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C L A S S A C T I O N R E P O R T E R
Friday, March 12, 1999, Vol. 1, No. 26
Headlines
COEUR D'ALENE: Settles Shareholder Litigation
LYCOS, INC.: Spector & Roseman Files Complaint in Massachusetts
MYLAN LABORATORIES: Will Defend Consumer & Securities Suits
NATIONAL COLLEGIATE: Settlement of Restricted Earnings Coach Suit
RANDALL'S FOOD: Court Rules MSP Not Top-Hat Plan; Trial to Follow
SEARS, ROEBUCK: Settles Credit Card Interest Rate Hike Litigation
SWISHER INTERNATIONAL: Company Sues Auditors McGladrey & Pullen
TIG HOLDINGS: Denies & Will Defend Shareholder Complaints
USX CORP.: Posted Pricing Fairness Hearing Scheduled for April 5
VARIAN ASSOCIATES: June Hearing on Class Certification Expected
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COEUR D'ALENE: Settles Shareholder Litigation
---------------------------------------------
Coeur d'Alene Mines Corp. has agreed to settle a class-
action lawsuit triggered by start-up problems at the Fachinal
Mine in Chile and a land movement problem at the Golden Cross
Mine in New Zealand. In return for dismissal of all claims,
reports Reuters, the company said it agreed to pay $7 million
into a settlement fund.
"This amount, and substantially all of Coeur d'Alene's costs of
defending the litigation, will be covered by Coeur d'Alene's
directors' and officers' insurance policy," the company said in a
statement. Coeur d'Alene Mines owns and operates, explores and
develops silver and gold mines in Idaho, Nevada and Alaska, as
well as in New Zealand, Chile and Australia.
The lawsuit was filed in federal court in Denver in July 1997 on
behalf of purchasers of Coeur's publicly traded debt and equities
between Jan. 9, 1995, and July 11, 1996. The plaintiffs alleged
violation of federal securities laws, saying that timely
disclosures regarding problems at the two mines were not made.
The company said the proposed settlement has been submitted to
the court for approval and is subject to various conditions. In
addition to the $7 million payment, Coeur d'Alene said it agreed
to contribute to the settlement fund 50 percent of any net
recovery it might obtain from the lawsuit the company filed in
1996 against Cyprus Amax Minerals Co. , the company from
which Coeur d'Alene purchased the Golden Cross Mine interest in
1993.
In that suit, Coeur d'Alene noted it alleged that Cyprus Amax
failed to disclose, at the time of the sale, its knowledge of the
land movement problem at the mine.
Coeur d'Alene said contributions would be made only after its
recovery from Cyprus Amax had paid back all expenses incurred in
the company's claim. The next $8 million of any recovery would
be retained by Coeur d'Alene as a reserve against the claim of
one of its property insurers, it continued, noting it disputes
this claim.
Coeur d'Alene and plaintiffs will then split any additional
recovery until the plaintiffs receive $6 million, with Coeur
d'Alene retaining all amounts thereafter, the company said.
LYCOS, INC.: Spector & Roseman Files Complaint in Massachusetts
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A class action lawsuit was filed Tuesday in the United States
District Court in the District of Massachusetts on behalf of all
purchasers of Lycos Inc. (NASDAQ:LCOS) common stock during the
period of Jan. 25, 1999 through Feb. 9, 1999 by the law firm of
Spector & Roseman, P.C.
The Complaint alleges that Lycos and the Chief Executive Officer
of the Company during the Class Period violated Sections 10 (b)
and 20 (a) of the Securities Exchange Act of 1934.
The Complaint charges that the defendants issued a series of
materially false and misleading statements concerning the
Company's commitment to remaining independent notwithstanding the
fact that Lycos was in serious and advanced discussions to merge
with USA Networks Inc. at the time. Because of the issuance of
these false and misleading statements, the price of Lycos common
stock was artificially inflated during the Class Period.
The Complaint alleges that on Feb. 9, 1999, the Company shocked
the market by announcing that it had signed a definitive
agreement to merge with USA's e-commerce and Internet assets and
Ticketmaster Online-Citysearch, Inc. and that post transaction
Lycos shareholders would own a mere 30% of the newly formed
company. Further, it was reported that Lycos shareholders would
receive 2.25 shares of USA, consideration of $94.50 per Lycos
share which was then trading at $127 per share, plus an option to
buy preferred shares in the newly formed company. As a result of
this announcement, the price of Lycos stock collapsed from a
Class Period high of $127.25 to $87.25 per share.
MYLAN LABORATORIES: Will Defend Consumer & Securities Suits
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On December 22, 1998, the Federal Trade Commission filed suit in
federal district court for the District of Columbia against
MYLAN LABORATORIES, INC. The FTC alleges that the Company
violated Section 5(a) of the Federal Trade Commission Act
with respect to two generic drugs manufactured and sold by
the Company (lorazepam and clorazepate). Specifically, the
FTC's complaint alleges the Company engaged in restraint of
trade, monopolization, attempted monopolization, and
conspiracy to monopolize, arising out of certain agreements
involving the supply of raw materials used to manufacture these
drugs. The FTC also sued in the same case the foreign supplier
of the raw materials, the supplier's parent company and its
United States distributor. The relief sought includes an
injunction barring the Company from engaging in conduct that
violates Section 5(a) of the FTC Act, rescission of
certain agreements and disgorgement in excess of $120 million.
In a parallel case also filed on the same day Attorney
Generals for ten states, Connecticut, Florida, Illinois,
Minnesota, New York, North Carolina, Ohio, Pennsylvania,
Virginia and Wisconsin, joined together to file a single
lawsuit against the Company in the same court. The complaint
filed by the States asserts claims pursuant to Section 1 and
2 of the federal Sherman Act against the same parties as
those named in the FTC suit and one other distributor not
named by the FTC. These claims are analogous to the claims
brought by the FTC under Section 5(a) of the FTC Act, and are
based on similar allegations. The States' complaint also
alleges violations of the respective states' competition
laws. The States further allege a per se violation of Section 1
of the Sherman Act with respect to the pricing of raw material
used in the manufacture of lorazepam (an allegation not made by
the FTC). Without specifying a dollar amount, the States seek
relief similar to that sought by the FTC and up to treble
damages. The complaint was amended in February 1999 to include
22 additional states as plaintiffs.
The Company is aware of 13 putative class actions filed by
private parties in various state and federal courts involving
the same conduct alleged in the complaints brought by the FTC
and the States, as well as alleged violations of state
consumer protection laws. The lawsuits seek an unspecified
amount of damages.
In addition, on January 11, 1999, a class action suit was filed
in federal district court for the Western District of
Pennsylvania alleging violations of federal securities laws by
the Company and certain directors and officers of the Company.
The suit alleges that the Company failed to disclose
monopolization of certain raw materials used to manufacture
lorazepam and clorazepate pursuant to Sections 10(b) and
20 of the Securities and Exchange Act of 1934 and Rule 10 b-5 of
the Securities and Exchange Commission. The alleged class period
is from February 17, 1998 to December 5, 1998. Without
specifying a dollar amount, the suit seeks compensatory
damages.
The Company believes that it has meritorious defenses to the
claims in all of these suits and intends to vigorously defend
them.
NATIOANL COLLEGIATE: Settlement of Restricted Earnings Coach Suit
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NCAA Division I restricted earnings coaches in three class action
lawsuits have reached a proposed settlement of their antitrust
claims against the NCAA. The NCAA will pay a total of $54.5
million to resolve the claims of the coaches whose salaries were
capped at $16,000 annually by the NCAA's restricted earnings
coach rule, which became effective in 1992. The rule was
declared unlawful in 1995 by Hon. Kathryn H. Vratil, United
States District Judge for the District of Kansas. That
determination of liability was upheld by the United States Court
of Appeals and review was denied by the United States Supreme
Court.
In April 1998, a joint jury trial on damages was held in the
three cases in Kansas City, Kansas. In its verdict, the jury
awarded the three plaintiff classes total damages of $22.3
million, which was automatically trebled under the antitrust laws
to $67 million. The NCAA has appealed that judgment. The
settlement, which was reached in mediation, must be approved by
the District Court.
Plaintiffs' attorneys are pleased with the proposed settlement
and believe that it represents a fair result under all of the
circumstances. If the settlement is approved by the District
Court, coaches who are members of the plaintiff classes will be
permitted to submit claims for compensation. The settlement
funds and claims will be administered by a third party to be
appointed by the Court.
Milberg Weiss represented one of the three classes, the Hall
class, which consisted of restricted earnings coaches in all
Division I sports except men's basketball and baseball. The men's
basketball and baseball classes were represented by Dennis Cross
and Lori S. Schultz from Morrison & Hecker in Kansas City and
Robert Wilson of Cotkin & Collins in Los Angeles.
RANDALL'S FOOD: Court Rules MSP Not Top-Hat Plan; Trial to Follow
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On February 22, 1999, Randall's Food Markets, Inc., received an
order of the U.S. District Court for the Northern District of
Texas issued in connection with a previously disclosed class
action lawsuit brought against the Company by former participants
in the Management Security Plan for employees of Cullum
Companies, Inc. Cullum was acquired by the Company in 1992. The
MSP was terminated following the acquisition of Cullum.
The District Court ruled that the Company had not demonstrated by
a preponderance of the evidence that the MSP was a "top-hat" plan
during the period the plan was being maintained by Cullum. A
top-hat plan is a plan which is unfunded and maintained by an
employer primarily for the purpose of providing deferred
compensation for a select group of management or highly
compensated employees. If the MSP had been considered a top-hat
plan by the District Court, the MSP would not have been subject
to the vesting, benefit accrual and fiduciary requirements of
ERISA. The Court's preliminary ruling did not address what, if
any, monetary damages or other relief may be available to the
plaintiffs. The date for the trial on damages has not been
established.
In the Memorandum Opinion and Order, Judge John McBryde concluded
that Cullum and the Company at all times intended the MSP to be a
top-hat plan and operated on the good-faith belief that it so
qualified. Judge McBryde went on to say that at no time did
Cullum or the Company or any of their officials act with an
improper motive or with any design to cause its employees to
receive less than the benefits to which they were entitled under
law.
SEARS, ROEBUCK: Settles Credit Card Interest Rate Hike Litigation
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Sears, Roebuck and Co. has agreed to pay a combination of money
and coupons worth $157.5 million to 11 million of its credit card
holders to settle a class- action lawsuit, the company announced
Tuesday. Sears will pay $72 million in cash and coupons to 3
million customers, or about $23.80 each. It also will send
coupons worth $7.50 to all 11 million plaintiffs and will pay $3
million for consumer counseling and education. The settlement
still must be approved in U.S. District Court. The disagreement
began when balances on credit cards were transferred to one of
its subsidiaries, the Sears National Bank, which increased the
credit card's annual percentage rate.
SWISHER INTERNATIONAL: Company Sues Auditors McGladrey & Pullen
---------------------------------------------------------------
On September 18, 1998, Brian Cox, individually and on behalf of
all others similarly situated, filed a class action law suit
(Case No. 3:98 CV403-MU) in the U.S. District Court for the
Western District of North Carolina, Charlotte Division, against
SWISHER INTERNATIONAL, INC., and certain current or former
officers and directors of the Company including Patrick L.
Swisher, W. Tom Reeder III, D. Chris Lazenby, Garnet R. Mucha and
Charles H. Cendrowski. The Lawsuit was amended by the Plaintiffs
on February 19, 1999 to, among other things, add the Company's
former independent auditors, McGladrey & Pullen LLP, as a
defendant. The Lawsuit, as amended, alleges violations of
Section 10(b) of the Securities Exchange Act of 1934, as amended,
against the Company and the Individual Defendants and violations
of Section 20(a) of the Exchange Act against the Individual
Defendants. The Plaintiffs are seeking damages for the alleged
violations, attorneys fees in connection with their prosecution
of the Lawsuit and such other relief as a court may deem just and
proper.
The facts alleged by the Plaintiffs are substantially similar to
the matters that are asserted by the Company's former auditors in
their February 20, 1998 withdrawal letter, filed by the Company
on or about February 27, 1998 as an exhibit to a Current Report
on Form 8-K.
The Company has obtained an extension of time to respond to the
Plaintiffs. The Company intends to vigorously defend the
Lawsuit.
On February 17, 1999, the Company filed an action directly
against its former independent accountants, McGladrey & Pullen
LLP (Civil Action No. 3:99CV56-MU), alleging, among other things,
McGladrey & Pullen's negligence in the conduct of their audits of
the Company's financial statements and in the manner in which
they withdrew from their relationship with the Company.
McGladrey & Pullen has not yet filed a response to this action.
TIG HOLDINGS: Denies & Will Defend Shareholder Complaints
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On February 12, 1998, a purported class action complaint, naming
TIG HOLDINGS, INC., and two of its executive officers as
defendants, was filed in the United States District Court for
the Southern District of New York on behalf of persons who
purchased TIG common stock during the period from October 21,
1997 to January 30, 1998, when TIG announced its fourth quarter
1997 results. The complaint alleges that TIG violated the
federal securities laws by misrepresenting the adequacy of its
underwriting and monitoring standards and its loss reserves,
and that three of its officers and directors sold shares at
prices that were artificially inflated as a result of the
alleged misrepresentations. Plaintiffs seek unspecified
monetary damages, including punitive damages. Management
believes that the lawsuit is without merit, and the
Company's position will be vigorously defended.
On December 9, 1998, a purported shareholder class action was
commenced in the Delaware Court of Chancery against the Company,
its directors and Fairfax. The complaint alleges, inter alia,
that the consideration to be paid pursuant to the Merger
Agreement is unfair and inadequate and that the terms of the
Merger Agreement were arrived at without a full and thorough
investigation by the directors. The complaint seeks injunctive
relief, including a judgment enjoining the transaction, and the
award of unspecified compensatory damages. The Company believes
that the action is without merit and intends to defend the
action vigorously.
USX CORP.: Posted Pricing Fairness Hearing Scheduled for April 5
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USX Corp., in its latest annual report, advises that the Marathon
Group, alone or with other energy companies, has been named in
a number of lawsuits in State and Federal courts alleging various
causes of action related to crude oil royalty payments based on
posted prices, including underpayment of royalty interests,
underpayment of severance taxes, antitrust violations, and
violation of the Texas common purchaser statute. Plaintiffs in
these actions include governmental entities and private entities
or individuals, and some seek class action status. All of these
cases are in various stages of preliminary activities. No class
certification has been determined as to Marathon in any case to
date.
USX Corp. further advises that, during November 1997, Marathon
and over twenty other defendants entered into a proposed class
settlement agreement covering antitrust and contract claims from
January 1, 1986, through September 30, 1997, excluding federal
and Indian royalty claims, common purchaser claims and severance
tax claims. A new settlement agreement was filed with the U.S.
District Court in Texas on June 26, 1998, which replaces the
November 1997 Settlement Agreement. The new settlement agreement
omits from the settlement class all State entities which receive
royalty payments and only covers private claimants. At a hearing
on December 1, 1998, the Court preliminarily approved the new
settlement agreement for the group of defendants of which
Marathon is a part. The new settlement agreement settles all
private claims, subject to opt-outs and a fairness hearing
scheduled on April 5, 1999, for a period from January 1, 1986 to
September 30, 1998.
VARIAN ASSOCIATES: June Hearing on Class Certification Expected
---------------------------------------------------------------
Varian Associates, Inc., is a party to three related federal
antitrust claims involving claims by independent service
organizations ("ISOs") that Varian's policies and business
practices relating to replacement parts violate the antitrust
laws. The ISOs purchase replacement parts from Varian and
compete with it for the servicing of linear accelerators made by
Varian. In response to several threats of litigation regarding
the legality of Varian's parts policy, Varian filed a declaratory
judgment action in a U.S. District Court in 1996 seeking a
determination that its new policies are legal and enforceable and
damages against two of the ISOs for misappropriation of Varian's
trade secrets, unfair competition, copyright infringement and
related claims. Subsequently, four of the defendants filed
separate claims in other jurisdictions raising issues allegedly
related to those in the declaratory relief action and seeking
injunctive relief against Varian and damages against Varian in
the amount of $10 million for each plaintiff. The defendants'
motion for a preliminary injunction in U.S. District Court in
Texas with respect to Varian's policies was defeated. The
ISOs defendants amended the complaint to include class action
allegations and allege a variety of other anti- competitive
business practices and filed a motion for class certification,
which is scheduled to be heard by the U.S. District Court in
Texas in June 1999.
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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
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herein is obtained from sources believed to be reliable, but is
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are $25 each. For subscription information, contact Christopher
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