/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/990216.MBX C L A S S A C T I O N R E P O R T E R Tuesday, February 16, 1999, Vol. 1, No. 8 Headlines AGENT ORANGE: Veterans Admin. Must Review Denied Claims AGRIBIOTECH, INC.: Lockridge Grindal Filed Complaint in New York AGRIBIOTECH, INC.: Cauley Firm Files Complaint in New Mexico ASSISTED LIVING: Stoll Stoll Files Complaint in Oregon BREAST IMPLANTS: Canadian Court Approved $25MM Settlement Pact CELL PATHWAYS: Milberg Weiss Files Complaint in Pennsylvania GENCOR INDUSTRIES: Abbey Gardy Filed Complaint in Florida GENCOR INDUSTRIES: Bashian Firm Files Complaint in Florida INSO CORP.: Stull Stull Filed Complaint in Massachusetts JDA SOFTWARE: Cauley Firm Files Complaint in Arizona LERNOUT & HAUSPIE: Bernstein Liebhard Files Complaint in New York LEVEL 8: Stull Stull Files Complaint in New York LOCKHEED MARTIN: Wolf Haldenstein Files Complaint in California PACIFIC GAS: Business Assert Utility Outage Claim for Lost Income PEOPLESOFT, INC.: Abbey Gardy File Complaint in California PEOPLESOFT, INC.: Spector & Roseman File Complaint in California PEOPLESOFT, INC.: Wechsler Harwood Files Complaint in California SERVICE CORPORATION: Cauley Firm Files Compaint in Texas SERVICE CORPORATION: Berger & Montague File Complaint in Texas SERVICE CORPORATION: Wolf Haldenstein Files Complaint in Texas SERVICE CORPORATION: Kirby McInerney Files Complaint in Texas SERVICE CORPORATION: Weiss & Yourman Files Complaint in Texas STATE FARM: Judge Approves $238MM Life Insurance Settlement Pact TATE FARM: Six Plaintiffs Appeal Life Insurance Settlement Pact SUNCRUZ: Editorial re Ex-Employees' Suit for Overtime Pay TRITEAL CORPORATION: Takes $500MM Charge on Securities Settlement USA NETS: Shareholder Suit Alleges Disclosure Failure WORLD ACCESS: Wolf Popper Files Complaint in Georgia WORLD ACCESS: Abbey Gardy Files Complaint in Georgia ZILA, INC.: Cauley Firm Files Complaint in Arizona ZILA, INC.: Milberg Weiss Suit Expands Class Period ********* AGENT ORANGE: Veterans Admin. Must Review Denied Claims ------------------------------------------------------- The Veterans Administration must review all benefit claims denied to hundreds of Vietnam veterans who failed to say their illnesses resulted from exposure to Agent Orange, a federal judge ruled Thursday, according to a report from San Francisco by reporter Jordan Lite, writing for the Associated Press. An estimated 1,000 veterans were denied back payments under strict language that required applicants to state that Agent Orange or herbicides were linked to the cause of the disability or death, a hurdle ruled illegal Thursday in the class-action lawsuit. Under VA regulations, veterans do not have to prove they were exposed to Agent Orange or other herbicides containing the toxic substance dioxin. In fact, anyone who served in the war is automatically presumed to have been exposed to it. A 1989 court ruling in the case voided all VA benefit decisions it had made based on the agency's assertion that only the skin disease chloracne was linked to Agent Orange. Although the VA has since recognized that a variety of cancers are connected to the defoliant, it has failed to review claims made prior to the 1989 ruling and continued to insist that benefit applicants state that their disability resulted from exposure to Agent Orange, the court found. "We agree with plaintiffs that the VA's approach is inconsistent with both the spirit and intent of this court's decision, as well as the liberal nature of the VA's own claims process," U.S. District Judge Thelton Henderson wrote. "The court expected that the VA would revisit those benefit decisions that had been erroneously decided under the invalidated regulations." The plaintiffs wanted the VA ordered to pay the benefits, but Henderson ruled that the agency should revisit the denied claims. With benefits denied as far back as 1985, retroactive payments would average $70,000 per person, plaintiffs' attorney Bart Stichman said. No one knows how many people suffer from the effects of Agent Orange, which was sprayed over wide swaths of jungle by U.S. planes during a 10-year period to strip away cover from enemy troops and their convoys. AGRIBIOTECH, INC.: Lockridge Grindal Filed Complaint in New York ---------------------------------------------------------------- Lockridge Grindal Nauen & Holstein P.L.L.P. of Minneapolis, Minnesota, on behalf of certain investors of AgriBio Tech, Inc. (NASDAQ:ABTX), on February 11, 1999, filed a securities fraud class action lawsuit in the United States District Court for the Southern District of New York against AgriBio Tech, Inc. and certain of its officers and directors (collectively the "Defendants"). The lawsuit has been brought on behalf of all persons who purchased AgriBio Tech, Inc. common stock during the period October 8, 1998 through January 22, 1999. The Complaint alleges that Defendants violated the federal securities laws, Section 10(b) and 20(a) of the Securities Exchange Act of 1934, by misrepresenting or failing to disclose material information about the status of AgriBio Tech's efforts to find a buyer for the company, including the possible price range and time frame. As a result of Defendants' false and misleading statements and omissions, the price of AgriBio Tech's stock was artificially inflated during the Class Period. On January 22, 1999, after the close of trading, the Company announced that it had abandoned its efforts to find a buyer and would only continue to make acquisitions on an "opportunistic basis." AGRIBIOTECH, INC.: Cauley Firm Files Complaint in New Mexico ------------------------------------------------------------ The Law Offices of Steven E. Cauley, P.A. announced that a securities fraud class action lawsuit has been filed in United States District Court in Albuquerque, New Mexico on behalf of all purchasers of all securities of AgriBioTech Inc. (Nasdaq: ABTX) between September 24, 1997 and August 26, 1998. The complaint alleges that during Fiscal Years 1997-1998, AgriBioTech reported favorable financial results with strong revenue growth and profitability causing the Company's stock to trade at artificially inflated levels, and as high as $29-1/2. According to the complaint, AgriBioTech's reported revenues were, as a result of the manipulations, overstated by 20% in Fiscal Years 1997-1998 and the loss it had actually incurred for Fiscal Years 1997-1998 was converted into a profit. Ultimately, AgriBioTech was forced by the SEC to change its accounting practices with regard to acquisitions and to disclose the extent of its accounting manipulations in prior quarters. Upon these startling revelations, AgriBioTech's stock price declined to $8-1/8 per share, a more than 71% reduction from its Class Period high of $29-1/2. Investors who purchased shares of AgriBioTech during the Class Period paid too much and may be able to recover for their losses, according to the complaint. ASSISTED LIVING: Stoll Stoll Files Complaint in Oregon ------------------------------------------------------ The law firm of Stoll Stoll Berne Lokting & Shlachter P.C. filed a class action has been commenced in the United States District Court for the District of Oregon on behalf of all persons who purchased the securities of Assisted Living Concepts, Inc. (Amex: ALF; Amex: ALF6K02) from April 29, 1997 through February 1, 1999, inclusive. Assisted Living is based in Portland, Oregon. The complaint charges the Company and William McBride III, Keren Brown Wilson, Stephen Gordon and Rhonda Marsh with violations of the Securities Exchange Act of 1934. Assisted Living owns, operated, leases and develops assisted living residences. After seven straight quarters of reporting allegedly increasing profitability, on February 1, 1999, the Company announced that is was restating its income for 1997 and the nine months ended September 31, 1998. As a result of the restatement, the Company's net income will be substantially less than previously reported. An official of American Retirement Corp. stated that ARC had dropped its plans to merge with the Company as a result of the restatement . The complaint alleges that defendants issued a series of false and misleading statements about Assisted Living's earnings, profitability and business condition and issued financial statements during the Class Period that were materially false and misleading and violated Generally Accepted Accounting Principles, thereby misleading investors regarding Assisted Living's true financial condition and then-current financial performance. As a result, the prices of Assisted Living's securities were artificially inflated during the Class Period. On February 1, 1999, the date of the Company's announcement, the prices of Assisted Living's securities plummeted. BREAST IMPLANTS: Canadian Court Approved $25MM Settlement Pact -------------------------------------------------------------- A Canadian court has approved a $25 million settlement in a class action suit involving several thousand women who say they suffered injury from silicone breast implants made by the Dow Corning Corp. The Vancouver Sun newspaper reports that details of the settlement will be mailed to an estimated 3,700 to 4,100 Canadians outside of Quebec and Ontario, where separate cases were filed. The settlement requires approval in U.S. courts because Dow Corning is in bankruptcy. Those filing claims in the case may each reportedly receive a $1,200 expedited settlement if there was no disease or injury and up to $250, 000 for total disability. Helen Harrington, the case's representative plaintiff, told the newspaper that individual compensation would depend on proof of recognized medical conditions, the number of eligible claimants, level of disability and age when the symptoms occurred. CELL PATHWAYS: Milberg Weiss Files Complaint in Pennsylvania ------------------------------------------------------------ Milberg Weiss Bershad Hynes & Lerach LLP announced that it filed a class action lawsuit on February 12, 1999 in the United States District Court for the Eastern District of Pennsylvania, on behalf of all persons who purchased the common stock of Cell Pathways, Inc (Nasdaq: CLPA), between November 11, 1998 and February 2, 1999, inclusive. The complaint charges CPI and certain officers of the Company during the relevant time period with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that defendants issued a series of materially false and misleading statements regarding the efficacy and near-term commercialization of the Company's cancer treatment drug, PREVATAC(TM)(exisulind). Because of the issuance of a series of false and misleading statements, the price of CPI common stock was artificially inflated during the Class Period. GENCOR INDUSTRIES: Abbey Gardy Filed Complaint in Florida --------------------------------------------------------- The law firm of Abbey, Gardy & Squitieri, LLP filed a class action lawsuit in the United States District Court for the Middle District of Florida on behalf of purchasers of Gencor Industries, Inc. (Amex:GX) common stock between February 5, 1998 and January 28, 1999. The complaint charges Gencor Industries, Inc. and certain of its officers and directors with violations of Sections 10(b), 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b- 5 promulgated thereunder. Among other things, plaintiff claims that the defendants issued materially false and misleading statements regarding the company's true financial condition and operating performance. On January 29, 1999, it was reported that Gencor Industries, Inc.'s "fiscal 1998 earnings per share of $1.52 may be reduced by as much as $0.35 to $0.50 per share" as a result of "accounting irregularities and other improprieties[.]" GENCOR INDUSTRIES: Bashian Firm Files Complaint in Florida ---------------------------------------------------------- The Law Offices of James V. Bashian, P.C. announced that a class action lawsuit was filed in the United States District Court for the Middle District of Florida on behalf of purchasers of Gencor Industries, Inc. (Amex:GX) common stock between February 5, 1998 and January 28, 1999. The complaint charges Gencor Industries, Inc. and certain of its officers and directors with violations of Sections 10(b), 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b- 5 promulgated thereunder. Among other things, plaintiff claims that the defendants issued materially false and misleading statements regarding the company's true financial condition and operating performance. On January 29, 1999, it was reported that Gencor Industries, Inc.'s "fiscal 1998 earnings per share of $1.52 may be reduced by as much as $0.35 to $0.50 per share" as a result of "accounting irregularities and other improprieties[.]" INSO CORP.: Stull Stull Filed Complaint in Massachusetts ---------------------------------------------------------------- On February 3, 1999, a securities class action lawsuit was filed in the U.S. District Court for the District of Massachusetts against Inso Corp. (Nasdaq: INSO) and certain of its officers on behalf of all persons who purchased or otherwise acquired shares of Inso Corp. common stock (the "Class") between April 22, 1998 and Jan. 28, 1999, inclusive. The complaint alleges that Inso and certain of its officers and/or directors, disseminated materially false and misleading statements concerning the Company's financial results for the first three quarters of fiscal 1998, thereby causing the price of the Company's common stock to be artificially inflated throughout the Class Period. After Inso announced that its financial results had been overstated by approximately $7 million for the first three quarters of 1998, the price of its common stock declined by 64%. JDA SOFTWARE: Cauley Firm Files Complaint in Arizona ---------------------------------------------------- The Law Offices of Steven E. Cauley announced that a securities fraud class action lawsuit has been filed in the United States District Court for the District of Arizona on behalf of purchasers of JDA Software Group, Inc. (Nasdaq: JDAS) common stock during the period between January 29, 1998 and January 5, 1999. The complaint charges that certain of JDA's officers and directors caused JDA to report that JDA was experiencing strong demand for its software products and services and that JDA would post strong revenue and earnings growth throughout 1998 and 1999. The complaint alleges that these statements caused the Company's stock to trade at artificially inflated levels, and permitted JDA's insiders to sell $43 million of their own JDA stock and JDA to issue and sell $90+ million of stock via a public offering. However, when JDA finally admitted that its sales force was in disarray, that its previously reported financial results were false and would have to be restated and that JDA would be reporting huge 4Q98 losses, JDA stock plummeted to just $6-1/16 per share, 80% lower than the levels where defendants had sold more than $140 million of JDA stock. LERNOUT & HAUSPIE: Bernstein Liebhard Files Complaint in New York ----------------------------------------------------------------- A securities class action lawsuit was commenced by Bernstein Liebhard & Lifshitz, LLP on behalf of purchasers of the common stock and call options of Lernout & Hauspie Speech Products, N.V. (Nasdaq: LHSPF) ("Lernout & Hauspie" or the "Company"), between April 28, 1997 and December 4, 1998, inclusive, (the "Class Period"), in the United States District Court for the Eastern District of New York. The lawsuit alleges violations of the federal securities laws and names as defendants the Company and certain of its officers and directors. The complaint charges Lernout & Hauspie and certain of its officers and directors with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading statements and failed to disclose material facts throughout the Class Period in the Company's public filings related to the merger with Equity International Corporation. As a result of these misrepresentations and omissions, the price of Lernout & Hauspie's common stock was artificially inflated throughout the Class Period. LEVEL 8: Stull Stull Files Complaint in New York ------------------------------------------------ Stull, Stull & Brody announced that a class action lawsuit will be filed in U.S. District Court on behalf of purchasers of Level 8 Systems Inc. (Nasdaq:LVEL). Level 8 Systems Inc. is a computer software developer. The company is a premier provider of message- oriented middleware (MOM) products and consulting services. The company provides "any-to-any" connectivity between enterprise applications. Defendants include Level 8 Systems Inc. and certain of its officers and directors. The complaint will charge that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10-b(5) by, among other things: issuing false and misleading statements regarding Level 8's financial condition as well as its present and future business prospects. Because of the issuance of a series of false and misleading statements, the price of Level 8's common stock was artificially inflated. LOCKHEED MARTIN: Wolf Haldenstein Files Complaint in California --------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP announced that it filed a class action lawsuit in the United States District Court for the Central District of California on behalf of all persons who purchased common stock of Lockheed Martin Corp. (NYSE: LMT) at artificially inflated prices during the period August 13, 1998 and December 23, 1998 and who were damaged thereby. The Complaint alleges that Lockheed violated the securities laws by misrepresenting how the Company had reached its 3rd Q 1998 EPS targets. The complaint alleges that the Company failed to reveal that it only reached its', and analysts', EPS targets by utilizing a secret accounting adjustment and that in the absence of this adjustment the EPS targets could not be met. Based on Lockheed's strong 3rd Q results and its forecasts of continued strong 4th Q 1998 EPS and further growth in 1999, the Company's stock rose to as high as $113-1/8 by November 2, 1998. Insiders at the Company took advantage of the stocks' artificial inflation to sell significant amounts of their own holdings at prices as high as $109.97 to reap personal proceeds of over $28 million. On December 23, 1998 the Company stunned the market by announcing that shortfalls in aircraft deliveries and satellite launches and higher than earlier disclosed write offs, Lockheeds 4th Q 1998 and 1998 results would be far below the levels previously forecast. Upon the release of these revelations the stock dropped from $95-3/4 to $82 on enormous volume of over 3.5 million shares. PACIFIC GAS: Business Assert Utility Outage Claim for Lost Income ----------------------------------------------------------------- The San Francisco Examiner relates that two small San Francisco businesses filed a lawsuit last Thursday against PG&E seeking damages stemming from a December 8, 1999, power failure that brought much of commerce and transportation to a halt in The City and San Mateo County. The law firm of Jenkins, Goodman & Neuman represents the owners in the complaint filed in San Francisco Superior Court. The complaint asks the court to declare the matter a class-action suit so that other plaintiffs may join and, if they prevail, share in any potential damages. Immediately following the six-hour power failure, PG&E established a system in which business owners could file claims to recover blackout-related expenses. The two plaintiffs did not file claims, said their lawyer, Farley Neuman. "They, like a lot of people, do not quite know what their rights are and how to calculate the damages resulting from the power outage," said Neuman. "It is not all that simple to calculate the damages." He added his firm would hire "an economist and possibly more than one and possibly a certified public accountant to help calculate the damages." The two plaintiffs are Sung & Leung, a partnership doing business as Better Choice Printing, providing copying and printing services, and Kaiser Leung, whose company Good Choice Services provides dry cleaning, laundry and alterations. Better Choice Printing "could not be operated since there was no source of electrical power to run the machines," the complaint read. Good Choice Services "suffered economic damages because of the power outage which brought (the) business to a virtual halt," the complaint asserted. Neuman said the suit is necessary, despite the availability of a claims process, "because there is no assurance as to how PG&E is going to handle these claims, how quickly they are going to do it and whether they are going to pay full value for these claims or not." Excluded from the class-action suit -- if a judge certifies the case as one -- would be business operators who filed claims or who have settled their claims with PG&E. Leonard Anderson, a PG&E spokesman, said the utility had no comment on the suit because no one there had seen it. He said, however, that "the claim form is the place to start the process of being reimbursed and, in fact, it is running smoothly and thousands of PG&E customers appear to have no trouble understanding the process." He said forms are available by telephoning PGE-5000 or at http://www.pge.comon the Internet. He said the utility has, to date, received more than 3,500 completed forms seeking payment. PG&E has processed more than 1,600 of them and paid claims on more than 1,500, said Anderson. Some have been sent back to individuals requesting more information, he said. "Small business owners, residential folks who have businesses at home -- they know how to document their losses and send those in," said Anderson. PEOPLESOFT, INC.: Abbey Gardy File Complaint in California ---------------------------------------------------------- Abbey, Gardy & Squitieri, LLP announced that a Class Action suit has been commenced in the United States District Court for the Northern District of California, on behalf of all purchasers of PeopleSoft Inc. (Nasdaq: PSFT) securities between February 4, 1997 and January 28, 1999, inclusive. The Complaint charges PeopleSoft and certain of its officers and directors with violations of the federal securities laws. Among other things, plaintiff claims that defendants issued a series of materially false and misleading statements regarding PeopleSoft's 1996, 1997 and 1998 financial results. PEOPLESOFT, INC.: Spector & Roseman File Complaint in California ---------------------------------------------------------------- A class action lawsuit was filed in the United States District Court Northern District of California on behalf of all purchasers of PeopleSoft, Inc. (NASDAQ:PSFT) common stock during the period of Feb. 5, 1997 through Jan. 29, 1999 by the law firm of Spector & Roseman, P.C.. PEOPLESOFT, INC.: Wechsler Harwood Files Complaint in California ---------------------------------------------------------------- On February 11, 1999, a securities class action lawsuit was filed in the United States District Court for the Northern District of California against Peoplesoft (NASDAQ: PSFT) and certain of its officers and directors by Wechsler Harwood Halebian & Feffer LLP on behalf of all persons who purchased or otherwise acquired shares of Peoplesoft common stock at artificially inflated prices between February 5, 1997 and January 29, 1999, inclusive. The complaint alleges that defendants violated the federal securities laws (Sections 10(b) and 20(a) of the Securities Exchange Act of 1934) by misrepresenting or failing to disclose material information about Peoplesoft's results of operations, and financial condition. The Complaint also alleges that the individual defendants reaped tens of millions of dollars in proceeds from stock sales while in the possession of material adverse non-public information. Through an announcement on early January 28, 1999, it was reported that the SEC was investigating two acquisitions made by Peoplesoft in 1996 and 1998 for improper acquisition accounting and that Peoplesoft may be required to restate its financial statements. SERVICE CORPORATION: Cauley Firm Files Compaint in Texas -------------------------------------------------------- The Law Offices of Steven E. Cauley, P.A. announce that a securities fraud class action lawsuit has been filed in United States District Court in Houston, Texas on behalf of all purchasers of all securities of Service Corporation International (NYSE:SRV) between February 2, 1998 and January 26, 1999, including those persons who acquired SRV stock in exchange for Equity Corporation International (NYSE:EQU) in a merger consummated on or about January 19, 1999. The lawsuit alleges that the following senior officers and/or directors of SRV sold the following amounts of SRV stock, totaling over $96 million, before it collapsed in price on January 26, 1999: % of Name Shares Sold Holdings Proceeds ---- ----------- -------- -------- Robert L. Waltrip 1,000,000 48% $39,010,000 L. William Heiligbrodt 650,000 19% 25,356,500 William B. Waltrip 450,000 52% 17,554,500 John W. Morrow, Jr. 250,000 58% 9,752,500 Glenn McMillen 39,260 46% 1,560,585 George R. Champagne 54,000 41% 2,268,000 Vincent L. Visosky 30,026 40% 1,261,092 After these sales were made, however, SRV issued a press release published on PR Newswire on January 26, 1999 that it expected "diluted earnings per share for the fourth quarter of 1998 to be lower than current analyst expectations," causing its stock price to collapse, according to the complaint. SERVICE CORPORATION: Berger & Montague File Complaint in Texas -------------------------------------------------------------- Service Corporation International (NYSE:SRV) and certain of its officers and directors engaged in securities fraud, according to a class action complaint filed in the United States District Court for the Southern District of Texas, Houston Division, by Berger & Montague, P.C. The lawsuit, filed on February 8, 1999, is brought on behalf of former shareholders of Equity Corporation International (NYSE:EQU), who acquired the shares of Service Corp. as a result of the January 19, 1999, stock-for-stock merger, and on behalf of persons who purchased or otherwise acquired Service Corp. (NYSE:SRV) common stock during the period July 23, 1998, to January 26, 1999, inclusive. The Complaint alleges that defendants made false and misleading statements during the Class Period. Specifically, the Complaint alleges that defendants misled the public with regard to the effects of adverse trends, market conditions and demographics on Service Corp.'s business and operations. The Complaint further alleges that defendants' misleading positive statements artificially inflated the price of Service Corp.'s common stock during the Class Period. On January 26, 1999, only six days after completing the merger with Equity Corp., Service Corp. announced disappointing fourth quarter and year-end 1998 financial results. The market reacted sharply to the announcement, with Service Corp. stock falling $15.19, or 44%, to $19.25 per share, after touching $18.38, the lowest price in 3 1/2 years. Service Corp. common stock had traded above $35 per share for much of the Class Period. SERVICE CORPORATION: Wolf Haldenstein Files Complaint in Texas ---------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz, LLP announces that it has filed a class action lawsuit in the United States District Court for the Southern District of Texas on behalf of all persons who purchased common stock issued by Service Corporation International (NYSE:SRV) ("Service") at artificially inflated prices during the period July 23, 1998 through February 8, 1999 (the "Class Period"); and former shareholders of Equity Corporation International ("Equity") who exchanged their shares of Equity common stock for shares of stock in Service through a stock-for-stock merger transaction consummated on January 19, 1999, pursuant to a false and misleading Proxy Statement and Prospectus, and who were damaged thereby. The complaint charges Service and certain of its directors and officers with violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule 10b-5 for, among other things, concealing material adverse non-public information from the public by failing to disclose that declining productivity and efficiency, combined with increasing costs, would adversely affect earnings in the fourth quarter and year of 1998. When Service preliminarily disclosed a severe earnings shortfall for the fourth quarter of 1998 on January 26, 1999, the price of Service stock fell 44% from $34-7/16 per share at the close of trading on January 25, 1999 to $19-1/8 at the close of trading on January 26, 1999. On February 9, 1999, the end of the Class Period, Service disclosed that the real reason for the earnings shortfall announced on January 26, 1999, was not revenue declines, but rather productivity, efficiency and cost problems. At the end of the trading day on February 9, 1999, Service stock had fallen another 15% to $16 3/16. SERVICE CORPORATION: Kirby McInerney Files Complaint in Texas ------------------------------------------------------------- On February 11, 1999, Kirby McInerney & Squire, LLP and Claxton & Hill, P.L.L.C. filed a class action lawsuit in the United States District Court for the Southern District of Texas against Service Corporation International, Inc. (NYSE:SRV) and certain of its officers and directors. The lawsuit was filed on behalf of all purchasers of Service Corp. securities between July 23, 1998 and January 26, 1999, inclusive, including former shareholders of Equity Corp. International (NYSE: EQU), who acquired Service Corp. securities in the January 1999 merger between the two companies. The Complaint asserts that defendants violated Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The lawsuit alleges that defendants' material misrepresentations and omissions caused the Company's stock to trade at artificially inflated levels during the Class Period. Throughout the Class Period, defendants misled the public by downplaying the effect that certain industry-wide conditions were having upon the Company (an operator of funeral homes). Just days prior to the disclosing the Company's true financial and operating condition, Service Corp. completed the merger with Equity Corp. International, using $576 million worth of its artificially inflated common stock as currency. When the Company finally announced "revised earnings estimates" on January 26, 1999, the price of its common stock plunged from $34 7/16 per share to $19 1/8 per share in a single day, a decline of 44%. SERVICE CORPORATION: Weiss & Yourman Files Complaint in Texas ------------------------------------------------------------- The law firm of Weiss & Yourman announced that Service Corp. International (NYSE: SRV)and its Chief Executive and Chief Operating Officers were named defendants in a class action lawsuit commenced last week in the United States District Court for the Southern District of Texas, Houston Division, Civil Action No. H990494, on behalf of investors who either surrendered their Equity Corporation stock for Service Corp. shares (as a result of their merger) or who purchased Service Corp. securities in the period between July 23, 1998 and January 26, 1999. The complaint alleges that defendants violated the federal securities laws (Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933) by, among other things, engaging in aggressive and improper accounting practices that inflated earnings and Service Corp.'s stock price during the Class Period. STATE FARM: Judge Approves $238MM Life Insurance Settlement Pact ---------------------------------------------------------------- >From Bloomington, Illinois, the Associated Press reports that a McLean County judge approved a settlement last week in which State Farm Insurance Cos. expects to pay $238 million to customers who sued the company accusing it of fraudulent practices in selling life insurance. Some 4 million State Farm customers were represented under the class-action lawsuit. A tentative settlement was announced in August, and McLean County Judge Ronald Dozier approved it Thursday, although he said it wasn't perfect. Judge Dozier suggested some minor changes but said he didn't feel he could legally make them. "We all can say it could be better," he said Thursday following two days of hearings on the settlement. "This settlement is fair, reasonable and adequate. It's not great, but it's good." State Farm expects to pay more than $26 million in attorney fees and case expenses. The Bloomington-based company denied any wrongdoing but said it agreed to settle the class-action lawsuit to avoid a protracted court battle. The settlement involves current and former owners of whole life and universal life policies issued between January 1982 and December 1997. The lawsuit accused the company of several fraudulent practices: * Encouraging policyholders to switch to a new policy, in which they lost value but were led to believe it was in their best interest; * Promising returns based on assumptions the company knew to be unrealistic, such as double-digit interest rates; * Soliciting sales by referring to life insurance policies as "investments" and "retirement plans"; and * Artificially inflating dividend projections. STATE FARM: Six Plaintiffs Appeal Life Insurance Settlement Pact ---------------------------------------------------------------- Within hours of its approval, six plaintiffs in the class-action lawsuit accusing State Farm Insurance Co. of fraudulent sales practices said they will appeal a $238 million settlement agreement. Attorney Kenneth Nelson, of Kansas City, Mo., said he would fight the settlement because the process of making a claim is too confusing and cumbersome. Under the agreement, the Associated Press related, State Farm would make varying payments -- averaging about $1,300 -- to every one of the 3 million customers represented by the class action. Nelson says those entitled to a larger award must undergo what a very confusing claim process. "We believe that will have the effect of discriminating against policy holders who are poor, disabled, elderly, unsophisticated in other words, the easiest targets for fraud," said Nelson, of Kansas City, Mo. Any appeal would only serve to stall State Farm's payments, said Tom Schneider, a State Farm lawyer. SUNCRUZ: Editorial re Ex-Employees' Suit for Overtime Pay --------------------------------------------------------- The following letter to the Editor appeared in the February 12, 1999, edition of the St. Petersburg Times: Re: "Ex-employee sues SunCruz for overtime pay," Jan. 28. I am the wife of a former SunCruz employee who has been fighting for the past two years to recoup my husband's back overtime pay from this company. SunCruz has known for over two years that it must pay overtime. It has known that it must pay back overtime to former employees. It has stalled. The statute of limitations runs out after two years. The Florida Department of Labor's wage and hour division is responsible for this. We made our claim against SunCruz to the department just days after my husband left the job. Now that Fred Miller has initiated a federal lawsuit against the company, it is ready to pay us. The catch is this: Miller thinks that having had to wait two years to recoup his money, which SunCruz knew it had to pay, entitles him to punitive damages. He is 100 percent correct. Who does this company think it is? It has been told that it has to pay overtime. It never refused to comply, it just stalled. Now the company is afraid that Miller will win his lawsuit. In an effort to avoid a class action suit, it has agreed to pay certain employees an unspecified amount. This company is sneaky. Port Richey does not need this kind of element. We have enough problems finding decent jobs for our residents. We cannot tolerate this. So, to everyone who has ever worked for SunCruz, do not settle. Find Fred Miller, and make this company pay for what it has put us through. Vanessa Blais, Holiday TRITEAL CORPORATION: Takes $500MM Charge on Securities Settlement ---------------------------------------------------------------- TriTeal Corporation, announcing a $2.6 million third quarter loss on $335,000 of sales for the period ending December 31, 1998, disclosed that the posted loss included a $500,000 charge pursuant to the revised terms of a preliminary settlement (subject to court approval) of the securities class action litigation pending against the Company. That third quarter charge brought total costs of the original and revised preliminary settlement of the securities class action litigation pending against the Company to $10 million. USA NETS: Shareholder Suit Alleges Disclosure Failure ----------------------------------------------------- Cablefax Daily reports that USA Nets [USAI] shareholder Pauline Lalondriz is seeking class- action status for a lawsuit against the company for allegedly failing to disclose that Italian law bars foreign ownership of programming, including USA Nets' joint Home Shopping Net venture with Luxembourg's SBS Broadcasting. WORLD ACCESS: Wolf Popper Files Complaint in Georgia ---------------------------------------------------- Recalling that investors have filed a class action lawsuit in federal court in Atlanta against World Access Inc. (Nasdaq:WAXS). The lawsuit was filed in the wake of World Access's announcement on February 11, 1999, that for the quarter ended December 31, 1998, World Access had income, after special charges, of only $2.2 million, or $.08 per share. This announcement comes after World Access announced, on January 5, 1999, that the Company's earnings after special charges would only be approximately $.15 per share compared with analysts consensus estimates of $.31 per share. The law firm Wolf Popper LLP filed the lawsuit against World Access on behalf of three groups of persons: (1) those who purchased World Access securities in the open market during the period October 7, 1998, through February 11, 1999; (2) those who exchanged securities issued by Telco Systems Inc. for World Access securities in the recent merger of those two companies; and (3) those who exchanged securities issued by NACT Telecommunications Inc. for World Access securities in the recent merger of those two companies. The Complaint charges that defendants violated the U.S. securities laws by issuing materially false and misleading statements and by omitting to disclose material facts required to be disclosed, in order to make the statements issued not materially false and misleading throughout the Class Period and in World Access's public filings related to the Telco and NACT mergers. WORLD ACCESS: Abbey Gardy Files Complaint in Georgia ---------------------------------------------------- Abbey, Gardy & Squitieri, LLP announced that a class action lawsuit with an expanded class period was filed in the United States District Court for the Northern District of Georgia on behalf of purchasers of World Access, Inc. (NASDAQ:WAXS) common stock between October 7, 1998 and February 11, 1999. The complaint charges World Access, Inc. and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. Among other things, plaintiff claims that the defendants issued materially false and misleading statements regarding the company's true financial condition and operating performance. ZILA, INC.: Cauley Firm Files Complaint in Arizona -------------------------------------------------- The Law Offices of Steven E. Cauley announce that a securities fraud class action lawsuit has been filed in the United States District Court for the District of Arizona on behalf of all persons who purchased common stock issued by Zila, Inc. (NYSE:ZILA) at artificially inflated prices during the period June 15, 1998 through January 13, 1999 and who were damaged thereby. The complaint alleges that the defendants misrepresented and/or failed to disclose material information about Zila's product OraTest(R) and the status of the clinical trials during its efforts to obtain FDA approval to sell OraTest(R) in the United States. The Company stated during the Class Period, absent supporting data and in the face of information obtained during the clinical trials to the contrary (which the Company withheld from the market place), that it expected to receive FDA approval to sell and market OraTest(R). As was later revealed following the FDA's rejection of the Company's application, the Company knew, but failed to disclose, that the FDA would not approve OraTest(R) premised on the Company's insufficient and poorly analyzed data. As a result of defendants' false and misleading statements and omissions concerning OraTest(R), the price of Zila's stock was artificially inflated during the Class Period. At the end of the Class Period, the FDA announced that it would not approve OraTest(R) due to the serious flaws in the efficacy studies and the Company's failure to supply the FDA with data justifying approval and the Company's common stock plummeted. Upon this announcement, the price of Zila collapsed, falling from $9-5/8 to $5-3/8, a one-day decline of 44%. ZILA, INC.: Milberg Weiss Suit Expands Class Period --------------------------------------------------- Milberg Weiss announced that the class period proposed in its lawsuit filed in the United States District Court for the District of Arizona against Zila, Inc. (Nasdaq: ZILA) and certain of its officers and directors for violations of the Securities Exchange Act of 1934, has been expanded to include purchases of Zila, Inc. publicly traded securities during the period between March 11, 1998 and January 13, 1999. ********* ********* 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., Princeton, NJ, and Beard Group, Inc., Washington, DC. Peter A. Chapman, Editor. Copyright 1999. All rights reserved. ISSN XXXX-XXXX. 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