/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/990226.MBX C L A S S A C T I O N R E P O R T E R Friday, February 26, 1999, Vol. 1, No. 16 Headlines AGRIBIOTECH, INC.: Cohen Milstein Files Complaint in New York ALLIED PILOTS: Stranded Passengers File Complaint in Texas ASSISTED LIVING: Stoll Stoll Files Bondholder Suits in Oregon ASSISTED LIVING: Weiss & Yourman File Complaint in Oregon BOEING CO.: Fort Campbell Helicopter Crash Case Settled CELL PATHWAYS: Spector & Roseman File Complaint in Pennsylvania CITY OF PHILADELPHIA: Foster Parents Press Forward with Suit ETHICON, INC.: Under Fire for Dirty Vicryl-Brand Sutures GENCOR INDUSTRIES: Stull Stull Files Complaint in Florida GENCOR INDUSTRIES: Bashian Firm Files Complaint in Florida GUN MANUFACTURERS: Florida Mayors May Face Jail If They Sue HOLOCAUST SURVIVORS: Gypsies Threaten to Join U.S. Class Actions JDA SOFTWARE: Zwerling Schachter Files Complaint in Arizona LASER TECHNOLOGY: Pomerantz Haudek Files Complaint in Colorado LERNOUT & HAUSPIE: Rabin & Peckel File Complaint in New York LERNOUT & HAUSPIE: Milberg Weiss Files Complaint in New York NATIONAL TECHTEAM: Posts Annual Loss After Settlement Charge ORBITAL SCIENCES: Abbey Gardy Files Complaint in Virginia ORBITAL SCIENCES: Schatz & Nobel File Complaint in Virginia PEDIATRIX MEDICAL: Stull Stull Files Complaint in Florida PEDIATRIX MEDICAL: Milberg Weiss Files Complaint in Florida SARA LEE: Attorneys Will Tour Meat Plant Next Week SERVICE CORPORATION: Finkelstein & Krinsk File Complaint in Texas SERVICE CORPORATION: Whittington Firm Files Complaint in Texas SPYGLASS, INC.: Bernstein Liebhard Files Complaint in Illinois TOBACCO LITIGATION: First Witness Called in Ohio Union Trial TOTAL RENAL: Spector & Roseman File Complaint in California TOTAL RENAL: Wechsler Harwood Files Complaint in California TOTAL RENAL: Milberg Weiss Files Complaint in California UNITED COMPANIES: Mortgage Lending Practices Under Court Review USA TALKS: Stull Stull Files Complaint in [California] ********* AGRIBIOTECH, INC.: Cohen Milstein Files Complaint in New York ------------------------------------------------------------- Cohen, Milstein, Hausfeld & Toll, P.L.L.C.m on behalf of their client, on February 23, 1999, filed a lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of AgriBioTech, Inc. (Nasdaq:ABTX) common stock during the period between October 8, 1998 and January 22, 1999, inclusive. The Complaint alleges that defendants, AgriBioTech and its Chairman and Chief Executive Officer, Johnny R. Thomas, violated 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 AgriBioTech'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 AgriBioTech'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." ALLIED PILOTS: Stranded Passengers File Complaint in Texas ---------------------------------------------------------- A second lawsuit has been filed by stranded passengers against the 9,300-member Allied Pilots Association for staging a sickout that caused American Airlines to cancel nearly 6,700 flights this month. Patrick E. Catalano, Esq., representing two Chicago residents, filed a lawsuit in state district court in Fort Worth, seeking at least $50 million for all passengers inconvenienced. The Texas suit estimates that more than 600,000 travelers were similarly displaced from Feb. 5 to Feb. 18. With Allied, its President, Captain Richard T. LaVoy and its Vice President, Captain Brian A. Mayhew, are named as co-defendants. The Texas lawsuit is based upon interference with contract, conspiracy, and punitive damage theories. The suit seeks $50 million in actual damages and $50 million in punitive damages resulting from the unlawful activities of the Union relating to the refusal of American Airlines pilots to report to work while protesting their employer's acquisition of Reno Air. As previously reported, a similar lawsuit was filed late last week in San Francisco, California, seeking at least $100 million in damages or $200 each for at least 500,000 travelers inconvenienced. Both lawsuits are seeking to be certified as class actions, meaning that every passenger inconvenienced could join one or both as a plaintiff. "We do not believe such lawsuits have merit," Rich LaVoy, president of the pilots' union, told the Associated Press. "We are in a dispute with American Airlines and our focus is on resolving that dispute." Officials for American Airlines declined to comment on the lawsuits when interviewed by reporters for the Associated Press. Speaking for the APA, Brian Mayhew told United Press International that the union has not seen the California lawsuit or the Texas Complaint. Attempting to shift the blame back to American, Mayhew told UPI, "In our view, such suits -- if they exist -- are without merit, and the ultimate solution remains in a negotiated settlement to the Reno Air dispute. The association looks forward to working toward that solution whenever AMR is prepared to resume bargaining in earnest." American is not named in the lawsuits. As U.S. District Judge Joe Kendall noted when he found the pilots' union in contempt on Feb. 13 for defying his Feb. 10 order to end the strike, "This illegal sickout by the union has cost untold millions of dollars in damages to hundreds of thousands of passengers and businesses in this country. American Airlines may or may no be right in the underlying labor dispute, but it is crystal clear that the company is not responsible for the canceled flights, passenger inconvenience, and monetary damage passengers have suffered. The union is responsible for the damages these passengers have suffered." ASSISTED LIVING: Stoll Stoll Files Bondholder Suits in Oregon ------------------------------------------------------------- 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 5 5/8% convertible subordinated debentures due 2003 or the 6% convertible subordinated debentures due 2002 of Assisted Living Concepts, Inc. (Amex: ALF) from the dates they were first offered, October 24, 1997 (2002 Debentures) and April 13, 1998 (2003 Debentures), through February 1, 1999, inclusive. Separate class actions have also been filed on behalf of purchasers of Assisted Living common stock between April 29, 1997 and February 1, 1999. Assisted Living is based in Portland, Oregon. The lawsuit was filed by the Portland law firm of Stoll Stoll Berne Lokting & Shlachter P.C. After seven straight quarters of reporting allegedly increasing profitability, on February 1, 1999, the Company announced that it 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. ("ARC") stated that ARC had dropped its plans to merge with the Company as a result of the restatement. The class action suits allege that the Company improperly recognized reimbursements from joint venture arrangements relating to its start-up residences as "other income" on its financial statements, when in fact those reimbursements should have been treated as loans. The improper income recognition led to the restatement announced February 1, 1999. The complaint charges the Company and William McBride III, Keren Brown Wilson, Stephen Gordon and Rhonda Marsh with violations of the federal securities laws. The separate complaints filed on behalf of purchasers of common stock and debentures allege that the prices of Assisted Living's securities were artificially inflated during the Class Periods due to the Company's false and misleading financial statements and statements about Assisted Living's earnings, profitability and business condition. The prices of the 2002 Debentures, 2003 Debentures and common stock all declined substantially on February 1, 1999, upon the news of the restatement of income. ASSISTED LIVING: Weiss & Yourman File Complaint in Oregon --------------------------------------------------------- The law firm of Weiss & Yourman has filed a class action lawsuit in the United States District Court for the District of Oregon on behalf of all those who purchased Assisted Living Concepts Inc. (AMEX:ALF) common stock between July 28, 1997, through Feb. 1, 1999, inclusive. The Complaint alleges that during the Class Period, the defendants continuously disseminated materially false and misleading statements regarding the company's current financial performance and business conditions. Since the second quarter of 1997, the company improperly recognized reimbursements from its joint venture partners as other income in its financial statements instead of as loans. Accordingly, the consolidated financial statements of ALF for the second, third and fourth quarters of 1997, and the first, second and third quarters of 1998 were false and misleading. BOEING CO.: Fort Campbell Helicopter Crash Settled ---------------------------------------------------------------- Boeing Co. will pay $4.4 million to the wives of five Fort Campbell soldiers killed when their helicopter crashed on a night training mission three years ago, an attorney told the Associated Press. Michael Sawicki, representing families of the soldiers, told the AP a settlement was reached last week. The March 7, 1996, crash into a snowy wheat field was initially blamed on an error by the student pilot of the Chinook MH47E. Army investigators later said melted snow leaked into the cockpit, knocking out the aircraft's flight instruments and control system. Wives of the five victims sued Boeing, builder of the Chinooks, and the Eaton Corp., which made circuit breakers used in the helicopters. Eaton has not settled. Sawicki related to the AP that Boeing will acknowledge no wrongdoing in the settlement, which is expected to be filed in U.S. District Court in Bowling Green, Kentucky. A federal judge must approve the agreement. Jack Satterfield, a spokesman for Boeing in Philadelphia, said a settlement was pending but declined to elaborate. CELL PATHWAYS: Spector & Roseman File Complaint in Pennsylvania --------------------------------------------------------------- A class action lawsuit was filed in the United States District Court for the Eastern District of Pennsylvania to recover damages on behalf of all purchasers of Cell Pathways, Inc. (NASDAQ:CLPA) common stock during the period of Nov. 3, 1998 through Feb. 2, 1999, as well as on behalf of all former Tseng Labs, Inc. shareholders who acquired CPI common stock pursuant to a Joint Proxy Statement and Prospectus. This class action lawsuit was filed by the law firm of Spector & Roseman, P.C. The Complaint alleges that CPI and certain officers and directors of the Company during the Class Period violated Sections 10(b), 20(a) of the Securities Exchange Act of 1934 and Section 11 of the Securities Act of 1933. The Complaint charges that the defendants issued a series of materially false and misleading statements concerning the discovery of a new means of treating cancerous and precancerous lesions through the use of CPI's new drug, PREVATAC, the progress and efficacy of this new treatment, and CPI's projected growth. According to the complaint, because of the issuance of these false and misleading statements, the price of CPI common stock was artificially inflated during the Class Period. The Complaint alleges that on Feb. 1, 1999, after the close of trading, the Company disclosed that, among other things, a preliminary evaluation of clinical trials of PREVATAC did not achieve a statistically significant clinical response when compared to a placebo, and that as a result, it would not be making its anticipated New Drug Application filing in March. As a result of this announcement, the price of CPI stock collapsed from a Class Period high of $29-1/8 to $6.00 per share. CITY OF PHILADELPHIA: Foster Parents Press Forward with Suit ---------------------------------------------------------------- The foster parents who have filed a suit against the city of Philadelphia plan to press ahead with their claim even though the removal of their children has been postponed, reports United Press International. The class-action suit charges that the city puts children at risk by removing them from foster homes without any notice. ETHICON, INC.: Under Fire for Dirty Vicryl-Brand Sutures ---------------------------------------------------------------- An outbreak of post-surgical infections struck an upscale cosmetic surgery center in Lafayette five years ago, confounding patients and their doctors. Seven women who had undergone breast-implant surgery developed raging infections: fever, chills, excruciating pain, wounds that wouldn't heal. The doctor provided antibiotics. He reoperated, removing implants. The women said the infections got worse. A similar outbreak, the Sacramento Bee reports, hit a hospital in St. Louis. Mysterious infections felled six patients. Then other cases occurred: a Connecticut woman who underwent breast cancer surgery; a weightlifter in Florida with a torn rotator cuff; a New Jersey retiree with a hernia; quadruple-bypass patients in Oklahoma City and Lancaster, Pa. Each patient developed a stubborn, aggressive infection that caused months or even years of suffering. Most required new operations. Some suffered permanent injury. Now a two-month investigation by the San Francisco Examiner has found that at least 100 U.S. patients who underwent surgery in 1994 suffered infections caused by a bacteria found in dirt. Court documents and Food and Drug Administration records say patients got sick after their surgeons used sutures sold by a manufacturer whose new, high- tech sterilization system had repeatedly malfunctioned a few months before. In a flurry of lawsuits and reports filed with the FDA, patients and doctors say the illnesses were linked to sutures contaminated with infectious bacteria. The manufacturer, Ethicon Inc., a division of the Johnson & Johnson medical supply conglomerate, news reports say, has denied in legal documents that its sutures caused any infectious outbreak. But federal records show that in September 1994, after prodding by FDA inspectors, Ethicon issued a recall for 3.6 million packages of its trademark Vicryl sutures, acknowledging that a new $50 million sterilizer at a Texas factory had malfunctioned repeatedly some five months before. Shortly before the recall, the FDA issued a "warning letter" to Ethicon, criticizing the firm for continuing to sell sutures to hospitals after the malfunctions were discovered and failing to conduct a proper investigation of what went wrong. Susan Odenthal, Ethicon's director of communications, said the sutures processed by the malfunctioning sterilizer posed a very low risk to patient health. Despite that, the company voluntarily decided to recall the sutures, she said. "Patient safety was first and foremost our objective" in all the company's actions, she said. "The fact that we initiated this whole recall speaks to our interest in patient safety." GENCOR INDUSTRIES: Stull Stull Files Complaint in Florida --------------------------------------------------------- Stull, Stull & Brody announced that it flied a class action lawsuit was filed on Feb. 19, 1999, in the United States District Court for the Middle District of Florida on behalf of all persons who purchased the common stock of Gencor Industries, Inc. (AMEX: GX) between Feb. 5, 1998, and Jan. 28, 1999. The complaint charges Gencor and certain of its executive officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements during the Class Period regarding the Company's financial condition and results of operations. These false and misleading statements caused the price of Gencor's common stock to be artificially inflated during the Class Period. GENCOR INDUSTRIES: Bashian Firm Files Complaint in Florida ---------------------------------------------------------- The law offices of James V. Bashian, P.C., announces 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 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'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(.)" GUN MANUFACTURERS: Florida Mayors May Face Jail If They Sue ----------------------------------------------------------- >From Miami, Florida, Jane Sutton, writing for Reuters, reports that mayors who sue gun makers would face up to five years in prison under a proposed Florida law that opponents say is the latest salvo in a national battle over liability for shooting injuries and deaths. The bill filed Feb. 19 by Florida state Representative George Albright would make it a crime for local government officials to sue gun and ammunition makers to recoup damages in cases arising from "the lawful design, marketing or sale of firearms." Public officials who file such lawsuits would risk conviction on a third-degree felony, punishable by up to five years in prison and fines up to $5,000. Albright, a Republican from Ocala, said product liability lawsuits should be left to private citizens and his bill would stop local government officials from exercising powers the legislature never intended them to have. "This is about a small group of greedy mayors and a small group of greedy trial lawyers," Albright told Reuters Tuesday. The ban would apply to lawsuits already pending, quashing the product liability suit that Miami's county government filed against two dozen gun makers and distributors in January. HOLOCAUST SURVIVORS: Gypsies Threaten to Join U.S. Class Actions ---------------------------------------------------------------- >From Bonn, Fiona Fleck reports for Reuters that gypsy Holocaust survivors in Germany threatened this week to join U.S. class- action lawsuits against German industry unless their representatives were included in plans to establish a compensation fund. Romani Rose, chief of the Central Council of German Sinti and Roma, said 500,000 European Gypsies were murdered, robbed and exploited as slaves by the Nazis during World War Two. Rose said Gypsy organisations should be treated on a par with Jewish groups, which have been key negotiators, and accused the government of breaking a promise to include the Gypsies. He acknowledged Gypsy survivors would benefit from the fund estimated at between two and three billion marks, but said they should help set it up and sit on any future administrative body. "The Central Council expects a pledge from the government and industry in the next 14 days to treat the genocide of the Gypsies in a similar way to Jewish victims," Rose told Reuters, adding they would join U.S. lawsuits if their demand was not met. He said of the 2,850 Holocaust survivors his group represented, 500 were former slave labourers. Six had U.S. citizenship and their names could be added to the U.S. lawsuits against German manufacturers and banks. Reuters relates that some 23,000 Sinti and Roma from 11 European countries were sent to Auschwitz. Rose said these survivors could join lawsuits against Deutsche Bank AG, which recently revealed it had helped finance the building of the death camp. Rose lambasted German industry saying Gypsies had campaigned for more than 10 years for slave labour compensation without success. He also said Gypsies had received less state and industry reparations than other groups in the past. "Industry's past exclusion of our minority from compensation and our undisputed disadvantage in terms of state compensation must not be allowed to continue," Rose said. Rose wrote last week to Chancellery Minister Bodo Hombach, who has coordinated the creation of the fund, in a last-ditch plea for inclusion in the compensation scheme. He said he was still waiting for a reply. Gypsies, known as the Sinti in Germany and the Roma in eastern Europe, were treated like the Jews as sub-human by the Nazis who believed in the supremacy of the "Aryan" race. Earmarked to die, Gypsies from across Nazi-occupied Europe were rounded up, deported to camps where they were gassed to death or subjected to the Nazi's "Extermination through Labour" programme under which slaves survived 90 days on average. The group, Rose told Reuters, also supports the interests of Gypsy Holocaust and slave labour survivors in Poland, the Czech Republic, Slovakia, Hungary, Yugoslavia and Ukraine. JDA SOFTWARE: Zwerling Schachter Files Complaint in Arizona ----------------------------------------------------------- The law firm of Zwerling, Schachter & Zwerling, LLP announced that a class action has been commenced 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 Jan. 29, 1998 and Jan. 5, 1999. The complaint charges JDA and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants made material misrepresentations and omitted material facts regarding JDA's financial condition, earnings and revenue growth which caused the Company's stock to trade at artificially inflated levels. The complaint alleges that during the Class Period JDA's senior insiders sold $43 million of their own JDA stock and caused JDA to issue and sell over $90 million of stock via a public offering. The complaint further alleges that following disclosure of JDA's serious financial problems on January 5, 1999, the price of JDA stock plummeted to just $6-1/16 per share, 80% lower than the levels at which defendants had sold more than $130 million of JDA stock. LASER TECHNOLOGY: Pomerantz Haudek Files Complaint in Colorado -------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP has filed suit against Laser Technology, Inc. (AMEX: LSR) and certain corporate insiders in the United States District Court for the District of Colorado on behalf of all purchasers of Laser Technology securities during the period January 25, 1996 through and including December 23, 1998. Trading of Laser Technology's common stock was halted on December 23, 1998 as a result of the Company's announcement that its independent public accountants, BDO Siedman, LLP, had resigned and withdrawn its previously issued audit letters on Laser Technology's fiscal year 1993 through 1997 financial statements. Several days later, on December 28, 1998, the Company reported that the auditor had resigned because it could "no longer rely on management's representations" and was "unwilling to be associated" with the Company's previously issued financial reports. To date, trading in Laser Technology's stock has not resumed. The complaint alleges that, by issuing false and misleading statements to the public, Laser Technology and certain corporate executives violated the federal securities laws and thereby artificially inflated the value of the Company's securities and damaged class members who acquired such securities during the Class Period. The Denver Post reports that Laser Technology officials declined to comment on the pending lawsuits. LERNOUT & HAUSPIE: Rabin & Peckel File Complaint in New York ------------------------------------------------------------ Rabin & Peckel LLP commenced a putative class action suit in the United States District Court for the Eastern District of New York, on behalf of all those who purchased Lernout & Hauspie Speech Products, N.V., common stock between Feb. 3, 1998 and Dec. 4, 1998, inclusive. The Complaint alleges that Lernout and certain of its officers violated the Securities Exchange Act of 1934 by making a series of materially false and misleading statements concerning Lernout's reported financial results. In particular, it is alleged that in connection with a number of acquisitions during the Class Period, the Company improperly wrote-off certain acquisition costs as "in process research and development" charges in violation of generally accepted accounting principles. The Complaint alleges that as a result of these false and misleading statements the price of Lernout common stock was artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages. LERNOUT & HAUSPIE: Milberg Weiss Files Complaint in New York ------------------------------------------------------------ A class action lawsuit was filed by Milberg Weiss Bershad Hynes & Lerach, LLP, in the United States District Court for the Eastern District of New York, on behalf of all persons who purchased the common stock of Lernout & Hauspie Speech Products (Nasdaq:LHSPF), between February 3, 1998 and December 1, 1999, inclusive. The complaint charges L&H and certain officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of false statements concerning the Company's financial condition and financial performance. Because of the issuance of a series of false and misleading statements, the price of L&H common stock was artificially inflated during the Class Period. Prior to the disclosure of the adverse facts described above certain insiders sold over 500,000 of shares of L&H common stock to the unsuspecting investing public at inflated prices realizing proceeds in excess of $23 million. NATIONAL TECHTEAM: Posts Annual Loss After Settlement Charge ------------------------------------------------------------ For the year ending December 31, 1998, National TechTeam Inc. (Nasdaq: TEAM), posted a $3,185,978 loss on record revenues of $33,572,564 after class action lawsuit-related expenses. Harry A. Lewis, President and Chief Executive Officer, said, "While we are proud of our record revenue increases and the growth potential of our businesses, our number one priority is to achieve sustained and predictable future operating profits. It's become clear to us that our rapid growth -- both internal and through acquisitions -- exceeded the ability of our previous reporting systems to keep pace. We have changed our reporting systems and intensified the scrutiny of our internal functions, in conjunction with our outside auditors. In addition, we have recently hired a General Counsel and a Director of Financial Review to augment our due diligence procedures and a C.P.A. for tax, treasury and accounting review. We believe these and other necessary steps, including management changes, will help clear away roadblocks to improve our operating profit and realize enhanced shareholder value." As announced on December 24, 1998, TechTeam reached an agreement in principle to settle all of the consolidated class action lawsuits that were brought against the Company and certain of its current and former officers and directors. In connection with this settlement, the Company recorded a pre-tax charge in the fourth quarter 1998 of $3.2 million for legal and settlement expenses. The settlement is subject to certain contingencies, including, but not necessarily limited to, final court approval. ORBITAL SCIENCES: Abbey Gardy Files Complaint in Virginia --------------------------------------------------------- Abbey, Gardy & Squitieri, LLP, commenced a class action suit in the United States District Court for the Eastern District of Virginia, on behalf of all purchasers of Orbital Sciences Corp. (NYSE: ORB) common stock between April 21, 1998 and February 16, 1999, inclusive. The Complaint charges that, during the Class Period, Orbital Sciences and certain officers and directors of that Company violated 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 financial statements and failed to reveal that the Company was employing fraudulent accounting methods which artificially inflated Orbital Sciences' earnings. After the close of trading on February 16, 1999, the Company announced that due to the improper accounting treatment of certain items, the Company would materially restate earnings for the first three quarters of 1998. The Complaint also alleges that defendants utilized their inside information regarding the artificial inflation of the Company's stock price to sell significant amounts of their own personal Orbital Sciences holdings for proceeds of over $3 million. ORBITAL SCIENCES: Schatz & Nobel File Complaint in Virginia ----------------------------------------------------------- A class action complaint was commenced on February 23, 1999 in the United States District Court for the Eastern District of Virginia on behalf of all purchasers of Orbital Sciences Corp. (NYSE:ORB) common stock from April 21, 1998 to February 16, 1999, inclusive. The Plaintiff is represented by the law firm of Schatz & Nobel, P.C. The Complaint alleges that, during the Class Period, Orbital and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by, among other things, issuing a series of materially false and misleading financial statements and failing to reveal that the Company was employing fraudulent accounting methods which artificially inflated Orbital's earnings. After the close of trading on February 16, 1999, the Company announced that, due to the improper accounting treatment of certain items, the Company would materially restate earnings for the first three quarters of 1998. The Complaint further alleges that the Defendants utilized inside information regarding to sell significant amounts of their own personal Orbtital holdings for proceeds of over $3 million. PEDIATRIX MEDICAL: Stull Stull Files Complaint in Florida --------------------------------------------------------- Stull, Stull & Brody filed, on Feb. 18, 1999, a securities class action lawsuit was filed in the United States District Court for the Southern District of Florida against Pediatrix Medical Group, Inc., and certain of its officers on behalf of all persons who purchased or otherwise acquired Pediatrix common stock during the period April 28, 1998 through and including Feb. 12, 1999 at artificially inflated prices. The complaint charges Pediatrix and certain of its executive officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements during the Class Period regarding the Company financial condition and results of operations. These false and misleading statements caused the price of Pediatrix's common stock to be artificially inflated during the Class Period. PEDIATRIX MEDICAL: Milberg Weiss Files Complaint in Florida ----------------------------------------------------------- A class action lawsuit was filed in the United States District Court for the Southern District of Florida, West Palm Beach Division, on behalf of all persons who purchased the common stock of Pediatrix Medical Group Inc. (NYSE: PDX), between April 28, 1998 and February 12, 1999, inclusive, by Milberg Weiss Bershad Hynes & Lerach LLP. The complaint charges Pediatrix and certain officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series false statements concerning the Company's financial condition and results of operations. Because of the issuance of a series of false and misleading statements, the price of Pediatrix common stock was artificially inflated during the Class Period. SARA LEE: Attorneys Will Tour Meat Plant Next Week -------------------------------------------------- Attorneys next week will begin touring a West Michigan meat packing plant that was linked to Listeria-tainted meat distributed nationwide. The Sara Lee subsidiary, Bil Mar Foods in Zeeland, Mich., faces at least five lawsuits from deaths linked to the contaminated meat. The parent company recalled 15 million pounds of hot dogs and cold cuts Dec. 23, after a rare strain of Listeria was found in opened and unopened packages at the plant. At least 17 deaths nationwide have been linked to the tainted meat. Chicago attorney Kenneth Moll plans to tour the Michigan plant next week, according to a report circulated by United Press International. Moll represents clients in two suits. He plans to take photos and video footage of the plant before the company starts modifying the facility. Arizona attorney Steve Copple, who is handling two other suits against the company, will tour the faciity in early March. A Sara Lee spokesman declined comment on the tours in the Grand Rapids Press, saying the company does not talk about pending litigation. Moll plans to ask a circuit court judge in Chicago to grant class-action status to a lawsuit he filed in late December, according to UPI. Moll has broadened the complaint to include at least eight other people, including a Memphis man whose wife died of listeriosis last year. Moll is alleging that the recall wasn't done soon enough by company officials and that they knew of the contamination as early as June of last year. SERVICE CORPORATION: Finkelstein & Krinsk File Complaint in Texas ----------------------------------------------------------------- Finkelstein & Krinsk alleges Service Corporation International (NYSE:SRV) commits fraud in Equity Corp. takeover and that SCI fails to tell shareholders of major 4th quarter earnings decline. A class action lawsuit charges that Service Corporation International defrauded its shareholders and those of Equity Corporation in a takeover scheme when SCI failed to disclose that its 4th quarter 1998 earnings would be dramatically lower than expectations. As a result the stock price of Service Corporation International collapsed $15.31 per share, a 45% single-day decline. The complaint was filed in the United States District Court for the Southern District in Texas on behalf of all persons who purchased or otherwise acquired the common stock of Service Corporation International between July 23, 1998 and January 26, 1999. SERVICE CORPORATION: Whittington Firm Files Complaint in Texas -------------------------------------------------------------- Whittington, von Sternberg, Emerson & Wilsher filed a class action lawsuit against Service Corporation International (NYSE: SRV) and certain of its officers and directors in the United States District Court for the Southern District of Texas, Houston Division. This suit is brought on behalf of all persons or entities who purchased or acquired securities of Service Corporation International between February 22, 1998 and January 26, 1999, inclusive, or exchanged the common stock of Equity Corporation International (NYSE: EOU) for the shares of Service Corporation in the January 19, 1999 merger between the two companies. The lawsuit alleges that, during the Class Period, certain officers and directors of Service Corporation issued false statements which caused the price of Service Corporation common stock to trade at artificially inflated prices. Thereafter, Service Corporation issued $830 million of stock to acquire Equity Corporation International. The lawsuit also alleges that the following senior officers and/or directors of Service Corporation sold the following amounts of service corporation stock, totaling of $96 million, before it collapsed in price on January 26, 1999: Name Shares Sold % of Proceeds Holdings ---- ----------- ------------- -------- 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, Service Corporation issued a press release published in 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. SPYGLASS, INC.: Bernstein Liebhard Files Complaint in Illinois -------------------------------------------------------------- Bernstein Liebhard & Lifshitz, LLP announces that it commenced a securities class action lawsuiton behalf of purchasers of the common stock of Spyglass, Inc. (Nasdaq: SPYG), between October 20, 1998 and January 4, 1999, inclusive, in the United States District Court for the Northern District of Illinois. 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 Spyglass 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 Company's financial and operating condition. Specifically, the complaint alleges that defendants misrepresented that certain contracts with key customers had been finalized when in fact these contracts had not been finalized. The revenue expected from these contracts, which is never likely to materialize, had formed the basis for forecasts of first quarter profitability. As a result of these misrepresentations and omissions, the price of Spyglass's common stock was artificially inflated throughout the Class Period. TOBACCO LITIGATION: First Witness Called in Ohio Union Trial ---------------------------------------------------------------- Brandeis University economist Adam Jaffe has accused the nation's tobacco companies of conspiring to control advertising and competition, reports Jeffrey T. Ottenbacher, writing for United Press International, after being called as the first witness in the Labor Unions' suit against tobacco companies. Jaffe testified, Mr. Ottenbacher relates, that shortly after the first link between cancer and cigarettes became public in 1953, tobacco company leaders met in a New York City hotel and agreed to fight the "health issue," with no one company claiming its products were less risky than another firm's products. Jaffe said company documents also show tobacco leaders during the New York City meeting admitted their advertising aggravated the "health issue," which included anything linking smoking with disease, and agreed to collectively restrict biological research. Jaffe showed the jury the internal documents indicating that the tobacco companies agreed to develop a public relations program on the health issue, and subsequently formed the Tobacco Industry Research Committee. Jaffe said the committee was publicly heralded as an objective, independent scientific entity, but actually performed public relations functions. During Jaffe's cross examination, Bob Webber, representing the R.J. Reynolds Tobacco Co., attempted to disprove the unions' argument that the industry tried to suppress a safer cigarette. Webber said domestic tobacco firms could not control research into such a product from foreign tobacco companies and, therefore, could not afford to abandon such research. He noted that both Philip Morris and Reynolds at different times produced "safer" cigarettes, but both products failed in the marketplace. However, he said the existence of those products also disproves Jaffe's claim that no research was conducted on a safer cigarette as part of an industry-wide conspiracy. Jaffe, under questioning from union lawyers, said he believed tobacco companies should have offered consumers sufficient research information to allow them to decide whether to smoke. But defense lawyers said Federal Trade Commission rules enacted in 1955, and still in force, prohibit tobacco companies from presenting any references to the presence or absence of the physical affects of smoking. TOTAL RENAL: Spector & Roseman File Complaint in California ----------------------------------------------------------- Spector & Roseman, P.C., filed a class action lawsuit on behalf of all purchasers of the common stock of Total Renal Care Holdings, Inc. (Nasdaq: TRL) between February 17, 1998 and February 17, 1999. The lawsuit has been commenced in the United States District Court for the Central District of California. It charges TRC and certain of its officers and directors with violating the federal securities laws by making misrepresentations about TRC's business, the successful integration of Renal Treatment Centers, TRC's earnings growth and financial condition, and its ability to continue to achieve profitable growth. These allegedly false and misleading statements caused TRC's stock price to be artificially inflated during the Class Period, and allowed TRC to make acquisitions using TRC stock as currency, and to complete a $345 million convertible debt offering. On February 17, 1999, however, the Company unexpectedly disclosed much weaker earnings for the fourth quarter, that it was writing- off $11 million in receivables, and that it received a letter from the Securities and Exchange Commission questioning the Company's accounting practices in its 1998 filings. As a result of this announcement, TRC's stock price collapsed from a Class Period high of $36-1/8 in June 1998, to as low as $8-3/4 per share. TOTAL RENAL: Wechsler Harwood Files Complaint in California ---------------------------------------------------------------- A class action lawsuit was filed by the firm of Wechsler Harwood Halebian & Feffer LLP in the United District Court for the Central District of California against Total Renal Care Holdings, Inc. and its officers and directors for violations of the Securities Exchange Act of 1934. TOTAL RENAL: Milberg Weiss Files Complaint in California -------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP and The Law Offices of Bruce G. Murphy announced that a class action lawsuit was filed in the United States District Court for the Central District of California against Total Renal Care Holdings, Inc. (NYSE: TRL) and its officers and directors for violations of the Securities Exchange Act of 1934. UNITED COMPANIES: Mortgage Lending Practices Under Court Review --------------------------------------------------------------- National Mortgage News reports that, as financial problems mount for United Companies Financial Corp., the Company is also finding its lending practices under scrutiny by the Federal government and private litigants. The U.S. Department of Justice and the Department of Housing and Urban Development are investigating UCFC lending practices in the Philadelphia metropolitan area. And a U.S. District Court in Philadelphia recently found that United Cos. violated the Home Owners and Equity Protection Act (HOEPA) and ordered the rescission of four mortgages and awarded each plaintiff $2,000 in damages. Legal services attorneys who brought the case are currently negotiating settlements for other United Cos. borrowers facing foreclosure. "The company believes this investigation by DOJ is part of an overall initiative by the agency to review the practices of the several large subprime lenders and does not stem from any findings of wrongdoing by the company," United Cos. says in a Securities and Exchange Commission disclosure. United Cos. also notes that HUD is investigating its relationships with mortgage brokers and home improvement contractors for possible kick-back and referral fee violations. The U.S. District Court decision in Margaret Newton vs. United Cos. found that the lender violated the disclosure requirements of HOEPA. However, industry attorneys are hailing it as a major decision because it is expected to make it very difficult for plaintiff attorneys to bring class action lawsuits under HOEPA. "It probably means that HOEPA is going to proceed on a case-by- case basis and probably not on a class action basis," said Frank Swain outside counsel for Home Equity Lenders Leadership Organization, which represents subprime lenders like United Cos. U.S. District Court Judge Marvin Katz ruled that it will take more than a handful of cases to show that United Cos. engages in a pattern and practice of making loans without consideration of the borrower's ability to repay. The lead attorney for the plaintiffs, Irv Ackelsberg, Esq., noted that the judge essentially wants a statistical overview of a company's lending to prove a pattern and practice. "So he is kind of opening the door to extensive discovery in an individual case," Mr. Ackelsberg said. The plaintiffs' attorneys also argued that United Cos. violates the Equal Credit Opportunity Act by first offering borrowers home improvement loans and then changing it to a first mortgage loan at a higher amount than the borrower requested. In the case of Margaret Newton, who wanted a $9,900 home improvement loan, United Cos. gave her a $15,500 first mortgage loan that included $1,581.65 for delinquent real estate taxes. "The ECOA was designed to avoid bait by a small loan for home improvements and switch to a large loan clearing title for a first mortgage," the judge said. But the judge did not go any further. "In view of the fact that this a case of first impression, the court will not award damages," Judge Katz said. The judge's remarks prompted private attorneys to file a class action lawsuit against United Cos. for alleged violations of the Equal Credit Opportunity Act. Meanwhile, United Cos. has acknowledged that a settlement with the Massachusetts Attorney General in October cost the company $1.2 million, which was reflected in third-quarter earnings. The state AG alleged UCFC charged excessive points and the settlement required reimbursement to certain borrowers. Predictably, UCFC did not admit to any wrongdoing. USA TALKS: Stull Stull Files Complaint in [California] ------------------------------------------------------ Stull, Stull & Brody has filed a class action lawsuit on behalf of purchasers of USA Talks.com, Inc. (OTCBB: USAT) securities between November 24, 1998 and January 29, 1999 for violations of federal securities laws. Defendants include USA Talks.com and certain of its officers and directors. The Complaint charges 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 misleading statements regarding USA Talks.com's financial condition as well as its present and future business prospects. ********* 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. 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. The CAR subscription rate is $575 for six months delivered via e- mail. 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