U.S. Interactive, Inc. - Securities Class Action

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_______________
Copyright (c) 2001
Stanford Law School

U.S. Interactive, Inc. Conclusion: According to the docket, on October 21, 2003, the Court found that the prerequisites for a class action under Fed. R. Civ. P. 23(a) and (b)(3) were satisfied. The Court entered the Order and Final Judgment signed by U.S. District Judge James T. Giles on October 22, 2003.

In a press release dated August 14, 2003, the defendants' counsel announced Pendency and Settlement of U.S. Interactive, Inc. Securities Class Action, for all persons who purchased stock between February 10, 2000 and November 8, 2000. Pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the above Court dated July 25, 2003, that a hearing will be held on October 20, 2003 at 2:00 p.m. in Courtroom 17614, United States Courthouse, 601 Market Street, Philadelphia, PA 19106-1797 to determine whether the proposed settlement for $3,250,000 should be approved by the Court as fair, reasonable, and adequate; and whether to award Plaintiffs' Counsel attorneys' fees and reimbursement of expenses.

The Individual Defendants, the Underwriter Defendants, and the Director Defendants all moved to dismiss the Complaint. The Court, by Memorandum and Order dated August 23, 2002, (1) granted in part and denied in part the Individual Defendants' motion to dismiss Counts I and II, (2) granted the Individual Defendants' and Director Defendants' motion to dismiss Counts III, IV and V, and (3) granted the Underwriter Defendants' motion to dismiss Counts III, IV, and V. The Court's ruling left the Individual Defendants as the sole remaining defendants. On November 26, 2002, the Court further clarified its Order of August 23, 2002. On December 18, 2002, the Defendants answered the remaining allegations in the Complaint, denying all allegations of liability.

The original Complaint alleges defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 by issuing a series of material misrepresentations to the market, thereby artificially inflating the price of U.S. Interactive securities. Specifically, during the Class Period, defendants repeatedly represented that the Company was experiencing strong growth and indicated that the Company was well along towards achieving profitability by the end of the year. However, at the time these statements were being made, defendants knew them to be false because: (a) an $80 million note issued by the Company as part of its SoftPlus acquisition was causing a large burden which would prevent the Company from achieving profitability; (b) the Company was being adversely affected by its financially-strapped dot-com customers; and (c) the Company was being adversely affected by the lengthening of the sales cycle. On 09/20/2000, the Company warned that its third-quarter financial results would be lower than originally expected due to rapid changes in the Internet professional services market, including longer sales cycles, re- evaluation of e-business initiatives by clients and prospects, and reduced funding available to dot-com clients. In response to this disclosure, U.S. Interactive stock dropped over 33% from the prior day's closing price, on record volume of 2,105,500 shares, to close at $12.937. On 11/08/2000, U.S. Interactive announced its third quarter performance and disclosed that not only were its third quarter financial results worse than the Company had pre-announced on September 20, 2000, but that the Company wrote-off $8.8 million of uncollectible accounts receivable during the third quarter, which amounts were primarily related to services performed for dot-com organizations. Following this full disclosure, U.S. Interactive stock dropped further on high volume of 1.5 million shares, to close at $0.81 per share.

NOTE: USIT was not named as a defendant because it announced, on January 22, 2001, that it filed a voluntary petition to reorganize under Chapter 11 of the United States Bankruptcy Code. On January 29, 2001, the trading of USIT stock was halted on the NASDAQ.

INDUSTRY CLASSIFICATION:
SIC Code: 8742
Sector: Services
Industry: Business Services

COMPANY/ISSUER NAME:	U.S. Interactive, Inc.
COMPANY/ISSUER TICKER:	USITQ
COMPANY WEBSITE:	http://www.usinteractive.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Arthur Friedman, et al. v. U.S. Interactive, Inc., et al.

COURT: E.D. Pennsylvania	DOCKET NUMBER: 01-CV-00522
JUDGE NAME: Hon. Bruce W. Kauffman
DATE FILED: 02/01/2001	SOURCE: Notice
CLASS PERIOD START: 02/10/2000	CLASS PERIOD END: 11/08/2000
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Berger & Montague PC 1622 Locust Street, Philadelphia, PA, 19103 (voice) 800.424.6690, (fax) 215.875.4604, investorprotect@bm.net Bruce G. Murphy 265 Llwyds Lane, Vero Beach La, FL, 32963 (voice) 561.231.4202, (fax) , Cauley, Geller, Bowman, Coates & Rudman LLP (San Diego, CA) 225 Broadway, Suite 1900, San Diego, CA, 92010 (voice) 619.702.7350, (fax) 619.702.7351, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA) 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101 (voice) 800.449.4900, (fax) , support@milberg.com Savett Frutkin Podell & Ryan, P.C. , Philadelphia, PA, (voice) 800.993.3233, (fax) , sfprpc@op.net Schiffrin & Barroway LLP 3 Bala Plaza E, Bala Cynwyd, PA, 19004 (voice) 610.667.7706, (fax) 610.667.7056, info@sbclasslaw.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 6

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT

Type:		Date on the document:

REFERENCE COMPLAINT

In Re: U.S. Interactive, Inc. Securities Litigation

COURT: E.D. Pennsylvania	DOCKET NUMBER: 01-CV-00522
JUDGE NAME: Hon. Edmund V. Ludwig
DATE FILED: 06/18/2001	SOURCE: Business Wires
CLASS PERIOD START: 02/10/2000	CLASS PERIOD END: 11/08/2000
TYPE OF COMPLAINT: First Consolidated
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Berger & Montague PC 1622 Locust Street, Philadelphia, PA, 19103 (voice) 800.424.6690, (fax) 215.875.4604, investorprotect@bm.net Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY) One Pennsylvania Plaza, New York, NY, 10119-1065 (voice) 212.594.5300, (fax) , Weiss & Yourman (New York, NY) The French Building, 551 Fifth Ave., Suite 1600, New York, NY, 10126 (voice) 212.682.3025, (fax) 212.682.3010, info@wyca.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE REFERENCE COMPLAINT
Notice Of Pendency And Settlement Of Class Action
Type: Notice		Date on the document: 08/04/2003
U.S. District Court Civil Docket
Type: Docket		Date on the document: 02/09/2005

OTHER DOCUMENTS
Complaint for Violations of the Federal Securities Laws
Case Name and/or Number: Zhang, et al. v. Zarilli, et al.
Type: Complaint		Date on the document: 02/08/2001

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