Copyright 2000 Times Publishing Company
St.
Petersburg Times
February 14, 2000, Monday, 0 South Pinellas
Edition
SECTION: BUSINESS; COVER STORY; Pg. 11E
LENGTH: 890 words
HEADLINE:
Class actions swamp corporate America
BODY:
Though Congress passed reforms in 1995 meant to
restrict the pace of class-action lawsuits against
corporations, the law has had little effect. Companies, local and national, have
faced lawsuits generally claiming shareholders were deceived by the companies in
which they invested. The vast majority of these suits will be settled before
they go to court. A recent sampling:
BANK ONE: Giant Midwestern bank is
besieged by shareholder lawsuits saying the bank misrepresented its financial
strength when buying First Chicago NBD Corp. and operating its First USA credit
card subsidiary. Status: Most suits are pending.
BERGEN BRUNSWIG:
California supplier of pharmaceuticals and health care products was harpooned by
shareholder suits saying company misled investors about performance last year
when company bought Tampa's PharMerica. Status: Most suits are pending.
CAMPBELL SOUP: Multiple lawsuits allege New Jersey food company said it had sold
its products, but never shipped them to customers. Suits say Campbell claimed
these phantom sales to meet Wall Street's earnings estimates and inflate the
price of its stock. Status: Most suits are consolidated and pending.
CENDANT CORP.: In December, the New Jersey franchiser of brand names
such as Ramada and Avis, said it will pay its shareholders $ 2.83-billion to
settle numerous allegations of accounting irregularities. Cendant's accounting
firm, Ernst & Young LLP, also agreed to pay shareholders $ 335-million to
settle similar lawsuit. Status: Cendant has acknowledged that CUC
International, which merged with HFS Inc. to create Cendant in 1997, used
irregular accounting practices to inflate earnings over the previous three
years.
COMPAQ COMPUTER: Five class-action lawsuits by investors who
purchased shares July 1997 through March 1998 were consolidated in federal court
in Texas. More class-action suits were filed last year on behalf of investors
buying stock during 1999. The suits allege Compaq misled investors and inflated
its stock value. Status: Most of the suits are pending.
DANKA
BUSINESS SYSTEMS: The shareholder lawsuit against the St. Petersburg provider of
copiers and services claims Danka misled investors in 1997 about the progress of
its acquisition of Kodak's office imaging and outsourcing businesses and engaged
in improper accounting practices. Status: The case is pending.
DIGITAL LIGHTWAVE: As of April 1998, the Clearwater maker of fiber optic
testing equipment faced 23 class-action complaints claiming the company, founder
Bryan J. Zwan and other corporate officers misled investors about the financial
performance of the company. (The company later restated its earnings.) In 1999,
a federal court granted final approval of a settlement: $ 4.25-million in cash
paid to plaintiffs and up to 1.8-million shares of stock to be issued.
Status: The company recorded a charge of $ 8.5-million as a result of the
settlement.
FIRST UNION: The Charlotte, N.C., bank faces at least two
class-action lawsuits filed in June by shareholders claiming First Union
misrepresented the difficulty of buying CoreStates Financial Corp. and the Money
Store Inc. The bank had cited lower-than-expected revenue from those
acquisitions. Status: The suits are pending.
LUCENT TECHNOLOGIES:
The high-tech New Jersey company faces suits lodged by a dozen law firms for
missing revenue estimates by 30 percent in the fourth quarter of 1999.
Status: The cases are pending.
POWERCERV: The Tampa maker of
business software was sued in 1997 in a class action by shareholder J. Conrad
Lifsey, who alleged PowerCerv executives inflated the stock price in an initial
public offering in March 1996. The court ordered mediation in 1998 without
resolution. In 1999, mediation again was advised but the parties declined. More
mediation may occur this year. Status: PowerCerv says it sustained higher
expenses last year to pay its outside counsel to fight the ongoing class-action
suit.
SUNBEAM CORP.: The Boca Raton company, once led by "Chainsaw
Al" Dunlap, seemed on a rapid rebound in the mid-1990s until it was forced
to restate earnings. Dunlap was fired. More than a dozen class-action lawsuits
were filed against the maker of outdoor grills and kitchen appliances, accusing
it of misleading investors. Status: Some suits are pending, while Sunbeam
has set aside more than $ 22-million to settle others. The company expected to
pay an estimated $ 5.2-million in 1999, $ 14.9-million in 2000 and $ 2.5-million
in 2001.
SYKES ENTERPRISES: After restating its 1999 earnings and
acknowledging a conflict with auditors on how to declare software income, the
Tampa provider of corporate call-center support watched its stock price drop by
more than 66 percent. This month, Sykes was hit by a wave of shareholder
lawsuits alleging investors were misled. Status: Suits are pending.
XEROX CORP.: Shareholder suits claim the Stamford, Conn., company misled
the market about the declining demand for its products and services. As details
emerged, the suits say, Xerox's share price dropped nearly 50 percent. At the
same time, the suits allege Xerox insiders sold hundreds of thousands of shares
for proceeds of more than $ 51-million. Status: Most suits are pending.
Source: Securities and Exchange Commission, companies, Times research.
GRAPHIC: COLOR PHOTO, (3); a can of Campbell's
Tomato Soup; a copier; "Chainsaw Al" Dunlap
LOAD-DATE:
February 15, 2000 
