/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/991207.MBX C L A S S A C T I O N R E P O R T E R Tuesday, December 7, 1999, Vol. 1, No. 215 Headlines ALLSTATE INSURANCE: To Reimburse Depreciation Re Roof Claims in Okla. ASBESTOS LITIGATION: U.K. Ap Ct Dismisses South African Victims’ Claims CERION TECHNOLOGIES: Ill. App. Ct. Revives Shareholder IPO Suit CITY OF YONKERS: New Chance to Show Bias in Schools As 2nd Cir Remands CONNECTICUT ENERGY: 2 Cases on Trade Practices Set for Trial in 2000 DYFS: Judge Will Hear If Teenager from Foster Care Can File Late Claim GEORGIA GULF: Contractors’ Workers Sue in Loui. on EDC Pipeline Rupture GEORGIA GULF: 5 Opt out of Settlement for Louisiana Water Contamination HOLOCAUST VICTIMS: A List of WWII Compensation Discussions HOLOCAUST VICTIMS: Veil Lifted On Holocaust Accounts In Swiss Banks INSPIRE INSURANCE: Milberg Weiss Files Securities Suit in Texas PARTY CITY: Faces Consolidated Securities Complaint in New Jersey PARTY CITY: Settles Store Franchisees’ Lawsuit in New York PSS WORLD: Securities Suit in Florida Has Been Voluntarily Dismissed TEXAS ALCOHOL: 3 White Males Sue for Denial of Job – FNN Coverage Y2K LIITGATION: A New Year's Eve Designated Vetter for Some Lawyers * A Class Action Member Says Coupon Settlement Does’t Benefit Consumers * The great assimilation of the Internet continues apace ******** ALLSTATE INSURANCE: To Reimburse Depreciation Re Roof Claims in Okla. --------------------------------------------------------------------- Allstate Insurance Company and Allstate Indemnity Company announced on December 3 they have begun a process to reimburse some Oklahoma policyholders for depreciated payments relating to roof replacement claims from 1990 to 1999. Allstate is sending notice of the proposed settlement to Oklahoma homeowners customers who had policies in effect between January 1, 1990 and October 18, 1999, which provided for depreciation on roof replacement and whose payments for roof replacement were reduced by Allstate for depreciation of labor or tear off and not reimbursed. The reimbursement process is part of a proposed settlement of a class action lawsuit regarding the company's handling of roof replacement claims. The proposed settlement is subject to final court approval. The lawsuit challenged Allstate's methods regarding depreciation of labor involved in replacing a roof and the cost of tearing off the roof being replaced. "While Allstate denies all allegations in the lawsuit, we entered into a settlement to spare our customers and the company additional costly and lengthy litigation," said Allstate spokesman Peter Debreceny. Allstate has begun mailing notices of the proposed settlement to potential class members. Only present and former policyholders who submit a claim form and who qualify will receive a payment, which will be based on a percentage of the amount of depreciation taken for the labor component of tear off and roof replacement. Customers with questions regarding their eligibility for reimbursement should call counsel for the class, John T. Edwards, Shannon L. Edwards and Phillip A. Dickey of Monnet, Hayes, Bullis, Thompson & Edwards, in Oklahoma City, 405-616-2977. The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurance company. Its main business units include Allstate Personal Property and Casualty, which provides insurance for more than 14 million households and has approximately 15,500 agents in the U.S. and Canada, and Allstate Life and Savings, which markets a number of life insurance and savings products under a variety of brands through a number of channels and is currently the nation's 17th largest life insurance business. ASBESTOS LITIGATION: U.K. Ap Ct Dismisses South African Victims’ Claims ----------------------------------------------------------------------- A landmark ruling has significantly reduced the risk to UK multinationals that this country's legal aid system will encourage people overseas to take class actions against them here. The Court of Appeal has refused to give 3,000 South African asbestos victims leave to pursue their case against Cape in the UK courts. Giving its reasons last week, the court said the fact the victims would not have access to legal aid in South Africa was relevant but not, on its own, sufficient grounds to allow the case to go ahead here. Citing the precedent of the Bhopal disaster, where the US courts dismissed a claim against Union Carbide because the majority of claimants were Indian residents, the court said the public interest lay in the Cape action being fought in the South African courts. But the decision may still be challenged - Leigh Day & Co, the solicitor acting for the Cape claimants, said it would be seeking permission from the House of Lords to appeal. (Financial Times (London) December 6, 1999) CERION TECHNOLOGIES: Ill. App. Ct. Revives Shareholder IPO Suit --------------------------------------------------------------- Nashua Corporation (NYSE: NSH) announced on December 2 that the Appellate Court of Illinois has reversed the order of the Circuit Court of Cook County, Illinois against the Company in connection with the initial public offering of Cerion Technologies Inc.("Cerion"). The lawsuit was filed in November 1997 by three individual plaintiffs who claimed to represent all persons who purchased Cerion's common stock between May 24, 1996 and July 9, 1996, and was dismissed with prejudice by the Circuit Court in May 1998. The lawsuit also named Cerion, certain directors and officers of Cerion, and the underwriter of the offering. Cerion, formerly headquartered in Champaign, Illinois, manufactured precision-machined aluminum disk substrates. Cerion ceased operations in November 1998. Cerion's assets and liabilities are held by Cerion Liquidating Trust under a shareholder-approved plan of liquidation and dissolution. Nashua Corporation markets specialty imaging products and services to industrial and commercial customers. The Company's products include thermal papers, pressure-sensitive labels and specialty papers, as well as copier, ink jet and laser printer supplies. On September 15, 1998, Cerion Technologies Inc. ("Cerion"), a publicly owned company of which Nashua owns 37.1 percent of the outstanding common stock, announced its decision to cease operations in the fourth quarter of 1998 and it is currently in the process of liquidation. Nashua's latest annual report is posted at http://www.sec.gov/Archives/edgar/data/69680/0000950135-99-001627.txt CITY OF YONKERS: New Chance to Show Bias in Schools As 2nd Cir Remands --------------------------------------------------------------------- Desegregation advocates will get a new chance to show that vestiges of discrimination persist in the Yonkers School District, a Second Circuit panel decided. Rethinking a June opinion on the same appeal, the appeals court stuck to its ruling that two vestiges claimed by the plaintiffs were unsubstantiated and the remedy - a mandate that the state provide $ 575 million to the district over nine years - was overbroad and overstepped the trial court's powers. What the panel did was abandon its position that there are no possible vestiges of discrimination beyond the two it rejected in June. As a result, the panel, led by Circuit Judge Dennis G. Jacobs, has remanded the two-decades-long case to the southern District for a hearing on whether elements of discrimination remain in the Yonkers School District. "The remand will entail a prolongation of uncertainty in this already protracted litigation, but we conclude that the delay is worthwhile to ensure that we have the full benefit of the district court's views," wrote Judge Jacobs in United States v. City of Yonkers, 97-6284, 97-6338, the seventh Second Circuit opinion in the case's history. The litigation focuses on identification and remedying any residual discrimination, despite the fact that the Yonkers school system is now fully integrated. If there are such vestiges, minority students affected are entitled to remedial measures. The desegregation advocates, led by the Yonkers Branch of the NAACP, will be able to establish alternative grounds for a remedy from the trial court. Off the table as possible vestiges of discrimination are the two rejected in June: that teachers have low expectations of minority students, and that teaching techniques and curriculum are insufficiently multicultural. In the 51-page majority opinion, Judge Jacobs reiterated the court's reasons for rejecting the two vestiges approved by the trial court. But in opening the door to proof of other remnants of discrimination, the majority came over to the position taken by Circuit Judge Robert D. Sack, a partial dissenter in June who wrote a short concurrence. The appeals panel asked District Judge Leonard B. Sand "to make further findings on the record and in light of this opinion as to whether - or not - there are remaining vestiges of segregation in the Yonkers school system, and if so what they are and what record evidence is relied on for support." The case was begun in 1980 when the federal government sued the city of Yonkers and its school system alleging housing and school segregation. The NAACP intervened in the case, which was later certified as a class action. Assistant Attorney General Denise A. Hartman represents the State of New York, which is a defendant in the case. Michael H. Sussman of Goshen is representing the NAACP. Stephen J. Routh of Hogan & Hartson in Washington represents the Yonkers Board of Education, a defendant that has weighed in on the side of the NAACP. And Raymond P. Fitzpatrick Jr., of Fitzpatrick Cooper & Clark in Birmingham, Ala., is the attorney for the City of Yonkers. (New York Law Journal November 18, 1999) CONNECTICUT ENERGY: 2 Cases on Trade Practices Set for Trial in 2000 -------------------------------------------------------------------- There are three lawsuits pending against The Southern Connecticut Gas Company in the Complex Litigation Docket, Connecticut Heating and Cooling Contractors Association, Inc., et al. v. Connecticut Natural Gas Corporation, et al., alleging conspiracy to violate antitrust laws against the three Connecticut LDCs; Connecticut Cooling Total Air, Inc. v. Connecticut Natural Gas Corporation, et al., alleging conspiracy to violate the Connecticut Unfair Trade Practices Act against the three LDCs; and Connecticut Cooling Total Air, Inc. v. Southern Connecticut Gas Company, alleging violation of the Connecticut Unfair Trade Practices Act. All of the suits relate to the LDCs' provision of service and maintenance to heating, cooling and ventilating systems and appliances. The plaintiffs are two trade associations and one plumbing and heating contractor, purporting to sue on behalf of a class of other such contractors. The cases have been brought as class actions, but class certification has not been granted. One of the cases against Connecticut Natural Gas alone was ordered to proceed to trial in August 1999 and settled just prior to trial. While that case was moving toward trial, discovery was stayed on the remaining cases. Yankee Gas has been selected as the next case to proceed to trial, which has been scheduled to commence on March 20, 2000. One of the cases against Southern is scheduled for trial on December 4, 2000. The plaintiffs seek treble damages in excess of $15,000, punitive damages, attorneys' fees and equitable relief. Southern is defending itself vigorously in these lawsuits, which management believes are without merit. DYFS: Judge Will Hear If Teenager from Foster Care Can File Late Claim ---------------------------------------------------------------------- In 1990, James Reele and his brother were placed in foster care because of alleged abuse by their adoptive parents, but that only led to more abuse, so he says, and he's determined to hold the state accountable. On Nov. 19, he won a procedural victory, as Superior Court Judge Marlene Lynch Ford in Toms River ruled that Reele could file a late claim against the Division of Youth and Family Services -- on the condition that he be evaluated by a psychiatrist. DYFS had opposed Reele's motion because he failed to file his suit within the required 90 days of his separation from the agency at age 18. He didn't file until Aug. 10 of this year, a day before his 19th birthday. Ford ordered that psychiatrist Robert Johnson of the University of Medicine and Dentistry conduct his evaluation of Reele's "mental emotional and physical state of health" and prepare a report by Dec. 17. At that time, Ford will conduct a hearing on whether Reele can file his claim. Johnson had evaluated Reele last month but has not yet reported his findings. Ford also ordered the Children's Home of Burlington County in Mount Holly to turn over Reele's medical and other records to Ford for review in camera. Katrina Wright, an associate at Lowenstein Sandler in Roseland who is representing Reele pro bono, says her client's records are vital to showing that he was improperly cared for by DYFS and was unable to understand the time limits on suing a state agency. "How could a homeless kid, who has never been to a regular school, how could he possibly know?" asks Wright. "He didn't know he could sue the state. He doesn't have a parent. He didn't have anybody he could go to." DYFS spokesman Andy Williams referred questions about the case to the Attorney General's Office, which declined to comment. Reele's story made news in 1992 when his adopted parents were convicted on endangerment charges for allegedly forcing him and his brother to sleep in dog kennels two years earlier. DYFS learned of the situation through one of the Reeles' other adopted children and took custody of James and his siblings. Since 1990, Wright says, Reele has been in 24 foster homes, never staying at one for more than three to six months. Reele's suit against DYFS alleges that because he was abused as a child and tortured, the agency should have recognized him as a child at risk. Cases like Reele's prompted Lowenstein Sandler to join a class-action suit filed in federal court in Trenton in August by Children's Rights, a not-for-profit child advocacy group, alleging that the agency doesn't adequately protect abused and neglected children. The suit, similar to others the group has filed in 11 other cities or states, seeks to have a panel of experts oversee DYFS. A state panel in February 1998 urged a number of reforms for DYFS, including hiring additional caseworkers and measures to reduce stays in foster care. (New Jersey Law Journal, 158 N.J.L.J. 744, Nov-29-1999) GEORGIA GULF: Contractors’ Workers Sue in Loui. on EDC Pipeline Rupture ----------------------------------------------------------------------- Georgia Gulf Corp. currently has numerous separate pending cases which originated as a result of a 1994 rupture of the Conoco Ethylene Dichloride (EDC) pipeline connecting Conoco's dock to the Vinyls Group's VCM plant. Plaintiffs are seeking compensatory and punitive damages as a result of alleged exposure to EDC while employed for contractors hired by Conoco to clean up the EDC. On October 13, 1997, a jury in the 14(th) Judicial District Court, Calcasieu Parish, Louisiana, returned a verdict against the Company in lawsuits brought by two of Conoco's contractor's employees who were not working on the cleanup. The Company appealed the verdict and, along with Conoco, settled with the plaintiffs for an undisclosed amount. The Company does not believe that the rulings related to the two above cases adversely affects the majority of the other cases. The remaining EDC pipeline cases relate to workers specifically hired by Conoco to clean up the spill. The Company has not completed discovery on these suits. Also, the Company has filed a suit against Conoco for indemnification for the pending and future cases related to the above EDC pipeline cleanup, as well as declaratory judgement that the Company is not responsible for the costs of the EDC pipeline spill. Conoco has since filed a counter suit against the Company. Conoco has also filed suit against the Company seeking recovery of cleanup costs incurred by Conoco related to the rupture of the EDC pipeline. Pursuant to the contract between the Company and Conoco, Conoco was responsible for operation and maintenance of the pipeline and all liabilities resulting therefrom. GEORGIA GULF: 5 Opt out of Settlement for Louisiana Water Contamination ----------------------------------------------------------------------- In 1998, the Company settled a class action suit styled SALLY COMEAUX ET AL. V. VISTA CHEMICAL COMPANY ET AL. ("COMEAUX). This class action was brought by the residents of Mossville, Louisiana, a community adjacent to the Vinyls' Group VCM Plant, alleging groundwater contamination caused by EDC. As a result of the settlement, the litigation accrual was adjusted resulting in a credit to earnings of $7,000,000 for the twelve months ended June 30, 1999. Five plaintiffs have opted out of the original settlement and are pursuing individual claims for unspecified damages. The Company is currently in the discovery phase of the five suits. Conoco/DuPont filed suit against the Company alleging bad faith in its dealings in the COMEAUX litigation discussed above. Conoco/DuPont are seeking reimbursement of the settlement amount they paid to the COMEAUX plaintiffs plus additional unspecified damages. Since the basis of the COMEAUX class action is EDC groundwater contamination, which primarily occurred prior to the Company's formation in 1984, Conoco/DuPont retained liability for this contamination pursuant to an agreement between the parties. In addition to the above claims, the Company is a named defendant in numerous other lawsuits and named parties in governmental proceedings arising in the ordinary course of business. The Company does not believe that the Vinyls Group will incur any additional material litigation liability related to any of the above claims. Additionally, pursuant to the Asset Purchase Agreement, the Company has indemnified the third party purchaser of the Vinyls Group for any liabilities and obligations relating to any litigation, action, suit, claim, investigation or proceeding against the Vinyls Group pending on the closing date of the sale. HOLOCAUST VICTIMS: A List of WWII Compensation Discussions ---------------------------------------------------------- A list of ongoing compensation discussions aiming to settle disputes from World War II: Slave Labor Representatives of Nazi-era slave and forced laborers face a deadline Wednesday to give their response to an $4.2 billion offer by German firms and the government. The fund was proposed in February as a way of resolving class-action lawsuits in the United States and elsewhere fending off new ones. About 60 companies are now participating, although only 20 have announced their involvement publicly. Lawyers for the victims have said between $5.3 billion and $7.9 billion would be a fair amount. No further meetings have yet been scheduled. Nazi Gold The U.S. government has established a fund to which all countries that received Nazi gold can voluntarily contribute in order to benefit Holocaust survivors. These negotiations are also taking place under the office of Deputy U.S. Treasury Secretary Stuart Eizenstat, who is the U.S. envoy to the Nazi labor talks. Insurance European insurance companies have been involved in talks led by a London-based claims commission to resolve unpaid insurance claims for those who died in the Holocaust. So far, companies have set up a $100 million fund to cover the claims. The commission is expected to announce details of the claims process after its next meeting, Dec. 15, although a dispute with one company, Germany's Allianz, over the release of Holocaust-era files may delay plans. The Dutch insurer Aegon (which controls Trans-America in the United States) has refused to turn over its client list, but because Aegon is a relatively small player, this will not hold up the compensation process. However, the commission may decide on a boycott at the Dec. 15 meeting of Aegon and Trans-America if they do not change their position. Negotiators at the Nazi labor talks have also discussed including unpaid insurance claims from World War II as part of the compensation from that industry fund which includes insurance companies. Previous Compensation The German government has already paid about $60 billion in payments, pensions and other programs for Holocaust-related crimes. (AP Online December 6, 1999) HOLOCAUST VICTIMS: Veil Lifted On Holocaust Accounts In Swiss Banks ------------------------------------------------------------------- The Volcker Committee report issued December 6 on dormant accounts in Swiss banks belonging to Holocaust victims highlights the campaign by Jewish organisations to obtain justice on three fronts: unclaimed Jewish accounts, Nazi gold, and unpaid insurance claims. The Volcker report lists 53,886 accounts in Swiss banks as being directly or indirectly related to the Holocaust period, of which more than 10,000 belonged to known or probable Holocaust victims. The report follows increasingly militant action by Holocaust survivors and victims' families to force Swiss bankers to open up their records and come to terms with the past. Following are some key dates in the dispute. * February 1996 The Swiss Bankers Association says it knows of only 775 bank accounts opened by foreign clients before 1945 remaining untouched since, and that the sums involved total 32 million dollars. The World Jewish Congress disputes the figure, putting forward its own estimate of six billion dollars, and urges the banks to investigate dormant accounts. * May 2, 1996 Creation of the Volcker Committee, headed by former US Federal Reserve chairman Paul Volcker, comprising representatives of Jewish organisations and of the Swiss Bankers Association, charged with investigating Swiss bank accounts that have been lying dormant since World War II. * December 13, 1996 The Swiss parliament commissions a team of historians and a lawyer under Lausanne historian Jean-Francois Bergier to examine Switzerland's links with the Third Reich, including the issue of Nazi gold and the treatment of Jewish refugees. * January 1997 Swiss bank employee Christoph Meili rescues Holocaust-era documents from a shredder room at Union Bank of Switzerland in Zurich. * March 1997 The Swiss central bank, in concert with private banks, sets up a humanitarian fund worth 190 million dollars to be distributed by the World Jewish Restitution Organisation among needy Holocaust survivors. * July, October 1997 Swiss banks publish lists naming 5,200 foreign clients whose accounts have remained dormant since the war. The accounts hold a total of 45 million dollars. The banks subsequently receive 12,000 claims, 7,500 of them in reference to published names. * May 25, 1998 The Bergier Commission issues a preliminary report concluding that Swiss banks turned a blind eye to the origins of Nazi gold stored in their vaults even after it became clear that the gold was illegally obtained. * June 19, 1998 Jewish leaders reject an offer by Swiss banks to pay 600 million dollars to settle their claims. * August 13, 1998 Following an audit by the Volcker Committee, Swiss banks Credit Suisse Group and UBS agree to pay out 1.25 billion dollars over three years in settlement of three class-action suits representing 31,000 survivors and their heirs. The agreement, which releases the banks from all Holocaust-related claims, comes just weeks before sanctions announced by a number of US cities and states against the Swiss were due to begin. * May 6, 1999 European insurance giants Allianz of Germany, AXA of France, Generali of Italy, and Switzerland's Winterthur and Zurich agree to pay the pre-war value of life insurance policies taken out by Holocaust victims, taking inflation and currency devaluation into account. Estimates of payouts are as high as 11 billion dollars. The companies had previously insisted there could be no payout without death certificates, an impossibility for most Holocaust victims. * December 6, 1999 The Volcker Commission issues its report on the Swiss banks' treatment of Jewish Holocaust survivors. (Agence France Presse December 6, 1999) INSPIRE INSURANCE: Milberg Weiss Files Securities Suit in Texas --------------------------------------------------------------- Milberg Weiss (http://www.milberg.com)announced on December 3 that a class action has been commenced in the United States District Court for the Northern District of Texas on behalf of purchasers of INSpire Insurance Solutions Inc. ("INSpire") (Nasdaq:NSPR) common stock during the period between Jan. 28, 1998 and Oct. 14, 1999 (the "Class Period"). The complaint charges INSpire and certain of its officers and directors and its parent company with violations of the Securities Exchange Act of 1934. INSpire is a provider of policy and claims administration solutions to the property and casualty insurance industry and offers comprehensive outsourcing services, software and software services. The complaint alleges that INSpire made false and misleading statements, issued false financial results and continually announced new contracts, representing that the new contracts would provide significant "recurring" revenue when, in fact, the contracts were generally contingent on the profitability of its customers. As a result, INSpire's stock traded at inflated levels during the Class Period. Defendants took advantage of this inflation, completing a secondary public offering of 3.9 million shares in 3/98, wherein INSpire sold 2.7 million shares and Millers Mutual, INSpire's largest shareholder (and largest customer), sold 975,000 shares for $20.5 million. INSpire's chief executive officer also sold 157,000 shares for $3.3 million in the secondary offering. INSpire used part of the proceeds from the secondary offering in which it sold 2.7 million shares for $54 million to purchase another software vendor, Paragon Interface Inc. ("Paragon"). Nonetheless, INSpire's software business continued to deteriorate. In 11/98, INSpire entered into a large outsourcing agreement with Arrowhead General Insurance Agency Inc. ("Arrowhead"). Defendants told the market that this transaction would generate $35 million in revenue in year one, that it would allow INSpire to expand geographically into California, that it would add $0.05 to 1999 earnings and was a "major leap forward" for INSpire. As a result of these statements, INSpire's stock immediately increased to more than $30 per share. Several of the defendants immediately took advantage of this inflation, selling 106,150 of their INSpire shares for $3.2 million. Finally on 10/15/99, INSpire revealed the horrible state of its business, including the write-off of nearly all of its assets associated with software and lower operating earnings from outsourcing. Analysts now project INSpire will have EPS of only $0.32 in 1999 (before charges) and only $0.17 in 2000 compared to Class Period forecasts of $.89 and $1.20, respectively. Upon these disclosures, INSpire stock dropped to less than $4 per share. While the Class has suffered millions in damages, the defendants received substantial benefits from their misdeeds. As the price of INSpire stock soared to as high as $35-3/8, the defendants sold more than 1.5 million shares of their INSpire stock for proceeds of more than $33.6 million. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at wsl@mwbhl.com PARTY CITY: Faces Consolidated Securities Complaint in New Jersey ----------------------------------------------------------------- Party City Corp. has been named as a defendant in the following twelve class action complaints: Weber v. Party City Corp., Steven Mandell, and David Lauber, Civ. Action No. 99-CV-1252; Opus GT Partners LP v. Party City Corp. and Steven Mandell, Civ. Action No. 99-CV-1327; Klein and Shiffrin v. Party City Corp., Steven Mandell and David Lauber, Civ. Action No. 99-CV-1325; Flynn v. Party City Corp., David Lauber and Steven Mandell, Civ. Action No. 99-CV-1328; Catanzarite v. Party City Corp., Steven Mandell and David Lauber, Civ. Action No. 99-CV-1317; Tabbert v. Party City Corp. and Steven Mandell, Civ. Action No. 99-CV-1353; Maietta v. Steven Mandell and Party City Corp., Civ. Action No. 99-CV-1386; Barry v. Party City Corp., Steven Mandell and David Lauber, Civ. Action No. 99-CV-1453; Kurzweil v. Party City Corp., Steven Mandell and David Lauber, Civ. Action No. 99-CV-1396; Hormel v. Party City Corp., Steven Mandell and David Lauber, Civ. Action No. 99-CV-1689; Sacher v. Party City Corp., Steven Mandell and David Lauber, Civ. Action No. 99-CV-2238: and Gross v. Party City Corp., Steven Mandell and David Lauber, Civ. Action No. 99-CV-2355. The Company's former Chief Executive Officer and former Chief Financial Officer and Executive Vice President of Operations have also been named as defendants. The complaints have all been filed in the United States District Court for the District of New Jersey. The complaints were filed as class actions on behalf of persons who purchased or acquired Party City common stock during various time periods between February 1998 and March 19, 1999. The complaints allege, among other things, violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seek unspecified damages. The plaintiffs allege that defendants issued a series of false and misleading statements and failed to disclose material facts concerning, among other things, the Company's financial condition, adequacy of internal controls and compliance with certain loan covenants. The plaintiffs further allege that because of the issuance of a series of false and misleading statements and/or failure to disclose material facts, the price of Party City common stock was artificially inflated. On September 13, 1999, the Court signed an Order appointing lead plaintiffs and lead counsel to represent the classes alleged in the complaints. The Order directed plaintiffs to file a consolidated and amended complaint in October 1999, which the plaintiffs did and which was served on the Company on or about October 18, 1999. PARTY CITY: Settles Store Franchisees’ Lawsuit in New York ---------------------------------------------------------- The Company was named as a defendant in a complaint filed with the Supreme Court of the State of New York, County of New York, on January 16, 1998 (the "Complaint"), by each of Party City of Greenbrook, Inc., Party City of Watchung, Inc., Party City of 22, Inc., Party City of Ralph Avenue and Party City of Jersey City, Inc., each a franchisee of the Company. Four of the plaintiffs in the suit have existing Party City franchise stores, with the remaining plaintiff possessing a right of first refusal to develop a Party City store in Watchung, New Jersey. The Complaint stated various causes of action, including unjust enrichment, unfair competition, fraud and misrepresentation, breach of contract, misappropriation of information and violations of the New Jersey Franchise Practices Act and the New York State Franchise Sales Act. The crux of the Complaint was that the Company undertook a course of conduct intentionally designed to adversely impact the value of the Plaintiffs' franchise stores in order to permit the Company to purchase such stores at a substantially reduced value. The Company settled the lawsuit on June 30, 1999, at no cost to the Company. In connection with the settlement, the Company agreed to sell the plaintiff one store at its fair value. PSS WORLD: Securities Suit in Florida Has Been Voluntarily Dismissed -------------------------------------------------------------------- Kaplan Kilsheimer & Fox LLP issued the following on December 6: A proposed class action that was filed on March 22, 1999 against PSS WORLD MEDICAL, INC. ("PSSI") (Nasdaq: PSSI) and certain of its officers and directors in the United States District Court for the Middle District of Florida has been voluntarily dismissed without prejudice. The suit was brought on behalf of all persons or entities who purchased or otherwise acquired the common stock of PSSI between June 16, 1998 and March 10, 1999, inclusive (the "Class Period"). The lawsuit charged PSSI and certain of its officers and directors with violations of the Securities and Exchange Act of 1934. If you purchased PSSI common stock during the Class Period, this dismissal does not affect your rights in any way. If you have any questions about this Notice, the action, or your rights, please contact an attorney of your choice or: Frederic S. Fox, Esq. Jonathan K. Levine, Esq. Janine R. Azriliant, Esq. Kaplan, Kilsheimer & Fox LLP 800-290-1952 212-687-1980 e-mail: mail@kkf-law.com TEXAS ALCOHOL: 3 White Males Sue for Denial of Job – FNN Coverage ----------------------------------------------------------------- Broadcast on Fox News Network on December 1, 1999 GUESTS: William McCauley; Bob Popper; Lawrence Guyot BYLINE: Sean Hannity; Alan Colmes HANNITY: Welcome back to HANNITY & COLMES. I'm Sean Hannity. Coming up later, charges that Al Gore's campaign manager is a racist. We'll bring you that information. And that debate is straight ahead. But a class action lawsuit has been filed against the Texas Alcohol and Beverage Commission that charging that three males were unfairly passed over for employment. Why? Because they're white. At issue is the commission's use of what they call workforce diversity points. That's a euphemistic term that assigns a number value Now the case is sure to cause an uproar in the state of Texas and around the country. And joining us from Austin is William McCauley. He is a police lieutenant who is a co-plaintiff in this case. His attorney Bob Popper, he now joins us in New York. And in Washington, we have Lawrence Guyot, who is a civil rights activist, strong supporter of affirmative -- oh, I'm sorry. Glad you're with us. All right, let me start. Mr. McCauley, tell us about these diversity points that we have. WILLIAM MCCAULEY, ALLEGES REVERSE DISCRIMINATION: Well, sir, I applied for a position as an agent trainee with the Alcoholic Beverage Commission last year, went through their testing process, which was a written test and interview process. They did a background check. And HANNITY: But you and I think one of your co-plaintiffs here also had higher scores than other people. But because you weren't a minority or because you weren't female, you did not get the opportunity. MCCAULEY: Exactly, sir. From what I understand, there were 13 people that scored lower than I did that were hired. Until -- they scored lower than I did until the diversity points were added. HANNITY: Lawrence, let's bring you in here. You know what, I could tell this man, Mr. McCauley, doesn't seem -- you don't have a racist bone in your body, Mr. McCauley, do you? MCCAULEY: No, sir. HANNITY: Never discriminated against anybody in your life? MCCAULEY: No, sir. HANNITY: You deplore racism? MCCAULEY: Yes, sir. HANNITY: You find it reprehensible as I do. OK, why should he have to bear the burden of correcting past injustices and wrongs when he's never discriminated against anybody? You're supporting state- LAWRENCE GUYOT, CIVIL RIGHTS ACTIVIST: No, no, I'm not supporting state-sanctioned. I'm supporting a policy to eradicate racism. And they wouldn't have affirmative action if a pattern of historic racism had not been developed... HANNITY: Mr. Guyot, he's being discriminated against though. HANNITY: Mr. Guyot, you are discriminating against this man... GUYOT: No, no... HANNITY: ... If you support this -- wait a minute... GUYOT: ... I've never met this man... HANNITY: ... If you support this system... GUYOT: ... I've never met this man. I want him and every American to have a job. HANNITY: ... All right, I stand corrected. I stand corrected. GUYOT: What I want because I want this country to remain viable and I don't want it to explode on the question of race. HANNITY: But if you support what is happening to this man that other people that he is competing with get extra points because of their discrimination... GUYOT: It is not. HANNITY: ... His opportunities in America are being ripped away from him... GUYOT: As many times as you... HANNITY: ... And that's... GUYOT: ... As many times as you try to describe it as state segregation, it's not... HANNITY: ... All right... GUYOT: ... discrimination. HANNITY: ... let's talk to Bob Popper. He's the attorney here. Look, we got Adiran (ph). We have Piscataway. We have the Hotwood (ph) case in Texas. BOB POPPER, ATTORNEY FOR RACIAL DISCRIMINATION CASE: What they're trying to do is plainly unconstitutional. You cannot use a diversity- based rationale to allow racial discrimination or racial preferences. Mr. Guyot should support what we're doing. There will be black and Hispanic members of the class in our class action lawsuit. This is a very strange animal in Texas... HANNITY: And they're going to lose. POPPER: ... Oh, they're going to lose. HANNITY: It's clear in this case because actually it's written in the policy... GUYOT: Oh, no, no, they're not going to lose... HANNITY: ... It's written in the policy. GUYOT: ... America is going to lose. HANNITY: But listen... GUYOT: No, no, but... (CROSSTALK) POPPER: Not in this particular case. HANNITY: When they saw Piscataway -- they had the Piscataway case ... black, then blacks are selected against in the hiring process. Now Mr. McCauley was selected against because he was white. But there were also black applicants in the same pool who were selected in this case was Hispanic women... COLMES: Let's... GUYOT: That makes sense to me. COLMES: ... Let me get Mr. Guyot back in here. Mr. Guyot, I want to ask you... GUYOT: Of course. COLMES: ... This is Alan. I'm on your side. Why is this not state sanctioned discrimination? Let's put this in the proper perspective. GUYOT: Look at its historical reason for existing. It exists to do away with a past pattern of discrimination... POPPER: But in this case there was no finding of... (CROSSTALK) COLMES: ... finish, then we'll go to you. Very fascinating. I'm very proud to hear that at some instances it tips and blacks are not hired. That makes it even more fair. COLMES: Bob Popper. POPPER: But what happens here is that there is an equal opportunity discrimination that's happening. Any race may be discriminated against. And the cause of all of this is the belief that Texas agencies should look a particular way, should have so many black faces, white faces, and Hispanic faces, regardless of the applicant pool, regardless of the population at large. This is a bizarre system that discriminates COLMES: Mr. McCauley, is it your belief that the only reason you didn't get this job is because you're white? Is that the only factor that stopped you? MCCAULEY: I can tell you for a fact that that's true. COLMES: You think that's it. That's the only reason. On this, according to what I've read -- you're going to disagree with me a little bit here on this. The workforce diversity points make up what I've read 10 percent of the total grade. You're going to say 20 percent. But let's say it's 20 percent... POPPER: I have an internal document saying it's 20 percent. COLMES: ... OK. But you've read 10 percent. That's what they've said externally. But OK, let's say that it's 20 percent. That's still a small percentage of all the other things they consider. Is that right? POPPER: But look, there were 18 applicants in the pool. And Mr. McCauley scored better than 13 of them. And he was told, looked in the eye and told, "We're sorry. You're the wrong race. You're the wrong sex. We know that you scored better. You don't get the job." GUYOT: You know the weakest part of your case? The weakest part of your case is this can be applied to both blacks and whites. You can't prove discrimination like that. POPPER: You know what? That is absolutely the strongest part of my case because... GUYOT: Not at all. POPPER: ... one cannot claim that this was designed to remediate any particular discrimination in the past because this was designed in effect to create a diverse workforce regardless of discrimination and regardless of the current state (INAUDIBLE)... GUYOT: When you add Hispanics as a class... COLMES: Look... GUYOT: ... that's not discrimination. COLMES: ... I think it's horrible that Mr. McCauley was discriminated against. I'm certainly against anything that discriminates against anybody. But can you understand, Mr. Popper, why there are certain structures in place to create diversity in the workplace because of the past, because of the history, because of the fact that for years people of color didn't have equal opportunity in the workplace? POPPER: Sure. I can understand that entirely. I can understand the good intentions with which not only ordinary affirmative action plans were implemented but this rather bizarre diversity-based affirmative action plan was implemented. But I'm telling you that the United States constitution includes an equal protection clause which forbids discrimination based on race... COLMES: But this is only... POPPER: ... And a recent case has held that diversity in particular is not an acceptable rationale. COLMES: ... But if race was the only thing they were taking into consideration. But it's only 20 percent of what they're taking into consideration. And 80 percent of what they're considering has to do with other factors. You can't say this is purely or mostly a race-based decision. POPPER: Look, if you look at a black man and you tell him that a Hispanic woman scored lower but he's not getting the job because he's the wrong race, doesn't that stink... HANNITY: All right, Mr. McCauley... (CROSSTALK) HANNITY: ... Hang on a second. Hang on a second. Mr. McCauley, I want to go to you because we don't have a lot of time. You know, Thurgood Marshall said in Brown versus Board of Ed, "Distinctions by race are so evil, so arbitrary, invidious, the state is bound to prevent against this." You're a victim of this, Mr. McCauley. How does that MCCAULEY: Well, when I found out the reason that I wasn't hired, it made me angry. I saw the scores. And I scored almost a perfect score on my oral interview. I made I think close to a 90 on the written test. It was weighted. It made me rather angry. HANNITY: Mr. McCauley, I hope you get your opportunity. I think in America nobody should be discriminated against. You shouldn't have the state discriminating against you. Wish you the best of luck in your case. MCCAULEY: Thanks. HANNITY: Mr. Popper, thank you for joining us also. POPPER: Thank you for having me. HANNITY: Mr. Guyot, thank you for being on board. Y2K LIITGATION: A New Year's Eve Designated Vetter for Some Lawyers ------------------------------------------------------------------- You might still be scrounging for a party to crash, but Jack Strausman has big plans for New Year's Eve. And he's hoping it's the most tedious night of his life. A lawyer for Potomac Electric Power Co., Strausman will be working when the clock strikes midnight Dec. 31. Actually, he'll be busy well into the wee hours, manning the company's command center at an undisclosed location in Montgomery County and monitoring the electrical grid for Y2K-related troubles. "I can't stress how much we're hoping for a dull New Year's Eve," said Strausman, 38. Plenty of businesses, as it happens, are keeping lawyers on hand for the millennium countdown, particular those lawyers working for telecommunications and electric power companies. Their jobs? To vet public comments that might emanate from the company in case of a major meltdown. None of these companies expects problems, mind you, but should the worst happen, they'll have a legal mind ready to parse the language of news releases. This legal mobilization could be pointless if the Y2K problem turns out be overhyped piffle. But keep in mind that a few hundred plaintiffs lawyers are poised to sue the bejesus out of Corporate America over year 2000 computer snafus. That's giving corporations a recurring nightmare that goes something like this: Company gets waylaid by a glitch. Riots ensue. Damages happen. Some company official then hits the airwaves to confess, "Man, we botched this one big time! I thought we'd tested all this equipment out months ago. Major disaster. Our mistake." Seems unlikely, doesn't it? Still, even if nothing happens, some on-call lawyers are expecting a decent show. "In one sense, it's a lot of potential boredom," said Jack Farris, an attorney for Bell Atlantic Corp. who will be one of two lawyers working the phone company come New Year's. "But there will be so much tension generated by the media that even if things go fine, it won't be boring. Uneventful maybe, but not boring." On the other hand, Ronald Palenski, an attorney with GTE Corp. in McLean, anticipates more yawns than alarms. "I'm stocking up on other work," he said, getting ready to fly to the company's Irving, Tex., branch. "I was there for the 9/9/99 transition" -- another date that generated some computer anxiety -- "and it was like watching the grass grow." As for Strausman, he won't see his family or get a sip of bubbly the whole night. So if it's as tedious as he hopes, what will he do all night? Maybe surf the Internet, he said. He has few other options. "They took solitaire off our computers a while ago." (The Washington Post December 6, 1999) * A Class Action Member Says Coupon Settlement Does’t Benefit Consumers ----------------------------------------------------------------------- For the past two decades I have been pretty much desensitized to news stories and nothing seems to faze me anymore. That was, of course, until the Nov. 21 article on lawyers and class-action suits. Like many people, I too have "benefited" from these suits. I was recently honored with a coupon from Delta Airlines that gives me a discount on airfare. The problem is that the conditions for use are longer than the legal document that I signed in the first place. I have been reading articles such as this for the past few years, and every single one has one theme in common. All lawyers involved in such class-action suits state that their "first concern is for the rights of their clients." If this was true, then they would do a majority of the work pro bono, for the good of their clients, of course. I do, however, have a simple solution to this complex problem. Since the issuance of coupons is an acceptable form of settlement for these righteous few, how about basing their fees on the number of coupons redeemed? (Sun-Sentinel (Fort Lauderdale, FL) Dec-2-1999) * The Great Assimilation Of The Internet Continues Apace -------------------------------------------------------- Once upon a time, the Net operated in some sort of magical bubble, apart from the mainstream of society. Cops didn't know much about it. Scammers and less reputable business types preyed on newbies. Virtual vigilantes sought to stop them through things like e-mail bombing and other technical tricks. Kids had no protection. Everyone made vast sweeping statements about e-commerce as a virtual ''yellow brick road.'' The courts had almost no predecents to draw from in groundbreaking decisions about online property. More changes are still to come, but it's all shaking out. The Internet is developing a very discernable shape. The events like those below, and those to come over the next year or two, will stay with us for years. The Net's ''formative years'' if you will. Sneaky Monitoring: Uncovered At a time when there is a growing public distrust of the intrusive corporate collection of data in our private lives, RealNetworks decides to surreptitiously snoop on what the users of its software are doing when online. RealNetworks makes multimedia software, best known for RealAudio. RealAudio was collecting up details on user listening preferences and sending them back to RealNetworks. What bonehead came up with this idea? I sure wish I'd been at that product development meeting: ''Hey, I have a great idea. Let's monitor everything our customers do, build a big database, use that information as a profit centre . . . and never tell anyone! It'll be our little secret.'' It's hard to believe an Internet company could believe anything can be kept hushed up online for long. Not surprisingly, RealNetworks is now being sued in three different instances. Each case wants ''class action status'' - which means damages in the many millions, on behalf of all users. With each revelation of privacy abuse like this, the U.S. government is forced one step closer to the day when it will finally throw its hands up and say, ''That's it! You Internet companies cannot self-regulate. So we're going to have to do it for you.'' And once they decide to regulate . . . who knows what they will do. The Kids Are All Right It was recently announced that, as of April 21, 2000, commercial Web sites must have parental permission before they can collect data on kids (under 13) for reselling. The U.S. Federal Trade Commission defines permission as a direct phone call, fax, letter or e-mail (the latter verified through use of a password or personal information number). You think that's going to slow down the data mining on kids? You bet. It's going to take a lot of enticing to get parents to give such formal permission. If the Web site is only going to compile the data for itself, a non-password protected e-mail will suffice. The FTC got involved in the matter when a study discovered that 89 per cent of big commercial kids sites routinely collected personal data - name, address and what they'd like to buy - while a mere 1 per cent sought parental permission. Online Fraud The California man who posted fake lots for auction on eBay was recently sentenced to 14 months in prison. Real, not virtual, jail time. Robert J. Guest, 31, took customers for over $37,000 U.S., pretending he had the Sony digital cameras and IBM laptops he advertised. He cashed the cheques and money orders and thought he could just ignore the matter, undoubtedly because it's the Web and everyone ''is anonymous.'' Surprise. War Online The Pentagon has opened a cyberwar command in Colorado Springs. The free-wheeling days are gone. You don't know who you are bumping into out there. The Pentagon said it attacked Serbian computer networks during the air strikes against Kosovo. Realistic About Retail It's Christmas. The usual polyanna predictions about e-ommerce are being carted out by ''objective'' research companies like Forrester and Jupiter. E-commerce is here to stay, we all know it, so put away the megaphone. But it's not necessarily wonderful everywhere. Business failures are still rampant online - just like offline! Levi Strauss surprised everyone and announced it was killing independent e-tail ventures www.levi.com and www. docker.com right after the holiday season. Instead, all that will be funneled through mega-retailer sites like J.C. Penny. The jeans people says they can't pay for it. A spokesperson was quoted on CNN: ''We've learned a lot over the last year. We've learned about effectively marketing our products online. We also learned that the cost of running a world-class e-commerce business is unaffordable for us right now.'' Net Stocks But one area that still operates outside reality is the publicly traded Internet company. These stocks are so over-valued, something's eventually got to give. Since Netscape went public back in 1995, 133 other Internet companies have launched initial public offerings (IPOs). Many have soared in stock price - ignoring traditional methods for determining stock price valuation. The founding editors of Red Herring magazine have a new book out called ''The Internet Bubble.'' They predict a crash for that sector in the near future. They calculate that those 133 companies are collectively over-valued by $230 billion U.S. And when the ''correction'' finally happens, they predict most holders of these stocks will by hit by a 50 per cent meltdown - if not more. Of the 133 companies, only 22 are making profit at all right now. And revenues are probably over-stated because Net companies include ''barter'' Web banner advertising. That's where one site swaps ads with another site, and books the transaction. There's nothing technically illegal about it. But it can distort investor impressions. For instance, the Sportsline Web site says it had $24 million in revenue. But it turns out that a fifth of that was cashless barter trading of ads. (The Toronto Star Dec-2-1999) ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk and Peter A. Chapman, editors. Copyright 1999. All rights reserved. ISSN 1525-2272. 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 * * *