/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/990324.MBX C L A S S A C T I O N R E P O R T E R Wednesday, March 24, 1999, Vol. 1, No. 34 Headlines ADVANCED MICRO: Spector & Roseman Files Complaint in California AETNA REAL: Settlement Agreement Presented to Delaware Court ARMSTRONG WORLD: Status of Asbestos Cases & Insurance ADR Ruling ASSISTED LIVING: Wolf Haldenstein Files Complaint in Oregon CHS ELECTRONICS: Milberg Weiss Files Complaint in Florida CHS ELECTRONICS: Schoengold & Sporn File Complaint in Florida CHS ELECTRONICS: Weiss & Yourman File Complaint in Florida LITTLE SWITZERLAND: Schubert & Reed File Complaint in Delaware NICE SYSTEMS: Milberg Weiss Files Complaint in New Jersey NICE SYSTEMS: Reinhardt & Anderson File Complaint in New Jersey PARTY CITY: Bernstein Liebhard Files Complaint in New Jersey PARTY CITY: Milberg Weiss Files Complaint in New Jersey PARTY CITY: Weiss & Yourman File Complaint in New Jersey QUINTEL COMMUNICATIONS: Awaiting Ruling on Motion to Dismiss RITE-AID: Henzel Firm Files Complaint in Pennsylvania SHONEY'S, INC.: Settles 3 Employee Class Action Suits for $18MM TELE-COMMUNICATIONS: Time Warner Shareholder Litigation Dismissed TELE-COMMUNICATIONS: No Discovery Yet in 1997 DMX Litigation TELE-COMMUNICATIONS: Cert. Petition Filed in United Cable Suit TELE-COMMUNICATIONS: Settlement in Colorado Shareholder Action TELE-COMMUNICATIONS: TCG/AT&T Merger Litigation Presses Forward TELE-COMMUNICATIONS: No Discovery Yet in Magness Shareholder Suit TELE-COMMUNICATIONS: TINTA Shareholder Pact Awaits Court Approval TELE-COMMUNICATIONS: TCI Series A&B Plaintiffs Start Discovery UNITED FOODS: Company Denies Allegations in Shareholder Complaint Y2K LITIGATION: Microsoft Prevails in Illinois FoxPro Suit ********* ADVANCED MICRO: Spector & Roseman Files Complaint in California --------------------------------------------------------------- Spector & Roseman, P.C. announced that it commenced a class action lawsuit 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. AETNA REAL: Settlement Agreement Presented to Delaware Court ------------------------------------------------------------ Aetna Real Estate Associates, L.P., advises in a Form 8-K filed with the SEC that, on March 15, 1999, it entered into a Stipulation and Agreement of Compromise, Settlement and Release, and that agreement was been filed with (and is subject to approval by) the Delaware Chancery Court. In November 1996, the Partnership and its general partners, Aetna/AREA Corporation and AREA GP Corporation, were named as defendants in two purported class action lawsuits filed in the Chancery Court of Delaware in New Castle County, entitled Bobbitt v. Aetna Real Estate Associates, L.P., et al and Estes v. Aetna Real Estate Associates, L.P., et al. ARMSTRONG WORLD: Status of Asbestos Cases & Insurance ADR Ruling ---------------------------------------------------------------- In its latest annual report, ARMSTRONG WORLD INDUSTRIES, INC., provides investors with a status report concerning on-going asbestos-related litigation against it: PERSONAL INJURY LITIGATION The Company is one of many defendants in approximately 154,000 pending claims as of December 31, 1998, alleging personal injury from exposure to asbestos. Nearly all claims seek general and punitive damages arising from alleged exposures, at various times, from World War II onward, to asbestos-containing products. Claims against the Company generally involve allegations of negligence, strict liability, breach of warranty and conspiracy with respect to its involvement with asbestos-containing insulation products. The Company discontinued the sale of all such products in 1969. The claims also allege that injury may be determined many years (up to 40 years) after first exposure to asbestos. Nearly all suits name many defendants, and over 100 different companies are reportedly involved. The Company believes that many current plaintiffs are unimpaired. A large number of claims have been settled, dismissed, put on inactive lists or otherwise resolved, and the Company generally is involved in all stages of claims resolution and litigation, including individual trials, consolidated trials and appeals. Neither the rate of future filings and resolutions nor the total number of future claims can be predicted at this time with a high degree of certainty. Attention has been given by various parties to securing a comprehensive resolution of the litigation. In 1991, the Judicial Panel for Multidistrict Litigation ordered the transfer of federal cases to the Eastern District of Pennsylvania in Philadelphia for pretrial purposes. The Company supported this transfer. Some cases are periodically released for trial, although the issue of punitive damages is retained by the transferee court. That court has been instrumental in having the parties resolve large numbers of cases in various jurisdictions and has been receptive to different approaches to the resolution of claims. Claims in state courts have not been directly affected by the transfer, although most recent cases have been filed in state courts. Amchem Settlement Class Action Georgine v. Amchem ("Amchem") was a settlement class action filed in the Eastern District of Pennsylvania on January 15, 1993, that included essentially all future personal injury claims against members of the Center for Claims Resolution ("Center"), including the Company. It was designed to establish a nonlitigation system for the resolution of such claims, and offered a method for prompt compensation to claimants who were occupationally exposed to asbestos if they met certain exposure and medical criteria. Compensation amounts were derived from historical settlement data and no punitive damages were to be paid. The settlement was designed to, among other things, minimize transactional costs, including attorneys' fees, expedite compensation to claimants with qualifying claims, and relieve the courts of the burden of handling future claims. The District Court, after exhaustive discovery and testimony, approved the settlement class action and issued a preliminary injunction that barred class members from pursuing claims against Center members in the tort system. The U.S. Court of Appeals for the Third Circuit reversed that decision, and the reversal was sustained by the U.S. Supreme Court on June 25, 1997, holding that the settlement class did not meet the requirements for class certification under Federal Rule of Civil Procedure 23. The preliminary injunction was vacated on July 21, 1997, resulting in the immediate reinstatement of enjoined cases and a loss of the bar against the filing of claims in the tort system. The Company believes that an alternative claims resolution mechanism similar to Amchem is likely to emerge. Recent Events During 1998, pending claims increased by 71,000 claims. This increase was higher than previously anticipated. The Company and its outside counsel believe the increase in claims filed during 1998 was partially due to acceleration of pending claims as a result of the Supreme Court's decision on Amchem and additional claims that had been filed in the tort system against other defendants (and not against Center members) while Amchem was pending. Asbestos-Related Liability The Company continually evaluates the nature and amount of recent claim settlements and their impact on the Company's projected asbestos resolution and defense costs. In doing so, the Company reviews, among other things, its recent and historical settlement amounts, the incidence of past claims, the mix of the injuries and occupations of the plaintiffs, the number of cases pending against it, the previous estimates based on the Amchem projection and its recent experience. Subject to the uncertainties, limitations and other factors referred to above and based upon its experience, the Company has estimated its share of liability to defend and resolve probable asbestos-related personal injury claims. The Company's estimation of such liability that is probable and estimable through 2004 ranges from $424.7 million to $813 million. The Company has concluded that no amount within that range is more likely than any other, and therefore has reflected $424.7 million as a liability in the accompanying consolidated financial statements. This estimate includes an assumption that the number of new claims filed annually will be less than the number filed in 1998 as discussed above under "Recent Events." Of this amount, management expects to incur approximately $80.0 million in 1999 and has reflected this amount as a current liability. The Company believes it can reasonably estimate the number and nature of future claims that may be filed during the next six years. However for claims that may be filed beyond that period, management believes that the level of uncertainty is too great to provide for reasonable estimation of the number of future claims, the nature of such claims, or the cost to resolve them. Accordingly, it is reasonably possible that the total exposure to personal injury claims may be greater than the recorded liability. The increase in recorded liability of $274.2 million in 1998 is primarily reflective of the increases in claims filed in 1998, recent settlement experience and current expectations about future claims. Because of the uncertainties related to the number of claims, the ultimate settlement amounts, and similar matters, it is extremely difficult to obtain reasonable estimates of the amount of the ultimate liability. The Company's valuation of the range of probable liability is primarily based on known pending claims and an estimate of potential claims that are likely to occur and can be reasonably estimated. The estimate of likely claims to be filed in the future is subject to a greater degree of uncertainty each year into the future. As additional experience is gained regarding claims and settlements or other new information becomes available regarding the potential liability, the Company will reassess its potential liability and revise the estimates as appropriate. Because, among other things, payment of the liability will extend over many years, management believes that the potential additional costs for claims net of any potential insurance recoveries, will not have a material after-tax effect on the financial condition of the Company or its liquidity, although the net after-tax effect of any future liabilities recorded in excess of insurance assets could be material to earnings in a future period. CODEFENDANT BANKRUPTCIES Certain codefendant companies have filed for reorganization under Chapter 11 of the Federal Bankruptcy Code. As a consequence, litigation against them (with some exceptions) has been stayed or restricted. Due to the uncertainties involved, the long-term effect of these proceedings on the litigation cannot be predicted. PROPERTY DAMAGE LITIGATION The Company is also one of many defendants in eight pending claims as of December 31, 1998, brought by public and private building owners. These claims include allegations of damage to buildings caused by asbestos-containing products and generally seek compensatory and punitive damages and equitable relief, including reimbursement of expenditures, for removal and replacement of such products. Among the lawsuits that have been resolved are four class actions, which involve public and private schools, Michigan state public and private schools, colleges and universities, and private property owners who leased facilities to the federal government. The Company vigorously denies the validity of the allegations against it in these claims. These suits and claims are not handled by the Center. Insurance coverage has been resolved and is expected to cover almost all costs of these claims. INSURANCE COVERAGE The Company's primary and excess insurance policies provide product hazard and nonproducts (general liability) coverages for personal injury claims, and product hazard coverage for property damage claims. Certain policies also provide coverage to ACandS, Inc., a former subsidiary of the Company. The Company and ACandS, Inc., share certain limits that both have accessed and have entered into an agreement that reserved for ACandS, Inc., a certain amount of excess insurance. The insurance carriers that provide personal injury products hazard, nonproducts or property damage coverages include the following: Reliance Insurance Company; Aetna (now Travelers) Casualty and Surety Company; Liberty Mutual Insurance Company; Travelers Insurance Company; Fireman's Fund Insurance Company; Insurance Company of North America; Lloyds of London; various London market companies; Fidelity and Casualty Insurance Company; First State Insurance Company; U.S. Fire Insurance Company; Home Insurance Company; Great American Insurance Company; American Home Assurance Company and National Union Fire Insurance Company (now part of AIG); Central National Insurance Company; Interstate Insurance Company; Puritan Insurance Company; and Commercial Union Insurance Company. Midland Insurance Company, an excess carrier that provided $25 million of personal injury coverage, certain London companies, and certain excess carriers providing only property damage coverage are insolvent. The Company is pursuing claims against insolvents in a number of forums. Wellington Agreement In 1985, the Company and 52 other companies (asbestos defendants and insurers) signed the Wellington Agreement. This Agreement settled nearly all disputes concerning personal injury insurance coverage with most of the Company's carriers, provided broad coverage for both defense and indemnity and addressed both products hazard and nonproducts (general liability) coverages. California Insurance Coverage Lawsuit Trial court decisions in the insurance lawsuit filed by the Company in California held that the trigger of coverage for personal injury claims was continuous from exposure through death or filing of a claim, that a triggered insurance policy should respond with full indemnification up to policy limits, and that any defense obligation ceases upon exhaustion of policy limits. Although not as comprehensive, another decision established favorable defense and indemnity coverage for property damage claims, providing coverage during the period of installation and any subsequent period in which a release of fibers occurred. The California appellate courts substantially upheld the trial court, and that insurance coverage litigation is now concluded. The Company has resolved most personal injury products hazard coverage matters with its solvent carriers through the Wellington Agreement, referred to above, or other settlements. In 1989, a settlement with a carrier having both primary and excess coverages provided for certain minimum and maximum percentages of costs for personal injury claims to be allocated to nonproducts (general liability) coverage, the percentage to be determined by negotiation or in alternative dispute resolution ("ADR"). Asbestos Claims Facility and Center for Claims Resolution The Wellington Agreement established the Facility to evaluate, settle, pay and defend all personal injury claims against member companies. Resolution and defense costs were allocated by formula. The Facility subsequently dissolved, and the Center was created in October 1988 by 21 former Facility members, including the Company. Insurance carriers, while not members, are represented ex officio on the Center's governing board and have agreed annually to provide a portion of the Center's operational costs. The Center adopted many of the conceptual features of the Facility and has addressed the claims in a manner consistent with the prompt, fair resolution of meritorious claims. Resolution and defense costs are allocated by formula; adjustments over time have resulted in some increased share for the Company. Insurance Recovery Proceedings A substantial portion of the Company's primary and excess insurance asset is nonproducts (general liability) insurance for personal injury claims, including among others, those that involve exposure during installation of asbestos materials. The Wellington Agreement and the 1989 settlement agreement referred to above have provisions for such coverage. An ADR process under the Wellington Agreement is underway against certain carriers to determine the percentage of resolved and unresolved claims that are nonproducts claims, to establish the entitlement to such coverage and to determine whether and how much reinstatement of prematurely exhausted products hazard insurance is warranted. The nonproducts coverage potentially available is substantial and, for some policies, includes defense costs in addition to limits. The carriers have raised various defenses, including waiver, laches, statutes of limitations and contractual defenses. One primary carrier alleges that it is no longer bound by the Wellington Agreement, and another alleges that the Company agreed to limit its claims for nonproducts coverage against that carrier when the Wellington Agreement was signed. The ADR process is in the trial phase of binding arbitration. The Company has entered into a settlement with a number of the carriers resolving its access to coverage. Other proceedings against non-Wellington carriers may become necessary. An insurance asset in the amount of $264.8 million is recorded on the Consolidated Balance Sheet. Of this amount, approximately $26 million represents partial settlement for previous claims which will be paid in a fixed and determinable flow and is reported at its net present value discounted at 6.35%. The total amount recorded reflects the Company's belief in the availability of insurance in this amount, based upon the Company's success in insurance recoveries, recent settlement agreements that provide such coverage, the nonproducts recoveries by other companies and the opinion of outside counsel. Such insurance is either available through settlement or probable of recovery through negotiation, litigation or resolution of the ADR process which is in the trial phase of binding arbitration. Of the $264.8 million asset, $16.0 million has been recorded as a current asset reflecting management's estimate of the minimum insurance payments to be received in 1999. CONCLUSIONS The Company does not know how many claims will be filed against it in the future, or the details thereof or of pending suits not fully reviewed, or the defense and resolution costs that may ultimately result therefrom, or whether an alternative to the Amchem settlement vehicle may emerge, or the scope of its insurance coverage ultimately deemed available. The Company continually evaluates the nature and amount of recent claim settlements and their impact on the Company's projected asbestos resolution and defense costs. In doing so, the Company reviews, among other things, its recent and historical settlement amounts, the incidence of past claims, the mix of the injuries and occupations of the plaintiffs, the number of cases pending against it, the previous estimates based on the Amchem projection and its recent experience. Subject to the uncertainties, limitations and other factors referred to above and based upon its experience, the Company has estimated its share of liability to defend and resolve probable asbestos-related personal injury claims. The Company's estimation of such liability that is probable and estimable through 2004 ranges from $424.7 million to $813 million. The Company has concluded that no amount within that range is more likely than any other, and therefore has reflected $424.7 million as a liability in the accompanying consolidated financial statements. Of this amount, management expects to incur approximately $80.0 million in 1999 and has reflected this amount as a current liability. The Company believes it can reasonably estimate the number and nature of future claims that may be filed during the next six years. However for claims that may be filed beyond that period, management believes that the level of uncertainty is too great to provide for reasonable estimation of the number of future claims, the nature of such claims, or the cost to resolve them. Accordingly, it is reasonably possible that the total exposure to personal injury claims may be greater than the recorded liability. The increase in recorded liability of $274.2 million in 1998 is primarily reflective of the increases in claims filed in 1998, recent settlement experience and current expectations about future claims. Because of the uncertainties related to asbestos litigation, it is not possible to precisely estimate the number of personal injury claims that may ultimately be filed or their cost. It is reasonably possible there will be additional claims beyond management's estimates. Management believes that the potential additional costs for such additional claims, net of any potential insurance recoveries, will not have a material after-tax effect on the financial condition of the Company or its liquidity, although the net after-tax effect of any future liabilities recorded in excess of insurance assets could be material to earnings in a future period. An insurance asset in the amount of $264.8 million is recorded on the Consolidated Balance Sheet and reflects the Company's belief in the availability of insurance in this amount, based upon the Company's success in insurance recoveries, settlement agreements that provide such coverage, the nonproducts recoveries by other companies, and the opinion of outside counsel. Such insurance is either available through settlement or probable of recovery through the ADR process, negotiation or litigation. The Company believes that a claims resolution mechanism alternative to the Amchem settlement will eventually emerge, but the liability is likely to be higher than the projection in Amchem. Subject to the uncertainties, limitations and other factors referred to elsewhere in this note and based upon its experience, the Company believes it is probable that substantially all of the defense and resolution costs of property damage claims will be covered by insurance. Even though uncertainties remain as to the potential number of unasserted claims and the liability resulting therefrom, and after consideration of the factors involved, including the ultimate scope of its insurance coverage, the Wellington Agreement and other settlements with insurance carriers, the results of the California insurance coverage litigation, the establishment of the Center, the likelihood that an alternative to the Amchem settlement will eventually emerge, and its experience, the Company believes the asbestos-related claims against the Company would not be material either to the financial condition of the Company or to its liquidity, although the net after-tax effect of any future liabilities recorded in excess of insurance assets could be material to earnings in such future period. Recent Developments On February 26, 1999, the Company received a preliminary decision in the initial phase of the trial proceeding of the ADR which was favorable to the Company on a number of issues related to insurance coverage. The decision, while favorable, relates to the initial phase of the ADR proceeding. The Company has not yet determined the financial implications of the decision. ASSISTED LIVING: Wolf Haldenstein Files Complaint in Oregon ----------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP announced that on Friday, March 19, 1999 it filed a class action lawsuit in the United States District Court for the District of Oregon on behalf of investors who bought Assisted Living Concepts, Inc. (AMEX: ALF) stock between April 29, 1997 and February 1, 1999. The lawsuit charges Assisted Living and several of its top officers with violations of the securities laws and regulations of the United States. The complaint alleges that defendants issued a series of false and misleading statements concerning the Company's earnings and revenue. Specifically, the complaint alleges that the Company knowingly or recklessly failed to include or improperly accounted for "start-up"costs associated with new projects in financial statements throughout the Class Period. The effect was to dramatically overstate the Company's earnings throughout the Class Period such that the Company was obliged to restate all its income for 1997 and for the first nine months of 1998. The restatement wiped out 40% of the Company's income fore 1997 and nearly 50% for the first nine months of 1998. On the news of the restatement, the stock price fell 52% on extraordinarily heavy trading volume. CHS ELECTRONICS: Milberg Weiss Files Complaint in Florida --------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach commenced a class action lawsuit on March 22, 1999, in the United States District Court for the Southern District of Florida, on behalf of all purchasers of the common stock of CHS Electronics, Inc. (NYSE: HS) between June 19, 1998, and March 22, 1999, inclusive. The complaint charges CHS and certain officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of false statements and failed to disclose material facts throughout the Class Period concerning, among others, the Company's business, operating results and its future prospects. Because of the issuance of a series of false and misleading statements, the price of CHS common stock was artificially inflated during the Class Period. CHS ELECTRONICS: Schoengold & Sporn File Complaint in Florida ------------------------------------------------------------- Schoengold & Sporn, P.C., on March 22, 1999, filed a lawsuit in the Federal District Court for the Southern District of Florida against CHS Electronics, Inc. (NYSE:HS), Claudio Osorio, (President, Chairman of the Board and Chief Executive Officer of CHS) and Craig S. Toll (CHS's Chief Financial Officer) on behalf of purchasers of the common stock of CHS during the period August 5, 1998 through and including March 22, 1999 (the "Class Period"). The securities class action complaint charges the defendants with violations of the federal securities laws (Sections 10(b) and 20 of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder), by among other things, misrepresenting and/or omitting material information concerning CHS's net revenues by overstating vendor rebates in the second, third and fourth quarters of 1998, resulting in the Company restating its earnings for the second and third quarters of 1998. The price of CHS shares were thereby artificially inflating during the Class Period. CHS ELECTRONICS: Weiss & Yourman File Complaint in Florida ---------------------------------------------------------- Weiss & Yourman commenced a class action lawsuit against CHS Electronics, Inc. (NYSE:HS) and certain individuals associated with the Company on March 22, 1999, in the United States District Court for the Southern District of Florida on behalf of investors who purchased CHS shares during the period June 19, 1998 through March 22, 1999. The lawsuit follows the Company's disclosure that it had overstated vendor rebates in the second, third and fourth quarters of 1998 and is required to restate its financials accordingly and restructure its operations. The complaint alleges that defendants issued a series of materially false and misleading financials and public statements during the Class Period. These false and misleading statements caused the price of CHS's common stock to be artificially inflated in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. LITTLE SWITZERLAND: Schubert & Reed File Complaint in Delaware ---------------------------------------------------------------- On March 22, 1999, Schubert & Reed LLP filed a class action in the United States District Court for the District of Delaware, on behalf of a class of purchasers of Little Switzerland, Inc. common stock (Nasdaq: LSVI) during the period 2/5/98 through 5/4/98, inclusive. The suit names as Little Switzerland, Inc., CEO John E. Toler, Jr., Chairman of the Board C. William Carey, CFO Thomas S. Liston, Destination Retail Holdings Corporation ("DRHC") and DRHC President and 100% shareholder Stephen G.E. Crane for violations of the federal securities laws. Plaintiff's complaint alleges: On or about February 4, 1998, defendants represented that DRHC had obtained a firm financing commitment to purchase Little Switzerland's shares at a price of $8.10 each. However, each of the defendants knew, but failed to disclose, that the financing commitment would expire on April 30, 1998, before Little Switzerland's shareholders were scheduled to vote to approve the merger at their May 8, 1998 Special Meeting of Shareholders. Defendants concealed this expiration of DRHC's financing until after the close of the markets on May 4, 1998. On May 5, 1998, after it was revealed that the financing commitment had expired, and that the lender did not intend to extend or renew it, Little Switzerland's stock dropped from its previous closing price of $7.953 to close at $5.688, a decline of over 28%, on unusually high volume of 562,200 shares. NICE SYSTEMS: Milberg Weiss Files Complaint in New Jersey --------------------------------------------------------- Weiss Bershad Hynes & Lerach commenced a class action lawsuit on March 22, 1999, in the United States District Court for the District of New Jersey, on behalf of all purchasers of the American Depository Shares ("Nice ADSs") of Nice Systems, Ltd. ("Nice" or the Company) between February 4, 1998, and September 24, 1998, inclusive. The complaint charges Nice and certain officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series false statements and failed to disclose material facts throughout the Class Period concerning the Company's operations, technologies, products and prospects. Because of the issuance of a series of false and misleading statements, the price of Nice ADSs was artificially inflated during the Class Period. Following Nice's disclosure of the adverse facts described above Nice ADSs fell 54%, or $14.19, to close at $15.63 per share. NICE SYSTEMS: Reinhardt & Anderson File Complaint in New Jersey --------------------------------------------------------------- A class action complaint was filed on March 22, 1999, in the United States District Court for the District of New Jersey on behalf of all persons who purchased the American Depository Shares (ADSs) of Nice Systems, LTD (NASDAQ: NICEY), between February 4, 1998, and September 24, 1998, inclusive, by Reinhardt & Anderson. The complaint charges Nice Systems and certain officers and directors of the Company during the relevant time period with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's business, including but not limited to: (i) failing to disclose that NiceUniverse suffered from numerous design defects and was not easily integrated with telecom environments; (ii) failing to disclose that NiceUniverse 3.0 version had not been certified by its distributors and therefore its ability to be sold was impaired; and (iii) that the Company rushed its Nice Universe 3.0 product into the market without regard to the fact that the product was riddled with defects. The Complaint further alleges that because of the issuance of a series of false and misleading statements, the price of Nice Systems shares was artificially inflated during the Class Period and plummeted over 50% to $15.63 per share once the truth concerning the Company's business was revealed. PARTY CITY: Bernstein Liebhard Files Complaint in New Jersey ------------------------------------------------------------ Bernstein Liebhard & Lifshitz, LLP, commenced a securities class action lawsuit on behalf of purchasers of the common stock of Party City Corporation (Nasdaq: PCTY), between July 23, 1998 and March 18, 1999, inclusive, in the United States District Court for the District of New Jersey. The lawsuit alleges violations of the federal securities laws and names as defendants the Company and certain of its officers and/or directors. The complaint charges Party City and certain of its officers and directors with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading statements and failed to disclose material facts throughout the Class Period in the Company's public filings and public statements. As a result of these misrepresentations and omissions, the price of Party City's common stock was artificially inflated throughout the Class Period. PARTY CITY: Milberg Weiss Files Complaint in New Jersey ------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach commenced a class action lawsuit on March 22, 1999, in the United States District Court for the District of New Jersey, on behalf of all purchasers of the common stock of Party City Corporation (NASDAQ: PCTY) between August 24, 1998, and March 18, 1999, inclusive. The complaint charges Party City and certain officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series false statements and failed to disclose material facts throughout the Class Period concerning, among others, the Company's financial condition and compliance with certain loan covenants. Because of the issuance of a series of false and misleading statements, the price of Party City common stock was artificially inflated during the Class Period. Prior to the disclosure of the adverse facts certain insiders and directors sold 98,000 shares of Park City common stock to the unsuspecting investing public at artificially inflated prices. Over $1.5 million in proceeds was realized as a result of these sales. PARTY CITY: Weiss & Yourman File Complaint in New Jersey -------------------------------------------------------- Weiss & Yourman commenced a class action lawsuit against Party City Corporation (NASDAQ:PCTY) and certain individuals associated with the Company on March 22, 1999, in the United States District Court for the District of New Jersey on behalf of purchasers of Party City shares between July 23, 1998 and March 19, 1999. The complaint charges Party City and certain of its executive officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that defendants issued a series of materially false and misleading statements regarding the Company's financial condition and results of operations. QUINTEL COMMUNICATIONS: Awaiting Ruling on Motion to Dismiss ------------------------------------------------------------ On or about May 4, 1998, a complaint entitled "Joseph Chalverus, on behalf of himself and all others similarly situated v. Quintel Entertainment, Inc., Jeffrey L. Schwartz and Daniel Harvey" was filed in the United States District Court for the Southern District of New York; subsequently, a complaint entitled "Richard M. Woodward, on behalf of himself and all others similarly situated v. Quintel Entertainment, Inc., Jeffrey L. Schwartz and Daniel Harvey" was filed in that same court, as was a complaint entitled "Dr. Michael Title, on behalf of himself and all others similarly situated v. Jeffrey L. Schwartz, Jay Greenwald, Claudia Newman Hirsch, Andrew Stollman, Mark Gutterman, Steven L. Feder, Michael G. Miller, Daniel Harvey and Quintel Entertainment, Inc." In addition to QUINTEL COMMUNICATIONS, INC., the defendants named in the Complaints are present and former officers and directors of the Company. The plaintiffs seek to bring the actions on behalf of a purported class of all persons or entities who purchased shares of the Company's Common Stock from July 15, 1997 through October 15, 1997 and who were damaged thereby, with certain exclusions. The Complaints allege violations of Sections 10(b) and 20 of the Securities Exchange Act of 1934, and allege that the defendants made misrepresentations and omissions concerning the Company's financial results, operations and future prospects, in particular relating to the Company's reserves for customer chargebacks and its business relationship with AT&T. The Complaints allege that the alleged misrepresentations and omissions caused the Company's Common Stock to trade at inflated prices, thereby damaging plaintiffs and the members of the purported class. The amount of damages sought by plaintiffs and the purported class has not been specified. On September 18, 1998, the District Court ordered that the three actions be consolidated, appointed a group of lead plaintiffs in the consolidated actions, approved the lead plaintiffs' selection of counsel for the purported class in the consolidated actions, and directed the lead plaintiffs to file a consolidated complaint. The consolidated and amended class action complaint which has been filed asserts the same legal claims based on essentially the same factual allegations as did the Complaints. On February 19, 1999, the Company and the Individual Defendants filed a motion to dismiss the Consolidated Complaint. Plaintiffs have served papers in opposition to the motion to dismiss. The District Court has not yet ruled on the motion to dismiss. The Company believes that the allegations in the Complaints are without merit, and intends to vigorously defend the consolidated actions. RITE-AID: Henzel Firm Files Complaint in Pennsylvania ----------------------------------------------------- The Law Offices of Marc S. Henzel hereby gives notice that a class action complaint has been filed in the United States District Court for the Eastern District of Pennsylvania on behalf of a class of persons who purchased the common stock of Rite Aid Corporation (NYSE: RAD), between December 14, 1998 and March 12, 1999, inclusive, and who were damaged thereby. The complaint charges Rite Aid and certain of its officers and directors with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued materially false and misleading statements and failed to disclose material facts throughout the Class Period in the Company's public filings and public statements. As a result of these misrepresentations and omissions, the price of Rite Aid's common stock was artificially inflated throughout the Class Period. SHONEY'S, INC.: Settles 3 Employee Class Action Suits for $18MM --------------------------------------------------------------- Karin Miller, writing for the Associated Press, reports that Shoney's Inc. has agreed to pay $18 million to settle three class-action lawsuits with current and former employees who sued over pay and labor issues. The Nashville-based restaurant company also announced Monday a first-quarter 1999 loss of $15.9 million, including a $14.5 million charge to help cover the settlement. The company had set aside $3.5 million in the last quarter of 1998 after U.S. District Judge Todd Campbell ruled in December that the company improperly reduced salaries of Shoney's managers and assistant managers to cover cash shortages at their restaurants. Shoney's had been scheduled to go to trial this June to determine damages the company owed to the 1,000 plaintiffs in that lawsuit, filed in 1995. The second lawsuit, filed in 1996, alleged that hourly employees were working off the clock, paid inappropriately and overtime hours were rolled from one week to another. About 18,000 workers joined that lawsuit, and trial was set for Jan. 4, 2000. In 1997, managers at Captain D's seafood restaurants alleged that its parent company reduced salaries to cover cash shortages, and used empty titles of "manager" and "assistant manager" to avoid paying overtime. About 250 people joined in the suit, which had not been set for trial. Campbell and the restaurant company's lenders still must approve the settlement deal, which would split the money among 19,000 current and former employees. Shoney's operates and franchises 1,217 Shoney's, Captain D's, Pargo's and Fifth Quarter restaurants in 28 states. The company closed 104 restaurants last year and announced the closure of 47 more this year as part of a restructuring plan hoped to turn around the struggling company. TELE-COMMUNICATIONS: Time Warner Shareholder Litigation Dismissed ----------------------------------------------------------------- Time Warner Stockholder Litigation. In November 1995, two lawsuits on behalf of and for the benefit of Time Warner, Inc. ("Time Warner") were filed in the Court of Chancery of the State of Delaware ("the Delaware Chancery Court") by purported stockholders of Time Warner. These actions, which have identical claims and allegations, are styled as Bernard v. Time Warner, Inc., Civil Action ("C.A.") No. 14651, and Parnes v. Time Warner, Inc., C.A. No. 14660, respectively. The defendants named in both complaints are Time Warner, Inc., Tele-Communications, Inc., and the following individuals who are directors of Time Warner: Gerald M. Levin, Merv Adelson, Beverly Sills Greenough, Michael A. Miles, Donald S. Perkins, Raymond S. Trough, Edward S. Finkelstein, Carla A. Hills, Henry Luce, III, Reuben Mark, Francis T. Vincent, Jr., Lawrence B. Buttenweiser, David T. Kearns, J. Richard Munro, and Richard D. Parsons. In both cases, plaintiffs allege among other things that the Time Warner directors breached their fiduciary duties in establishing the terms of Time Warner's proposed merger with Turner Broadcasting System, Inc. ("TBS") Specifically, plaintiffs contend in both cases that the Time Warner directors impermissibly sought to entrench themselves and that TCI aided and abetted the Time Warner directors' alleged breaches of fiduciary duty. Plaintiffs complain in both cases that, in connection with the proposed merger between TBS and Time Warner (the "TBS-Time Warner Merger"), TCI will receive (i) a premium for its TBS stock with a value of nearly 7% over the value of the merger consideration to be received by other TBS stockholders, (ii) exclusive programming benefits at discounted prices from TBS, (iii) an agreement to purchase TBS's and Time Warner's interests in two regional sports networks, and (iv) five million additional shares of Time Warner stock in exchange for giving Time Warner an option to purchase a subsidiary of TCI. In exchange for these alleged benefits, TCI allegedly facilitated efforts by the Time Warner directors and Time Warner's management to entrench themselves by allowing the Time Warner voting stock to be received by TCI upon consummation of the TBS-Time Warner Merger to be placed in a voting trust controlled by defendant Levin, who is the chairman and chief executive officer of Time Warner. Plaintiffs seek in both actions to enjoin the consummation of the proposed TBS-Time Warner Merger, to rescind the TBS-Time Warner Merger if it is consummated, and to enjoin the transfer of Time Warner's assets or stock to TCI in connection with the TBS-Time Warner Merger. TCI moved to dismiss these actions on November 22, 1995. Discovery has not commenced in these actions. On December 5, 1995, plaintiffs in both actions agreed to stay any proceedings pending regulatory developments regarding the proposed TBS-Time Warner Merger. The TBS-Time Warner Merger was consummated on October 10, 1996. This case has been voluntarily dismissed, TCI discloses in its latest annual report. TELE-COMMUNICATIONS: No Discovery Yet in 1997 DMX Litigation ------------------------------------------------------------ In September 1996, a putative class action complaint was filed with the Delaware Chancery Court in C.A. No 15206 by a stockholder of DMX Inc. ("DMX"). The complaint was filed following the announcement of a proposed business combination in which TCI Music, Inc. ("TCI Music"), a newly formed entity, would acquire DMX (the "TCI Music-DMX Merger"). The proposed business combination contemplates that the shareholders of DMX, including subsidiaries of TCI that currently own approximately 45% of DMX's outstanding stock, would receive shares of TCI Music Class A common stock having one vote per share and representing approximately 19% of TCI Music's outstanding shares. TCI would hold TCI Music Class B common stock having ten votes per share and representing approximately 81% of the TCI Music common equity outstanding immediately after the transaction. TCI would acquire those shares in exchange for consideration that includes DMX subscriber accounts held by TCI subsidiaries and equipment used by those subsidiaries to distribute the DMX music service to TCI customers. The defendants in the action include DMX, TCI and the directors of DMX (Jerold H. Rubinstein, Donne F. Fisher, Leo J. Hindery, Jr., James R. Shaw, Sr., Kent Burkhart, J.C. Sparkman and Menon Bhaskar). Mr. Fisher is a director of and a consultant to TCI. Mr. Hindery is a director and an executive officer of TCI. Mr. Sparkman is a director of TCI. The gravamen of the complaint is that the DMX directors would breach their fiduciary duties by approving the proposed business combination. Specifically, plaintiff alleges that, due to TCI's alleged control over the DMX board, the DMX directors are unwilling to negotiate with TCI to maximize the value for the public stockholders of DMX. Plaintiff claims that the proposed consideration to be paid the public stockholders of DMX is grossly unfair, inadequate and substantially below the fair value of DMX. Plaintiff seeks to enjoin the consummation of proposed business combination or, should the proposed transaction proceed, to rescind the transaction. Plaintiff also seeks unspecified rescissory and compensatory damages, fees and costs. The action remains pending and discovery has not commenced. The TCI Music- DMX Merger was consummated on July 11, 1997. Based upon the facts available, management believes that, although no assurance can be given as to the outcome of this action, the ultimate disposition should not have a material adverse effect upon the financial condition of the Company. TELE-COMMUNICATIONS: Cert. Petition Filed in United Cable Suit ---------------------------------------------------------------- Clarence L. Elder, both individually and as the group Representative vs. Tele-Communications, Inc. et al. On December 11, 1995, plaintiff filed suit in the Circuit Court for Baltimore City, Case No. 95345001/CL205580 against UCTC L.P. Company, UCTC of Baltimore, Inc., UTI Purchase Company, Inc. and Tele- Communications, Inc. The allegations made in the complaint pertain to plaintiff's interest in United Cable Television of Baltimore Limited Partnership. Plaintiff claims he was wrongfully denied certain preference distributions, rights to purchase stock, rights to escrow funds, and tax distributions. The Court granted defendants' Motion for Summary Judgment and plaintiff has filed an appeal. On September 24, 1997, the Maryland Court of Special Appeals affirmed in all but one respect the Circuit Court's summary judgment in favor of the defendants. The court found that the settlement agreement at issue is ambiguous concerning the number of Limited Partnership units the plaintiffs were entitled to purchase (186.6 or 311), but ruled in favor of defendants concerning the price at which the units must be sold and all other issues. Plaintiffs have filed a motion for reconsideration, and have filed a petition for certiorari in the Court of Appeals on December 24, 1997 if their motion for reconsideration is denied. If the Court of Special Appeals decision is not disturbed, the only issue for trial will be the number of units Plaintiffs are entitled to purchase at fair market value, as determined in accordance with the appraisal previously obtained by defendants. Based upon the facts available, management believes that, although no assurance can be given as to the outcome of this action, the ultimate disposition should not have a material adverse effect upon the financial condition of the Company. TELE-COMMUNICATIONS: Settlement in Colorado Shareholder Action -------------------------------------------------------------- James Dalton, et al. v. Tele-Communications, Inc., et al. On February 24, 1997, James Dalton, et al. filed suit in District Court for Arapahoe County, Colorado, Case No. 97-CV421, against TCI and certain current and former officers of TCI and its subsidiary, TCIC (John C. Malone, Brendan R. Clouston, Barry P. Marshall, Camille K. Jayne, Sadie N. Decker, Bruce W. Ravenel, Gerald W. Gaines, Bernard W. Schotters, II) and Daniel L. Ritchie and Donne F. Fisher, in their capacity as co-personal representatives of the estate of Bob Magness. Plaintiffs filed this action under the Colorado Securities Act and Colorado common law on behalf of all persons who purchased TCI securities from January 10, 1996 through October 24, 1996 ("the class period"). Plaintiffs claim, in part, that the defendants made false and misleading statements during the class period concerning TCI's revenue and cash flow growth, customer growth, and expansion and diversification into a multi-business platform; and that TCI failed to disclose the performance of its various operations. Plaintiffs claim further, in part, that TCI's cash flow growth was weak and below levels necessary to fund a multi-business diversification program and that TCI was competitively disadvantaged and would likely be threatened by adverse conditions impacting its business. Plaintiffs are seeking nationwide class certification and claim that the amount in controversy is less than $75,000 per named plaintiff, exclusive of interest and costs. On September 3, 1997, defendants motion to dismiss was denied. Defendants answered the Complaint on October 3, 1997. Settlement has been reached in principle, which settlement requires further documentation, notice and court approval. Based upon the facts available, management believes that, although no assurances can be given as to the outcome of this action, the ultimate disposition should not have a material adverse effect upon the financial condition of the Company. TELE-COMMUNICATIONS: TCG/AT&T Merger Litigation Presses Forward --------------------------------------------------------------- In December of 1997 and January of 1998, in the Delaware Chancery Court, the following three actions were filed: Sternberg v. TCI Communications, Inc., et al., Case No. 16092, Cirillo v. Tele- Communications, Inc., et al., Case No. 16139, and Blain v. Tele- Communications, Inc., et al., Case No. 16161. The complaints were filed in response to public reports of a proposed merger between Teleport Communications Group ("TCG") and AT&T Corporation ("AT&T") whereby each share of TCG common stock would be exchanged for 0.943 shares of AT&T Common Stock. Common to the three complaints are the following defendants: TCG, TCG shareholders, TCI, Comcast Corporation, ("Comcast") and Cox Communications, Inc. ("Cox"); and the following TCG directors: Brian L. Roberts, Brendan R. Clouston, Larry E. Romrell, Lawrence S. Smith, Robert Annunziata, James O. Robbins, Jimmy W. Hayes, David M. Woodrow, John R. Dillon, Bernard W. Schotters, Gerald W. Gaines, James Bruce Llewellyn and C.B. Rogers, Jr. Additionally, the Cirillo complaint names AT&T as a defendant. Messrs. Clouston, Romrell and Schotters were affiliated with TCI during the period relevant to the allegations in the complaints. The gravamen of the complaints is that the price at which AT&T proposed to acquire TCG shares was inadequate and that, in causing TCG to pursue the merger with AT&T, the defendant directors, TCI, Cox and Comcast were acting in their own self- interest rather than in the interests of TCG and its stockholders. Specifically, the complaints allege that the defendants controlled TCG, had access to internal financial information concerning TCG's true value, and used such information to the detriment of TCG's public stockholders. The Cirillo complaint additionally alleges that AT&T has aided and abetted the alleged wrongdoing. The complaints seek to enjoin the proposed merger, to rescind the merger should it be consummated, and to recover unspecified compensatory damages for the public holders of TCG common stock, or their successors in interest, who are being or will be harmed by the defendants' actions. In addition, the Sternberg complaint seeks an order requiring the defendants to undertake actions to maximize the value of TCG's stock in furtherance of their fiduciary duties. The merger between TCG & AT&T was consummated in July 1998. Discovery has not commenced in these actions. Based upon the facts available, management believes that, although no assurances can be given as to the outcome of this action, the ultimate disposition of this matter should not have a material adverse effect upon the financial condition of the Company. TELE-COMMUNICATIONS: No Discovery Yet in Magness Shareholder Suit ----------------------------------------------------------------- On January 8, 1998, seven putative derivative actions on behalf of and for the benefit of TCI were filed in the Delaware Chancery Court by purported shareholders of TCI: Morgan, et al. v. Tele-Communications, Inc., et al., C.A. No. 16128-NC; Steiner v. Tele-Communications, Inc., et al., C.A. No. 16130-NC; Weisberg v. Tele-Communications, Inc., et al., C.A. No. 16131-NC; Pan v. Tele-Communications, Inc., et al., C.A. No. 16133; Klein v. Tele- Communications, Inc., et al., C.A. No. 16135; Crandon Capital Partners v. Tele-Communications, Inc., et al., C.A. No. 16136; and Deutsch v. Tele-Communications, Inc., et al., C.A. No. 16148. Also named as defendants in these cases are John C. Malone, John W. Gallivan, Donne F. Fisher, Leo J. Hindery, Jr., J.C. Sparkman, Paul A. Gould, Jerome H. Kern, Kim Magness, and Robert A. Naify. These are derivative shareholder actions challenging the Magness estate settlement and the related payment to John C. Malone. Plaintiffs allege, among other things, the following claims for relief: breach of fiduciary duties, self-dealing and unjust enrichment, and waste of Company assets. The complaints seek repayment of amounts paid for call agreements, injunctive relief, attorney fees, costs and unspecified compensatory damages. These actions have been consolidated for all purposes under the current caption styled as In Re: TCI - Magness Estate Derivative Litigation, Consolidated C.A. No. 16128. The plaintiffs have not demanded a jury trial. On June 26, 1998, plaintiffs filed an amended complaint to add claims arising from the proposed merger between TCI and AT&T (the "TCI-AT&T Merger") substantially similar to those alleged in the TCI-AT&T Merger litigation described below. The gravamen of the amended complaint is that the TCI directors breached their fiduciary duties by approving the Magness estate settlement, pursuant to which (i) the 1997 sale by the Magness estate of approximately 32 million shares of TCI Group Series A Stock to affiliates of Merrill Lynch & Co. and Lehman Brothers was partially voided; (ii) the Magness estate and Dr. Malone agreed to vote their TCI stock as a single group; and (iii) TCI acquired the rights to purchase separately the shares of TCI Group Series B Stock currently held by Dr. Malone and the Magness estate in exchange for the respective payment by TCI to Dr. Malone and the Magness estate of $150 million and $124 million, respectively. Specifically, the plaintiffs allege that the TCI directors sought to entrench themselves through the Magness estate settlement, and the TCI directors' approval of the settlement constituted waste of TCI assets. Plaintiffs also allege that Dr. Malone would be unjustly enriched by the proposed TCI-AT&T Merger, announced on June 24, 1998, because the merger exchange ratio provides a premium for the shares of TCI Group Series B Stock over the shares of TCI Group Series A Stock, and the Magness estate settlement unjustly increased Dr. Malone's holdings of TCI Group Series B Stock. In the amended complaint, plaintiffs seek a declaratory judgment that the defendants breached their fiduciary duties to the Company, an accounting by the TCI director defendants to TCI for the damages allegedly sustained by the Company, an accounting by Dr. Malone to TCI for the damages allegedly sustained by the Company, an accounting by Dr. Malone of his profits from the Magness estate settlement, the rescission of the Magness estate settlement, the repayment by Dr. Malone of any payments he has received under the Magness estate settlement and an award of unspecified compensatory damages. Discovery has not commenced in this action. The TCI-AT&T Merger was consummated on March 9, 1999. TELE-COMMUNICATIONS: TINTA Shareholder Pact Awaits Court Approval ----------------------------------------------------------------- On July 13, 1998, two putative class action complaints were filed by certain stockholders of Tele-Communications International, Inc. ("TINTA") in the Delaware Chancery Court. The actions, which have identical claims and allegations, are styled as Berkowitz v. Tele-Communications, Inc., et al., C.A. No. 16533, and Chetkov v. Tele-Communications, Inc., et al., C.A. No. 16534, respectively. The complaints were filed following the announcement of a proposed business combination in which Liberty Media Group would acquire all outstanding public shares of TINTA not already owned by TCI Ventures Group. The defendants named in both complaints are TCI, TINTA, and the Board of Directors of TINTA: Leo J. Hindery, Jr., John C. Malone, Gary S. Howard, David J. Evans, Pierre Lescure, Paul A. Gould, Fred A. Vierra, and Jerome H. Kern. The gravamen of both complaints is that the TINTA directors will breach their fiduciary duties by approving the merger and undervaluing the proposed merger consideration to the detriment of the TINTA public stockholders. Plaintiffs in both actions seek to enjoin the consummation or closing of the proposed merger, or the rescission of the merger in the event it is consummated, and unspecified compensatory damages, fees and costs. The Company and the plaintiffs have reached an agreement in principle to settle the class action litigation in exchange for TCI's willingness to include a pricing provision in the merger agreement providing TCI with the option of either increasing the merger exchange ratio to yield at least $22.00 per share of TINTA common stock or to terminate the merger agreement. The merger was consummated on November 19, 1998. The tentative settlement is subject to numerous conditions, including the execution of definitive settlement documents, court approval of the settlement and consummation of the merger. TELE-COMMUNICATIONS: TCI Series A&B Plaintiffs Start Discovery -------------------------------------------------------------- AT&T-TCI Group Series A Stockholder Litigation. Between June 24 and July 1, 1998, thirteen purported class action complaints were filed by holders of TCI Group Series A Stock in the Delaware Chancery Court under the captions Nieto v. Tele-Communications, Inc., et al., C.A. No. 16470; Martin, et al., v. Tele- Communications, Inc., et al., C.A. No. 16471; Bove v. Tele- Communications, Inc., et al., C.A. No. 16473; Freiman v. Tele- Communications, Inc., et al., C.A. No. 16474; Great Neck Capital Appreciation Investment Partnership, L.P. v. Tele-Communications, Inc., et al., C.A. No. 16477; Cohen v. Tele-Communications, Inc., et al., C.A. No. 16478; Silvert v. Tele-Communications, Inc., et al., C.A. No. 16479; Alex Cooper Profit Sharing Trust v. Tele-Communications, Inc., et al., C.A. No. 16482; Satz v. Tele- Communications, Inc., et al., C.A. No. 16489; Stefansky, et al., v. Tele-Communications, Inc., et al., C.A. No. 16490; Hushing v. Tele-Communications, Inc., et al., C.A. No. 16491; Krim v. Tele-Communications, Inc., et al., C.A. No. 16495; and Hirsch v. Tele-Communications, Inc., et al., C.A. No. 16501. The complaints were filed in response to the announcement of the proposed TCI- AT&T Merger and allege substantially similar claims. On December 4, 1998, the Delaware Chancery Court consolidated these actions under the caption In re Tele-Communications, Inc., Shareholders Litigation, Consolidated C.A. No. 16470. On February 10, 1999, plaintiffs filed a consolidated amended complaint (the "TCI Group Consolidated Complaint"). The defendants named in the consolidated action are TCI and the following TCI directors: Donne F. Fisher, John W. Gallivan, Paul A. Gould, Leo J. Hindery, Jr., Jerome H. Kern, Kim Magness, John C. Malone, Robert A. Naify and J.C. Sparkman. AT&T was also named as a defendant in the consolidated action. The gravamen of the TCI Group Consolidated Complaint is that the TCI directors breached their fiduciary duties to the holders of TCI Group Series A Stock because Dr. Malone, the largest holder of TCI Group Series B Stock, with the acquiescence of the other TCI directors, has obtained under the TCI-AT&T Merger agreement a premium in the merger consideration for the stockholders of TCI Group Series B Stock over the amount of merger consideration that would be received by the stockholders of TCI Group Series A Stock. Plaintiffs also allege that the TCI proxy statement relating to the proposed TCI-AT&T Merger, dated January 11, 1999, contains inadequate disclosures regarding the value under the TCI-AT&T Merger of the stock options, stock appreciation rights and restricted stock awards held by the officers and directors of TCI, the correct premium that will be paid for shares of TCI Group Series B Stock pursuant to the merger agreement, the factors relied upon by the TCI directors determining that the 10% premium to be received by the stockholders of TCI Group Series B Stock was acceptable, and the existence of various lawsuits attacking the TCI-AT&T Merger and related transactions. Plaintiffs in the consolidated action seek to enjoin the proposed TCI-AT&T Merger, or rescind the TCI-AT&T Merger in the event it is consummated, and request unspecified compensatory damages, fees and costs. Plaintiffs have filed discovery requests in this action. The TCI-AT&T Merger was consummated on March 9, 1999. UNITED FOODS: Company Denies Allegations in Shareholder Complaint ---------------------------------------------------------------- United Foods, Inc., in a Form 8-K filed with the SEC, acknowledges that a complaint was filed against the company and its directors by astockholder 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 believe the complaint to be without merit," the Company says. Y2K LITIGATION: Microsoft Prevails in Illinois FoxPro Suit ---------------------------------------------------------- Microsoft Corp. (Nasdaq: MSFT) announced a major court victory Friday with the dismissal of a year 2000 lawsuit filed in federal court in Illinois. The lawsuit, filed originally as a class action by plaintiff Ruth Kaczmarek of Naperville, Ill., was dismissed with prejudice by the U.S. District Court for the Northern District of Illinois. In a strongly worded opinion, the court said, "As we near the 21st century, the media has focused on many potential Y2K problems. This focus will inevitably lead to much litigation . . . which the courts will need to determine is meritful or meritless. Unfortunately for the plaintiff, we find this lawsuit falls in the latter category." "This is an important win for Microsoft," said Andy Culbert, a corporate attorney at Microsoft. "This case shows that Microsoft has acted in a responsible and pro-consumer manner with respect to its products and year 2000. The court's dismissal of this case with prejudice sends a strong message that should deter groundless year 2000 litigation." The original case had alleged that certain versions of the Microsoft(R) FoxPro(R) database software contained a defect in the way it handles dates after Dec. 31, 1999. The plaintiff argued that because of the alleged defect, Microsoft had breached the warranties and committed negligence in the software's design. The FoxPro-related issue centers around a product feature called the Century function. When the Century function is set to "On," FoxPro accepts and can correctly process dates into the next century. When it is set to "Off," it assumes two-digit years to be within the 20th century. Microsoft disclosed this information in the product manual and at http://www.microsoft.com/year2000/on its year 2000 Web site. "This opinion really puts year 2000 issues in perspective and supports all of the work Microsoft has been doing to help customers prepare for the year 2000," said Michel Gahard, a corporate attorney at Microsoft. "Microsoft is committed to providing the information resources, tools, channel support and services to assist our customers in preparing for the year 2000, and we will continue down that path." The court found that Microsoft had made it clear in the manual for FoxPro how the software handles dates and that the plaintiff's claim was without merit. "Kaczmarek's main problem is that there is nothing inherently wrong with computer software that assumes that a two- digit year entry means the 20th century, particularly when the default setting is disclosed as part of the contract," the court said. Moreover, FoxPro is Y2K-compliant: A developer can set the Century feature to "On" to provide a four-digit-year field when a client needs an application that will process dates occurring later than Dec. 31, 1999 -- something, we assume, is occurring with greater frequency as that date approaches." "In other words," the court said, "there is no defect in the program; FoxPro operates in the manner indicated by the user manual. Thus, Kaczmarek cannot establish a breach of Microsoft's warranties. * * * Finally, absent a defect in FoxPro, Kaczmarek cannot show negligence by Microsoft. Because there is no factual or legal basis for Kaczmarek's claims, the case is dismissed with prejudice." ********* 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. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *