging that it engaged in deceptive trade practices and false advertising with respect to the sale of certain pro-hormone supplements and that plaintiffs were therefore entitled to equitable and monetary relief pursuant to the New York General Business Law. Similar complaints were filed against other companies in the vitamin and nutritional supplement industry. The Court has not yet certified a class and the matter is currently in discovery. New Securities Fraud Cases CHARLOTTE RUSSE: Class Period in Securities Fraud Suit Expanded --------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP expanded the class period for the securities class action lawsuit on behalf of all securities purchasers of Charlotte Russe Holding Inc. (NASDAQ: CHIC). The new class period is from October 23, 2003 through December 6, 2004 inclusive. The complaint charges the Company, Mark Hoffman, and Daniel Carter with violations of the Securities Exchange Act of 1934. Charlotte is a mall-based specialty retailer of apparel and accessories targeting young women between the ages of 15 and 35. The Company has two distinct store concepts: Charlotte Russe and Rampage. The complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts known to defendants or recklessly disregarded by them: (1) that the strategic repositioning of the Rampage stores was failing to produce tangible results; (2) that other measures, promoted by management, as actions designed to improve operations, were proving futile in both the merchandising and store organizations; and (3) that as a result of the above, the defendants' fiscal 2004 projections were lacking in any reasonable basis when made. On September 9, 2004, Charlotte reported revised guidance for the fourth quarter of fiscal 2004 which would end on September 25, 2004. News of this shocked the market. Shares of Charlotte fell $3.43 per share, or 23.44 percent, on September 9, 2004, to close at $11.20 per share. Then on December 6, 2004, Charlotte reported that Donna Desrosiers, Executive Vice President and GMM for the Charlotte Russe chain, had resigned for personal reasons. The Company also announced that, as a result of weaker than expected sales during the quarter to date, it was now forecasting that comparable stores sales would decline mid to high single-digits during the first quarter of fiscal 2005 ending on December 25, 2004. The Company had previously guided investors to expect a low single-digit comparable sales increase for the quarter. On this news shares of Charlotte fell $0.82 per share, or 7.52 percent, on December 7, 2004, to close at $10.09 per share. For more details, contact Marc A. Topaz, Esq. or Darren J. Check, Esq. by Phone: 1-888-299-7706 or 1-610-667-7706, or by E- mail: info@sbclasslaw.com. CONEXANT SYSTEMS: Milberg Weiss Launches Securities Suit in NJ -------------------------------------------------------------- Milberg Weiss Bershad & Schulman LLP initiated a securities class action on behalf of purchasers of the securities of Conexant Systems, Inc. (Nasdaq: CNXT) between March 1, 2004 and November 4, 2004, inclusive seeking to pursue remedies under the Securities Exchange Act of 1934. The action is pending in the United States District Court for the District of New Jersey against defendants Conexant, Dwight W. Decker (Chairman), Armando Geday (CEO) and J. Scott Blouin (Chief Accounting Officer). The complaint alleges that defendants' Class Period representations about the Company's operations, made in Conexant press releases, were materially false and misleading because they failed to disclose the following adverse facts: (1) that the Company was stuffing the channel with products, such that its revenues did not reflect the true, end-user demand for its products; (2) that the Company's inventory glut would lead to lowered revenues as distributors and retailers would need to exhaust existing inventory before purchasing new products from Conexant; (3) that the combined company was suffering from serious operating deficiencies, particularly in the wireless local area network ("WLAN") division of Globespan that was not effectively integrated into the combined company's operations, causing the Company to lose its leadership position in the WLAN market; (4) that, contrary to defendants express representations that the Globespan integration was "on schedule" and that "outstanding progress" was being made in that regard, integration of the Globespan acquisition was mishandled, causing such a massive drain on the Company that, by the end of the Class Period, the outlook for the much larger combined company was worse than Conexant's stand-alone prospects. On November 4, 2004, defendants issued a press release announcing disappointing results for the fourth quarter of 2004, including a loss of $367.5 million ($0.79 per share) which was blamed on poor demand, inventory buildup and failed product launches. Later that day, the Company held a conference call to discuss its fourth quarter results. Defendant Geday's response to an analyst's question revealed that the Company's inventory glut was not a recent phenomenon, but had been building for as long as five quarters. In reaction to the Company's press release and conference call, the price of Conexant securities dropped to $1.60 per share on November 5, 2004 from $1.76 on November 4, 2004. As detailed in the complaint, earlier announcements that only partially disclosed the facts about Conexant's business had already taken a heavy toll on Conexant's stock price, which traded as high as $7.77 per share during the Class Period. For more details, contact Steven G. Schulman, Peter E. Seidman and Andrei V. Rado, by Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165, by Phone: (800) 320-5081 by E-mail: sfeerick@milbergweiss.com or visit the firm's Website: http://www.milbergweiss.com JAKKS PACIFIC: Lerach Couglin Updates NY Securities Fraud Suit -------------------------------------------------------------- Lerach Coughlin Stoia Geller Rudman & Robbins LLP updated the securities class action filed 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 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 (3) 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. Subsequent to the filing of the complaint, on November 16, 2004, JAKKS issued a press release announcing that it entered into a worldwide licensing agreement with WWE to develop and market WWE(R) TV Games. The press release gave the impression that JAKKS and WWE had resolved their differences. However, it was later disclosed, by WWE, that the deal was only an amendment to an earlier agreement that is now in dispute and the litigation between the two companies is continuing. For more details, contact Samuel H. Rudman or David A. Rosenfeld of Lerach Coughlin by Phone: 800/449-4900 or 619/231-1058 by E- mail: wsl@lerachlaw.com or visit the firm's Website: http://www.lerachlaw.com. PFIZER INC.: Emerson Poynter Launches Securities Suit in S.D. NY ---------------------------------------------------------------- Emerson Poynter LLP initiated a securities class action filed in the United States District Court for the Southern District of New York on behalf of purchasers of Pfizer Inc (NYSE: PFE) (NYSE:PFE) publicly traded securities during the period between October 31, 2000 and December 16, 2004. The complaint charges Pfizer and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Pfizer is a research-based, global pharmaceutical company that discovers, develops, manufactures and markets prescription medicines for humans and animals, as well as consumer healthcare products. The complaint alleges that during the Class Period, defendants issued false and misleading statements and omissions regarding the safety and marketability of Pfizer's Celebrex and Bextra COX-2 inhibitor products. Throughout the Class Period, defendants were made aware of strong indicators that Pfizer's COX-2 inhibitor drugs posed serious undisclosed health risks to patients who were prescribed the drugs. As a result of the defendants' false statements, Pfizer's stock traded at inflated levels during the Class Period. The true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (1) that although the information does not appear in the U.S. package insert and prescribing information, Celebrex increases the potential for causing adverse cardiovascular events, since it is a selective COX-2 inhibitor capable of creating a metabolic imbalance between prothrombic cyclo-oxygenase-1 (COX-1) and antithrombotic cyclo-oxygenase-2 (COX-2) metabolism; (2) that prior clinical studies, including the CLASS study where concurrent low-dose aspirin therapy, ibuprofen or diclofenac controls were employed, were flawed and defective, since non-steroidal anti-inflammatory drug ("NSAID") use also impacts the metabolic balance between COX-1 and COX-2 metabolism, potentially lowering the observed number of cardiovascular events in those studies; (3) that even as defendants promoted Celebrex to physicians, patients and investors on the basis of its safety and efficacy, health authorities continued to receive alarming reports of observed cardiovascular and cerebrovascular adverse reactions in patients not predisposed to cardiovascular disease; (4) that even as defendants heralded the safety of Celebrex following the recall of Vioxx, another anti-arthritic drug marketed by Merck, defendants knew that, unlike the scientifically valid clinical studies triggering the Vioxx recall, previous clinical trials pointing to the cardiovascular safety of Celebrex, including the CLASS study, were so flawed and defective that additional clinical studies looking at cardiovascular safety were required; and (5) that even as defendants intensified their retail advertising campaign and public statements following the Vioxx recall, including publishing full-page advertisements in major newspapers heralding the safe use of the drug, overwhelming and indisputable data and results pointed to a class-specific cardiovascular health risk for COX-2 inhibitors, including the adverse cardiovascular safety data defendants had already generated for Bextra, the Company's other selective COX-2 inhibitor drug, and nearly completed specific safety studies of Celebrex that would demonstrate that Celebrex suffered from the class-specific cardiovascular risks attributable to COX-2 inhibitors. On December 17, 2004, Pfizer announced it had "received new information . about the cardiovascular safety of its COX-2 inhibitor Celebrex (celecoxib) based on an analysis of two long- term cancer trials." On this news, Pfizer shares fell to as low as $22 per share. For more details, contact the shareholder relations department of Emerson Poynter LLP by Phone: 1-800-663-9817 or by E-mail: epllp@emersonpoynter.com. SOURCECORP INC.: Schiffrin & Barroway File Securities Suit in TX ---------------------------------------------------------------- The law firm of Schiffrin & Barroway, LLP initiated a class action on behalf of all securities purchasers of the SOURCECORP Incorporated (NASDAQ: SRCPE) from May 7, 2003 through October 26, 2004 inclusive in the United States District Court for the Northern District of Texas. The complaint charges SOURCECORP, Ed H. Bowman, Jr. and Barry L. Edwards 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 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, SOURCECORP announced that based on information provided by, and the recommendation of, corporate management, the Company's Audit Committee concluded on October 25, 2004 that the Company's previously issued financial statements and related independent auditors' report for the year ended December 31, 2003, as well as its previously issued financial statements for the 2004 quarterly periods ended March 31, 2004 and June 30, 2004, should no longer be relied upon. The Company, under the guidance of the Audit Committee, had initiated an investigation of the financial results of one of the Company's operating subsidiaries in the Information Management Division of the Company's Information Management and Distribution reportable segment. Following this announcement, shares of SOURCECORP fell $6.59 per share, or 29.67 percent. For more details, contact Marc A. Topaz, Esq. or Darren J. Check, Esq., by Phone: 1-888-299-7706 or 1-610-667-7706, or by E-mail at info@sbclasslaw.com. SOURCECORP INC.: Lerach Coughlin Updates TX Securities Lawsuit -------------------------------------------------------------- Lerach Coughlin Stoia Geller Rudman & Robbins LLP updated the class action commenced in the United States District Court for the Northern District of Texas on behalf of purchasers of SOURCECORP, Incorporated (NASDAQ:SRCPE) common stock during the period between May 7, 2003 and October 27, 2004. The complaint charges SOURCECORP and certain of its officers and directors with violations of the Securities Exchange Act of 1934. SOURCECORP provides value-added business process outsourcing solutions to clients across the United States. The Company targets information intensive industry segments such as healthcare, legal, financial services and government. The complaint alleges that, throughout the Class Period defendants issued numerous positive statements and filed quarterly reports with the SEC which described the Company's increasing financial performance. These statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (1) that the Company had improperly and prematurely recognized revenue prior to the delivering contractually required output to a certain customer; (2) that the Company improperly and prematurely recognized revenue for services that were performed and delivered to customers that were in excess of the volume and/or revenue limits set by the contract with the customer and of which there is no assurance that the customer will ever make payment; (3) that the Company lacked adequate internal controls and was therefore unable to ascertain its true financial condition; and (4) that as a result of the foregoing, the values of the Company's revenues and earnings for 2003 and the first two quarters of 2004 were materially overstated at all relevant times and will now have to be restated. On October 27, 2004, the Company shocked the market when it issued a press release announcing that based on information provided by, and the recommendation of, corporate management, the Company's Audit Committee concluded on October 25, 2004 that the Company's previously-issued financial statements and related independent auditors' report for the year ended December 31, 2003, as well as its previously-issued financial statements for the 2004 quarterly periods ended March 31, 2004 and June 30, 2004, should no longer be relied upon. Specifically, the Company admitted that the Information Management Division of its Information Management and Distribution reportable segment had improperly and prematurely recognized revenue prior to the delivery of contractually required output to a certain customer; and for services which were performed and delivered to certain customers in excess of the volume and/or revenue limits set by the contract. Due to its improper revenue recognition practices, the Company will have to adjust its revenues and diluted earnings per share for 2003 by at least $5.4 million and $0.19 respectively. For the six months ended June 30, 2004, the Company may have to adjust its revenues and diluted earnings per share by at least $2.8 million and $0.10 respectively. Upon this shocking news, shares of the Company's stock fell $5.96 per share, or almost 30%, to close at $16.25 per share, on unusually heavy trading volume. Following that announcement, on November 16, 2004, the Company received a Nasdaq Staff Determination letter indicating that the Company had failed to timely file its quarterly report on Form 10-Q for the quarter ended September 30, 2004, as required by Nasdaq Marketplace Rule 4310(c)(14), and that the Company's common stock is therefore subject to delisting from The Nasdaq Stock Market. The Company now trades under the ticker symbol SRCPE. For more details, contact Samuel H. Rudman or David A. Rosenfeld of Lerach Coughlin by Phone: 800/449-4900 or 619/231-1058 by E- mail: wsl@lerachlaw.com or visit the firm's Website: http://www.lerachlaw.com. TRI-PATH TECHNOLOGY: Schiffrin & Barroway Files Stock Suit in CA ---------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Northern District of California on behalf of all securities purchasers of Tripath Technology Inc. (NasdaqNM:TRPH) from January 29, 2004, through October 22, 2004, inclusive. 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. by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706 or by e-mail: info@sbclasslaw.com. ********* 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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