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/raid1/www/Hosts/bankrupt/CAR_Public/990322.MBX C L A S S A C T I O N R E P O R T E R Monday, March 22, 1999, Vol. 1, No. 32 Headlines ADVANCED MICRO: Stull Stull Files Complaint in California ADVANCED MICRO: Spector & Roseman File Complaint in California ALCOA, INC.: Intends to Appeal Texas Asbestos Jury Verdicts ALUMAX, INC.: Delaware Shareholder Suit in Post-Merger Limbo AMERICA WEST: Schatz & Nobel Files Complaint in Arizona AMERICAN FAMILY: Settles Deceptive Insurance Sales Practice Suits ASBESTOS LITIGATION: Ohio Sup.Ct. Opines About Witness Coaching AVIATION DISTRIBUTORS: Class Action Settlement Receives Approval BMC SOFTWARE: Schiffrin & Barroway File Complaint in Texas CENDANT CORP.: Settles Litigation Suit with PRIDE Securityholders CENTRAL & SOUTH: April 5 Deadline for Cities to Participate CHS ELECTRONICS: Schatz & Nobel Files Complaint in Florida CHS ELECTRONICS: Reviewing Shareholder Complaints with Skepticism EEX CORP.: Files Motion to Dismiss Consolidated Securities Suit ENTERGY CORP.: Jefferson County & Calcasieu Parish Settlements FLEMING COMPANIES: Investors' Suits Dismissed Without Prejudice FLEMING COMPANIES: D&O Insurers Appeal Anti-Allocation Ruling FLEMING COMPANIES: May Assume Control of Derivative Litigation FLEMING COMPANIES: Discloses Filing of Customer Overcharge Suits HALLWOOD ENERGY: April 30 Fairness Hearing in Colorado HOLOCAUST VICTIMS: More Austrian Firms Charged with Wrongdoing LASER TECHNOLOGY: Berman DeValerio File Complaint in Colorado LYCOS, INC.: Weinstein Kitchenoff Files Suit in Massachusetts LYCOS, INC.: Johnson Firm Files Complaint in Massachusetts MEDICAL MANAGEMENT: Upgrade Patch & Cash Pool Settles Y2K Lawsuit METAL RECOVERY: Signs Settlement Agreement in Malvy Litigation MICHIGAN CONSOLIDATED: Pursues Claims Against Furnace Suppliers MONY GROUP: Prevails in Life Insurance Sales Practices Appeal OCCIDENTAL PETROLEUM: Discloses Suit by MidCon ESOP Beneficiaries ORBITAL SCIENCES: Lowey Dannenberg Files Complaint in Virginia ORBITAL SCIENCES: Miller Faucher Files Complaint in Virginia PEDIATRIC SERVICES: Responds to Shareholder Class Action Suits PEDIATRIX MEDICAL: Bernstein Litowitz Files Complaint in Florida RITE-AID CORP.: Abbey Gardy Files Complaint in Pennsylvania RITE-AID CORP.: Gross Firm Files Complaint in Pennsylvania SAFESKIN CORPORATION: Spector & Roseman File Suit in California SAFESKIN CORPORATION: Pomerantz Haudek Files Suit in California SAFESKIN CORPROATION: Abbey Gardy Files Complaint in California SAFESKIN CORPORATION: Stull Stull Files Complaint in California SAFESKIN CORPORATION: Lowey Dannenberg Files Suit in California SAFESKIN CORPORATION: Responds to Shareholders' Complaints SBC COMMUNICATIONS: Inside Telephone Wiring Cases Settled SHELL OIL: Still Fighting with Polybutylene Co-Defendants TOBACCO LITIGATION: Jury Rejects Ohio Unions' Claims TOBACCO LITIGATION: Washington Union Trial Presses Forward TOBACCO LITIGATION: Louisiana AG Dismisses Claims Against Fleming TORCHMARK CORP.: Status Report Concerning Policyholder Litigation TORCHMARK CORP.: Trial Date Requested in Royalty Litigation TORCHMARK CORP.: Ready to Begin Appeal of Discrimination Verdict TWINLAB CORP.: Stull Stull Files Complaint in New York UNITED FOODS: Shareholder Complaint Filed to Halt Tender Offer USA TALKS.COM: Wechsler Harwood Files Complaint in California ********* ADVANCED MICRO: Stull Stull Files Complaint in California --------------------------------------------------------- A class action lawsuit was filed in the U.S. District Court for the Northern District of California by Stull, Stull & Brody on behalf of purchasers of Advanced Micro Devices, Inc. (NYSE: AMD) common stock between November 9, 1998 and March 8, 1999. AMD supplies integrated circuits for the global personal and networked computer and communications markets. AMD has three fabrication facilities in Austin, Texas, including the state-of- the-art FAB 25 facility which manufactures and produces the AMD- K6 processors on 0.25-micron, five-layer metal process technology. The defendants include AMD 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 AMD's financial condition as well as its present and future business prospects. ADVANCED MICRO: Spector & Roseman File Complaint in California -------------------------------------------------------------- Spector & Roseman, P.C. announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of persons who purchased the publicly traded securities of Advanced Micro Devices, Inc. (NYSE: AMD) between October 6, 1998 and March 8, 1999. The complaint alleges that AMD and its Chairman and CEO, William Sanders, III, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint charges that during the Class Period, defendants issued a series of materially false and misleading public statements about AMD's operations and earnings, including the purported success of its flagship K6 microprocessor. Because of the issuance of these false and misleading statements, the price of AMD's publically traded securities were artificially inflated during the class period. The complaint alleges that in January 1999, AMD disclosed for the first time that its newest K6 chip was experiencing production and design problems, which had resulted in significant yield and production problems during late 1998. In response to this announcement, defendant Sanders assured investors that AMD's problems were "behind us now" and that AMD was on track to post strong performance in the first quarter of 1999. On March 8, 1999, AMD shocked the market by announcing that the production problems which defendants assured investors had been resolved had in fact adversely affected K6 production throughout January and February of 1999, and that AMD would suffer a "significant loss" for the first quarter of 1999. This revelation caused the price of AMD shares to plummet to approximately $17 per share, almost 50% below its Class Period high. ALCOA, INC.: Intends to Appeal Texas Asbestos Jury Verdicts ----------------------------------------------------------- Alcoa, Inc., along with various asbestos manufacturers, distributors and other businesses, is a defendant in numerous individual lawsuits filed in the State of Texas on behalf of persons claiming injury as a result of occupational exposure to asbestos at various Alcoa facilities. In two of these cases, jury verdicts were returned against the Company, Alcoa advises investors in its latest annual report. These vervicts will be appealed, Alcoa says. ALUMAX, INC.: Delaware Shareholder Suit in Post-Merger Limbo ------------------------------------------------------------ Following the March 9, 1998 announcement of the proposed acquisition of Alumax, Inc., by Alcoa, Inc., and AMX Acquisition Corporation, five putative class actions on behalf of stockholders of Alumax were filed in the Delaware Court of Chancery against Alumax and certain of Alumax's directors. Four of these actions also named Alcoa as a defendant. The plaintiffs in those actions alleged, among other things, that the director defendants agreed to a buyout of Alumax at an inadequate price, that they failed to provide Alumax's stockholders with all necessary information about the value of Alumax, that they failed to make an informed decision as no market check of Alumax's value was obtained and the acquisition is structured to ensure that stockholders will tender their shares and is coercive. In addition, the plaintiffs alleged that the Schedules 14D-1 and 14D-9 filed by Alcoa, AMX Acquisition Corporation and Alumax, respectively, failed to disclose certain information necessary for Alumax's stockholders to make an informed decision regarding the offer and the other transactions contemplated by the merger agreement. Plaintiffs seek to enjoin the acquisition or to rescind it in the event that it is consummated and to cause Alumax to implement a "full and fair" auction for Alumax. Plaintiffs also seek compensatory damages in an unspecified amount, costs and disbursements, including attorneys' fees, and such other relief as the Delaware Court of Chancery may deem appropriate. In July 1998, Alcoa acquired all of the outstanding shares of Alumax for approximately $3.8 billion, consisting of cash of approximately $1.5 billion, stock of approximately $1.3 billion and assumed debt of approximately $1 billion. Alumax operated over 70 plants and other manufacturing facilities in 22 states, Canada, Western Europe and Mexico. The matter is still pending, but there have been no developments since the close of the tender offer and merger in mid-1998. AMERICA WEST: Schatz & Nobel Files Complaint in Arizona ------------------------------------------------------- A class action complaint was filed by Schatz & Nobel, P.C. in the United States District Court for the District of Arizona on behalf of all purchasers of common stock of America West Holdings Corp. (NYSE: AWA) from November 19, 1997 to September 3, 1998, inclusive. The Complaint charges that, during the Class Period, America West 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, knowingly or recklessly making misrepresentations about America West's business, financial condition, earnings, and the prospects for future earnings growth. The Complaint alleges that the Company issued false statements about its competitive advantages due to its exceptionally low operating costs, industry-leading aircraft utilization rates, cost-savings outsourced aircraft maintenance procedures, improving financial results, record earnings per share and prospects for continued EPS growth. As a result, the Defendants artificially inflated the price of the Company's common stock during the Class Period to an all-time high of $31-5/16 on April 21, 1998. This enabled America West's insiders to sell 2.4 million shares of their publicly traded America West stock, 97% of the publicly traded stock they owned, in just 90 days, for $67.8 million in proceeds. However, on September 3, 1998, when America West revealed that its expenses would dramatically increase and earnings decrease due to major operational disruptions resulting from the serious maintenance problems it had concealed, America West's stock declined by 31%. AMERICAN FAMILY: Settles Deceptive Insurance Sales Practice Suits ----------------------------------------------------------------- The Wisconsin State Journal reports that American Family Life Insurance Co. agreed Tuesday to pay $77 million to settle two class-action lawsuits accusing the insurer of deceptive sales practices. The settlement could affect owners and previous owners of 534,000 traditional and universal life insurance policies sold between 1982 and 1996 by American Family Life. In the settlement, the Journal says, American Family Life and its parent company, American Family Mutual Insurance Co., denied any wrongdoing. The company said it agreed to the settlement to avoid costly litigation. The lawsuits stemmed from the sale of so-called "disappearing premium" or "vanishing premium" life insurance policies, the Journal relates. The policies were sold to consumers using the concept that dividends accumulating under the policy eventually could be used to pay the policy's premiums. The policies were sold when interest rates ranged well into the double digits. The prime rate, the rate banks offer to their best customers, soared to more than 20 percent, for instance. Savers could get certificates of deposit paying up to 16.5 percent. But as interest rates declined in the 1990s, policy dividends did not accumulate as rapidly as policyholders expected. Some policyholders claimed sales illustrations misled them. "The issue in these lawsuits is whether policyholders clearly understood that when their dividends went down, additional out- of- pocket premium payments would be required," James F. Eldridge, American Family executive vice president, said in a statement. American Family said it believes the policy illustrations clearly disclosed that changing economic conditions could affect future premium payments. The lawsuit was brought in Waukesha County Circuit Court. The court must still approve the settlement. ASBESTOS LITIGATION: Ohio Sup.Ct. Opines About Witness Coaching --------------------------------------------------------------- The Ohio Supreme Court voted Wednesday to allow civil trial jury instructions to include statements of proven witness coaching by plaintiffs' lawyers. The ruling stems from a Butler County, Ohio, class-action asbestos case with more than 800 plaintiffs, in which defendants' lawyers alleged witnesses were case defendants are manufacturers, suppliers, installers and distributors of asbestos products. AVIATION DISTRIBUTORS: Class Action Settlement Receives Approval ---------------------------------------------------------------- Aviation Distributors Inc. (OTC BB:ADIN), a defendant in three class action lawsuits filed in October 1997, Thursday announced that the Federal Court granted final approval of the Stipulation of Settlement and the settlement agreement. The complaints were filed seeking damages for alleged violations of the Federal Securities laws. All claims were dismissed against the defendants. Terms of the settlement include a total cash consideration of $740,000 plus a total of 210,000 shares of ADI common stock. ADI is issuing 80,000 shares and the founder and former CEO of ADI is contributing 130,000 shares. Saleem Naber, president and chief executive officer, stated: "We are pleased to have reached a reasonable and satisfactory settlement. The final approval eliminates a significant amount of legal costs and management time related to the class action lawsuits that have been devoted to achieving the settlement. The company will now be able to concentrate more of its management and financial resources on business development, sales and increasing ADI's value." ADI is one of the world's 10 largest aircraft part redistributors and inventory management service providers to major commercial airlines worldwide, with agents in the United States, the United Kingdom, Europe, Australia, India, the Orient, the Middle East, Indonesia and South America. BMC SOFTWARE: Schiffrin & Barroway File Complaint in Texas ---------------------------------------------------------- Schiffrin & Barroway, LLP, filed a class action lawsuit was filed in the United States District Court for the Southern District of Texas on behalf of all purchasers of the common stock of BMC Software, Inc. (Nasdaq:BMCS) from April 16, 1998 through February 25, 1999, inclusive. The complaint charges BMC Software and certain of its officers and directors with issuing false and misleading financial statements that failed to use proper accounting methods. CENDANT CORP.: Settles Litigation Suit with PRIDE Securityholders ----------------------------------------------------------------- Cendant Corp. a leading franchiser of hotels, real estate and car rentals, said it settled a class-action shareholders' suit with investors who held a complex security know as PRIDES, according to a report circulated by Reuters. PRIDES, or preferred redeemable increased dividend equity securities, Reuters explains, is Merrill Lynch's term for preferred shares that are mandated for conversion into common stock at maturity. With PRIDES, investors accept limited capital gains in exchange for a higher dividend. Cendant and the lead counsel for the PRIDES' holders had announced a preliminary agreement in January. The class-action suit was among more than 50 lawsuits filed after accounting irregularities surfaced at the company April 15. The suits were condensed into two, one involving a limited number of PRIDES' holders and and the other encompassing the rest. Reuters reports that Cendant said the finalized non-cash settlement is not expected to impact 1999 earnings per share unless its common stock price makes a significant jump. Under the deal, Cendant said it will not change its previously reported after-tax charge of about $228 million recorded in the fourth quarter of 1998. The deal calls for Cendant to distribute roughly 19 million more common shares when the mandatory purchase associated with the PRIDES occurs in February 2001. This represents about 2 percent more shares than are currently outstanding. Cendant has also agreed to file a shelf registration statement for an additional 15 million PRIDES, which could be issued by it at any time for cash. CENTRAL & SOUTH: April 5 Deadline for Cities to Participate ----------------------------------------------------------- In May 1996, the City of San Juan, Texas filed a purported class action in Hidalgo County, Texas District Court on behalf of all cities served by CPL (owned by CENTRAL & SOUTH WEST CORP.) based upon CPL's alleged underpayment of municipal franchise fees. The plaintiffs' petition asserts various contract and tort claims against CPL as well as certain audit rights. The suit seeks unspecified damages and attorneys' fees. CPL filed a counterclaim for any overpayment of franchise fees it may have made as well as its attorneys' fees. CPL also filed a motion to transfer venue to Nueces County, Texas, and a plea to the jurisdiction and pleas in abatement asserting that the Texas Commission has primary jurisdiction over the claims. In May 1996 and December 1996, respectively, the Cities of Pharr, Texas and San Benito, Texas filed individual suits making claims virtually identical to those claimed by the City of San Juan. In January, 1997, CPL filed an original petition at the Texas Commission requesting the Texas Commission to declare its jurisdiction over CPL's collection and payment of municipal franchise fees. In April 1997, the Texas Commission issued a declaratory order in which it declined to assert jurisdiction over the claims of the City of San Juan. CPL appealed the Texas Commission's decision to the Travis County, Texas District Court, which affirmed the Texas Commission ruling on February 19, 1999. After the Texas Commission's order, the Hidalgo County District Court overruled CPL's plea to the jurisdiction and plea in abatement. In July 1997, the Hidalgo County District Court entered an order certifying the case as a class action. CPL appealed this order to the Corpus Christi Court of Appeals. In February 1998, the Corpus Christi Court of Appeals affirmed the trial court's order certifying the class. CPL appealed the Corpus Christi Court of Appeals ruling to the Texas Supreme Court, which declined to hear the case. In August 1998, the Hidalgo County District Court ordered the case to mediation and suspended all proceedings pending the completion of the mediation. The mediation was completed in December, 1998, but the case was not resolved. On January 5, 1999, a class notice was mailed to each of the CPL cities; the cities have until April 5, 1999, to decide whether or not to participate in the lawsuit as a class member. CHS ELECTRONICS: Schatz & Nobel Files Complaint in Florida ---------------------------------------------------------- A class action complaint was filed by Schatz & Nobel, P.C. in the United States District Court for the Southern District Of Florida on behalf of all purchasers of common stock of CHS Electronics Inc. (NYSE:HS) from February 27, 1997 to March 10, 1999, inclusive. The Complaint charges that, during the Class Period, CHS and certain of its officers and directors (collectively, the "Defendants") violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by, among other things, knowingly or recklessly making misrepresentations about the Company's financial condition, business and earnings. The Complaint alleges that (i) Defendants' financial statements were based, in large measure, upon forged documents and false customer orders; (ii) throughout the Class Period, Defendants had inaccurately described the amount of its vendor rebates; (iii) throughout the Class Period, Defendants had improperly kept certain assets (primarily accounts receivable) off its balance sheet; (iv) throughout the Class Period, as a result of the foregoing, CHS's assets and earnings were materially overstated; and (v) as a result of the foregoing, CHS was performing far worse than publicly represented and its operating performance measures (particularly its accounts receivable/turnover ratio) were materially overstated. The Complaint further alleges that by making these material misrepresentations, the Defendants artificially inflated the price of the Company's common stock during the Class Period. However, when this information was disclosed on February 24, 1999, the price of CHS collapsed, and currently trades far below its Class Period highs. CHS ELECTRONICS: Reviewing Shareholder Complaints with Skepticism ----------------------------------------------------------------- CHS Electronics, Inc. (NYSE: HS), a leading international distributor of microcomputer products, today announced that a class action complaint has been filed alleging that the Company and two of its officers violated federal securities laws in connection with financial reporting and disclosure during the period February 27, 1997 through March 10, 1999. The suit purports to be on behalf of those who purchased CHS Electronics common stock during that time frame. Claudio Osorio, Chairman and Chief Executive Officer, commented, "The Company, in coordination with its legal counsel, is in the process of carefully reviewing the allegations of the complaint. However, we believe that the claims are without merit and we intend to vigorously defend the suit." Miami-based CHS Electronics, ranked number 320 on the latest Fortune 500 list of the largest U.S.-based industrial corporations is a leading international distributor of microcomputers, peripherals, and software to approximately 150,000 resellers in 46 countries in Europe, Latin America, Asia, the Middle East and Africa. Unlike other computer wholesalers, CHS Electronics distributes a limited product line for a limited number of leading computer manufacturers and does so only outside the United States. The Company believes that its "focused distribution" enables it to respond more quickly to customers, provide better service, and reduce inventory and working capital requirements. CHS believes it is the largest microcomputer distributor in Europe and Latin America. Information regarding CHS Electronics can be found at http://www.chse.comon the Company's website. EEX CORP.: Files Motion to Dismiss Consolidated Securities Suit --------------------------------------------------------------- On August 3, 1998, EEX Corp., several of its current and/or former officers and directors, Texas Utilities Company and TUC's Chief Executive Officer were named in a class action lawsuit filed in the Northern District of Texas that was designated as Gracy Fund L.P. v. EEX Corporation, et al. The Gracy Fund complaint alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 against various defendants. Additionally, on August 3, 1998, EEX, several of its current and/or former officers and directors, and two additional companies (ENSERCH Corporation and DeGolyer & MacNaughton) were named in a class action lawsuit filed in the Southern District of Texas that was designated as Stan C. Thorne v. EEX Corp., et al. The Thorne complaint alleged violations of the 34 Act and common law-based negligent misrepresentations and fraud claims. On October 5, 1998, the Thorne defendants filed a motion to transfer the Thorne action to the Northern District of Texas. On November 20, 1998, the Thorne action was transferred to the Northern District of Texas and consolidated with the Gracy Fund action. On January 22, 1999, plaintiffs filed an amended class action complaint in the consolidated Gracy Fund action against EEX, several of its current and/or former officers and directors and another company, ENSERCH Corporation. The Consolidated Complaint alleges violations of Sections 11, 12(a)(2) and 15 of the 33 Act and violations of Sections 10(b), 14(a) and 20(a) of the 34 Act against various defendants. The Consolidated Complaint alleges the Sections 10(b), 15 and 20(a) claims on behalf of a class of plaintiffs who acquired EEX's stock pursuant to an October 1996 Registration Statement and Proxy/Prospectus. Plaintiffs allege that during the class period, defendants made materially false and misleading statements, and failed to disclose material facts, regarding the value and volume of EEX's proved reserves from its East Texas operations. According to plaintiffs, these purported misrepresentations artificially inflated the price of EEX's common stock throughout the class period, induced the EEX Subclass to approve the merger that spun EEX off from ENSERCH and induced the EEX Subclass to acquire stock pursuant to the Registration Statement and Proxy/Prospectus issued regarding this merger. EEX says it intends to contest this action vigorously, and filed a motion to dismiss the Consolidated Complaint on March 8, 1999. All discovery is stayed pending the determination of the motion to dismiss. ENTERGY CORP.: Jefferson County & Calcasieu Parish Settlements -------------------------------------------------------------- Several lawsuits have been filed on behalf of plaintiffs in state and federal courts in Jefferson and Orange Counties, Texas. These suits seek relief from Entergy Gulf States as well as numerous other defendants for damages caused to the plaintiffs or others by the alleged exposure to hazardous waste and asbestos on the defendants' premises. The plaintiffs in some of these suits are also suing Entergy Gulf States and all other defendants on a conspiracy claim. There are also asbestos-related lawsuits filed in the District Court of Calcasieu Parish in Lake Charles, Louisiana, naming numerous defendants including Entergy Gulf States. The suits allege that each plaintiff contracted an asbestos-related disease from exposure to asbestos insulation products on the premises of the defendants. Plaintiffs have filed lawsuits in Louisiana in state courts in East Baton Rouge, Iberville, and Ascension Parishes. These suits seek relief from Entergy Gulf States and numerous other defendants for damages caused to the plaintiffs or others by alleged exposure to hazardous waste and asbestos on the defendants' premises. It is not known how many of the plaintiffs in any of the foregoing cases actually worked on Entergy Gulf States' premises. Settlements with the Jefferson County plaintiffs and with the Calcasieu Parish plaintiffs are in the process of being consummated. Entergy Gulf States' share of the settlements of these cases is not material, in the aggregate, to its financial position or results of operations. FLEMING COMPANIES: Investors' Suits Dismissed Without Prejudice --------------------------------------------------------------- In 1996, Fleming Companies, Inc., and certain of its present and former officers and directors (Robert E. Stauth, R. Randolph Devening, Harry L. Winn, Kevin J. Twomey and Donald N. Eyler) were named as defendants in nine purported class action suits filed by certain stockholders (Kenneth Steiner, Lawrence B. Hollin, Ronald T. Goldstein, General Telcom Money Purchase Plan & Trust, Bright Trading, Inc., City of Philadelphia, Gerald Pindus, Charles Hinton and Lawrence M. Wells, among others) and one purported class action suit filed by a noteholder (Robert Mark), each in the U.S. District Court for the Western District of Oklahoma (Mr. Devening was not named in the noteholder case). In 1997, the court consolidated the stockholder cases as City of Philadelphia, et al. v. Fleming Companies, Inc., et al. (the noteholder case was also consolidated, but only for pre-trial purposes). During 1998 the noteholder case was dismissed and during 1999 the consolidated case was also dismissed, each without prejudice. The court has given the plaintiffs the opportunity to restate their claims. The complaint filed in the consolidated cases asserts liability for the company's alleged failure to properly account for and disclose the contingent liability created by the David's litigation and by the company's alleged "deceptive business practices." The plaintiffs claim that these alleged practices led to the David's litigation and to other material contingent liabilities, caused the company to change its manner of doing business at great cost and loss of profit, and materially inflated the trading price of the company's common stock. The company denies each of these allegations. FLEMING COMPANIES: D&O Insurers Appeal Anti-Allocation Ruling ------------------------------------------------------------- In 1997, Fleming Companies, Inc., won a declaratory judgment in the U.S. District Court for the Western District of Oklahoma against certain of its insurance carriers regarding policies issued to Fleming for the benefit of its officers and directors ("D&O policies"). On motion for summary judgment, the court ruled that the company's exposure, if any, under the class action suits is covered by D&O policies written by the insurance carriers (aggregating $60 million in coverage) and that the "larger settlement rule" will be applicable to the case. According to the trial court, under the larger settlement rule a D&O insurer is liable for the entire amount of coverage available under a policy even if there is some overlap in the liability created by the insured individuals and the uninsured corporation. If a corporation's liability is increased by uninsured parties beyond that of the insured individuals, then that portion of the liability is the sole obligation of the corporation. The court also held that allocation is not available to the insurance carriers as an affirmative defense. The insurance carriers have appealed. FLEMING COMPANIES: May Assume Control of Derivative Litigation -------------------------------------------------------------- In October 1996, certain present and former officers and directors (Robert E. Stauth, Harry L. Winn, Jr., Kevin J. Twomey, Archie R. Dykes, Carol B. Hallett, Edward C. Joullian III, John A. McMillan, Guy A. Osborn, Howard H. Leach, R.D. Harrison (subsequently dismissed), Lawrence M. Jones, R. Randolph Devening, Donald N. Eyler, E. Dean Werries and James E. Stuard) of Fleming Companies, Inc., were named as defendants in a purported shareholder's derivative suit in the U.S. District Court for the Western District of Oklahoma (Cauley, et al. v. Stauth, et al.). Plaintiffs' complaint contains allegations that the defendant breached their respective fiduciary duties to the company and were variably responsible for causing the company to (i) become "involved with" Premium Sales Corporation and its illegal course of business resulting in a $20 million settlement paid by Fleming; (ii) "systematically misrepresent and overstate" the cost of company products, resulting in litigation by David's Supermarkets (which was settled by the company for $20 million), and others, and ultimately leading to the class action suits discussed above; and (iii) fail to meet its disclosure obligations under the law resulting in the class action lawsuits and increased borrowing costs, loss of customers and loss of market value. In another purported shareholder derivative action filed in October 1996 in the U.S. District Court for the Western District of Oklahoma (Rosenberg v. Stauth, et al.), the plaintiff sued the same and additional present and former officers and directors (E. Stephen Davis, Thomas L. Zaricki, Gerald G. Austin and Glenn E. Mealman). In this case, the plaintiff alleged the defendants caused the company to: (i) violate certain sale agreements with David's Supermarkets resulting in the David's litigation, (ii) fail to disclose to the investing public the risks associated with the David's litigation, (iii) violate certain sale agreements with Megafoods (a former customer) in a manner similar to that alleged by David's Supermarkets, and (iv) defraud persons who invested in the Premium-related entities resulting in litigation. Plaintiffs sought damages from the defendants on behalf of Fleming in excess of $50,000, forfeiture by the defendants of their salaries and other compensation for the period in which they allegedly breached their fiduciary duties, retention of all monies held by the company as deferred compensation or otherwise on behalf of the defendants as a constructive trust for the benefit of the company, and attorney's fees and costs. On September 30, 1997, both derivative suits were dismissed, without prejudice, for failure to make demand on the company's Board of Directors prior to instigating the litigation. With the leave of the court, plaintiffs filed an amended complaint in October 1998. On November 4, 1998, a special committee of Fleming's Board of Directors filed a motion to intervene in the case and requested ninety days within which to elect to assume control of the case. The motion is currently pending. FLEMING COMPANIES: Discloses Filing of Customer Overcharge Suits ---------------------------------------------------------------- In its latest annual report, Fleming Companies, Inc., discloses that, in 1998, the company and one of its associates were named in a suit filed in the United States District for the District of Utah by three current and former customers of the company (Storehouse Markets, Inc., et al. v. Fleming Companies, Inc., et al.). The plaintiffs' allege product overcharges, fraudulent misrepresentation, fraudulent nondisclosure and concealment, breach of contract, breach of duty of good faith and fair dealing and RICO violations and seek declaration of class action status and recovery of actual, punitive and treble damages. Damages, Fleming says, have not been quantified. HALLWOOD ENERGY: April 30 Fairness Hearing in Colorado ------------------------------------------------------ The Law Office of J. James Carriero, Esq., advised persons who were owners of record of Hallwood Energy Corporation ("HEC") stock (who were paid by the Hallwood Group, Inc. in connection with the tender offer dated October 15, 1996 of the Hallwood Group, Inc. and ensuing merger of HEC into the Hallwood Group, Inc. or who filed for appraisal) that, pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the District of Colorado, dated March 2, 1999, the Court has certified a class for purposes of a proposed settlement of the above-captioned action. Mr. Carriero further advised that a hearing will be held on April 30, 1999 at 9:30 a.m. before the Honorable Walker D. Miller at the United States Courthouse, District of Colorado, 1929 Stout Street, Denver, Colorado 80294. The purpose of this hearing is to determine whether the proposed settlement of the Consolidated Class Action against defendants, Hallwood Energy Corporation, the Hallwood Group Incorporated, Anthony J. Gumbiner, William L. Guzzetti, Brian . Troup, Hans-Peter Holinger, Rex A. Sebastian and Nathan C. Collins (collectively, the "Defendants"), should be approved by the Court as fair, reasonable and adequate, whether the application by counsel for Plaintiffs in the Consolidated Class Action for an award of attorneys' fees and reimbursement of expenses should be approved, and whether the Consolidated Class Action should be dismissed with prejudice. HOLOCAUST VICTIMS: More Austrian Firms Charged with Wrongdoing -------------------------------------------------------------- >From Vienna, Austria, Reuters reports that U.S. Holocaust lawyer Edward Fagan has listed three Austrian banks and one company he planned to take to court for their alleged roles in World War Two, citing Austrian news agency APA as its source. APA reportedly quoted Fagan as saying at the end of a visit to Vienna that he would file unspecified class action suits against three savings banks -- Erste Bank, Raiffeisen Zentralbank Oesterreich and state-owned P.S.K. -- as soon as he returned to New York. He would also take legal action against Lenzing on grounds the viscose manufacturer allegedly profited from slave labour during the war, when Austria was part of Nazi Germany. APA quoted Fagan as saying he wanted to hold settlement talks with the three savings banks along the lines of the negotiations that have taken place between Holocaust lawyers and Bank Austria, Austria's largest bank. "We want to bring in all these Austrian banks so that we can put an end to this," Fagan was quoted as saying. LASER TECHNOLOGY: Berman DeValerio File Complaint in Colorado ------------------------------------------------------------- Laser Technology Inc. (Amex: LSR) was charged with issuing false and misleading financial statements in a shareholder class action filed by Berman, DeValerio & Pease LLP in the United States District Court for the District of Colorado on March 17, 1999. The case, which alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, was filed on behalf of all persons and entities who purchased the common stock of Laser Technology from January 25, 1996 through and including December 23, 1998, and who suffered losses on their investments. According to the complaint, on December 23, 1998, trading in Laser Technology common stock was halted pending the release of news by the company. On that day, Laser Technology issued a press release announcing that the Company's independent auditors had withdrawn its opinions on the Company's financial statements for the fiscal years ended September 30, 1993, 1994, 1995, 1996, and 1997 and resigned because: (1) the Company did not have internal controls in place to ensure accurate financial reporting; and (2) the auditors could not rely on management's representations. The Company's press release further indicated that the auditors' resignation had taken place amid a previously undisclosed investigation by the Board of Directors of Laser Technology into the Company's accounting systems and procedures. Laser Technology also indicated that an interim Chief Financial Officer had been appointed pending the conclusion of the investigation and further, that the three outside directors who were members of the Company's Special Audit Committee had resigned from their positions as a result of disagreements with management. The press release also stated that the reporting of Laser Technology's year end results for fiscal year1998 would be delayed. LYCOS, INC.: Weinstein Kitchenoff Files Suit in Massachusetts ------------------------------------------------------------- Weinstein Kitchenoff Scarlato & Goldman Ltd. announces that a class action lawsuit has been commenced on behalf of Lycos, Inc. OPTIONS INVESTORS, between January 8, 1999, and February 9, 1999. The lawsuit has been commenced in the United States District Court for the District of Massachusetts. It charges Lycos and its President and Chief Executive Officer, Robert J. Davis, with violating the federal securities laws by misrepresenting and/or failing to disclose material information about the Company's ongoing negotiations with USA Networks, Inc. It alleges that at the same time that Lycos was in negotiations with USA Networks to be acquired, Mr. Davis repeatedly stated that Lycos intended to remain an independent company. When Lycos revealed that it would be acquired by USA Networks, its stock price plunged 31% in reaction to the acquisition, and investors who purchased call options, or who sold put options were damaged thereby. LYCOS, INC.: Johnson Firm Files Complaint in Massachusetts ---------------------------------------------------------- The Law Offices of Dennis J. Johnson has filed a Class Action Lawsuit in the United States District Court for Massachusetts on behalf of all purchasers of Lycos, Inc. (Nasdaq: LCOS) securities between January 8, 1999 and February 9, 1999, inclusive. The Complaint charges Lycos and its chief executive officer with violations of the federal securities laws. The complaint alleges that defendants issued a series false statements which represented that Lycos was committed to a strategy of remaining an independent entity when, in fact, Lycos was in advanced discussions with USA Networks, Inc. ("USA") to merge with Lycos which would result in shareholders of Lycos constituting no more than 30 percent of the equity holders in the newly-formed entity. When Lycos announced that it had agreed to a transaction with USA, the price of Lycos dropped 25% on extremely heavy trading volume. MEDICAL MANAGEMENT: Upgrade Patch & Cash Pool Settles Y2K Lawsuit ----------------------------------------------------------------- A settlement of the Year 2000 class action lawsuit filed against Medical Manager Corporation was formally approved by Magistrate Judge Joel Rosen of the United States District Court for the District of New Jersey at a settlement hearing held on March 15, 1999. The Magistrate Judge also certified a Settlement Class, which includes all persons or entities who purchased or obtained Versions 7 and 8 of The Medical Manager software, or private label versions of such software, and purchased an upgrade from such software to Version 9 on or before December 16, 1998. Plaintiffs are represented by the firms of Bernstein Litowitz Berger & Grossmann LLP and Sherman, Silverstein, Kohl, Rose & Podolsky. Under the terms of the Settlement, the Company will provide Version 8.l2, an upgraded version of its Version 8.11 software, containing a "Y2K patch." Medical Manager has represented, to the best of its knowledge, that Version 8.12 will operate in the same manner as Version 8.11, but will recognize and process dates after December 31, 1999 and generate a four-digit year field for purposes of paper and electronic billing to Medicare and other insurance carriers. Version 8.12 will be licensed, without a license fee, to Version 7 and 8 users who participate in the Settlement. In addition, the Settlement also provides that participating users of Versions 7 or 8, who purchased a Version 9 upgrade on or before December 16, 1998, will have the option to obtain one of four add-on modules from the Company -- worth at least $1,000 each -- without a license fee, or elect to share in a cash settlement fund of approximately $600,000. "This Settlement provides significant benefits to the members of the Settlement Class," said Jeffrey A. Klafter, a partner with Bernstein Litowitz Berger & Grossmann LLP. "Every user of Version 7 or 8 can continue to use the software after the end of this century without having to pay the substantial costs involved in purchasing Version 9. Users who already upgraded to Version 9 will receive partial compensation from the Company. These benefits are estimated to exceed $46 million." "We are delighted with this Settlement," said Harris Pogust, a partner at Sherman, Silverstein, Kohl, Rose & Podolsky. "Physicians can now concentrate on providing the highest quality health care to their patients instead of fighting off companies which are attempting to profit from the imminent coming of the Year 2000." The Medical Manager is an integrated physicians' practice management system encompassing patient care, clinical, financial and management applications. The software is used by solo practitioners, management service organizations, physicians' practice management organizations, managed care organizations and other providers of health care services. The complaint alleged that Medical Manager violated various state consumer protection or unfair trade practice laws and breached implied and express warranties by marketing non-Year 2000 compliant versions of The Medical Manager and by failing to remedy this alleged defect without charge. METAL RECOVERY: Signs Settlement Agreement in Malvy Litigation -------------------------------------------------------------- Metal Recovery Technologies Inc. (OTC Bulletin Board: MRTI) has signed a settlement agreement of the Class Action Lawsuit relating to its discontinued Malvy operations, the main terms and conditions of which are in accordance with those previously reported in the Company's September 1998 Form 10Q. The Company will provide details of the settlement agreement under Form 8-K shortly. Court approval of the settlement is expected to be granted in July 1999. Chairman Michael Lucas stated, "I am pleased that this matter is now, subject only to court approval, behind us. It has been expensive and time consuming and has constantly had a negative impact on our share price. With the uncertainty removed and the expected start of production in May in East Chicago for the MITL joint venture I am optimistic for the future." MICHIGAN CONSOLIDATED: Pursues Claims Against Furnace Suppliers --------------------------------------------------------------- In July 1998, the Wayne County Michigan Circuit Court approved a settlement of two class action lawsuits in relation to a discontinued energy conservation program. There were 46,000 class members. The notice of settlement was sent in June 1998 to the class members. Terms of the settlement included capped co-payments for the repair of chimney damages or the installation of a chimney liner and a reduced price for a carbon monoxide detector purchased from MICHIGAN CONSOLIDATED GAS CO. The request for reimbursement period ended on October 9, 1998, at which time only 30 class members participated in the settlement. Claims totaling $3,105 were paid out in November 1998. MichCon is continuing its lawsuit against certain of the manufacturers, contractors and installers of the plaintiffs' furnaces. MONY GROUP: Prevails in Life Insurance Sales Practices Appeal ------------------------------------------------------------- The MONY Group Inc. (NYSE: MNY) announced that its principal subsidiary, MONY Life Insurance Company, won the New York State Supreme Court appeal of a class-action sales-practices lawsuit. On March 18, the Appellate Division of the Supreme Court of the State of New York unanimously affirmed the 1997 Supreme Court dismissal of Goshen vs. The Mutual Life Insurance Company of New York (now named MONY Life Insurance Company). The case involved the "vanishing premium" concept in the sale of life insurance policies in the 1980s and early 1990s. "This lawsuit truly had no merit, because strong ethical practices are embedded in the culture of this organization. The appeals court has confirmed the judge's decision that MONY did not act fraudulently nor engage in deceptive sales practices," said Michael I. Roth, chairman and CEO of The MONY Group Inc. "The appeals court upheld a decision in our favor that recognized the significant training of agents and employees to act ethically in the sale of life insurance policies." The MONY Group Inc. (NYSE: MNY) is the holding company for the member companies of The MONY Group, which provide financial protection and asset accumulation products and services. Its principal subsidiary, MONY Life Insurance Company, founded in 1842 as The Mutual Life Insurance Company of New York, issued the first mutual life insurance policy in the United States in 1843. OCCIDENTAL PETROLEUM: Discloses Suit by MidCon ESOP Beneficiaries ----------------------------------------------------------------- In its latest annual report filed with the Securities & Exchange Commission, OCCIDENTAL PETROLEUM CORP. discloses without further detail that, in December 1998, David Croucher and others filed a purported class action suit in the Federal District Court in Houston, Texas on behalf of persons claiming to have been beneficiaries of the MidCon Employee Stock Ownership Plan (ESOP). The plaintiffs allege that each of the U.S. Trust Company of California (the ESOP Trustee) and the MidCon ESOP Administrative Committee breached its fiduciary duty to the plaintiffs by failing to properly value the securities held by the ESOP, and allege that Occidental actively participated in such conduct. The plaintiffs claim that, as a result of this alleged breach, the ESOP participants are entitled to an additional aggregate distribution of at least $200 million and that Occidental has been unjustly enriched and is liable for failing to make that distribution. ORBITAL SCIENCES: Lowey Dannenberg Files Complaint in Virginia -------------------------------------------------------------- Lowey Dannenberg Bemporad & Selinger, P.C., has filed a class action in the United States District Court for the Eastern District of Virginia, on behalf of a class of purchasers of Orbital Sciences Corporation common stock (NYSE: ORB) during the period April 21, 1998 through February 16, 1999, inclusive. The suit charges defendants Orbital Sciences Corporation, its Chairman and CEO David W. Thompson and CFO Jeffrey V. Pirone, with issuing false and misleading financial statements in violation of the federal securities laws, which inflated the market price of Orbital shares during the Class Period. On February 16, 1999, after the close of trading, Orbital announced that it was restating the first three fiscal quarters of 1998, and that earnings had decreased during the first three quarters, instead of increasing as previously reported. The restatement reduces previously reported net income by approximately $1,774,000 in the first quarter of 1998, by approximately $1,421,000 in the second quarter of 1998, and by approximately $6,175,000 in the third quarter of 1998. Total diluted earnings per share for the nine months ended September 30, 1998 were reduced by more than 40% from $0.62 to $0.37 per share. Meanwhile, insiders reaped more than $3 million in trading proceeds during the period being restated downward. ORBITAL SCIENCES: Miller Faucher Files Complaint in Virginia ------------------------------------------------------------ Miller Faucher Cafferty and Wexler LLP, pursuant to Section 21(D)(a)(3)(A)(i) of the Securities Exchange Act of 1934, hereby gives notice that it today filed a class action lawsuit in the United States District Court for the Eastern District of Virginia on behalf of a class of purchasers of Orbital Sciences Corporation's common stock during the period of April 21, 1998 through February 16, 1999, to recover damages caused by defendants' violations of the federal securities laws. The suit names as defendants Orbital Sciences Corporation, its Chairman and CEO David W. Thompson and CFO Jeffrey V. Pirone. The complaint alleges that on Tuesday, February 16, 1999, after the close of trading, Orbital Sciences Corporation announced that it was restating the first three fiscal quarters of 1998, and that earnings had decreased during the first three quarters of its fiscal year, instead of increasing as it had previously reported. Orbital's restatement reduced previously reported net income by approximately $1,774,000 (or approximately $0.07 per diluted share) in the first quarter of 1998, by approximately $1,421,000 (or approximately $0.04 per diluted share) in the second quarter of 1998, and by approximately $6,175,000 (or approximately $0.15 per diluted share) in the third quarter of 1998. Total diluted earnings per share for the nine months ended September 30, 1998 were reduced from $0.62 to $0.37 per share. Insiders reaped more than $3 million in insider trading proceeds during the period now being restated. On the news of its restatement, Orbital shares fell $2.25 to close at $27.375 on February 17, 1999, losing 7.5% of their value in a single day's trading -- off 44% from their class period high of $49.125. On March 5, 1999, Orbital stock closed at $25.50. PEDIATRIC SERVICES: Responds to Shareholder Class Action Suits -------------------------------------------------------------- Pediatric Services of America, Inc. (NASDAQ:PSAI) acknowledged that it has recently learned that on March 11, 1999, a purported shareholder class action lawsuit was filed against the Company and certain of its officers in the U.S. District Court for the Northern District of Georgia. The complaint alleges that PSAI violated the federal securities laws by, among other things, misrepresenting and/or omitting material information concerning PSAI's accounts receivable in its reports filed with the Securities and Exchange Commission during the period from the quarter ended September 30, 1997 through the quarter ended September 30, 1998. The complaint was filed by a single shareholder, the Arnold Nelson Mahler and Roberta Jo Mahler Family Trust, purportedly on behalf of all shareholders who purchased shares of PSAI stock during the period from December 23, 1997 through July 29, 1998. Joseph D. Sansone, Chairman, President and CEO of PSAI, stated that "we have reviewed the complaint and believe the claims are unfounded and the lawsuit is without merit. This lawsuit represents the very type of shareholder strike suits, instigated by class action plaintiff's lawyers, that Congress has recognized as abusive. PSAI will vigorously defend itself against this litigation." PEDIATRIX MEDICAL: Bernstein Litowitz Files Complaint in Florida ---------------------------------------------------------------- The Jacksonville Police And Fire Pension Fund filed a class action lawsuit on Wednesday, March 17, 1999, against Pediatrix Medical Group, Inc. (NYSE: PDX), and certain of its officers and directors, in the United States District Court for the Southern District of Florida, according to plaintiff's attorney Bernstein Litowitz Berger & Grossmann LLP. The Fund expects to seek a lead plaintiff role in the class action, which it filed on behalf of itself and all persons who purchased Pediatrix common stock between April 28, 1998 and February 12, 1999 inclusive. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making material misrepresentations concerning the reported financial results of Pediatrix. Among other things, the complaint alleges that Pediatrix overstated its reported revenues and earnings throughout the Class Period, in violation of generally accepted accounting principles, by recognizing revenue from accounts receivable that were not collectible. On February 12, 1999, the Company announced for the first time that the release of its 1998 financial results would be delayed due to issues detected by its outside auditors relating to the Company's accounts receivable. Pediatrix also revealed that it would be likely to restate its previously reported results, due to its improper capitalization of certain costs that should have been expensed during the Class Period. On the date of this announcement, Pediatrix common stock lost nearly 50% of its value, falling from $53.625 to $28 per share. RITE-AID CORP.: Abbey Gardy Files Complaint in Pennsylvania ----------------------------------------------------------- A Class Action lawsuit has been commenced in the United States District Court for the Eastern District of Pennsylvania on behalf of all purchasers of Rite Aid Corp. (NYSE: RAD) common stock between December 14, 1998 and March 11, 1999, inclusive, by Abbey, Gardy & Squitieri, LLP. The Complaint charges RAD and certain of its officers and directors with violations of federal securities laws. Among other things, plaintiff claims that defendants issued a series of materially false and misleading statements regarding RAD's financial condition and results of operations by concealing expenses related to its store expansion program and the institution of its new distribution facility. RITE-AID CORP.: Gross Firm Files Complaint in Pennsylvania ---------------------------------------------------------- The Law Offices Bernard M. Gross, P.C. announced that, on March 19, 1999, a class action lawsuit was filed in the United States District Court for the Eastern District of Pennsylvania on behalf of a class consisting of all persons who purchased the common stock of Rite Aid Corp. ("RAD") from December 14, 1998 through and including March 12, 1999. The Complaint charges RAD (NYSE:RAD) and certain of its officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Complaint alleges that defendants RAD and Martin Grass issued a series of materially false and misleading statements and failed to disclose material facts throughout the Class Period in the Company's public filing and public statements. SAFESKIN CORPORATION: Spector & Roseman File Suit in California --------------------------------------------------------------- Spector & Roseman P.C. announced that a class action lawsuit has been commenced in the United States District Court for the Southern District of California on behalf of all persons who purchased the publicly traded securities of Safeskin Corp. (Nasdaq:SFSK) between Feb. 18, 1998 through March 11, 1999. The complaint alleges that Safeskin, which manufactures and distributes disposable latex and synthetic medical examination gloves and disposable powder-free examination gloves, and certain of its officers and directors, violated provisions of the Securities Exchange Act of 1934. The complaint charges that during the Class Period, in an effort to increase the price of Safeskin's stock, defendants issued a series of materially false and misleading public statements about Safeskin's ability to show topline growth due to the strength of its product and its competitive advantages once its supply constraints were rectified. Moreover, defendants represented that the Company was well positioned to benefit from an increase in the examination glove market due to its strong efficiencies and favorable reputation among users of its product. When concerns arose about possible overcapacity and Safeskin's possible over shipping of products to distributers, defendants denied the existence of any of these problems and stated that sales were strong. As a result of the issuance of these false and misleading statements, the price of common stock was artificially inflated during the class period. Ultimately, Safeskin shocked the market by announcing that its first quarter 1999 earnings would be well below previous forecasts of $.27 per share, with earnings of only $.01 per share. This revelation caused the price of Safeskin shares to collapse from a Class Period high of $46-3/16 to as low as $8 per share. SAFESKIN CORPORATION: Pomerantz Haudek Files Suit in California --------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP has filed a class action lawsuit filed in the United States District Court for the Southern District of California against the Safeskin Corporation (Nasdaq: SFSK) for the period of October 28, 1998 through March 11, 1999, on behalf of purchasers and sellers of options on the common stock of Safeskin and on behalf of purchasers of Safeskin common stock. The Complaint charges that Safeskin and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by, inter alia, materially misleading investors by disseminating materially false and misleading information to the investing public which materially misrepresented Safeskin's revenues and profits and the Company's operations. Specifically the Complaint alleges that shortly after the market had closed on March 11, 1999, the Company formally announced that it would report "lower than expected sales and earnings for the first quarter and full year 1999" because the Company was "delivering product into our distribution channels" which resulted in "more inventory in the system" than the distributors could sell. In sum, Safeskin had been "stuffing" its distribution channels with product during the third and fourth quarters of fiscal 1998, which inflated the Company's revenues and misrepresented the robustness of its operations. The market reaction to the news was disastrous. During the Class Period, the price of Safeskin common stock traded as high as $34.41 per share. Safeskin common stock closed at $15.25 on March 11, 1999, before the Company announced that it had been channel stuffing. The next day, Safeskin common stock plummeted $6.28 per share to close at $8.97 per share -- a loss of approximately 41%, on a volume in excess of 24.7 million shares traded -- 22 times the three-month daily average. SAFESKIN CORPROATION: Abbey Gardy Files Complaint in California --------------------------------------------------------------- A Class Action has been filed in the United States District Court for the Southern District of California on behalf of purchasers of Safeskin Corporation (Nasdaq: SFSK) securities during the period October 28, 1998 through March 11, 1999, by Abbey, Gardy & Squitieri, LLP. The Complaint charges Safeskin and certain of its officers and directors with violating the federal securities laws. The plaintiff claims that defendants misrepresented and concealed material facts concerning the Company's business and its financial results and that certain officers sold Safeskin common stock while failing to disclose material adverse information about the Company and its financial results. SAFESKIN CORPORATION: Stull Stull Files Complaint in California --------------------------------------------------------------- Stull, Stull & Brody has filed a class action lawsuit in the Southern District of California, on behalf of purchasers of Safeskin Corp. (NASDAQ:SFSK) securities for violations of federal securities laws. Defendants include Safeskin and its president, Richard Jaffe. 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 Safeskin's financial condition as well as its business prospects, specifically projections for the first quarter of fiscal 1999. SAFESKIN CORPORATION: Lowey Dannenberg Files Suit in California --------------------------------------------------------------- Lowey Dannenberg Bemporad & Selinger, P.C., announced that it filed a class action lawsuit in the United States District Court for the Southern District of California on behalf of purchasers of Safeskin Corporation (NASDAQ:SFSK) common stock from October 29, 1998 through March 11, 1999. The complaint charges Safeskin and certain of its officers with violations of the federal securities laws which inflated the market price of Safeskin stock. The complaint alleges that during the Class Period, defendants issued a series of false and misleading statements that overstated Safeskin's income, gross margins and future prospects. Defendants further represented that the Company's growth was due to Safeskin's increased production after having solved its manufacturing problems and that this increased production was needed to meet increasing customer demands. In fact, defendants knew or were reckless in failing to know that Safeskin was selling its customers more products than they needed or wanted by offering extended and favorable payment terms, actions which defendants repeatedly publicly denied. As a result of such conduct, defendants knew that they could not continue to report record earnings and income in future quarters. On March 11, 1999, after the market closed, defendants announced that revenues for its first quarter ending March 31, 1999, were expected to be $28 million below what defendants led the market to believe they were expecting, and that the Company was reducing its sales and earnings expectations in light of higher than estimated distributor inventory levels. Moreover, the Company announced that Safeskin estimated that sales for the year would be lower by approximately an additional $25 million. SAFESKIN CORPORATION: Responds to Shareholders' Complaints ---------------------------------------------------------- Safeskin Corporation (Nasdaq: SFSK), said that several lawsuits have been filed against the Company and certain of its directors and officers since the Company's announcement last week that sales and earnings would be below analysts' expectations for the first quarter and full year 1999. The lawsuits seek to be certified by the court as class actions and purport to cover different periods of time. The Company believes that the allegations in the complaints it has received are without merit and stated that it would defend these lawsuits vigorously. Safeskin Corporation is a leading manufacturer of high quality disposable latex and synthetic medical examination gloves for the United States market and believes that it is the world's leading manufacturer of high quality disposable powder-free examination gloves. The Company produces gloves at its manufacturing facilities in Southeast Asia using proprietary formulations and processes. SBC COMMUNICATIONS: Inside Telephone Wiring Cases Settled --------------------------------------------------------- Six putative class actions in Texas, Missouri, Oklahoma, and Kansas that involved the provision by SWBell of maintenance and trouble diagnosis services relating to telephone inside wire located on customer premises were settled during 1998. These actions alleged that SWBell's sales practices in connection with these services violated antitrust, fraud and/or deceptive trade practices statutes. The trial court has approved the settlement, and SBC COMMUNICATIONS, INC., indicates in its latest annual report that this settlement is not expected to materially affect its financial results. SHELL OIL: Still Fighting with Polybutylene Co-Defendants --------------------------------------------------------- Since 1984, Shell Oil Co. has been named as a defendant in numerous product liability cases, including class actions, involving the failure of residential plumbing systems constructed with polybutylene plastic pipe. The Company has also been sued regarding failures in polybutylene pipe connecting users with utility water lines and polybutylene pipe used in municipal water distribution systems. The polybutylene pipe was manufactured primarily by United States Brass Corporation and Vanguard Plastics, Inc. using polybutylene resin supplied by the Company to fabricate the pipe and initially, in the case of residential plumbing systems, polyacetal resin supplied by E.I. DuPont de Nemours and Company (DuPont) and Hoechst Celanese Corporation (Hoechst Celanese) to fabricate the pipe fittings. The plaintiffs in the litigation claim property damages and, in some cases, fraud and intentional misrepresentation seeking punitive damages. The Company's position is, and most of the judgments to date have confirmed that, most of the leaks in residential plumbing systems have occurred due to the failure of the polyacetal insert fittings. Polyacetal is no longer used to manufacture insert fittings for these systems and during 1996, the Company announced it would no longer sell polybutylene resin for use in the domestic pipe market. Shell reminds investors in its latest annual report that it, DuPont & Hoechst Celanese have agreed on a mechanism to fund the payment of most of the residential plumbing claims in the United States as the result of two class action settlements. The class action settlement provides for the creation of an entity to receive and handle claims and for a $950 million fund to pay such claims, which claims may be filed until 2009, depending on various factors. If the settlement funds are exhausted, Shell notes, additional funds may be provided by the defendants or claimants who have not received their full benefits under the class action settlement may seek their remedy in a new court proceeding at that time. Additionally, a small percentage of defendants have opted out of the class action settlement and some have asserted their claims outside such settlement. Significant issues remain to be resolved as to how costs will be shared among the defendants. One fittings co-defendant has agreed to fund 10% of all acetal fitting costs related to the class action settlement; the Company and the other fittings co-defendant have agreed to arbitrate to determine how the remaining acetal fittings portion of the cost of the class action settlement will be shared between them. Additionally, in matters outside the residential plumbing claims and the class action settlement, claims continue to be filed involving alleged problems with polybutylene pipe used in municipal water distribution systems. The Company will continue to defend these matters vigorously but it cannot currently predict when or how polybutylene related matters will finally be resolved. TOBACCO LITIGATION: Jury Rejects Ohio Unions' Claims ---------------------------------------------------- Jeffrey T. Ottenbacher, providing gavel-to-gavel coverage from U.S. District Court in Akron, Ohio, for United Press International, reports that a federal jury has found the nation's tobacco companies innocent in a $2 billion, class-action lawsuit filed by more than 100 Ohio union health and benefit funds -- the first case of its kind in the nation. The unions -- seeking to recover the costs of treating smoking- related illnesses -- had accused the companies of concealing evidence, suppressing development of safer cigarettes and obstructing justice. The Akron U.S. District Court jury returned its verdict after deliberating about 15 hours following a two-week trial. ourt officials initially predicted the entire trial would take up to three months, including two penalty phases, had the jury found any of the companies guilty. The lead lawyer for the six tobacco companies, Robert Weber, said: "I'm gratified to see Ohioans use common sense and reject the madness going in the legal system. It's time to stop whipping the tobacco companies. One way to dissuade such cases is to win and we just scored a 10-strike." Weber congratulated the jurors for not being swayed by emotionalism. "The tobacco companies have a good story to tell and a legal product for generations and generations, for people to choose to use or not use." Continuing, "This jury's verdict -- along with the 10 cases that were previously dismissed -- should send a strong and unambiguous signal to these and other plaintiffs' lawyers. This one-two knockout punch should put an end, once and for all, to these types of contrived lawsuits which only serve to waste the court's time and the taxpayers' money," Weber added. Union attorney Patrick Coughlin said: "I think what troubled (the jurors) the most was that people have known for a long time that cigarettes are bad for you." Coughlin said he also believed the jury rejected the idea that the health care funds relied on information from the tobacco companies to make their health care decisions. "We are delighted with the court's ruling," Gregory Little, a lawyer for Philip Morris, told the Associated Press. "This jury sent a clear message reaffirming the health risks of smoking have been well-known for decades, and that cigarette companies have not withheld material information regarding health effects from the public." "We have maintained all along that these cases, many brought by the same plaintiffs' lawyers, are based on tortured legal theories and built on a selective and contorted view of the facts. They are contrived to enrich the plaintiffs' lawyers -- the union workers themselves would have received no money," Weber said. "For the plaintiffs' lawyers to claim that Ohio's working men and women were unable to make personal and informed choices about smoking because of tobacco advertising, or to understand the well-known health risks of smoking, is both patronizing and insulting. It's preposterous to think that those who manage union health care funds were somehow insulated from all the scientific, public and common knowledge of the health risks of smoking. In fact, for more than three decades every pack of cigarettes sold in the United States has carried health warning mandated by Congress," Weber continued. The defendants were Philip Morris Inc.; the R.J. Reynolds Tobacco Co. , the Brown & Williamson Tobacco Co., the British American Tobacco Co. Ltd., the Lorillard Tobacco Co., and the American Tobacco Co. The named plaintiffs in the case were Iron Workers Local Union No. 17 Insurance Fund, IBEW Local No. 38 Health and Welfare Fund; Ohio Laborers District Council - Ohio Contractors' Association Insurance Fund, Dealers-Unions Insurance Fund, Local 47 Welfare Fund No. 1, and the Toledo Electrical Welfare Fund. The union fund claims, seeking $670 million in compensatory damages, were brought under federal and state RICO laws and civil conspiracy statutes. At the conclusion of the plaintiffs' evidence, U.S. District Judge James S. Gwin dismissed the federal RICO claim, leaving only two of the complaint's original 18 claims. The jury had to determine for each company whether it had committed mail or wire fraud, tampered with evidence or obstructed justice. The jurors also had to determine for each of the plaintiffs whether each company had violated the Ohio Corrupt Activities Act, had committed a civil conspiracy or conspired to violate the Ohio Corrupt Activities Act. Around the country, several similar cases have been thrown out before reaching trial, with judges saying the unions have no legal standing unless they file separate lawsuits on behalf of every smoker. This was the first case of its kind to go to trial. A streaming video by the Tobacco Companies discussing the case is available at http://www.newstream.com/99-109.shtmlvia the Internet. TOBACCO LITIGATION: Washington Union Trial Presses Forward ---------------------------------------------------------- Late Thursday afternoon, Federal Judge William L. Dwyer of the Western District of Washington denied the tobacco industry's motion to stay the proceedings in a class action lawsuit brought on behalf of health and welfare trust funds. His decision came in the wake of a defense verdict in a similar case in Akron, Ohio. The lawsuit is set to begin trial on September 7, 1999. "Despite yesterday's Ohio jury verdict, we are not deterred. Health and welfare trust fund cases continue to move forward. The overwhelming evidence of corrupt activity by the tobacco industry will not go away; these cases will not go away. "We plan to vigorously pursue claims on behalf of the other health funds, both in this case and across the country. We feel confident that other juries will properly hold the tobacco industry accountable for its actions," stated Michael E. Withey of Stritmatter Kessler Whelan Withey, counsel for the Plaintiffs. TOBACCO LITIGATION: Louisiana AG Dismisses Claims Against Fleming ----------------------------------------------------------------- In August 1996, Richard E. Ieyoub, Attorney General of the State of Louisiana, brought an action in the 14th Judicial District Court of Louisiana against The American Tobacco Company and numerous defendants including Fleming Companies, Inc. The suit sought recovery of state health-care and related expenditures allegedly caused by tobacco products. Pending final court approval, the the case was settled (without liability to Fleming) and releases delivered. Separately, notices of suit or intention to sue have been filed by 27 individuals in the Court of Common Pleas of Philadelphia County, and by 3 individuals in the Court of Common Pleas of Dauphin County, Pennsylvania; one individual brought suit in the Circuit Court of Shelby County, Tennessee; one individual brought suit in the Tenth Judicial District Court for the Parish of Natchitoches, Louisiana; and one individual brought suit in the 38th Judicial District Court, Cameron Parish, Louisiana. Each case named as co-defendants at least one major manufacturer of tobacco products and Fleming Companies, Inc., or a current or former company subsidiary, among others. With respect to each case, the company is being indemnified and defended by a substantial third-party co-defendant. Pursuant to a tolling agreement among the parties, all of the cases which were already pending in Pennsylvania (save two) were dismissed in 1998 without prejudice and may be refiled at a later date. TORCHMARK CORP.: Status Report Concerning Policyholder Litigation ----------------------------------------------------------------- In its latest annual report, TORCHMARK CORP. advises investors about the status of lawsuits brought by disgruntled policyholders: (A) Liberty has been subject to 76 individual cancer policy lawsuits pending in Alabama and Mississippi, which were stayed or otherwise held in abeyance pending final resolution of Robertson v. Liberty National Life Insurance Company (Case No. CV-92-021). Liberty filed motions to dismiss these lawsuits based upon the U.S. Supreme Court opinion issued in Robertson in March 1997. Only two of these individual cancer policy lawsuits remain, the other such suits having been dismissed. (B) Torchmark, its insurance subsidiaries Globe and United American, and certain Torchmark officers were named as defendants in purported class action litigation filed in the District Court of Oklahoma County, Oklahoma (Moore v. Torchmark Corporation, Case No. CJ-94-2784-65, subsequently amended and restyled Tabor v. Torchmark Corporation). This suit claims damages on behalf of individual health policyholders who are alleged to have been induced to terminate such policies and to purchase Medicare Supplement and/or other insurance coverages. On February 6, 1998, the defendants renewed their motion to dismiss the class claims for failure to prosecute. The District Court, in an order dated April 2, 1998, allowed bifurcation of Tabor into Medicare Supplement policy claims and non-Medicare Supplement policy claims. The non-Medicare Supplement claims were stayed pending disposition of a related case involving the same plaintiffs filed in Mississippi while discovery was allowed to proceed on plaintiffs' motion to certify a class of Medicare Supplement policyholders' claims. (C) On August 25, 1995, a purported class action was filed against Torchmark, Globe, United American and certain officers of these companies in the United States District Court for the Western District of Missouri on behalf of all former agents of Globe (Smith v. Torchmark Corporation, Case No. :95-3304-CV- S-4). This action alleges that the defendants breached independent agent contracts with the plaintiffs by treating them as captive agents and engaged in a pattern of racketeering activity wrongfully denying income and renewal commissions to the agents, restricting insurance sales, mandating the purchase of worthless leads, terminating agents without cause and inducing the execution of independent agent contracts based on misrepresentations of fact. Monetary damages in an unspecified amount are sought. A plaintiff class was certified by the District Court on February 26, 1996, although the certification does not go to the merit of the allegations in the complaint. On December 31, 1996, the plaintiffs filed an amended complaint in Smith to allege violations of various provisions of the Employment Retirement Income Security Act of 1974. Extensive discovery was then conducted. In October 1998, defendants filed a motion to decertify the presently defined class in Smith. (D) Torchmark, its subsidiaries United American and Globe and certain individual corporate officers are parties to purported class action litigation filed in April, 1996 in the U.S. District Court for the Northern District of Georgia (Crichlow v. Torchmark Corporation, Case No. 4:96-CV-0086-HLM) involving certain hospital and surgical insurance policies issued by Globe and United American. In September 1997, the U.S. District Court entered an order granting summary judgment against the plaintiffs on certain issues and denying national class certification, although indicating that plaintiffs could move for the certification of a state class of Georgia policyholders. Discovery then proceeded on the remaining claims for breach of contract and the duty of good faith arising from closure of the block of business and certain post-claim matters as well as fraud and conspiracy relating to pricing and delay in implementing rate increases. On June 17, 1998, the U.S. District Court entered an order which denied the plaintiffs' motion to certify a Georgia policyholders class, denied reconsideration of the previously entered motion for summary judgment on certain issues, denied reconsideration of the denial of national certification of a class of policyholders and severed and transferred claims of Mississippi policyholders to the U.S. District Court for the Northern District of Mississippi (Greco v. Torchmark Corporation, Case No. 1:98CV196-D-D). The U.S. District Court granted defendants' motion for summary judgment on all remaining issues in Crichlow on February 4, 1999. Plaintiffs in Greco have moved to certify a class of persons purchasing Globe hospital and surgical insurance policies in Mississippi. On February 1, 1999, defendants filed a motion for summary judgment in Greco. (E) Liberty was a party to 53 individual cases filed in Chambers County, Alabama involving allegations that an interest- sensitive life insurance policy would become paid-up or self- sustaining after a specified number of years. Only one of these cases remains pending with all others having been settled and dismissed by the Chambers County Circuit Court. (F) Lawson v. Liberty National Life Insurance Company (Case No. CV-96-01119), is a case filed in the Circuit Court of Jefferson County, Alabama, where the plaintiffs sought to represent a class of interest-sensitive life insurance policyholders, including those allegedly induced to exchange life insurance policies or where the existing policy's cash value was allegedly depleted, in litigation alleging fraud, negligence and breach of contract in the sale or exchange of interest- sensitive policies by Liberty. Torchmark was subsequently added as a defendant. In May 1996, the Circuit Court entered an order conditionally certifying a plaintiffs class, which was subsequently redefined in March 1997. The Circuit Court's order allowed the parties to challenge the conditional certification based upon subsequent discovery in the case. In March 1998, the defendants challenged the conditional certification and a hearing on final certification was held in October 1998. On February 9, 1999, the Circuit Court entered an order decertifying the conditional class and denying all petitions to certify a class in Lawson. (G) In 1978, the United States District Court for the Northern District of Alabama entered a final judgment in Battle v. Liberty National Life Insurance Company, et al (Case No. CV- 70-H-752-S), class action litigation involving Liberty, a class composed of all owners of funeral homes in Alabama and a class composed of all insureds (Alabama residents only) under burial or vault policies issued, assumed or reinsured by Liberty. The final judgment fixed the rights and obligations of Liberty and the funeral directors authorized to handle Liberty burial and vault policies as well as reforming the benefits available to the policyholders under the policies. Although class actions are inherently subject to subsequent collateral attack by absent class members, the Battle decree remains in effect to date. A motion filed in February 1990 to challenge the final judgment under Federal Rule of Civil Procedure 60(b) was rejected by both the District Court in 1991 and the Eleventh Circuit Court of Appeals in 1992 and a Writ of Certiorari was denied by the U.S. Supreme Court in 1993. (H) In November 1993, an attorney (purporting to represent the funeral director class) filed a petition in the District Court seeking "alternative relief" under the final judgment. This petition was voluntarily withdrawn on November 8, 1995 by petitioners. On February 23, 1996, Liberty filed a petition with the District Court requesting that it order certain contract funeral directors to comply with their obligations under the Final Judgment in Battle and their funeral service contracts. A petition was filed on April 8, 1996 on behalf of a group of funeral directors seeking to modify the 1978 decree in Battle in light of changed economic circumstances. All parties made extensive submissions to the District Court and a hearing on the opposing petitions was held by the District Court on February 9, 1999. TORCHMARK CORP.: Trial Date Requested in Royalty Litigation ----------------------------------------------------------- Purported class action litigation was filed on January 2, 1996 against Torchmark, Torch Energy Advisors Incorporated, and certain Torch Energy subsidiaries and affiliated limited partnerships in the Circuit Court of Pickens County, Alabama (Pearson v. Torchmark Corporation, Case No. CV-95-140). Plaintiff alleges improper payment of royalties and overriding royalties on coalbed methane gas produced and sold from wells in Robinson's Bend Coal Degasification Field, seeks certification of a class and claims unspecified compensatory and punitive damages on behalf of such class. On April 11, 1996, Torchmark's motion to change venue was granted and the case has been transferred to the Circuit Court of Tuscaloosa County, Alabama. Torchmark's motion to dismiss remains pending while discovery is proceeding. On February 10, 1999, the plaintiffs filed a request for a class certification hearing and to set a trial date for the Pearson case. TORCHMARK CORP.: Ready to Begin Appeal of Discrimination Verdict ---------------------------------------------------------------- In July 1998, a jury in U.S. District Court in the Middle District of Florida recommended an aggregate total verdict amounting to $21.6 million against Liberty in Hipp v. Liberty National Life Insurance Company (Case No. 95-1332-CIV-T-17A). This case, originally filed in 1995 in the Florida state court system, is a collective action under the Fair Labor Standards Act, alleging age discrimination by Liberty in violation of the Age Discrimination in Employment Act and the Florida Civil Rights Act. The plaintiffs, ten present or former Liberty district managers, sought damages for lost wages, loss of future earnings, lost health and retirement benefits and lost raises and expenses. Three of these plaintiffs, Florida residents, also sought compensatory and punitive damages allowable under Florida law. On November 20, 1998, the District Court remitted the $10 million punitive damage portion of the jury verdict to $0, thus reducing the total verdict to $11 million (including an advisory verdict of $3.2 million in front pay awards). Additional revised front pay submissions were made by the plaintiffs to the District Court in December 1998 and Liberty responded thereto in January 1999. Liberty is awaiting the entry of a final judgment in the Hipp case and thereafter will pursue all available post trial and appellate relief. TWINLAB CORP.: Stull Stull Files Complaint in New York ------------------------------------------------------ On March 17, 1999, a securities class action lawsuit was filed in the United States District Court for the Eastern District of New York against Twinlab Corp. (NASDAQ:TWLB) and certain of its officers and directors by Stull, Stull & Brody on behalf of all persons who purchased or otherwise acquired the common stock of Twinlab at artificially inflated prices between April 28, 1998, and February 24, 1999, inclusive. The complaint alleges that defendants violated the federal securities laws through a series of false and misleading statments. As a result of defendants' false and misleading statements, prices of Twinlab's common stock were artificially inflated during the Class Period, such that persons who purchased or otherwise acquired Twinlab's common stock during the Class Period were damaged by overpaying for their common stock. UNITED FOODS: Shareholder Complaint Filed to Halt Tender Offer -------------------------------------------------------------- United Foods, Inc. (AMEX:UFDA)(AMEX:UFDB) today announced that a complaint was filed against the Company and its directors by a stockholder of the Company in a Delaware Chancery Court. The complaint seeks class action status and requests injunctive and other relief with respect to a pending proposal by the Company's Chairman and Chief Executive Officer, James I. Tankersley, his wife and their children to acquire the remaining shares of the Company's common stock that are not owned by them for $3.00 per share in cash. The Company and the other defendants assert their belief that the complaint is without merit. USA TALKS.COM: Wechsler Harwood Files Complaint in California ------------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP commenced a class action lawsuit on March 18, 1999, in the United States District Court for the Southern of California on behalf of all persons who purchased the common stock issued by USA Talks.com, Inc. (OTCBB:USAT), during the period Nov. 24, 1998 through Jan. 29, 1999. The complaint charges USAT and certain of its officers and directors violated the Securities and Exchange Act of 1934. The complaint alleges that Defendants caused the Company's stock price to rise from approximately $5.75 per share to a Class Period high of approximately $53.25 per share by misrepresenting USA Talks' publicly reported network installation and technology. On Jan. 29, 1999, the SEC halted trading in the Company's common stock "citing questions about the accuracy of information released to the public by the Company." Ten days later, trading in USAT stock resumed, with the price of the stock falling dramatically. ********* 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. 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