Thursday, July 31, 2003, Vol. 5, No. 150
APARTHEID LITIGATION: Minister Asks For Dismissal of NY Lawsuits
ATLANTA FALCONS: Former Exec Launches Sexual Harassment Charges
BAXTER INTERNATIONAL: IL Court Dismisses Securities Fraud Suit
BRIGHTPOINT INC.: IN Court Approves Securities Suit Settlement
BURGERS' OZARK: Recalls 6.5Tlbs Bacon For Undeclared Ingredient
CALIFORNIA MICRO: SEC Says Two Auditors Neglected Watchdog Role
HALLIBURTON CO.: Asks For Dismissal of Securities Fraud Lawsuit
HUMANA HEALTH: Faces Several Antitrust Lawsuits in OH, KY Courts
HUMANA INC.: Enters Settlement For PCA Consolidated Stock Suit
HUMANA INC.: Working To Resolve Consumer ERISA, RICO Suits in FL
ILLINOIS: Hospitals Accused With Fraud Over Liver Transplants
INTEL CORPORATION: CA Court Dismisses Securities Fraud Lawsuit
JEHOVAH'S WITNESSES: Faces Four CA Suits Alleging Sexual Abuse
LAND O'LAKES: Recalls 1-lb Salted Stick Butter For Injury Hazard
LOUISIANA: Plaintiffs Seek Lights Suit Remand to Federal Court
MCI/WORLDCOM: AT&T Asserts Fraud In Local Telephone Access Fees
OBESITY LITIGATION: Fat Suit Crusade Invades Ice Cream Parlors
TOBACCO LITIGATION: Lorillard Hails Verdict in LA Smoker Lawsuit
TOBACCO LITIGATION: Center Says LA Verdict a Victory For Smokers
TRILLIUM BANQUET: No Way To Determine Cause of E. Coli Outbreak
TURNSTONE SYSTEMS: CA Court Approves Securities Suit Settlement
New Securities Fraud Cases
ADMINISTAFF INC.: Ademi & O'Reilly Lodges Securities Suit in TX
AVATAR HOLDINGS: Abbey Gardy Launches Securities Fraud Lawsuit
CENTRAL PARKING: Marc Henzel Launches Securities Suit in M.D. TN
COSI INC.: Marc Henzel Lodges Securities Fraud Suit in S.D. NY
DIVINE INC.: Marc Henzel Commences Securities Fraud Suit in IL
DIVINE INC.: Kirby McInerney Lodges Securities Suit in N.D. IL
LABORATORY CORPORATION: Robbins Umeda Lodges Stock Lawsuit in CA
South African Minister Penuell Maduna officially asked United
States District Court Judge John E. Sprizzo to dismiss two class
actions seeking reparations for apartheid victims, Business Day
The strongly-worded letter to Judge Sprizzo reiterated the South
African government's opposition to the suits, which charge a
number of corporations that did business in South Africa before
1994, with aiding and abetting the South African apartheid
regime.
The letter states that the litigation would hurt the country's
economy and the very people it was meant to help by increasing
unemployment and crime. "If this litigation proceeds, far from
promoting economic growth and employment, and thus advantaging
the previously disadvantaged, the litigation, by deterring
foreign direct investment, and undermining economic stability
will do exactly the opposite of what it ostensibly sets out to
do," Mr. Maduna stated, according to Business Day.
"I understand that under United States law, courts may abstain
from adjudicating cases in deference to the sovereign rights of
foreign countries to legislate, adjudicate and otherwise resolve
domestic issues without outside interference, particularly where
the relevant government has expressed opposition to the actions
proceeding in the United States and where adjudication would
interfere with the foreign sovereign's efforts to address in
which it has the predominant interest. The government (of South
Africa) submits that its interest in addressing its apartheid
past presents just such a situation," the letter continued.
Mr. Maduna told the American judge that government's policy was
to "promote reconciliation with and business investment by all
firms," South African and foreign, "and we regard these lawsuits
as inconsistent with that goal."
"The remedies demanded in the current litigation in the United
States --both the specific requests (such as for the creation of
a historical commission and the institution of affirmative
action programmes) and the demand for billions of dollars in
damages to be distributed by the US courts -- are inconsistent
with South Africa's approach to achieving its long term goals,"
Mr. Maduna argued, Business Day states.
Atlanta Falcons team owner Arthur Blank faces a federal lawsuit,
charging him with condoning a work climate where female
employees were treated as "sex objects," the Associated Press
Former Atlanta Falcons vice president of human resources Carol
Faubert, 53, filed the suit, charging the team fired her after
she spoke out against sexual harassment of women staffers. She
claimed that Mr. Blank dismissed her because she objected to his
refusal to hire women with young children and his decision to
prohibit certain employees from earning overtime.
"Her dismissal had nothing to do with her performance," Larry
Pankey, one of Ms. Faubert's lawyers, told AP.
In a statement, Susan Bass, the Falcons' vice president for
community affairs, denied the suit, saying, "This lawsuit was
filed by a disgruntled former employee whose objective is
obvious: to threaten public embarrassment as a means of
extracting unwarranted personal gain."
Mr. Blank, 60, who co-founded The Home Depot, purchased the
Falcons in February 2002. Ms. Faubert, who joined the Falcons
in April 2002, was fired nearly a year later in February 2003.
Judge Blanche M. Manning of the United States District Court for
the Northern District of Illinois dismissed, in its entirety, a
consolidated securities class action complaint filed against
Baxter International, Inc. and various officers of the Company.
Several plaintiffs had sued Baxter in August 2002, alleging
violations of the federal securities laws in connection with
Baxter's disclosures, prior to July 18, 2002, of certain
estimates regarding its performance in full-year 2002. The
plaintiffs filed a consolidated complaint in December 2002, and
Baxter and the individual defendants then filed a motion to
dismiss the complaint.
On July 17, 2003, Judge Manning granted Baxter's motion and
dismissed all claims against Baxter and its officers in their
entirety. The court ruled in its July 17 opinion that Baxter's
disclosures were accompanied by substantive and sufficiently
tailored cautionary language. At a hearing before Judge Manning
earlier today, plaintiffs indicated that they intend to appeal
The United States District Court for the Southern District of
Indiana approved the settlement proposed by Brightpoint, Inc.
for the securities class action filed against it, several of its
executive officers and directors and the Company's current
independent auditors. The action is asserted on behalf of all
purchasers of the Company's publicly traded securities between
January 29, 1999 and January 31, 2002.
On April 29, 2003, the parties to the litigation entered into a
stipulation of settlement. The settlement provides for the
Company's insurer, under the Company's directors and officers
liability policy, to pay $5,050,000. These funds will be used
to make distributions to members of the class who timely file a
proof of claim, and to pay plaintiff's attorney's fees and
On May 1, 2003, the Court issued an order preliminarily
approving the settlement and providing for notice of the
settlement to the class. On July 18, 2003, the court issued an
order and judgment approving the settlement and dismissing the
BURGERS' OZARK: Recalls 6.5T lbs Bacon For Undeclared Ingredient
Burgers' Ozark Country Cured, a California, Mo., firm, is
voluntarily recalling approximately 6,500 pounds of bacon
products that contain an undeclared ingredient (sodium nitrite),
the US Department of Agriculture's Food Safety and Inspection
Service announced.
The products being recalled are approximately 1 lb. packages of
"Burgers' Smokehouse Old Fashioned Bacon Seasoning Pieces" and
"Burgers' Smokehouse Old Fashioned Bacon End Slices." Each
package bears the establishment code "EST. 1161" inside the USDA
seal of inspection.
The products contain sodium nitrite, but the product label does
not list sodium nitrite as an ingredient. The company
discovered the problem.
The "Old Fashioned Bacon Seasoning Pieces" were distributed to
retail stores in Missouri, Arkansas, and Kansas. The "Old
Fashioned Bacon End Slices" were distributed nationally by mail
For more details, contact Steven Burger, company president by
The United States Securities Exchange Commission (SEC) charged
two auditors with failing to fulfill their watchdog duties as an
auditing team that certified Silicon Valley chip maker
California Micro Devices' financial statements, the Gainesville
Sun reports.
Michael J. Marrie and Brian L. Berry, who worked at that time
for Coopers and Lybrand (now part of PriceWaterhouseCoopers),
allegedly failed to detect signs of financial fraud in the
Company's statements, the SEC alleged, reversing a 2001
administrative law judge ruling. The company allegedly
fabricated a $5 million profit in 1994, to conceal a $15 million
loss. This trigerred a scandal that resulted in criminal
charges against several former executives.
The SEC decision reprimanded Mr. Marrie and Mr. Berry for "a
reckless violation of their professional duties" when they were
the accountants assigned to audit California Micro Devices.
Their conduct represented "an egregious refusal to investigate
the doubtful and see the obvious," the SEC said, the Gainesville
Michael Perlis, an attorney representing Marrie and Berry,
didn't respond to a telephone message late Tuesday, the
Gainesville Sun stated.
Halliburton Co. asked a federal court to dismiss a securities
class action filed against it and former chief executive and US
Vice President Dick Cheney, newsobserver.com reports. The suit,
filed on behalf of the Company's shareholders, alleges that the
Company manipulated its financial reports by booking revenue on
cost overruns before it was certain of getting paid.
Company lawyer Ronald W. Stevens said Judicial Watch, the group
spearheading the suit, failed to produce evidence of fraud.
Mr. Stevens said Judicial Watch was pushing its lawsuit "to make
political hay with respect to Vice President Cheney . the
federal courts shouldn't be used for these kinds of unsavory
political purposes."
Federal Judge Sam A. Lindsay began considering the motion for
dismissal. He expressed skepticism about some of Judicial
Watch's claims, saying that the group was just assuming that Mr.
Cheney knew details about the accounting change. However, he
left open the possibility that the group could revise its
lawsuit after gathering more evidence of fraud.
Larry Klayman, Judicial Watch's chairman and general counsel,
denied any political motivation, saying he is a Republican who
voted for Cheney and President Bush in 2000, newsobserver.com
reports. He said top Halliburton officials and their auditors
made the accounting change to prop up sagging financial results.
"Why not just be honest with the public? They weren't," he said.
A lawyer for Mr. Cheney, Steven M. Farina from the Washington
office of Williams & Connolly, attended the hearing but did not
speak, newsobserver.com states. He declined to comment after
the session.
Humana Health Plan of Ohio, Inc. faces several antitrust suits
filed in state courts in Ohio and Kentucky by the Academy of
Medicine of Cincinnati, the Butler County Medical Society, the
Northern Kentucky Medical Society and several physicians. The
suits also names as defendants:
(1) Aetna Health, Inc.,
(2) Anthem Blue Cross Blue Shield, and
(3) United Healthcare of Ohio, Inc.
The suits allege that the defendants have violated the Ohio and
Kentucky antitrust laws by conspiring to fix the reimbursement
rates paid to physicians in the Greater Cincinnati and Northern
Kentucky region. Each suit seeks class certification, damages
and injunctive relief.
Plaintiffs cite no evidence that any such conspiracy existed,
but base their allegations on assertions that physicians in the
Greater Cincinnati region are paid less than physicians in other
major cities in Ohio and Kentucky.
The state courts in Ohio and Kentucky each have denied motions
by the defendants to compel arbitration or alternatively to
dismiss. Defendants have filed notices of appeal with respect
to the orders denying arbitration. The Ohio court has agreed to
stay proceedings pending resolution of the appeal. The Kentucky
court granted a similar request with respect to the physician
plaintiffs who are subject to arbitration agreements, but denied
the requested stay with respect to the association plaintiffs
and any physician plaintiffs whose contracts do not contain
arbitration provisions.
The plaintiffs have filed motions to certify a class in each
case. The purported classes allegedly consist of all physicians
who have practiced medicine at any time since January 1, 1992,
in a four-county region in Southwestern Ohio or a three-county
region in Northern Kentucky.
Humana, Inc. entered a settlement for a consolidated class
action filed against it in the United States District Court for
the Southern District of Florida by former stockholders of
Physician Corporation of America (PCA), which the Company
acquired in a merger that became effective on September 8,1997
and certain of PCA's former directors and officers.
The consolidated complaint alleges that PCA and the individual
defendants knowingly or recklessly made false and misleading
statements in press releases and public filings with respect to
the financial and regulatory difficulties of PCA's workers'
compensation business.
On July 24, 2002, the court denied the defendants' motion for
summary judgment. On May 20, 2003, the court granted the
plaintiffs' motion for class certification. On June 4, 2003,
the defendants requested the Court of Appeals for the Eleventh
Circuit grant permission to appeal the class certification
Thereafter, the parties reached agreement to settle the case for
the amount of $10.2 million. The settlement has been reflected
in our financial statements as of June 30, 2003. The settlement
agreement is subject to notice to the class and approval by the
The Company has pursued insurance coverage for this matter from
two insurers, each of which has denied coverage. On April 23,
2003, one of the insurers filed a complaint in the United States
District Court for the Southern District of Florida seeking, in
effect, a declaration of the responsibilities of the two
insurers. The Company intends to continue to pursue the
insurance proceeds.
Humana, Inc. is moving to resolve several class actions filed
against them in the United States District Court for the
Southern District of Florida, that were part of a wave of
generally similar actions that target the health care payer
industry and particularly target managed care companies.
These cases were consolidated. The cases included separate
suits against the Company and five other managed care companies
that purported to have been brought on behalf of members, which
have been referred to as the subscriber track cases, and a
single action against the Company and nine other companies that
purports to have been brought on behalf of providers, which is
referred to as the provider track case.
In the subscriber track cases, the plaintiffs sought a recovery
under the Racketeer Influenced and Corrupt Organizations Act
(RICO) for all persons who were subscribers at any time during
the four-year period prior to the filing of the complaints.
Plaintiffs also sought to represent a subclass of policyholders
who purchased insurance through their employers' health benefit
plans governed by ERISA, and who were subscribers at any time
during the six-year period prior to the filing of the
The complaints allege, among other things, that the Company
intentionally concealed from members certain information
concerning the way in which the Company conducts business,
including the methods by which the Company pays providers. The
plaintiffs did not allege that any of the purported practices
resulted in denial of any claim for a particular benefit, but
instead, claimed that the Company provided the purported class
with health insurance benefits of lesser value than promised.
The complaints also allege an industry-wide conspiracy to engage
in the various alleged improper practices.
On September 26, 2002, the court denied the plaintiffs' request
for class certification. On October 9, 2002, the plaintiffs
asked the Court to reconsider its ruling on that issue. The
Court denied the motion on November 25, 2002.
Thereafter, the Company entered into a settlement arrangement
with the two named plaintiffs pursuant to which we paid each
$8,000. The Court entered an order dismissing the subscriber
track cases with prejudice on May 19, 2003.
In the provider track case, the plaintiffs assert that the
Company and other defendants improperly paid providers' claims
and "downcoded" their claims by paying lesser amounts than they
submitted. The complaint alleges, among other things, multiple
violations under RICO as well as various breaches of contract
and violations of regulations governing the timeliness of claim
payments.
The Company moved to dismiss the provider track complaint on
September 8, 2000, and the other defendants filed similar
motions thereafter. On March 2, 2001, the court dismissed
certain of the plaintiffs' claims pursuant to the defendants'
several motions to dismiss.
However, the court allowed the plaintiffs to attempt to correct
the deficiencies in their complaint with an amended pleading
with respect to all of the allegations except a claim under the
federal Medicare regulations, which was dismissed with
prejudice. The court also left undisturbed the plaintiffs'
claims for breach of contract.
On March 26, 2001, the plaintiffs filed their amended complaint,
which, among other things, added four state or county medical
associations as additional plaintiffs. Two of those, the Denton
County Medical Society and the Texas Medical Association,
purport to bring their actions against the Company, as well as
against several other defendant companies. The Medical
Association of Georgia and the California Medical Association
purport to bring their actions against various other defendant
companies. The associations seek injunctive relief only.
The defendants filed a motion to dismiss the amended complaint
on April 30, 2001. On September 26, 2002, the Court granted the
plaintiffs' request to file a second amended complaint, adding
additional plaintiffs, including the Florida Medical
Association, which purports to bring its action against all
defendants. On October 21, 2002, the defendants moved to
dismiss the second amended complaint. The court has not yet
ruled on that motion.
Also on September 26, 2002, the court certified a global class
consisting of all medical doctors who provided services to any
person insured by any defendant from August 4, 1990, to
September 30, 2002. The class includes two subclasses. A
national subclass consists of medical doctors who provided
services to any person insured by a defendant when the doctor
has a claim against that defendant and is not required to
arbitrate that claim. A California subclass consists of medical
doctors who provided services to any person insured in
California by any defendant when the doctor was not bound to
arbitrate the claim.
On October 10, 2002, the defendants asked the Court of Appeals
for the Eleventh Circuit to review the class certification
decision. On November 20, 2002, the Court of Appeals agreed to
review the class issue. Oral argument has been scheduled before
the appellate court on September 11, 2003. The District Court
has ruled that discovery can proceed during the pendency of the
request to the Eleventh Circuit, and the Eleventh Circuit
rejected a request to halt discovery.
The Court has set a trial date of June 30, 2004. In the
meantime, one of the defendants, Aetna Inc., announced on May
22, 2003, that it has entered into a settlement agreement with
the plaintiffs. The agreement has been filed with the Court and
is subject to approval by the Court.
Three Chicago hospitals face charges that they used fraud to
increase the eligibility of patients for organ transplants, the
Associated Press reports. Federal officials named the hospitals
(1) the University of Chicago Hospitals,
(2) Northwestern Memorial Hospital and
(3) the University of Illinois Medical Center at Chicago
The three hospitals allegedly exaggerated the seriousness of the
conditions of some patients so they could get liver transplants
sooner. Prosecutors stated one case where a patient who was
certified as being seven days from death was found in a hospital
lobby, dressed in a clown costume for a show supporting a blood
"By falsely diagnosing patients and placing them in intensive
care to make them appear more sick than they were, these three
highly regarded medical centers made patients eligible for liver
transplants ahead of others," US Attorney Patrick J. Fitzgerald
told the Associated Press.
The suit was culled from a 1999 whistleblower suit filed by Dr.
Raymond Pollak, a University of Illinois Medical Center surgeon,
against the three institutions. The University of Chicago and
Northwestern immediately agreed to settle the suit, without
admitting to any wrongdoing.
Illinois Attorney General Lisa Madigan said in a statement,
"that "there is no room for fraud when it comes to deciding
which patient receives an organ . No one should play leapfrog
with peoples' lives."
John Easton, a spokesman for the University of Chicago
Hospitals, told AP "contrary to the government's allegations,
the hospitals believe that all decisions about patient care were
completely justified."
Northwestern Memorial Hospital spokeswoman Kelly Sullivan issued
a statement saying the hospital agreed with the need to
investigate the allegations, AP reports. She added that the
institution disagreed with the government's "suggestion that
intensive care unit coverage of two critically ill patients,
comatose and suffering from liver failure, was unnecessary."
The United States District Court in California dismissed a
securities class action filed against semiconductor giant Intel
Corporation, the Associated Press reports.
The suit charges Company executives with making false and
misleading statements in order to artificially inflate the
Company's stock price. The Company allegedly made positive
statements in 2000 that raised the Company's price to an all-
time high of more than $75 per share.
Judge Jeremy Fogel granted the Company's motion to dismiss,
saying plaintiffs failed to show company officials knowingly
misled investors about Intel products or revenues in the third
quarter of 2000.
"We maintained all along that there's no intent on Intel's part
to mislead or defraud shareholders," Intel spokesman Chuck
Mulloy told the Associated Press. Attorneys representing the
lead plaintiff, the Hawaii Reinforcing Iron Workers Pension
Trust Fund, did not return calls or e-mail messages seeking
The Jehovah's Witness congregation faces four California
lawsuits accusing its officials of covering up alleged sexual
abuse of children by congregation leaders, the Associated Press
The cases were filed last week in three northern California
counties, following similar suits in Nevada, Minnesota, Texas,
New Hampshire, Maryland, Oregon and Washington. Lawyers for the
plaintiffs in the California suits are now holding public
meetings to look for more victims and witnesses.
"It is a widespread problem and nothing's been done about it to
protect these children, to protect future children," Bill
Brelsford, one of the Sacramento attorneys who filed the suits,
told AP. "Once they (church leaders) know about it, they don't
do anything to stop it."
William H. Bowen was excommunicated from the church after he set
up a website and hot line for abuse victims. He estimates that
15 to 17 lawsuits are pending nationwide before the California
suits were filed. The Church's general counsel Philip Brumley
said the figure is closer to 10.
Mr. Brumley reiterated that the church's probe revealed that its
elders did nothing wrong when they tried to protect victims. He
further stated that the elders complied with sexual abuse
reporting laws and adhered to biblical admonitions against
accepting accusations by a single witness.
"We abhor child abuse," Mr. Brumley told AP. "The assertion or
allegation of a cover up, or a nonchalance about child abuse, is
just so far from the truth."
Mr. Bowen's website has compiled more than 1,000 abuse stories
on his Web site, and fielded more than 6,000 complaints since
2001 against the 6 million strong church. "I have literally the
last couple months been bombarded with this stuff. These are
not liars, they're abuse survivors," Mr. Bowen told AP. "It
never stops. New victims are coming in on a weekly basis."
Other members have allegedly suffered persecution and
excommunication after they went public with their allegations.
Last year, church members or elders in Tennessee and Kentucky
were banned from the church after they went public with
allegations the denomination has protected pedophiles. Suits
filed last year by members in Maryland, Oregon and Washington
also claim church elders told them they would not be believed if
they reported the molestation without corroboration by
Mr. Brumley told AP the requirement stems from biblical
references that no single witness should rise up against any
man, but denied the church discourages victims or their parents
from going to police. Where molestation allegations are
corroborated, the abuser is banned from the church and is never
again allowed to hold a position of authority if the
excommunication is rescinded, he added.
Land O'Lakes is voluntarily recalling a limited quantity of LAND
O LAKESr Salted Stick Butter in one-pound packages. The product
may contain small fragments of metal. There have been no
reports of injury or illness associated with the consumption of
the product covered by this recall.
The product was distributed in: Alabama, Florida, Georgia,
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota,
Missouri, Mississippi, Montana, Nebraska, North Carolina, North
Dakota, Oklahoma, South Carolina, South Dakota, Tennessee,
Texas, Wisconsin and Wyoming.
The product was sold in retail grocery stores between June 11,
2003, and July 26, 2003. The affected product has one of the
following production codes listed after the date, which is
located above the Nutrition Facts on the packaging:
(1) (date) KE 107P
This voluntary recall does not include any other butter
products, production codes or any other LAND O LAKESr products.
For more details, contact the Company by Phone: 1-800-328-4155
to speak to a consumer affairs representative.
Plaintiffs seek the remand of a proposed light cigarette class
action to Louisiana state court, because the claims against the
defendants are viable, LexisOne reports. The suit was filed in
the Calacsieu Parish District Court against:
(1) Brown & Williamson Tobacco Corporation,
(2) Batus Inc., Pelican Cigar Co.,
(3) Schlesinger Wholesalers & Automotive Cigarette Service
Inc. and
(4) the Kroger Co.
The suit, filed on behalf of all people who purchased B&W Capri
Lights, GPC Ultra Lights or other B&W light cigarettes in
Louisiana for personal consumption between the first date B&W
placed the light cigarettes into the stream of commerce through
the present time, alleges the defendants marked B&W light
cigarettes as "lights" and said it contained lowered tar and
nicotine. These representations appeared in packs of Capri
Lights, GPC Lights and other B&W lights brand in Louisiana.
B&W later asked the case to be removed to the US District Court
for the Western District of Louisiana based on fraudulent
joinder, LexisOne reports. B&W also maintained that the amount
in controversy exceeds $75,000, exclusive of interests and
costs. Additionally, B&W maintained that this case may be
removed pursuant to 28 U.S. Code Section 1442(a)(1) because B&W
acted in relevant respects under the direction of a federal
The plaintiffs moved for the remand of the suit, stating that
the Company's fraudulent joinder arguments fail because the
redhibition claims asserted against all defendants are viable,
credible and substantial.
MCI/Worldcom faces charges of improperly diverting calls to
Canada to avoid paying local telephone companies their access
fees, the Associated Press reports. Telecommunications firm
AT&T Corporation made the allegations, stating in a court filing
that the Company placed national interests at risk because the
calls could be unprotected from eavesdroppers.
AT&T made a filing in the US Bankruptcy Court, which is
currently considering efforts by MCI parent WorldCom, Inc. to
emerge from Chapter 11 bankruptcy. In an effort to clean up its
image, WorldCom is planning to adopt the name of MCI's long
distance division. AT&T said they had evidence of their charges
dating back to July 2001 until early this week.
AT&T further alleged the Company carried out a coding process
that shifted calls from a local carrier in the Midwest, then to
a local carrier in the Canadian province of Manitoba, then to
Bell Canada and back to the United States on AT&T lines, the
Associated Press reports. Bell Canada has a long-standing
agreement to send its US-bound calls to AT&T lines.
AT&T asserted tests on its lines in the past two weeks confirmed
the activity. MCI's routing allegedly deceived AT&T into
believing the calls had originated in Canada - forcing AT&T to
pay the high local access fees. Calls from federal agencies
such as the State Department, the US Postal Service, the Library
of Congress and the US Agency for International Development, as
well as a member of Congress were tagged as the ones diverted.
MCI did not return a telephone call Monday seeking comment, AP
states. However, it said over the weekend that its competitors
were trying to throw up roadblocks to its emergence from
bankruptcy.
Another probe by federal prosecutors is ongoing, over
accusations that the Company defrauded other telephone companies
of hundreds of millions of dollars, by masking long-distance
calls as local calls and diverted others to Canada to avoid
paying special-access fees to local carriers across the country.
MCI officials have "demonstrated their willingness to play fast-
and-loose with our national interests to line their pockets with
cost savings from local telephone tariffs they dodged," AT&T
said in its filing.
Another chapter in the battle of the fat lawsuit war soon may be
written, as some leaders in this crusade bring their challenge
to the ice cream parlors, the Washington Times reports. Ben,
Jerry, Haagen-Dazs and other ice-cream makers may be brought to
court if they do not properly display the fat content of their
ice cream on menus in their stores.
John Banzhaf III, a law professor at George Washington
University and a leader of the movement, recently sent out
letters to six major ice-cream companies, in which Professor
Banzhaff warned the ice-cream makers that they will face
litigation if they do not put the fat content of their ice-cream
product on the menu boards in their stores. The warning letters
also were signed by Michael F. Jacobson, executive director for
the Center for Science in the Public Interest, a nonprofit
health advocacy group in Washington, D.C.
The six companies that will receive the warning letter are
Baskin-Robbins Inc., Cold Stone Creamery, the Haagen-Dazs
Shoppes Inc., TCBY, Ben & Jerry's Homemade Holdings Inc. and
Friendly Ice Cream Corporation.
Professor Banzhaf, a leader in the legal battle against Big
Tobacco, has designed the very cases that became vehicles of
successful litigation against the major tobacco companies.
Professor Banzhaf has boasted that $246 billion was made from
major tobacco litigation and that a similar amount could be
made, mostly by settlements, in obesity lawsuits. Not one
obesity case has gone to court, but three have been settled out
of court for more than $14 million. The first and largest was a
$10 million settlement with McDonald's last year.
Professor Banzhaf does not hide the fact that suing the ice-
cream makers is a good way for trial lawyers to make money.
However, he still refers to these lawsuits as "public interest,"
citing obesity as a major killer. Professor Banzhaf said he
does not make any money from the settlements, but passes the
word on to other trial lawyers. "I don't ever see a dime," he
Some Washington-area residents think the new crop of lawsuits
targeting the ice-cream industry is leaving out a key ingredient
of junk-food consumption--personal responsibility. In fact, the
latest step in the self-termed sue-fat movement gave rise to
some derisive laughter.
Typical of the remarks made are those of Steve Patrick, 40, of
Columbia, Md., who recently ate a cup of Cherry Garcia at Ben &
Jerry's in Georgetown. "Everyone knows Ben & Jerry's and Haagen
Dazs are premium ice creams. You can't be premium without
having butterfat and sugar," he said.
Mr. Patrick's opinion reflects those who think people should not
blame anyone but themselves for their gaining weight.
The reader may find additional coverage of the "fat lawsuit war"
by the Class Action Reporter in other issues, such as the July
23, 2003 issue, in "* Tobacco Litigation Expert takes on
Obesity."
The Lorillard Tobacco Company hailed a Louisiana jury's verdict
stating that tobacco firms are not responsible for funding a
medical monitoring program for present and former smokers in the
state. The same jury found the companies liable for funding a
smoking cessation program for the class of Louisiana present and
former smokers.
The verdict was rendered in the class action suit, Gloria Scott.
v. The American Tobacco Company, which is being tried in a New
Orleans federal district court. Jurors in the case were asked
to decide whether tobacco companies are liable to fund medical
monitoring and smoking cessation programs for Louisiana's
present and former smokers.
"We are pleased that the jury rejected the plaintiffs' principal
claim for medical monitoring, which is an untested and
potentially dangerous medical scheme that no major medical
organization recommends," said Ronald S. Milstein, Vice
President and General Counsel for Lorillard Tobacco Company, in
a statement.
"Asking the companies to fund a smoking cessation program when
well over half of the plaintiff class no longer even smokes,
just doesn't make sense," he continued. "Liability to fund
smoking cessation programs should not be tried in class action
lawsuits. Research has shown time and time again that willpower
is the only smoking cessation aid that always works. We are
confident that the appeal courts will remedy this situation."
A similar action, in which a West Virginia jury was asked to
decide if the tobacco companies should fund a medical monitoring
program, ended in a verdict for the defense. The West Virginia
jury was not asked to decide if the companies should fund a
smoking cessation program.
The Center For Tobacco Cessation labeled a Louisiana jury
verdict in a medical monitoring lawsuit against tobacco
companies a "victory" for smokers.
In a statement, the group said that more than one million
Louisiana smokers may get the help they need to quit smoking due
to a jury verdict July 28 that would compel leading tobacco
companies to pay for tobacco cessation programs in the state.
"The verdict to compel tobacco cessation programs on the tobacco
industry's dime is an exciting development for smokers in
Louisiana because it potentially provides unprecedented access
to evidence-based programs to help smokers quit. While the jury
found the provision of such programs reasonably necessary, the
panel refused to force the tobacco industry to pay for medical
monitoring for smokers who show no signs of illness," the group
asserted.
"This verdict is a tremendous opportunity to ensure that smokers
in Louisiana have access to proven treatments for quitting that
double or even triple their chances at a successful quit
attempt," said Linda A. Bailey, J.D., M.H.S., director of the
Center for Tobacco Cessation. "There's no discounting it. This
is a victory, clear and simple, for smokers in the state."
The group believes that the smoking cessation programs will
complement the support Louisiana currently provides to state
residents who smoke and bolster efforts to improve the public's
health. The state offers a toll-free tobacco quit line
available to all state residents and provides coverage to state
Medicaid beneficiaries for some tobacco dependence medications,
including nicotine nasal spray, nicotine inhaler and Zyban.
In addition, industry-funded cessation programs would infuse new
funding to tobacco control efforts in Louisiana, the statement
asserted. Currently, the state invests approximately $8 million
in tobacco control programs overall, just one-third of the
minimum amount recommended by the Centers for Disease Control
and Prevention. Only a portion of that amount funds tobacco
cessation efforts.
"Smoking is an incredibly addictive habit that requires a
combination of treatments to help smokers quit for good," Ms.
Bailey said. "To deliver on the promise of the jury's verdict,
the industry-funded cessation program should be independent of
industry influence possibly coordinated by the state, provide
counseling and medications to smokers, and include promotion of
tobacco cessation via advertising that reaches smokers, their
families, and physicians."
The defendants in the case include Philip Morris USA,
Incorporated, R.J. Reynolds Tobacco Company, Brown and
Williamson Tobacco Corporation, and Lorillard Tobacco Company.
The jury determined that over a period of more than 20 years
these firms conspired to distort the public's knowledge about
smoking and health and violated their duty not to market their
products to minors.
The verdict marks the end of the first phase of the case. A
second phase, with the same jury, will design the smoking-
cessation programs. In the third phase, the judge will decide
how much the tobacco industry will have to pay for the programs.
Dates have not been set for phases two and three.
The Peel Region Health Department said there is no way to
determine how food at Mississauga, Canada's Trillium Banquet
Hall became contaminated, Haltonsearch.com reports.
The department started its probe on food sources and food
handling at the banquet hall after forty-one E. C. Drury High
School students fell ill after eating food at the banquet hall
during their graduation. The department investigated 117 people
who reported having symptoms associated with food borne illness
after eating at the hall between June 25 to 29. Out of the 117,
85 attended the EC Drury graduation. 46 tested positive for E.
coli 0157:H7, the health department reported.
The department tested samples from food, water, the kitchen
environment and food handlers through the Central Public Health
Laboratory, but despite a thorough investigation, they couldn't
determine how the contamination started.
"Although we haven't pinpointed how the bacteria came to
contaminate the food served at the banquet hall, the fact that
people who ate at different events at the same banquet hall
became ill with the same strain of E. coli confirms that food
served at the hall was the source of infection," said Dr. David
McKeown, Peel Region's medical officer of health, in a press
release, haltonsearch.com reports. Dr. McKeown said measures
have been implemented at the banquet hall to reduce the risk of
a recurrence.
Meanwhile, the planned class action against the banquet Hall is
set to commence as soon as the claim is issued. A public
meeting with two lawyers from Sutts Strosberg, the 21-lawyer
firm that's handling the lawsuit, will be held this week with
students who contracted E. coli, and their parents.
The banquet hall has been given the go-ahead to resume food
preparation on the site, but Peel health inspectors will have an
increased presence at the facility for upcoming events.
Dr. Bob Nosal, Halton's Medical Officer of Health, told
Haltonsearch.com it's fortunate there haven't been any cases of
hemolytic uremic syndrome -- which can cause severe damage to
the kidneys and other organs -- arising from the E. coli
infections.
California preliminarily approved a settlement of a purported
class action that was brought against Turnstone Systems, Inc.,
certain of its officers and directors and its underwriters on
behalf of persons who purchased common stock issued pursuant to
the company's secondary stock offering in September 2000.
The suit was settled for $7.0 million, of which insurance for
the company's directors and officers will pay approximately $6.1
million and the company will contribute approximately $0.9
million in cash.
While the company continues to deny any wrongdoing or violation
of securities laws, it believes the settlement is in the best
interest of the company and its stockholders to avoid the
distraction and expense of continued litigation. The settlement
is conditioned upon, among other things, notice to the company's
stockholders of the settlement and final approval by the court.
Ademi & O'Reilly, LLP initiated a securities class action in the
United States District Court for the Southern District of Texas,
Houston Division, on behalf of purchasers of Administaff, Inc.
(NYSE:ASF) publicly traded securities during the period between
April 3, 2001 to July 31, 2002, inclusive.
The complaint alleges 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 material
misrepresentations to the market between April 3, 2001 and July
31, 2002, thereby artificially inflating the price of
Administaff securities.
The complaint alleges that these statements were materially
false and misleading because they failed to disclose and
misrepresented the following adverse facts, among others:
(1) that Administaff had inadequate and deficient pricing
and billing systems and was incorrectly calibrating
pricing for clients that experienced declines in
average payroll cost per worksite employee;
(2) that Administaff was incorrectly matching the price and
cost for health insurance on new and renewing client
contracts; and
(3) that, in violation of Generally Accepted Accounting
Practices and in order to retain its coveted place on
the Fortune 500 listing, Administaff was improperly
recognizing revenue by failing to net Administaff's
worksite employee payroll costs against revenues.
On August 1, 2002, before the open of trading, Administaff
shocked the investing public when it released its financial and
operational results for the second quarter ended June 30, 2002,
reporting ``a net loss and diluted net loss per share of $3.2
million and $0.11'' as compared to Thomson Financial/First Call
estimates of $0.04 earnings per share.
Market reaction was swift and negative, with Administaff stock
falling from a close of $7.50 on July 31, 2002 to a close of
$4.20 on August 1, 2002, or a single-day decline of 44% in heavy
trading.
For more details, contact Guri Ademi by Phone: (866) 264-3995 by
Fax: 1-414-482-8001 or visit the firm's Website:
http://www.gademi@ademilaw.com
Abbey Gardy, LLP commenced a securities class action on behalf
of all persons or entities who hold 7% convertible subordinated
notes due April 1, 2005 sold by Avatar Holdings Inc.
(NasdaqNM:AVTR).
The Complaint alleges that defendants violated Sections 12(a)(2)
and 15 of the Securities Act of 1933. The complaint names as
defendants the Company and:
(1) Gerald D. Kelfer, Avatar's Chief Financial Officer,
President and Vice Chairman, and
(2) Juanita I. Kerrigan, Avatar's Vice President and
Avatar is a corporation primarily engaged in real estate
operations in Florida and Arizona. The case is brought in
connection with Avatar's July 1, 2003 announcement of its
redemption of $60 million of the $94,429 million in aggregate
principal amount of Notes outstanding. The Notes were
convertible, at any time prior to maturity, to shares of Avatar
common stock at a conversion price of $31.80 per share or Avatar
could redeem the Notes at its option at specified prices.
Because Avatar is a real estate company, the true value of its
real estate holdings is critical to Noteholders in making a
decision whether to have their Notes redeemed for cash, or
whether to exchange those Notes for shares of Avatar's common
stock. The Company's public documents state that its real
estate is valued at the lower of cost or market value.
Plaintiff alleges that Noteholders are unable to make an
informed decision whether to convert their Notes to Avatar
common stock or allow them to be redeemed because defendants
failed to disclose the basis on which the Company's land
inventories are valued. The complaint seeks disclosure of this
material information or damages that flow from the failure to
disclose it.
For more details, contact Nancy Kaboolian by Phone:
(212) 889-3700 or 800-889-3701 or by E-mail:
nkaboolian@abbeygardy.com
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Middle
District of Tennessee, Nashville Division, on behalf of all
purchasers of the common stock of Central Parking Corporation
(NYSE: CPC) from November 4, 2002 through February 13, 2003,
inclusive.
misrepresentations to the market between November 4, 2002 and
February 13, 2003, thereby artificially inflating the price of
Central Parking common stock.
(1) that the Company's internal controls were inadequate to
record and document the Company's financial results;
(2) that the Company was materially understating its bad
debt reserve, thereby overstating its earnings;
(3) that the Company was materially understating its
accounts payable, thereby overstating its financial
condition; and
(4) as a result of the foregoing, the Company's financial
statements were not prepared in accordance with
Generally Accepted Accounting Principles and,
therefore, were materially false and misleading.
On February 14, 2003, Central Parking shocked the market when it
announced that it would be taking a charge to increase its bad
debt reserve and that it would be taking a charge to increase
its accounts payables. In response to this announcement, the
price of Central Parking common stock dropped from $15.82 on
February 13, 2003 to a close of $12.31 on February 14, 2003, or
a single-day decline of more than 22%, on more than seven times
normal trading volume.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182
action in the United States District Court for the Southern
District of New York on behalf of purchasers of the common stock
of Cosi, Inc. (NASDAQ: COSI) between November 22, 2002 to
February 4, 2003 inclusive and who were damaged thereby. The
action, is pending against the Company and:
(1) Andrew M. Stenzler (CEO and Chairman),
(2) Jonathan M. Wainwright, Jr. (President) and
(3) Kenneth S. Betuker (CFO)
The complaint charges that defendants violated Sections 10(b)
promulgated thereunder, by issuing a series of materially false
and misleading statements to the market between November 22,
2002 to February 4, 2003.
As alleged in the complaint, the Registration Statement and
Prospectus for the Company's November 22, 2002 IPO contained
several sections which discussed the Company's plans for growth
and described how the proceeds raised from the IPO would enable
the Company to implement these plans.
The complaint further alleges Mr. Stenzler made similar
representations in an interview broadcast on CNNfn. These
statements were materially false and misleading, according to
the complaint, because:
(i) they failed to disclose that the funds raised by the
IPO would be insufficient to implement the Company's
expansion plan, contrary to defendants' Class Period
representations; and
(ii) at the time of the IPO, defendants should have known
that the costs of expansion would be greater than the
cash available to the Company (which included working
capital and proceeds from the IPO), making it highly
improbable that the Company would be able to
successfully continue to open numerous new stores at
such a rapid pace.
888-643-6735 by Fax: 610-660-8080 or by E-Mail:
mhenzel182@aol.com
action in the United States District Court for the Northern
District of Illinois, Eastern Division on behalf of purchasers
of divine, inc. (OTC Pink Sheets: DVINQ) formerly publicly
traded securities during the period between November 12, 2001 to
February 18, 2003, inclusive.
The complaint alleges that Andrew J. Filipowski (Chief Executive
Officer and Chairman of the Board of Directors) and Michael P.
Cullinane (Chief Financial Officer and Executive Vice President)
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 material misrepresentations to the market between
November 12, 2001, and February 18, 2003, thereby artificially
inflating the price of Divine securities.
Throughout the class period, as alleged in the Complaint,
defendants failed to disclose and misrepresented these material
adverse facts:
(1) Divine was engaged in a scheme of inflating its
revenues by approximately $65 million by instructing
employees of its wholly-owned subsidiary, RoweCom, to
offer discounts to library customers that paid cash in
advance -- months before payments were due to
publishers -- even though Divine had no plan to pay its
obligations to publishers,
(2) Divine was fraudulently diverting nearly $74 million
from RoweCom's operations,
(3) Divine lacked adequate financial and internal controls
with respect to its RoweCom operations, and
(4) as a result of the foregoing, Divine lacked a
reasonable basis to project profitability by year-end
or an ability to maintain its operations without
bankruptcy protections.
The Class Period ends on February 18, 2003. On that date, Divine
announced that "despite efforts over the past several months to
minimize operating expenses and various liabilities, its board
of directors has determined that it must seek alternatives to
protect the value and viability of its operations.
As a result, Divine has engaged Broadview International LLC as
advisors to assist in exploring strategic options, which may
include asset divestitures, comparable transactions, and/or the
filing of a voluntary petition under Chapter 11 of the United
States Bankruptcy Code."
In response to this announcement, the price of Divine stock
declined precipitously. During the Class Period, Divine
completed two acquisitions, among numerous others -- acquiring
Viant Corporation and Delano Technology Corporation -- using its
common stock as currency.
Kirby McInerney & Squire, LLP initiated a securities class
District of Illinois, Eastern Division on behalf of all
purchasers of Divine, Inc. (Other OTC:DVINQ.PK) common stock
during the period from November 12, 2001 through February 18,
2003, inclusive.
The action charges Divine and certain of its senior officers
with violations of Sections 10(b) and Rule 10b-5 of the
Securities Exchange Act of 1934. The alleged violations stem
from the dissemination of false and misleading statements, which
had the effect -- during the class period -- of artificially
inflating the price of Divine's shares.
Throughout the class period, defendants issued a series of
material misrepresentations to the market, which served to
artificially inflate the price of Divine securities. As alleged
in the complaint, defendants failed to disclose and
misrepresented these material adverse facts:
advance - months before payments were due to publishers
- even though Divine had no plan to pay its obligations
to publishers;
from RoweCom's operations;
with respect to its RoweCom operations; and
Additionally, as alleged in the complaint, Divine filed a
Registration Statement on Form S-4 in connection with its
acquisition of Viant Corporation, on June 19, 2002. That
Registration Statement was false and misleading as it
incorporated by reference Divine's materially false and
misleading financial results, as previously reported on Forms
10-K and 10-Q with the SEC.
During the class period, Divine completed its acquisition of
Viant Corporation, among other acquisitions, using its
artificially inflated common stock as currency.
On February 18, 2003, the close of the Class Period, Divine
protect the value and viability of its operations. As a result,
Divine has engaged Broadview International LLC as advisors to
assist in exploring strategic options, which may include asset
divestitures, comparable transactions, and/or the filing of a
voluntary petition under Chapter 11 of the United States
Bankruptcy Code." In response to this announcement, the price
of Divine stock declined precipitously.
For more details, contact Ira M. Press or Elaine Mui by Phone:
(888) 529-4787 or by E-mail: emui@kmslaw.com.
Robbins Umeda & Fink, LLP initiated a securities class action on
behalf of purchasers of the securities of Laboratory Corporation
of America Holdings (NYSE:LH) between February 13, 2002 and
October 3, 2002, inclusive. The action is pending in the United
States District Court, Middle District of North Carolina,
against the Company and:
(1) Thomas Macmahon (LabCorp's CEO),
(2) Richard L. Novak (LabCorp's COO) and
(3) Wesley Elingburg (LabCorp's CFO)
and misleading statements to the market between February 13,
2002 and October 3, 2002. During the class period, the Company
issued statements that failed to disclose and/or misrepresented
the following adverse facts, among others:
(1) LabCorp was experiencing increased competition in its
traditionally strongest and core markets, such as the
Carolinas;
(2) the Company had understaffed certain of its core
markets, leading to a lack of key employees, such as
phlebotomists and account representatives, causing a
material deterioration of service levels and a loss of
business to increased competition;
(3) the decreased sale volume was caused by material
operational deficiencies, rather than by a couple of
pending deals that closed late, as the Company had
represented;
(4) defendants knew that the Company's sales problems would
continue in the foreseeable future, contrary to the
statements that volume growth would increase; and
(5) as a result of the foregoing, the Company's assurance
that its historical strong growth would continue lacked
any reasonable basis.
Throughout the class period, LabCorp insiders, including the
individual defendants, sold a total of 316,112 shares of LabCorp
stock at artificially inflated prices, collecting proceeds of
over $26 million.
On October 3, 2002, after the close of regular trading, LabCorp
shocked the market by announcing that it expected disappointing
3Q:2002 results due to ``continued slowdown in volume growth in
the routine, or core, testing business in certain key regions of
the country,'' which it expected would continue at least until
the end of 2002.
Investors, primed by defendants' Class Period statements to
believe that the Company's business was growing faster than ever
and had already overcome the brief slowdown in growth during the
second quarter, were shocked to learn that the slowdown had
continued and was not expected to abate until after the end of
the year and that the slowdown had been in the Company's core
In reaction to the Company's belated disclosure, the price of
LabCorp common stock plummeted, falling 34.6% in one day, from a
close of $33.18 per share on October 3 to $21.68 per share on
October 4, on trading volume of over 21.2 million shares, which
is many times the Company's average daily trading volume.
For more details, contact Marc M. Umeda by Mail: 1010 Second
Ave., Suite 2360, San Diego, CA 92101 by Phone: 800-350-6003 or
by E-mail: umeda@ruflaw.com
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities. The Asbestos Defendant Profiles is backed by an
online database created to respond to custom searches. Go to
http://litigationdatasource.com/asbestos_defendant_profiles.html
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora
Fatima Antonio and Lyndsey Resnick, Editors.
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.
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