This is an update from Michael Green, class action attorney. Please read carefully. It may affect your decision whether to wait to accept any settlements. Subject: Norvergence Class Action Update - URGENT INFORMATION Dear Class Members: Unfortunately, this letter is not brief, but there is a lot to tell. All of the information below affects all of you and your rights, I urge you to read the letter in its entirety , including the important and significant affidavit attached at the end. A. NEW CRITICAL INFORMATION AND IMPORTANT NEW FILINGS WITH THE COURT We have recently learned several critical pieces of information through our continued investigation that we believe strengthens our case dramatically against the leasing companies. THIS WEEK THE NEW JERSEY NATIONAL CLASS ACTION WAS REMANDED BACK TO NEW JERSEY STATE COURT, which means that we will now be able to move ahead very quickly with the case, our motion practice and discovery practice. Next week , we will be attacking the enforcement of the equipment rental agreements directly in two ways: 1. Our Motion for Partial Summary Judgment will seek to void ab initio (from the beginning ) the ERAs as they unconscionably grossly overcharge for the equipment . We have recently learned from the Project Manager of Adtran who manufactured the Matrix for Norvergence what the Matrix retail list price would have been ($2850) . The motion also clearly shows how the agreements are not true leases under law. We expect the motion to be heard on Friday, February 18, 2005 ; and, 2. Our Motion for Class Certification will allege that the leasing companies have no “holder in due course” status by alleging that leasing companies that insured the Matrix knew from the beginning that the boxes were worth far less than the cost of the leases as some, if not all, of those companies insured the boxes for much less than the cost of the leases. On the flip side, it will be alleged, that those companies that insured the Matrix for the cost of the leases (a price much greater than their true value) did not do their required due diligence which has a clear standard in the insurance industry and they were essentially insuring equipment for more than it was worth. (This allegation may also include an allegation of insurance fraud . Unlike the leasing industry, the insurance industry is highly regulated and there is a fiduciary responsibility for proper value declaration and corresponding collection of premiums. The leasing companies that insured the Matrix boxes directly had a fiduciary duty to know the price of the equipment they were declaring to be insured. In addition, it will be alleged that those companies that asked class members to in! sure the equipment should have known the price of the equipment as well.) The Class Action has recently uncovered, through its own investigation and the investigation and assistance of Rhonda Roland Shearer and the Art Science, Research Laboratories (ASRL) of New York, New York, information that suggests that many if not all of the leasing companies have known from the beginning of their involvement with Norvergence that the Matrix boxes were worth far less than the cost of the leases . Attached below please find the affidavit of Rhonda Roland Shearer which will be attached to our Motion for Partial Summary Judgment being filed next week seeking to void the contracts ab initio (from the beginning). Her affidavit details (1) how her Matrix boxes were insured by CIT for far less than the cost of her lease ; and (2) how the Project Manager of the Matrix boxes for Adtran stated the list retail value of the Matrix would have been $2850, and how another Matrix technician likened the Matrix to a “doorsto! p.” The Adtran Project Manager also stated that Norvergence never bought the Matrix (without add-ons) from Adtran for more than $1550. Also, keep in mind that in the computer industry, list price is often 20-40% higher than the actual purchase price that customers ultimately pay. Knowing the values the leasing companies used to insure the Matrix and knowing the actual list value of the Matrix , the leasing companies will no longer be able to state that they had “no idea” that the equipment was worth far less than the lease itself and they will lose their “holder in due course” status, effectively making them open to the same claims of fraud and misrepresentation that could be made against Norvergence. Alternatively, if they insured the Matrix for too much due to their lack of due diligence, they may also be open to allegations directly against them of insurance fraud which will be alleged under our Consumer Fraud Act claim and in our motion for class certification . E! ither way, they have a significant problem. Along with its motion for summary judgment, the class action will also be filing next week a class certification motion seeking certification of a national class of all former Norvergence customers that had their agreements assigned to a third party leasing company. B. THE ATTORNEYS GENERAL SETTLEMENTS As to the settlements with the Attorney Generals (AGs) by some leasing companies , we applaud the AGs for taking action after Class Action Counsel significantly helped move the case towards settlement. Class Counsel moved the case towards settlement by: 1. forcing the organization and identification of the defendants and their attorney representation almost 6 months ago through the filing and service of the first national class action naming 26 leasing companies in August of 2004 (the AGs and the Weir Group requested from Class Counsel our compiled service lists of the defendant leasing companies which we provided for service of cease and desist letters, subpoenas and court filings); 2. organizing and setting up the first global settlement meeting with the leasing company defendants, representative AGs (NJ & FL), and an observing representative of the FTC (Randy Brook) in November 2004 ; 3. extending in November and December , at the request of the leasing companies such as CIT , the dates for the defendants to answer our complaints, which delayed our case dramatically but allowed the leasing companies time to focus on settlement with the AGs and the class actions, rather than the threatening class action litigation in New Jersey, Florida and Texas, which we thought overall was to the benefit! of the class; 4. our investigation of the case which was shared through our court filings with AGs offices, many of whom called Class Counsel and directly requested our papers or other information, including the NJ, NY, FL, PA, MI, CT, CA, IL Attorneys General offices; 5. our organization of the attorney network of 40 law firms around the country to defend individual actions and coordinate document sharing by all of the attorneys, 6. our regular communication with over 1500 class members in our email database keeping them apprised of developments; 7. our communication through our website to class members and interested parties that averaged 10,000 to 40,000 hits a week in September, October, November, December of 2004; 8. our prosecution of the preliminary injunction which in turn forced 26 leasing companies to show their hand and defend the case on its merits for all to see; 9. our survey regarding possible settlement of over 700 class members whose results we shared directly in a letter to the offices of 15 AGs around the country; and, 10. our threat of nationwide litigation by filing 6 class actions around the country. We are talking with the leasing companies that have settled with the AGs as well regarding settlement and in an effort to determine exactly what the settlement terms mean for the companies as well as class members to assess how fair the AG settlements are for class members. Please be aware that as the releases for the AG settlements are presently stated, when you release “any and all” claims you will be releasing your rights to participate in any compensation received by the class action. Until we have been able to make an adequate determination as to the fairness of the individual settlements with each company, we will vigorously prosecute the class action against all of the companies named in the action. We will keep you apprised of our investigation and talks in that regard as well. We firmly believe that our motion for partial summary judgment coupled with the new critical information we have developed has solid ground in the law to void the agreements completely. We will distribute the motion for partial summary judgment next week in an email so that interested class members may read it themselves. As always, we will keep you apprised of developments. Please see the affidavit below. Very truly yours, Michael S. Green Attorney for Plaintiffs Norvergence Class Action __________________________________________ EXQUISITE CATERERS, LLC, ET ALS .. : on behalf of themselves and all others similarly : situated, : SUPERIOR COURT : OF NEW JERSEY : MONMOUTH COUNTY Plaintiffs, : LAW DIVISION : DOCKET NO.: L - 3686-04 v. : : CIVIL ACTION POPULAR LEASING USA, INC., ET ALS . : AND DOE CORPS. 1-40, : : : Defendants. : : : : __________________________________________: STATE OF NEW YORK: COUNTY OF YORK: AFFIDAVIT OF RHONDA ROLAND SHEARER I, Rhonda Roland Shearer, being duly sworn according to law, depose and state the following upon personal knowledge: 1. I am the Director of Art, Science, Research Laboratory (“ASRL”) in New York, New York, a 501(3)(c) not-for-profit. 2. ASRL is an academic interdisciplinary think-tank that uses scientific research methods to investigate inaccuracies in a variety of disciplines, including journalism, art and science. Its goal is to report this misinformation and correct the historical record using advanced computer and Internet technologies. Students publish as they do their research, and their results too demonstrate to the public the power of critical thinking. 3. I am also the President of a for-profit entity, Turbo, Inc., that produces art, software, lectures and publications. 4. On June 30, 2003, I signed on behalf of Turbo, Inc. two equipment rental agreements (hereinafter “ERA”) with Norvergence for 2 Matrix boxes with two voice cards. My monthly payments for the equipment of my ERAs was $477.35 and the term for the ERA was 60 months. The total price of my ERA over its term was $28,641. 5. Shortly after June 30, 2003, my ERA was assigned to CIT. (Annexed hereto the ERA documents as “Exhibit A”) 6. CIT informed me that they required insurance for the equipment and gave me the option of getting the insurance through them. 7. I chose to be insured through CIT. Along with my monthly equipment rental payment, I paid CIT a separate amount for the insurance. My monthly payment for insurance was $32.84. 8. CIT, in a letter to me dated July 16, 2003 stated that the insured amount of the equipment was $22, 650, the amount that Norvergence invoiced CIT for the ERAs. ( See CIT Letter of July 16, 2003 annexed hereto as “Exhibit B” and Invoice annexed hereto as “Exhibit C” ) In addition, in a phone call to CIT on or about January 10, 2005, representatives of CIT reiterated that the amount insured was $22,650. ! ; Those representatives included Supervisor Linda Farris. 9. However, on or about January 10, 2005, I spoke with a representative of American Bankers Insurance, Maryanne Craig, the underwriter for my ERA. She informed me that CIT had listed the basis or inventory amount for the premium on the equipment as $8,960, not $22,650. 10. CIT informed American Bankers Insurance that the fair market replacement value of my equipment, two Matrix boxes with two voice cards, was $8,960, despite the fact that they informed me that they were insuring the “insured value” of $22,650 which was the amount invoiced by Norvergence to CIT. 11. On January 12, 2005, I spoke with Dowling Bowman, the Adtran Project Manager for the Norvergence Matrix Project. He was involved in the configuration of the Matrix and discussed it with Norvergence's executives and engineers, including Peter Salzano. 12. Dowling Bowman informed me of the following: a. Norvergence paid Adtran no more than $1550 for the Matrix boxes. b. A comparable Adtran product to the Matrix is Adtran Product #4200376L24#EA1 whose retail list price during the time of sale of the Matrix was $2850.88. c. A single voice card added to the Matrix listed for $223. d. The comparable retail price for my two Matrix boxes with two voice cards was $6,146.88. e. A patch was developed by Adtran to change the Matrix from an ATM network box to a TDM network box which could be installed for a list price of $375. f. The Matrix box, as currently configured, was virtually worthless in today's market. Even if reconfigured, it was worth no more than $900. g. There was no “proprietary” software or hardware added to the Matrix boxes that added any unique or substantive functionality to the equipment as evidenced by the fact that there standard model Product##4200376L24#EA1 was functionally equal to the Matrix. h. Software for the Matrix that was added at the request of Norvergence by Adtran did not add any cost to the product for Norvergence. 13. On or about January 11, 2005, I spoke with Adtran tech support engineer “Sean”, who told me that without the $375 TDM software conversion patch, the Matrix was a “doorstop.” Dated: _________________ ____________________________ RHONDA ROLAND SHEARER
Before me on this ___ day of January 2005 ______________________ Notary Public MICHAEL SCOTT GREEN, ESQ. Law Offices of Michael Scott Green 86 Washington Avenue Milltown , New Jersey 08850 Tel: (732) 390-0480 Fax: (732) 390-0481 Cell: (732) 690-2093 E-mail: msgreen@lawmsg.com On the web@: www.lawmsg.com PRIVILEGED ATTORNEY/CLIENT, ATTORNEY WORK PRODUCT. The information in this transmittal is privileged and confidential and is intended only for the recipient(s) listed above. If you are neither the intended recipient(s) nor a person responsible for the delivery of this transmittal to the intended recipient(s), you are hereby notified that any distribution or copying of this transmittal is prohibited. If you have received this transmittal in error, please notify the sender immediately at (732) 390-0480 or by return e-mail. MICHAEL SCOTT GREEN, ESQ. Law Offices of Michael Scott Green 86 Washington Avenue Milltown , New Jersey 08850 Tel: (732) 390-0480 Fax: (732) 390-0481 Cell: (732) 690-2093 E-mail: msgreen@lawmsg.com On the web@: www.lawmsg.com |