Thursday, August 15, 2002, Vol. 4, No. 161
CATHOLIC CHURCH: Sex Abuse Claims, Losses Hit LA Archdiocese Budget
CITIGROUP INC.: Asks TX Court To Dismiss Two Securities Fraud Suits
DOMINION TELECOM: Moves To Dismiss Trespass, Unjust Enrichment Suit
EXELON CORPORATION: Court Grants Motion Consolidating Securities Suits
FLORIDA: Santa Rosa Island Residents File Suit To Stop Levy Of Taxes
FORD MOTOR: Agrees To Settle Claims Over Excessive Late-Payment Charges
IOWA: Public Employees Pension Plan Hires Firm To Track Securities
KOS PHARMACEUTICALS: Appeals Court Upholds Dismissal of Securities Suit
LEXENT INC.: Discovery Yet To Commence in Securities Suit in S.D. NY
MASSACHUSETTS BAY: Disabled Riders Sue To Seek Access Improvements
MILBERG WEISS: KANSAS: Kansas Fund Manager Files Suit Alleging Fraud
NCR CORPORATION: Will Establish $9 Million Reserve For Settlement Costs
NEW ORLEANS: Orleans Parish District Attorney Sued Over Office Mold
NUCLEAR FUELS: Black Workers Allege Radiation Exposure Intentional
PAYPAL INC.: CA Consumer Fraud Lawsuit Over Online Accounts Dismissed
PAYPAL INC.: Sued For Electronic Fund Transfer Act Violations in CA
PAYPAL INC.: Faces Consumer Fraud Lawsuit Over Accounts in CA Court
PAYPAL INC.: Faces Suit For Violations of Consumer Laws in N.D. CA
SHURGARD STORAGE: Faces Consumer Suit Over Storage Units in CA Court
SLAVERY REPARATIONS: Supporters Holding August 17 Washington D.C. Rally
TELLABS INC.: Mounting Vigorous Defense V. Securities Suits in N.D. IL
TEXAS: 2,500 Mission Residents Dispute Pesticide Chemical Levels Study
WEST CORPORATION: CA Court Dismisses Telemarketing Fraud Consumer Suit
*Investors Seek Their Due In Court, Suits Pending v. CMS Show Trend
AON CORPORATION: Mark McNair Commences Securities Fraud Suit in N.D. IL
CHARTER COMMUNICATIONS: Wechsler Harwood Lodges Securities Suit in CA
CHARTER COMMUNICATIONS: Stull Stull Initiates Securities Suit in MO
MSC INDUSTRIAL: Mark McNair Commences Securities Fraud Suit in E.D. NY
SEEBEYOND TECHNOLOGY: Schiffrin & Barroway Lodges Securities Suit in CA
VIVENDI UNIVERSAL: Berger & Montague Commences Securities Suit in NY
The Roman Catholic Archdiocese of Los Angeles has been hit so hard by
stock market losses and the prospect of settling sexual abuse claims
that it plans to cut its budgets for ministry and education by as much
as 30 percent and leave some jobs unfilled, the Associated Press
Newswires reports.
"We are in 2 1/2 years of not just zero return but minus return,"
Cardinal Roger M. Mahony told the Los Angeles Times. "We not only did
not get a dollar, but we lost huge amounts of money . I am very
alarmed."
Archdiocese spokesman Tod Tamberg said the nation's largest archdiocese
still does not have a budget and has not reported unspecified losses
from the stock market. Mr. Tamberg said he does not know whether there
will be layoffs, though personnel costs have been contained through
attrition.
Meanwhile, the archdiocese is expected to subsidize its new $200
million Cathedral of Our Lady of Angels and conference center for
several years to meet operational costs, the Los Angeles Times reports.
The cathedral will be dedicated September 2, but the celebrations will
be scaled back with only soft drinks, not lunch, served at the
ceremony.
Cardinal Mahony said endowments that support scholarships for Catholic
elementary and high school students and for St. John's Seminary in
Camarillo, as well as archdiocesan operational costs, have been
particularly hard hit by the stock market's decline. Mr. Tamberg could
not determine how much money the archdiocese has lost in the stock
In the past, the archdiocese's annual operating budget has been about
$500 million, according to past statements by church officials. The
archdiocese has about 300 employees, according to a Dun & Bradstreet
report. The archdiocese's financial records are not open to the public
because it is a nonprofit religious institution.
So far, the Los Angeles archdiocese's payments to sexual abuse victims
have totaled about $3.5 million, most of it covered by insurance, Mr.
Tamberg said. That amount does not include any future settlements or
lawsuits, including a class action filed last month on behalf of 50
alleged victims against the archdiocese.
Citigroup Inc. asked the United States District Court for the Southern
District of Texas to dismiss two consolidated securities class actions
relating to its transactions with fallen energy trader Enron
One of the suits also name as defendants prominent firm Salomon Smith
Barney, Inc. (SSB), along with commercial and/or investment banks,
certain current and former Enron officers and directors, lawyers and
accountants.
One action, brought on behalf of individuals who purchased Enron
securities (NEWBY, ET AL. V. ENRON CORP., ET AL.), alleges violations
of Sections 11 and 15 of the Securities Act of 1933, as amended, and
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as
amended. The other action, brought on behalf of current and former
Enron employees (TITTLE, ET AL. V. ENRON CORP., ET AL.), alleges
violations of the:
(1) Employment Retirement Income Security Act of 1974, as amended
(ERISA),
(2) Racketeer Influenced and Corrupt Organizations Act (RICO),
(3) negligence and
(4) civil conspiracy
The Company intends to defend against these suits vigorously and said
that it will fully cooperate with investigations pertaining to this
matter in a disclosure to the United States Securities and Exchange
Dominion Telecom, Inc. faces a class action filed by two North Carolina
landowners in the United States District Court in Richmond, Virginia.
The suit, which also names Virginia Electric and Power Company
(Virginia Power) as defendant, was filed on behalf of all owners of
land in North Carolina and Virginia, other than public streets or
highways, that underlies Virginia Power's electric transmission lines
and on or in which fiber optic cable has been installed."
The plaintiffs claim that Virginia Power and Dominion Telecom strung
fiber-optic cable across their land, along a Virginia Power electric
transmission corridor without paying compensation. The plaintiffs are
seeking damages for trespass and "unjust enrichment" as well as
punitive damages from Virginia Power and Dominion Telecom.
In July 2002, Virginia Power and Dominion Telecom filed a motion to
dismiss the complaint. Virginia Power and Dominion Telecom disagree
with the premises and allegations of the complaint, and intend to
contest liability. The outcome of the proceeding, including an
estimate as to any potential loss, cannot be predicted at this time.
The United States District Court for the Northern District of Illinois
granted Exelon Corporation's motion consolidating six virtually
identical securities class actions charging the Company with federal
securities violations.
The suits, filed on behalf of purchasers of the Company's stock
securities between April 24, 2001 and September 27, 2001, inclusive,
allege that the Company violated federal securities laws by issuing a
series of materially false and misleading statements relating to its
2001 earnings expectations during the class period.
The court also stayed discovery indefinitely. A lead plaintiff has not
been selected. The Company believes the lawsuit is without merit and
is vigorously contesting this matter.
Homeowners and businesses in two beach communities on Santa Rosa Island
in the Florida Panhandle pay no real property taxes, but that could
change, the Associated Press Newswires reports. Seven Namarre Beach
residents are suing to stop Santa Rosa County Appraiser Gregory Brown
from taxing them. The case also would set a precedent for Pensacola
Beach in neighboring Escambia County.
The court case may be delayed while the plaintiffs appeal Circuit Judge
Michael Allen's decision. He refused to make the lawsuit a class
action. Another motion is pending from the county to dismiss the
Millions of dollars are at stake. Both barrier island communities are
on property deeded to Escambia by the federal government in 1947. No
taxes have been levied since then because the land is public property,
although occupied by private interests. Escambia, unable to sell the
island property under terms of the federal deed, leased lots at
Pensacola Beach to private individuals and businesses for period of up
to 99 years, with options to renew.
Escambia then leased Navarre Beach to Santa Rosa County in 1956 for
$100 a year, Santa Rosa, in turn, has subleased to individuals an
businesses. Many leaseholders pay rental fees that are laughably low
by today's standards, but they contend they had been promised they
never would be taxed.
An earlier lawsuit ended in 1987, with a ruling in favor of five
Pensacola Beach leaseholders who had challenged attempts by Escambia
County to levy a property tax. Mr. Brown, the Santa Rosa County
Property Appraiser, has come up with a different tactic. He is not
assessing the land, just the buildings and other structures. He
contends a state attorney general's opinion supports that approach. "I
think it's fair," said Mr. Brown.
However, leaseholders say it is unfair to say they are getting a free
ride. They point out that their lease fees pay for such services as
police and fire protection and mosquito control. The fees, however,
pale in comparison to what the counties and their school boards would
receive from the property taxes. They don't share in the lease fees.
In Santa Rosa, for example, the lease fees total just more than $1
million. The tax would add $3.8 million. Escambia gets $5.1 million
in lease fees, while the tax would generate about $10 million.
Ford Motor Company tentatively settled a class action filed by lease
customers who alleged they were charged excessive penalties for making
late payments, the Associated Press Newswires reports. The Company has
agreed to pay as much as $80 million to 1.8 million lease customers,
and about $7 million in legal fees, the company reported in a filing
with the Securities and Exchange Commission.
"We are adequately reserved. We will take no hit on the bottom line
over this," Company spokeswoman Melinda Wilson said recently. Ms.
Wilson said that the Company still believed that there was noting
excessive about its late fees, which were 7.5 percent of the monthly
lease payment or $50, whichever was less.
The instant class action grew out of a lawsuit filed in California in
the mid-1990s and a second suit filed later in Maryland, which
subsequently were consolidated.
The settlement is on a claims-made basis, meaning that only those who
put in a claim for compensation will get it. Ms. Wilson said letters
were sent out last month to those affected. A hearing for final
approval of the settlement is scheduled for September 20, the Company
The Iowa Public Employees' Retirement System (IPERS) has hired Barack,
Rodos & Bacine, a Philadelphia-based firm specializing in securities
litigation, to track IPERS' interests in securities lawsuits, according
to a report by Associated Press Newswires. IPERS wants to be sure that
it benefits from any class action litigation with which it should file
a claim. The choice was announced recently by Mollie Anderson,
director of the Iowa Department of Personnel and acting chief executive
officer of IPERS.
"We have lots and lots of securities in lots of different places and
some of them are subject to class-action lawsuits," said Kelly Lovell,
deputy general counsel for IPERS. "We are hiring a firm to keep track
of securities litigation involving these securities. We want to make
sure that the proof of claim gets filed for IPERS and that we get the
money that is coming to us."
IPERS, which has more than $14 billion in investments, once held as
much as $30 million in WorldCom stock and bonds before last month's,
WorldCom bankruptcy and about $2 million in the Enron collapse. Fund
managers want to make sure they benefit from any class actions filed in
such cases.
"The main thing we want to do is not leave any money lying on the table
because we did not have a claim filed in a timely way," said Kelly
Lovell.
Kelly Lovell said that Barrack, Rodos & Bacine was chosen because the
firm had the best system for tracking cases from the filing of the
lawsuit through the resolution. "We will be posting on our Web site
fairly soon what they find. We'll know all the lawsuits that we are in
and at what stage."
The 11th Circuit Court of Appeals upheld the dismissal of a securities
class action filed against Kos Pharmaceuticals, Inc., the members of
its Board of Directors, certain of its officers and the underwriters of
the Company's October 1997 offering of common stock.
The suit, filed initially in the United States District Court for the
Northern District of Illinois, on behalf of purchasers of the Company's
Common Stock during the period from July 29, 1997, through November 13,
1997, claims
(1) sections 11, 12(a)(2) and 15 of the Securities Act of 1933,
(2) sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and Rule 10b-5 promulgated thereunder; and
(3) for common law fraud, negligent misrepresentation and breach
of fiduciary duty.
The claims in the lawsuit relate principally to certain statements made
by the Company, or certain of its representatives, concerning the
efficacy, safety, sales volume and commercial viability of the Niaspan
Upon the Company's motion, the case was transferred to the United
States District Court for the Southern District of Florida. The
Company filed a motion to dismiss the complaint against the Company and
the individual defendants on January 7, 1999. On May 24, 1999, the
dismissed the lawsuit with prejudice.
The plaintiffs filed an appeal with the United States Circuit Court of
Appeals for the 11th Circuit. The appeals court later affirmed the
district court's dismissal of the plaintiff's claims with prejudice.
Discovery has not commenced in the securities class action pending in
the United States District Court for the Southern District of New York
against Lexent, Inc., certain of its senior executives and its
underwriters.
The complaint alleges that the registration statement and prospectus
relating to the Company's initial public offering contained material
misrepresentations and/or omissions in that those documents did not
disclose that:
(1) certain underwriters had solicited and received undisclosed
fees and commissions and other economic benefits from some
investors in connection with the distribution of the Company's
stock in the initial public offering; and
(2) certain underwriters had entered into arrangements with some
investors that were designed to distort and/or inflate the
market price for the Company's stock in the aftermarket
following the initial public offering.
The suit against the Company and its executives is part of a number of
initial public offering securities claims against multiple issuers and
underwriters presently pending before Judge Shira Scheindlin of the
The Company believes that the claims against it and its senior
executives are without merit, and the Company intends to defend itself
and its senior executives vigorously. Management currently believes
that the resolution of this litigation will not have a material adverse
impact on the Company's financial position or the results of
operations, although the ultimate outcome of this matter cannot be
determined at this time.
Disabled train and bus riders filed a federal class action against the
Massachusetts Bay Transportation Authority, seeking repairs and
improvements instead of monetary damages, Associated Press Newswires
The suit, filed in the US District Court in Boston, claims bus drivers
pass disabled riders by on the street, and that equipment meant to help
them, such as elevators and bus wheelchair lifts, is often in
disrepair. The plaintiffs allege elevators at MBTA stations are often
broken or contaminated by human waste.
"This case is about common decency and the way we treat disabled
people," the plaintiffs' attorney, Taramattie Doucette, told the Boston
Herald. "The MBTA has made empty promises to these people over the
years, but hasn't come through with concrete results."
Blind riders said the bus drivers fail to make announcements and don't
pull close enough to the curb. Wheelchair-bound riders complain that
bus drivers pass them by, and that the gap between the cars and the
platform makes it difficult to board the MBTA's subway trains. Those
using scooters or wheelchairs said elevators are filthy if they work at
MBTA General Manager Michael Mulhern acknowledged there are problems,
but said they are being addressed. Mr. Mulhern said, "We take these
allegations seriously and we are doing a tremendous amount of work on
the situation. We have a focused plan in motion and want a chance to
tell the story in the courtroom."
Milberg Weiss Bershad Hynes & Lerach, noted for its securities class
actions, has been sued by a Kansas hedge fund manager, according to a
report by The Kansas City Star.
The plaintiff, James Loeffelbein, of Bucyrus, Kansas, alleges the law
firm misled him when it said it was agreeing to represent him in a
fraud action against one-time Wall Street high flier, Rare Medium Group
Instead, Mr. Loeffelbein asserts, the firm used him "to coattail onto
an existing class action," against Rare Medium in Delaware, so it could
make a quick fee "with nothing more than some negotiations." Mr.
Loeffelbein is represented by Overland Park lawyers Loren Moll and
Louis Cohen of Caldwell & Moll.
"Milberg Weiss wanted to become the "lead counsel" in the class action
so it could control the case, manage the outcome (usually a settlement)
and get the largest share of the attorney fees in the case," Mr.
Loeffelbein alleges in a lawsuit filed in Johnson County District
Mr. Loeffelbein and associated investors owned or controlled more than
one-million shares of Rare Medium. Mr. Loeffelbein says he discovered
that Milberg Weiss only agreed to represent him because the firm knew
that the best way to become lead counsel was to file an action on
behalf of members of the class who owned or controlled the most shares.
Milberg Weiss was indeed appointed lead counsel and the class action
was settled in April. The settlement "was of no significant benefit to
the Rare Medium stockholders, but resulted in the payment of legal fees
to Milberg Weiss of approximately $1.1 million."
Besides suing Milberg Weiss, the lawsuit also names as defendants Rare
Medium Group, which used to be a Web site designer, and three top Rare
Medium executives. Mr. Loeffelbein claims that Rare Medium and the
executives issued false and misleading information about the company,
whose stock sold for $52 a share in April 2000, but by August 2000. the
price had plummeted to 25 cents.
NCR Corporation will establish a $9 million pretax reserve to pay its
share of costs resulting from an out-of-court settlement of class
actions reached by Lucent Technologies, Inc. last week, the Wall Street
Journal reports.
The lawsuits claimed AT&T Corporation's phone-equipment business, now
part of Lucent, engaged in misleading actions regarding the leasing of
telephones following the 1984 breakup of AT&T.
Although NCR was not named in the lawsuits, the Company said it will
pay part of the $350 million settlement, this liability being in
accordance with the terms of the divestiture agreement accompanying the
spin-off of NCR and Lucent from AT&T. The Company says it does not
know the dollars amount of its liability, but it will not exceed three
percent of the settlement.
The Company, a maker of electronic cash registers, bank-teller machines
and computer systems, said it will adjust its second-quarter results to
reflect the charge when it files its quarterly statement this week.
Including the $9 million pretax reserve, the Company said it will
report net income of $25 million, or 25 cents a share, compared with
$32 million, or 32 cents a share, reported July 25.
Orleans Parish District Attorney Harold Connick faces a suit filed by
about 40 of his own employees who claim he is making them work in
unhealthy conditions at the Plaza Tower office building, court records
show, the Associate Press Newswires reports. Mr. Connick is being sued
in his official capacity as part of a proposed class action against the
owners of the 44-storey office building. A late October hearing is
scheduled to determine whether the class action will be certified.
The building is now virtually empty after employees began complaining
of leaks, which resulted in mold and other building problems. Mr.
Connick maintained two floors in the building for the district
attorney's child support department.
State workers in the building also have filed suit against both the
building owners and their employers, the Department of Health and
Hospitals and the Department of Social Services. The state workers
have sought class action status, and the presiding judge has combined
the suits filed by the state workers and Mr. Connick's employees.
The lawsuit's goal is to persuade the presiding judge to allow
attorneys to seek damages from the personal assets of executives
running or owning corporations that have owned or managed the building.
Attorneys representing the plaintiffs allege that owners of the
building "kept moving this property among themselves in an attempt to
thwart liability," said Madro Bandaries, the plaintiffs' attorney. The
leases are worth about $10 million to the owners of the building.
Citing health concerns for workers, the state signed a $14 million,
five-year lease for a recently renovated Central Business District
office tower about the same age as the 32-year-old Plaza Tower.
British Nuclear Fuels (BNFL) is being sued, at one of its American
plants, by black workers who claim they were deliberately assigned to
jobs that exposed them to almost twice as much radiation as their white
colleagues in an environment of "hostile racism," according to The
Independent (London).
Black workers at the Westinghouse Savannah River Company (WSRC), a
company in which BNFL has a major financial stake, say they found
nooses left in their lockers, racist graffiti scrawled on lavatory
walls and heard parts of the plant referred to as the "coon area." The
black workers claim they were constantly overlooked for promotion,
despite being better qualified than their white colleagues.
The revelation of the lawsuits, involving 32 plaintiffs seeking
hundreds of thousands of dollars, will be of considerable embarrassment
to BNFL, which says it is strictly opposed to racism. Last night, MPs,
trade union leaders and anti-racism campaigners called for the
government-owned company to launch an immediate investigation. In the
United States, workers at the South Carolina plant asked BNFL to
intervene and settle the claims.
Labor MP Alan Simpson said, "It cannot be acceptable under any
circumstances for a British company to be involved in any way in these
practices . No one is suggesting BNFL was responsible for this, but
they have rebranded themselves as a clean-up company and they ought to
clean up their own house first."
The allegations focus on the Savannah River Site, a former nuclear
weapons production facility, which now reprocesses nuclear waste in
Aiken, South Carolina. The US Department of Energy-owned site, in
which BNFL has a 40 percent economic interest, was found by the US
equal opportunities watchdog, the EEOC, to have a "racially hostile
work environment."
However, the lawsuits go further, claiming black workers were
deliberately placed in jobs with greater risk of exposure to radiation.
This is based on a report by Dr. Jim Ruttenber, an expert in the
evaluation of toxic exposure in the workplace. Using the WSRC's own
data, he concluded that blacks were routinely placed in jobs with, on
average, 80 percent more radiation, than were whites.
The lawsuits date from 1997 when a New York Lawyer Ivan Smith tried to
bring a class action for 99 workers. Mr. Smith said that when he
visited the site he was subjected to a hit-and-run attack, and told,
"Nigger, get out."
The court ruled against the class action and 62 plaintiffs settled with
WSRC. The remaining cases are to return to court in October.
The class action pending against Paypal, Inc., filed on behalf of a
purported class of users whose accounts have been restricted by the
Company, has been dismissed.
The suit claims that the Company has restricted funds or user accounts
in a manner that breaches the Company's User Agreement provisions on
account restrictions, that constitutes an unlawful, unfair or
fraudulent business practice under California law, and that constitutes
a conversion of the users' funds. The plaintiffs sought an order
awarding:
(1) actual and compensatory damages,
(2) restitution or other equitable relief,
(3) punitive damages as to any conversion of users' funds,
(4) an injunction preventing the Company from continuing to
convert funds or to engage in the alleged unlawful, unfair or
fraudulent practices regarding account restrictions,
(5) plaintiffs' costs incurred in the litigation, including
attorney's fees, and pre- and post-judgment interest, and
(6) such other relief as the court may deem proper.
The Company believes its policies and procedures regarding account
restrictions are appropriate and are an important part of its risk
management system. On March 18, 2002, the Company removed the case
from Superior Court in Santa Clara County to the United States District
Court for the Northern District of California. On April 1, 2002,
plaintiffs filed a motion to remand the case back to Superior Court.
On June 11, 2002, the Company received notice of dismissal of this
Paypal, Inc. faces a class action pending in the US District Court for
the Northern District of California, San Jose Division, on behalf of a
purported class of customers who use their PayPal account primarily for
personal, family or household purposes.
The suit alleges that the Company has violated the Electronic Fund
Transfer Act, and seeks an order awarding:
(2) restitution and other equitable relief as the court deems
(3) treble damages and penalties under the Electronic Fund
Transfer Act,
convert the remaining funds in the plaintiffs' accounts,
(6) such other relief as the court may deem just and proper.
The Company believes it has meritorious defenses to the suit and will
contest it vigorously. However, the ultimate resolution of this suit
could have a material adverse effect on the Company's financial
condition and results of operations and cash flows.
Paypal, Inc. faces a class action filed in the Superior Court of the
State of California in Santa Clara County, on behalf of a purported
class of all persons who hold or held PayPal accounts:
(1) that the Company restricted in their entirety, even though
suspected frauds only implicate a portion of the funds in the
accounts;
(2) that the Company restricted without any reasonable ground to
suspect user fraud or other justifiable basis; or
(3) from which the Company deducted funds without justification,
without completing an investigation, or without providing the
user with the written results of the investigation within
three business days of completing the investigation.
a conversion of the users' funds.
The Company intends to vigorously defend against this suit.
Paypal, Inc. faces a class action filed in the United States District
Court for the Northern District of California, San Jose Division, on
behalf of a purported class of all persons who, at any time since the
launch of the PayPal service in October 1999, have opened an account
with the Company or had money electronically transferred from or to an
account with another financial institution in connection with a PayPal
transaction.
The suit claims that the Company has:
(1) violated the Electronic Fund Transfer Act by, among other
things, failing to conduct a good faith and timely
investigation of errors reported by customers, failing to
provisionally credit amounts alleged to be in error within ten
business days, and failing to provide a telephone number and
address readily available to the consumer for reporting
unauthorized transactions;
(2) converted funds of class members to the Company's own use
through unlawful conduct;
(3) transferred or retained from class members monies that the
Company had no right to retain;
(4) unjustly retained monies belonging to the class members; and
(5) been negligent in not making dispute resolution information
readily available for customers, making it difficult for
customers to resolve disputes with the Company in an efficient
and appropriate manner, and failing to establish and maintain
adequate procedures concerning the transfer of funds.
The suit also claims that the alleged actions constitute unlawful,
unfair, fraudulent and deceptive business practices under California
On May 1, 2002, the plaintiffs filed an amended complaint, dropping one
of the three named plaintiffs and added in causes of action under the
California Consumers Legal Remedies Act. On May 10, 2002, the
plaintiffs filed a motion for certification of their proposed plaintiff
contest it vigorously. However, the ultimate resolution of these
matters could have a material adverse effect on the Company's financial
Shurgard Storage Centers, Inc. faces a class action filed in the
Superior Court of California for Orange County, alleging that the
Company misrepresented the size of its storage units.
The suit seeks class action status and seeks damages, injunctive relief
and declaratory relief against the Company under California statutory
and common law relating to:
(1) consumer protection,
(2) unfair competition,
(3) fraud and deceit and
(4) negligent misrepresentation
The Company does not currently believe that the outcome of this
litigation will have a material adverse effect on its financial
position or results of operations. However, the Company cannot
presently determine the potential total damages, if any, or the
ultimate outcome of the litigation. The Company intends to vigorously
defend this action.
Supporters of slavery reparations are preparing for a weekend rally in
Washington, DC, a city, which they point out, was built in part by
slaves hauling sandstone blocks and sawing lumber, the Associated Press
Organizers say the Millions for Reparations rally on Washington's
National Mall on Saturday, August 17, will be an important
demonstration of the broad support that reparations enjoy among US
blacks.
"It is our contention that millions of black people in America support
the idea of reparations for black people, and thousands of those
millions will be in Washington," said Conrad Worrill, national chairman
of the National Black United Front.
The reparations effort has gathered steam this year, with class actions
seeking compensation for the unpaid labor of enslaved blacks, filed
this spring against insurance companies, railroads and banks. The
Reparations Coordinating Committee, a group of prominent black
attorneys and scholars, is also working on a separate lawsuit against
the United States government, which it plans to file later this year.
Organizers say the rally's populist flavor will complement the other
reparations efforts in the legal area. "It is the masses of people on
the ground that change things, that make history," said Viola Plummer,
co-chair of the rally and chairwoman of the December 12th Movement, a
black human rights group. "What the Reparations Coordinating Committee
is doing is amassing research and information in order to bring
lawsuits. You can't have one without the other."
The rally's leadership comes from less-familiar sources in the civil
rights movement. Major names, such as the Rev. Jesse Jackson, the Rev.
Al Sharpton, National Urban League President Hugh Price and Kweisi
Mfume, president of the NAACP, are not expected to attend. Rep. John
Conyers, a Michigan Democrat, who has proposed, for the last 13 years,
a commission to study the institution of slavery, does plan to attend.
Many Blacks allege they still suffer from the vestiges of slavery, as
demonstrated by present-day gaps between blacks and whites in
everything from health to education to the criminal justice system,
reparations backers say. However, some conservative blacks do not
support the movement, saying it depicts blacks as victims.
Tellabs, Inc. faces several securities class actions filed in the
United States District Court for the Northern District of Illinois on
behalf of purchasers of the Company's common stock between December
11,2000 and June 19,2001. The suits name as defendants the Company
(1) Michael J. Birck, Chairman and Chief Executive,
(2) Richard C. Notebaert, former Chief Executive, President and
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market between December 11, 2000 and June 19, 2001.
The Company believes these claims are without merit and intends to
defend the actions vigorously.
About 2,500 residents of Mission, Texas dispute state findings that
chemical levels near former pesticide businesses there were
insufficient to pose a danger to residents, The Fort Worth Star-
Telegram reports.
Three years ago, the plaintiffs banded together and sued. The most
recent version of their petition accuses 35 large companies of
polluting or inadequately cleaning three sites laden with pesticides in
this town of 50,000 known for its citrus industry. Their class action
cites each of the chemical and pharmaceutical companies as a producer
of the ingredients used by the Haye-Sammons pesticide plant before it
closed in 1972.
Pesticides were first brought into Mission by rail in the mid-1940s.
Not long after, the town's south side was rife with sickness, misery
Last week, the Texas Natural Resource Conservation Commission released
results of testing on 48 properties in Mission near former pesticide
businesses. Seventeen sites indicated various levels of chemicals such
as toxaphene, dieldrin, heptachlor epoxide and DDT. However, the
commission says none are at a level high enough to pose a danger to
residents. All of these chemicals could cause liver, kidney or nervous
system damage in higher concentrations.
The commission vowed to fund and perform the estimated $500,000 cleanup
of the 17 sites on which they located chemicals.
Edinburg lawyer Ramon Garcia told the Express-News that "the Rio Grande
Valley was not that populated in the mid-1940s when the Hayes-Sammons
chemical company moved into Mission and set up a warehouse on the
tracks to receive and store pesticides. There were a lot of vacant
areas where companies could have located. But for whatever reason,
they located in the heart of Mission, which was predominantly
Mexican-American." Mr. Garcia, who is known for winning large
judgments, is representing plaintiffs in their class action.
Attorneys for the defendants said the plaintiffs' case is severely
flawed. "They have yet to produce any evidence that anything my
clients produced or sold has caused them any injury," said Robert
Newman, a Houston lawyer defending four of the defendants, Allied
Chemical Corp., Aventis Pharmaceutical, FMC Corp. and Maxus Energy
Corp. All are alleged to be product suppliers of Hayes-Sammons.
The United States District Court, Southern District of California
dismissed the consumer class action pending against West Corporation.
The suit also names as defendants:
(1) West Telemarketing Corporation,
(2) Memberworks Incorporated,
(3) MWI Essentials,
(4) MWI Leisure Advantage,
(5) MWI Home & Garden,
(6) MWI Connections and
(7) MWI Valuemax
The complaint alleges that class members were sold club memberships by
misleading means or billed for club memberships they did not purchase
as a part of an upsell offer after ordering another product. The
plaintiff asserts four separate claims. The plaintiff claims the
defendants mailed unordered merchandise to the plaintiff and the
similarly situated class members in violation of 39 USC ss. 3009. The
plaintiff has also asserted claims for conversion, unjust enrichment
and fraud.
The purported class is composed of all persons in the United States
who, after calling a telephone number to inquire about or purchase
another product:
(1) were sent a membership kit in the mail;
(2) were charged for a Memberworks membership program; and
(3) were customers of a joint venture between Memberworks and the
Company or were wholesale customers of the Company.
The Company filed a motion to dismiss for lack of personal
jurisdiction, which was denied. The Company then joined with
Memberworks on a motion to dismiss on various other grounds, which the
court granted on July 12, 2002.
The fallout from the latest corporate scandals will likely be dealt
with in court, as plaintiff attorneys sign up irate investors by the
dozens, the Detroit Free Press reports.
Companies like CMS Energy Corp., Qwest Communications International
Inc., WorldCom Inc. and Xerox Corp. are finding out the hard way that
cutting financial corners and engaging in dubious transactions to
artificially boost revenues is a mistake.
CMS, Michigan's largest power company, is facing at least a half dozen
lawsuits after revealing that it engaged in bogus energy trades that
padded its 2000 and 2001 revenues. The revelation caused the Company's
stock to plunge 40 per cent. Since January 2, Company stock has lost
69 percent of its value.
The lawsuits allege CMS violated securities laws by engaging in the so-
called round-trip energy trades, which intentionally misled investors.
Round-trip trades, which are not illegal in themselves, involve buying
electricity from another company at a set price, then selling it back
to that company at the same price.
"We are suing them for failure to disclose material accounting
violations to the investing public," said David Scott, managing partner
of Scott & Scott LLP, a Connecticut law firm that represents dozens of
Company shareholders. "We are bringing the suit, which has received
class action status, on behalf of all purchasers of securities of CMS
during that time."
State and federal regulators are now looking into how some of these
recent corporate scandals were allowed to happen - and why those who
direct policy-making felt "free" to engage in accounting practices they
knew were fundamental wrongdoings. Following the disclosures in
January of massive accounting irregularities at Enron Corp., a steady
spate of revelation has stunned much of the investing public and caught
many federal agencies off their guard.
"It is true that at the end of every bull market, the amount of
corporate fraud tends to increase," said Charles Neimeier, chief
counsel of the US Securities and Exchange Commission's Financial Fraud
Task Force. "But this period is unique, because of the size of the
companies that are implicated in these schemes. For the last several
years, the number of reporting failures has increased sharply."
Over the last three months, several Fortune 500 corporations have been
forced to wipe away billions of dollars in previously reported revenue
that they booked using accounting loopholes.
Among the developments:
(1) WorldCom restated $3.9 billion in revenue and filed for
bankruptcy. It has more recently revealed another $3.3
billion of hidden debt;
(2) Qwest Communications International acknowledged misreporting
$1.16 billion in sales and will restate results from 1999 to
(3) Xerox acknowledged $6.4 billion in phantom sales and paid a
$10 million fine;
(4) Adelphia Communications filed for bankruptcy protection in May
and said it will restate earnings for the last three years.
Former chief executive John Rigas is arrested on charges of
stealing hundred of millions of dollars from the company;
(5) CMS told investors $5.3 billion of earlier-stated revenues
came from round-trip trades, for which, ultimately, if
properly posted on the books, there would be neither debit nor
revenue.
In the case of Dearborn-based CMS, the round-trip energy trades, 13 in
all, were the vehicles that eventually got Michigan's largest power
company into trouble. As a result, the company is facing several
investor lawsuits for artificially inflating their stock values, which
plaintiffs claim the company knew it was doing and intended to do.
The investors charge in the complaints that defendants CMS violated
several sections of the Securities Act of 1934 by issuing a series of
materially false and misleading statements to the market between August
3, 2000, and May 10, 2002.
"We have seen this kind of behavior before- it shakes the fundamental
core of the market," said David Scott, the investors' attorney.
"Everybody is scared that tomorrow will bring a new problem. What we
are seeing is that companies for the last five years have engaged in
aggressive (and misleading) efforts to keep up stock prices, because
CEOs are highly compensated for doing so."
Meanwhile, the head of the US Federal Energy Regulatory Commission said
recently that he would support legislation to ban round-trip trading of
electricity. "We are alarmed that this kind of thing could be so
widespread," said SEC's Mr. Neimeier. "There is no industry that is
immune from having this happen. Once you start down the path of
tweaking your results, it is almost impossible to stop."
A recent study by Weiss Ratings, Inc., found questionable accounting
methods resulted in close to $1.3 trillion in lost shareholder value at
33 major companies from January 2001 to June 2002. The report is
entitled "The Worsening Crisis of Confidence on Wall Street: The Role
of Auditing Firms." The study demonstrates how some major auditing
firms failed to warn shareholders of obvious problems that let to the
latest financial implosions.
"We have a responsibility to society to present fair financial
information," said Alan Reinstein, an accounting professor at Wayne
State University. "That is the auditor's sole responsibility, and when
we walk away from that responsibility, I have serious concerns about
our profession."
In an effort to try to restore confidence in markets and punish rogue
corporations and accounting firms for engaging in illegal activity,
Congress has approved and President Bush has signed legislation that is
aimed at cracking down on fraud. The new law calls for severe criminal
penalties including prison time for individuals who engage in corporate
fraud and document shredding. The new law also establishes an
independent board to oversee the accounting industry.
The measure would limit the amount of consulting work accounting firms
do with companies whose books they audit. In addition, personal loans
from companies to their top officials would be banned.
"The accounting profession has been self-regulated for almost a hundred
years," said Mr. Reinstein. "If we don't get our act in order, the
wholesale regulation of our industry may come sooner than people
think."
The Law Office Of Mark McNair initiated a securities class action on
behalf of shareholders who acquired Aon Corporation (NYSE:AOC) between
May 4, 1999 and August 6, 2002, inclusive, in the United States
District Court for the Northern District of Illinois against the
Company and certain of its officers and directors.
The action charges that defendant violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Mark McNair by Mail: 1101 30th St. N.W. Suite
500, Washington, DC 20007 by Phone: 877-511-4717 or 202-872-4717 or by
E-mail: mcnair@justice4investors.com.
Wechsler Harwood Halebian & Feffer LLP initiated a securities class
action in the United States District Court for the Central District of
California on behalf all persons who purchased or acquired Charter
Communications, Inc. (Nasdaq:CHTR) securities between November 9, 1999
through July 17, 2002, inclusive against the Company and certain of its
officers.
The complaint asserts claims for violation of Section 10(b) and 20(a)
of the Securities and Exchange Act of 1934 against Charter
Communications, as well as its Chief Executive and Chief Financial
Officers. The alleged violations, according to the complaint, stem
from materially false and misleading statements made by the defendants
during the class period that materially misrepresented Charter
Communications' financial performance; thereby causing Company
securities to trade at artificially-inflated prices.
The complaint alleges that defendants:
(1) overstated Charter's revenue;
(2) failed to account appropriately for installation costs; and
(3) artificially inflated the reported number of subscribers for
the Company's basic cable services.
On July 18, 2002, when a Merrill Lynch analyst expressed concerns about
potentially misleading accounting practices, Charter's stock fell more
than 13%. A subsequent article in Forbes discusses a Credit Suisse
First Boston report that further amplifies these concerns and describes
how Charter handles the impact of "churn" -- labor and advertising
costs -- on the Company's balance sheet, by improperly capitalizing
approximately 30% of its installation labor costs over an extended time
For more details, contact Craig Lowther by Mail: 488 Madison Avenue,
8th Floor New York, New York 10022 by Phone: 877-935-7400 or by E-mail:
clowther@whhf.com
Stull Stull & Brody initiated a securities class action in the United
States District Court for the Eastern District of Missouri, on behalf
of all purchasers of the common stock of Charter Communications, Inc.
(NASDAQ:CHTR) between November 9, 1999 and July 17, 2002, inclusive
against the Company and certain of its officers and directors.
The complaint charges defendants with issuing false and misleading
statements concerning its business and financial condition.
Specifically, the complaint alleges that defendants' material omissions
and the dissemination of materially false and misleading statements
regarding the nature of Charter's revenue and earnings caused Charter's
stock price to become artificially inflated, inflicting damages on
investors.
The suit alleges that defendants overstated Charter's revenue, failed
to appropriately account for installation costs and artificially
inflated the number of subscribers for the Company's basic cable
On July 18, 2002, when a Merrill Lynch, Co. analyst expressed concerns
about potentially misleading accounting practices, Charter's stock fell
more than 13%. Additionally, a subsequent article in Forbes discusses a
Credit Suisse First Boston report that further amplifies these concerns
and describes how Charter handles the impact of "churn" - labor and
advertising costs - on the Company's balance sheet, by improperly
capitalizing approximately 30% of its installation labor costs over an
extended time period.
For more details, contact Tzivia Brody by Mail: 6 East 45th Street, New
York, NY 10017 by Phone: 800-337-4983 by Fax: 212-490-2022 or by E-
mail: SSBNY@aol.com
behalf of shareholders who acquired MSC Industrial Direct Co. Inc.
(NYSE:MSM) securities between November 4, 1999 and August 5, 2002,
inclusive, in the United States District Court for the Eastern District
of New York against the Company and certain of its officers and
directors.
For more information, contact Mark McNair by Mail: 1101 30th St. NW
Suite 500, Washington, DC 20007 by Phone: 877-511-4717 or 202-872-4717
or by E-mail: mcnair@justice4investors.com.
Schiffrin & Barroway LLP initiated a securities class action against
SeeBeyond Technology Corp. (Nasdaq:SBYN) claiming that the company
misled investors about its business and financial condition, in the US
District Court for the Central District of California. The suit seeks
damages for violations of federal securities laws on behalf of all
investors who bought Company securities between December 10, 2001 and
The complaint alleges that the Company made positive but false
statements about its results and business, while concealing material
adverse information about customers pushing out orders. As a result,
Company stock traded at artificially inflated levels, permitting
defendants to complete a secondary public offering of 8.5 million
shares (plus 1.2 million of an over allotment) for proceeds of $82
million, including 2 million shares sold by the Company's CEO.
Immediately before the offering, the Company announced its 4thQ 01
results, which met analyst expectations. Defendants represented that
the Company had met the numbers without pulling in sales from the 1stQ
02 such that 1stQ 02 results would be favorable as well. The Company
indicated it had good visibility into 1stQ 02 results and forecast
revenues of more than $44 million for that quarter.
For more details, contact the Shareholder Relations Manager by Phone:
888-299-7706 (toll free)/610-822-2221 by E-mail: info@sbclasslaw.com or
visit the firm's Website: http://www.sbclasslaw.com
Berger & Montague, PC initiated a securities class action against
Vivendi Universal, SA (NYSE: V) and certain of its principal officers
and director in the United States District Court for the Southern
District of New York on behalf of all persons or entities who purchased
Company securities between April 23, 2001 and July 2, 2002.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of the Company's securities.
Prior to and during the class period, defendant Jean-Marie Messier took
Vivendi on an acquisition binge that, according to published reports,
resulted in the Company amassing approximately $18 billion in debt as
he turned the Company from a water concern into an entertainment
powerhouse.
During the class period, defendants made misrepresentations and/or
omissions of material fact, including the following:
(1) misstating the Company's cash position and ability to service
its debt obligations;
(2) misstating the Company's earnings in its public filings with
the SEC and elsewhere as a result of failing to record write-
downs of goodwill and other intangible assets associated with,
inter alia, the merger among Vivendi, Seagram and Canal+ long
after it had become apparent that such assets were being
carried at values vastly higher than their true values;
(3) Failing to disclose that the exchange ratio for the merger
between MP3.com, Inc. and Vivendi was distorted due to
artificial inflation in the price of Vivendi American
Depositary Shares (ADSs);
(4) Affirmatively misstating the value of goodwill and other
intangible assets associated with, inter alia, the merger
among Vivendi, Seagram and Canal+ by carrying such assets at
the cost of acquiring them long after it had become apparent
that Vivendi had overpaid to acquire such assets; and
(5) Failing to disclose that Vivendi had significant off-balance-
sheet liabilities in the form of its undisclosed sale of put
options on tens of millions of dollars worth of Vivendi shares
during 2001 in order to pay for stock options it awarded to
executives.
During the class period, defendants' false statements artificially
inflated Vivendi ADSs to as high as $68.80 per ADS. Defendants
reported favorable, but misleading, financial results to the market and
represented that Vivendi was not as susceptible to economic problems as
competitors and that the Company had the "highest resiliency and lowest
sensitivity to recessionary environment." The defendants also
represented that Vivendi was successfully implementing recent mergers,
which were being reorganized quickly to generate synergies.
These positive but false statements allowed the Company to complete
additional acquisitions in its $100 billion buying spree between 1998
and 2001. Late in June 2002, news leaked from Vivendi that its debt was
at alarming levels, causing Vivendi's ADSs to decline in price from $28
to $20. Vivendi's ordinary shares declined in similar fashion.
Nonetheless, Messier reassured the market that liquidity was not a
problem. However, as ratings agencies continued to downgrade the
Company's debt, the ADSs continued to decline. On July 2, 2002,
Vivendi's debt was downgraded again and the Company was in danger of
default. On July 3, 2002, Messier was forced to resign.
Vivendi ADSs collapsed upon these revelations, falling to $15-21/32 on
July 3, 2002, on huge volume of 8 million shares. This collapse wiped
out billions of dollars in Vivendi shareholder value, compared to the
end of 2001. Later, on July 9, 2002, Bloomberg reported that the
Commission des Operations de Bourse was reviewing statements released
by Vivendi to ensure "they abide by our rules." The regulators had
raided Vivendi's Paris headquarters as part of an investigation into
whether Vivendi had disclosed relevant information to investors in the
prior 18 months.
For more details, contact Sherrie R. Savett, Carole A. Broderick,
Barbara A. Podell or Kimberly A. Walker by Mail: 1622 Locust Street,
Philadelphia, PA 19103 by Phone: 888-891-2289 or 215-875-3000 by Fax:
215-875-5715 by E-mail: InvestorProtect@bm.net or visit the firm's
Website: http://www.bergermontague.com
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima
Antonio and Lyndsey Resnick, Editors.
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