,C. Richard Henriksen, Jr. 41466-Ralph W. Curtis #6859

HENRIKSEN & HENRIKSEN, P.C. 1320 South 500 EastSalt Lake City, Utah 84102

Kenneth J. CatanzariteRalph AscherJim Travis TiceRichard Vergel de DiosCATANZARITE LAW CORPORAIUB2331 West Lincoln AvenueAnaheim, California 92801

Lionel Z. GlancyPeter A. BinkowMichael GoldbergLAW OFFICES OF LIONEL Z. GLANCY1801 Avenue of the Stars, #308Los Angeles, California 90067

ATTCRNEYS FOR PLAINTIF

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH

JEFF T. CAPRIN AND MICHELE A. ) Case No.CAPRIN, individually and on behalf )of all others similarly situated,

9 k, v k.N"5w') tiAt V:TY0N

R

Plaintiff, ) _

)v. ) auivi TRIAL DEMANDED

)SIMON TRANSPORTATION SERVICES, ) PROPOSED CLASS ACTION INC., RICHARD D. SIMON, ALBAN B. )LANG, and KELLE A. SIMN, )

)Defendants. )

)

1 •

Plaintiffs, by their attorneys, for their Class AcLion

Complaint (the "Complaint") allege the following upon personal

knowledge as to themselves and their own acts, and upon

informaLion and belief based upon the investigation ofi •

plaintiff's attorneys as to all other matters. The

investigation includes the thorough review and analysis of

public sLaLements, publicly-filed documents of Simon

Transportation Services, Inc. ("Simon" or the "Company"), press

releases and •news articles.

SUMMARY OF ACTION

1. This is a. securities class - action on behalf of

public investors who purchased. the common stock of Simon during

the period from February 13, 1997 through April 2, 1.998 (the

"Class Period"). Plaintiffs complain of a fraudulent scheme

and deceptive course of business that injured purchasers of

Simon stock during the Class Period.

2. Simon, a corporation whose headquarters are in

West Valley City, ULah, is a truckload carrier which provides

tumperaLure-controlIed transportation services for major

..3hippex. s in the food industry.

3. Throughout the Class Period, Simon, while

portraying itself as a rapidly-growing company, failed to

• disclose Lhe severe operational problems that were hammering

2

the Company. This case involves defendants material omissions

and the dissemination of materially false and misleading

! statements regarding toe demand for and market acceptance of

Simons services, all which drove Simon's stock price to a

1 Class p eriod high of $24 3/4 per share and enabled Simon

insiders to profit handsomel l y from sales of Simon common_ stock

1at. artificially inflated nHces.

4. Insiders sold millions of dollars of the Company1

stock prior to disclosing severe problems with the Company's

operations. After the Company's press release announcing its

firsL quarter results on January 15, 1998, insiders rushed to

sell millions of dollars of stock, 4 ust days before a February

1 12, 1998 release, which partially disclosed •.7_he problems with

the Company's earnings,

S. In 7,he Company's April 2, 1998.press release,

Simon announced it expected losses due to a revenue shortfall

of approximately $6 million below company expectations and

disclosed the full nature and extent of the signifiCant

problems. Vie next day the stock fell $5 15/18 to close at

$9 1/8. This close represents a 63% drop from the Company's

class period high of $24 3/4.

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JURISDICTION AND VENUE

G. This Court has jurisdiction over this action

pursuant to Section 27 of the Securities Exchange Act of 1934

(the 1934 Act"), 28 U.S.C. §§ 1331 and 1337. The claims

asserted herein arise under, Sections 10(h) and 20(a) of Lhe

1934 Act, 15 U.S.C. 578j(b), 78(n), and 78t(a), and Rule 10b-

5, 17 C.F.R. §240.10b-5, promulgated thereunder by the SEC.

7. Venue is prolDer in this DistricL pursuant to

•1Section 22 of the 1933 Act, Section 27 of the 1934 Act, 15

U.S.C. §78aa, and 28 U.S.C. §1391(b). Many of the defendants

• reside in this District. Many of t...acts giving rise to the

violations complained of, including the dissemination of false

and misleading public statellients and financial informat1or,

occurred in this District.

8. In connection with the wrongs alleged herein,

1 defendants used the instrumentalities of interstate collmlerce,

including the United States mails, interstate wire and

telephone facili-cAes, and the facilities of the national

securities markets.

THE PARTIES

9. Plaintiffs 'Jeff T. Caprin and Michele A. Caprin

purchased shares of Simon common stock during the Class Period

and were damaged thereby, as set forth in. Lheir Certifications

4

filed with this Complaint.

10. Defendant Simon is a Nevada corporation with

Headquarters at 5175 West 2100 South, West valley City, Utah

84120. Simon is a truckload carrier that specializes in

• temperature-cont'zbiled transportation services for major

1 shippers in the food industry. Simon's shares were, during the

Class Period, listed and actively traded on the NASDAQ National

Market, an efficient system.

11, Defendant Richard D. Simon ("Richard Simon') is

and was at all relevant times Chairman. of the Board, President

and Chief Executive Officer of Simon. Defendant. Richard Simon

was quoted in andjer responsible for the preparation, approval •

or release of each statement plaintiffs allege was false and

misleading, including all press releases and regulatory

filings. In addition, by virtue of his positions as Chairman,

President and Chief Executive Officer, Richard Simon was under

a continuing duty to direct and control the operations of

Simon, to exercise duo care and diligence in those operations,

and to oversee and review all corporate operations, including

the filing of documents with the SEC and the making of public

statements. During the Class Period, defendant Richard Simon

sold approximately 70,000 shares of Simon dommon stock at

artificially inflated prices, while in possession of

5

undisclosed, materially adverse information about the Company.

Defendant Richard Simon yielded total proceeds in excess of

$1.4 million dollars from these insider sales of Simon stook.

By failing to disclose the severe operational problems,

defondant Richard Simon was able to sell a large portion of his

holdings in the Company at artificially inflated prices.

12. Defendant Alban B. Lang ("Lang') is and was at

all relevant times Treasurer and Chief Financial Officer of

. Simon. Defendant Lang was quoted in and/or responsible for the

preparation, approval or release of each statement piaintifT.s

allege was false and misleading, including all press releases

and regulatory filings. In addition, by virtue of his

positions as Treasurer and. Chief Financial Officer, Lang was

under a continuing duty to direct and control the operations of

Simon, to exercise due care and diligence in those operations,

and to oversee and review all corporate operations, including

the filTha of documents with the SEC and the makinc of public

statements. During the Class Period, defendant Lang sold at

least 20,000 shares of Simon common stock at artificially

inflated prices, while in possession of undisclosed., materially

1 adverse information about the Company. Defendant Lang yielded

total proceeds in excess of $420,000 from these insider sales

of Simon stoc .s. By failing to disclose the severe operational

6

problems, defendant Lang was able to sell a large portion of

his holdings in the Company at artificially inflated prices.

13. Defendant Kelle A. Simon ("Relic Simon") is and

waS at all relevant pimes Vice President of Maintenance and a .

Director of Simon. During the Class Period, defendant Kong

Simon sold at least 50,000 shares of Simon common stock at

arLificially inflated prices, while in possession of

undisclosed, materially adverse information about the Company.

Defendant Kelle Simon yielded total proceeds in excess of $1

million dollars from these insider sales of Simon stook. By

failing to disclose the severe operational problems, defendant

Rene Simon was able to sell a large portion of his holdings in

• the Company at artificially inflated prices.

14. By virtue of their positions as officers and/or

directors of the Company, the defendants named in.paragraphs

11-13 above (the "Individual Defendants") had the authority and

ability to and, in fact, controlled the contents of the

Company's annual and quarterly reports filed with the SEC, and

press releases. Further, the actions of the Individual

Defendants during the Class Period caused the material

misstatement of the Company's financial condition and results

as alleged herein. The Individual Defendants were aware of the

contents of the Company 's publicl y disseminated reports and

7

press releases alleged herein to be misleading prior to their

issuance and had the ability and opportunity to prevent their

issuance or cause them to be corrected, but failed. Lo do so.

'Each of TJle Individual Defendants were signatories to the

Registration Statement and some, if not all, of the other

filings described herein.

CLASS ACTION ALLEGATION,

15. Plaintiffs bring this action as a class action

pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of

Civil Procedure, individually and on behalf of all other

persons or entities who purchased or acquired. Simon during the

Cla g s Period and were dama ged thereby, excluding the defendants

herein, their affiliates and any officers or (..irectors of Simon

or its affiliates, and any members of immediate families and

their heirs, successors and assigns (the (1-iassH).

16. The Class is so numerous that joinder of all the

members of the Class is impracticable. Plaintiff believes

1 there are hundreds of record holders of the Company's common

stock located throughout the United States.

17. Plaintiffs' claims are typical of the claims of

absent Class members. Members of the Class have sustained

damages arising out of defendants wrongful conduct in

violation, of the federal securities laws in the same way as the

8

;

plaintiff sustained damages from the unlawful conduct.

18. Plaintiffs will fejrly and Hdequatelv protect

the interests of the Class. Plaintiffs have retained counsel

competent and experienced in class and securities litigation.

19. A class action is superior to other available

methods for the fair and efficient adjudication of the

controversy. The Class is numerous and geographically

dispersed. It would be impracticable for each member of the

Class to bring a separate action. The individual damages of

any member of the Class may be relatively small when measured

against the potential costs of bringing this action, and thus

make the expense and burden of this litigation unjustifiable

for individual actions. In this class action, the Court can

determine the rights of all members of the Class with judicial

economy. Plaintiffs do not anticipate any difficulty in Lhe

management of this suit as a class action.

20. Common questions of law and fact . exist: as to all

members of the Class and. predominate over any questions

affecting solely individual members of the Class. These

questions include, but are not limited to, the following:

a. whether defendants' conduct as alleged

herein violated the federal securities laws;

b. whether the GEC filings, press releases and

9

statements disseminated to the investing public during the

Class Period misrepresented Simon's financial condition and

results;

c. whether defendants acted knowingly or

recklessly in omitting and/or misrepresenting material facts;

d. whether the market price of Simon common

stock during the Class Period was artificially inflated; and

e. whether the members of the Class have been

damaged, and if so, what is the proper measure of damages.

21. The statutorY safe harbor provided for forward-

looking statements under certain circumstances does not apply

to any of the allegedly false statements pleaded in this

Complaint. To the extent that the Complaint alleges 7_hat any

forward-looking statements were materially misleading, the

defendants made no meaningful cautionary steccements identifying

important factors that could cause actual results to differ

materially from those in the purportedly forward-looking

statements and in fact, defendants had no reasonable basis for

their forward looking statements.

FACTUAL BACKGROUND

Simon's Operations

22. Simon holds itself out to be a rapidly-growing

truckload carrier that specializes in temperature-controlled

10

transportation services for major shippers in the food

industry.

23. Simon is a holding company organized in 1955,

the sole business of which in to own 100% of the capital stock

of Dick Simon Trucking, Inc., a Utah corporation. Dick Simon

Trucking, Inc was incorporated in 1972 and had operated as a

sole proprietorship since 1955. Simon acquired all the capital

stock of Dick Simon Trucking, Inc. contemporaneously with the

November 17, 1995 effective date of the Company's initial

oublic offering.

24. As of February 13, 19 g 7, the Company reported

that subsequent to Simon's November 1995 initial public

offering, the Company. took delivery of approximately 665 new

tractors and traded approximately 348 older models. This

expanded the Company's fleet by 317 tractors add reduced the

fleet's average age to approximately 13 months at September 30,

1996. Also, at this time the entire fleet is equipped with

electronic engines and Oual.comm Satellite-based tracking and

communications units, and most are covered with 3 year, 503,000

mile engine warranties. Furthermore, Simon took delivery of

806 new 53-toot, temperature-controlled trailers during fiscal

1996. The weighted average tractor fleet increased by a total

of 29.4%. This expannion and upgrade contributed to 34.4%

11

revenue growth in fiscal 1996, to $101.1 minion from $75.2

million in fiscal 1995.

The Class Period Commences With Simons Secondary Offering

25. On February 19, 1997, Simon announced the

closing of their secondary offeing of 2,200,000 shares of its

Class A Common Stock at l_6 per ,hare. Of the shares offered,

1,425,000 shares were sold by the Company and 775,000 shares

1 were sold by certain selling Shareholders.. Richard Simon sold

500,000 shares and officers or employees Alban Lang, Rene

Simon, Lyn Simon, Richard D. Simon, Jr. and Sherry Bokevoy sold

15,000 .shares each.

26. The offering was led by Morgan Keegan & Cowpony,

Inc. and co—nanaged by A.G. Edwards & Sons Inc. and Georga K.

Baum & Company.1

Simon's Reported Financial Results During The Class Period

27. On April 15, 1997, the Company disseminated the

! following :.)ress release announcing the second. quarter of fiscal

year 1997 results:

SIMON TRANSPORTATION REPORTS SECOND WARTEROF FISCAL YEAR 1997. RESULTS

SALT LAKE CITY, .April 15 /PRNewswire/ -- SimonTraiwportation Services, Inc. (Nasdaq: STMN)announced today revenues, eaIninys, and earnings pershare for the second quarter Of fiscal 1997 and the

1 six months ended March 31, 1997.

Revenue for the second quarLer increased 61% to

12

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a record $35.8 million, compared with $22.2 millionfor the corresponding quarter of fiscal 1996. Netearnings increased 44% to $1.4 million or 25 centsper share, compared with $1.0 million or 20 cents pershare for the corresponding quarter a year ago, on a17% increase in weighted average shares outstandingfrom a successful secondary offering in February1991.

For the first six months of fiscal 1997, revenueincreased 63% to a record $69.9 million from $42.8million for the corresponding period in fiscal 1996.I're forma net earnings increased 77% to $2.6 millionor 51 cents per share, compared with $1.5 million or36 cents per share in the fiscal 1995 period on a 25%increase in weighted average shares outstanding.

"We continued our profitable growth during oursecond fiscal quarter," said Chairman, President, and

• Chief Executive Officer Richard D. Simon. "During thequarter ended March 31, 1991, we added. 128 tractors,increasing our fleet size to 1139. Our successful

• stock offering in February 1997 has added $22.9million in cash to the Company. With these proceeds,we purchased approximately 60 tractors and we plan topay cash for most of the remaining 250 tractorsscheduled for delivery this year,' Mr. Simoncontinued.

28. On July 15, 1997, the Company disseminated the •

following press release announcing their third quarter . 1997

.results:

SIMON TRANSPORTATION REPORTS THIRD QUARTEROF FISCAL 1997 RESULTS

1 SALT LAKE CITY, July 15 /PRNewswire/ -- SimonTransportation Services Inc. (Nasdaq: SINN) todayreported record revenues and earnings for theCompany's third quE.rter of fiscal year 1997 and thenine months ended June 30, 1997.

Revenues for the third quarter were $41.2

•1 13

1

million, up 51% from $27.2 milliou. last year. Netearnings for the third quarLer were Hp 180% to $3.1million or 49 cents per share compared with $1.1million or 23 cents per share last year.

Net earnings for the third quarter included apre-tax gain of $1.9 million on the'sale of theCompany's former headquarter facilities. Excludingthis non-recurring item, net earnings increased 72%to $1.9 million or 30 cents per snare compared with

.1 million or 23 cents per share last year, on a32% increase in weighted average shares outstanding

1 from a successful follow on offering in February997.

Revenues for the nine months were $111.1million, up 59% from $70.0 million last year. Proforma net earnings increased 120% to $5.7 million or$1.03 per share compared with $2.6 million or 60cents per share last year. Excluding the

1 non-recurring gain on the sale of the Company'sformer headquarter facilities, pro forma net earningsIncreased 75% to $4.5 million or 82 cents per sharecompared with $2.6 million or 60 cents a year ago, ona 28% increase in weighted average sharesoutstanding.

"This is an exciting period for SimonTransportation,' said Chairman,. President, and ChiefExecutive officer Richard D. Simon. "In addition toposting record revenues and earnings for the quarter,we have completed the relocation to our new corporatefacilities which provides us with ca pacity forcontinued business expansion,' Mr. Simon continued.

29. 011 October 15, 1997, the Company disseminated

1 the following press release announcing the fourth quarter

fiscal 1997 results;

SIMON TRANSPORTATION REPORTS FOURTH QUARTER1 AND FISCAL 1997 RESULTS

SALT LAKE CITY, Oct. 15 /PRNewswire/ -- SimonTransportation Services, Inc. (Nasdaq: SINN) today

14

reported record revenues and earnings for theCompany's fourth quarLer & fiscal year endedSeptember 30, 1997.

Revenues for the fourth quarter were up 42% to$44.2 million from $31.1 million last year. Netearnings for the fourth quarter were up 52% to $2.1 •million compared . with $1.3 million last year.Earning per share improved to 33 cents from 27 centslast year on a 32% increase in weighted averageshares outstanding due to the follow-on offeting inFebruary 1997.

Revenues for the fiscal year ended September 30,1997 were up 54% to $155.3 million from $101.1million last year. Pro forma net earnings in tiscal1997 increased 100% to $7.8 million compared to $3.9million for fiscal 1996. Earnings per shareincreased to . $1.36 from $.08 last year on a 29%increase in weighted average shales outstanding. Thenet earnings in fiscal 1.997 included a gain ot $1.9million ($1.2 milUon net of tax or 21 cents pershare) on .sale of the Company's former headquartersand primary terminal facilities.

'We continue to grow our Company at a profitablerate,' said Chairman, President, and Chief ExecutiveOfficer Richard D. Simon. "This year, we haveincreased our fleet size by 43% to 1,344 tractors. WerecenLly arranged with Frei ghtliner Corporation topurchase 1,450 tractors during the next two years.About 50% of the order is for additions to our fleetand Should increase our fleet to over 2,000 tractorsby the end of the agreement. In July, we moved intoour new corporate headquarters and primary terminalfacilities, our driver-friendly facilities havehelped improve our communications with drivers, andwill provide additional capacity to manage our growthinto the future," Mr. Simon continued.

15

30. On January 15, 1998, the Company disseminated

the following pre p s release announcing its financial results

for fiscal 1997:

SIMON TRANSPORTATfON REPORTS FIRST QUARTER 1998F1SCAL YEAR RESULTS

SALT LAKE CITY, Jan. 15 /PRNewswire/ 51mon..Transportation Services, Inc. (Nasdaq: SJ...,MN)announced today revenues, earnings, and earnings pershare for the auarter ended December 31, 1997, theCompany's first quarter of its 1998 fiscal year:

Revenues for the first quarter were $47.0million, up 37% from $34.2 million last year. Netearnings for the first quarter were $1,86 million, up50% from $1.24 million last year. Earnings per share

increased to 30 cents from 26 cents, on a .increase in weighted average shares outstanding froma successful follow-on offering in February 1997.

Richard D. Simon, Chairman and Chief ExecutiveOfficer, said, 'Freiaht demand from customerscontinues to be very strong. To enhance our presenceIn the Southeast, we purchased a 14 acre terminalsite in Atlanta, which we expect to have operationalin February. This should improve our efficiency byproviding bulk fuel, maintenance, and driverrecruiting and training facilities that we currentlylack in the region. In addition, we recentlyincreased our driver pay and arc actively seekinghigher rates from our customers to cover at least theamount of the pay increase. We ex pect the newcustomers and higher pay to assist us in recruitingand retaining enough quality drivers to meet customerdemand and grow our fleet es planned."

Simon 's Partial Disclosure of Qperations Problems

31. On February 12, 1998 f the Company disseminated

the following press release:

16

STMON TRANSPORTATION REPORTSPROJECTED EARNINGS SHORTFALL

SALT LAKE CITY, Feb. 12 /PRNewswire/ -- SimonTransportation Services, Inc. (Nasdaq: SINN) todayannounced that its revenue and. earnings for theqOarter endinc March 31, 1998 and the fiscal yearending September 30, 1998, are expected to fallsubstantially below analysts's expectations.Earnings per share for the fiscal year are expectedto be lower than in fiscal 1997.

Richard D. Simon, Chairman, President, and ChiefExecutive Officer stated: "Despite continued strongfreight demand, our growth will be slowed in the nextfew quarters because of delays in receiving newtractor deliveries. Tractors scheduled to bedelivered in February are running several weeksbehind schedule. By the time deliveries catch up toour schedule, we estimate the weighted average number•

• of tractors in our fleet will be approximately five• percent below the projected level for the year. This

problem was compounded by a period when we had a• substantial number of unseated tractors. A recenttwo-cent per mile driver pay increase has resulted inour trucks being almost fully manned currently. Weare aggressively pursuing rate increases to cover theincreased driver wage, but believe that there will beat least a one-quarter lag before any rate increasescould begin to make up the wage difference. Thecurrent quarter also will be negatively affected byincreased costs associated with opening our Atlantaterminal, accepting delivery of 280 . new 53-foottrailers, and disposing of our last 12b 48-foottrailers.

"We are disappointed to announce this news toour stockholders. However, we believe this is atemporary condition that will be corrected. SimonTransportation has excellent customers who continueto demand more and more equipment. We will continueto provide high-quality service and are confidentthat our growth will return as tractor deliveries arenormalized.

32. In response to the foregoing partial disclosure,

17

on Februa-fy 13, 1.998 Simon stock dropped 3 3/4 to 13 3/8.

33. While Simon's top jnsiders failed to disclose

the Company's dramatically lower expected earnings, the

individual Defendants in January, 1998, sold 140,000 shares of

stock for more than $2.0 million to personally profit from

Simon's artific1ally inflated stock value. No-:.withstanding

their access to confidential information as a result of-their

status as directors, officers and/or insiders of the Company,

and their corresponding duty to disclose adverse material facts

before trading in Simon stock, the Individual Defendants sold

significant amounts of Simon shares at artificially inflated

prices in order to profit from the fraud, and did so while in

possession of material nonpublic information. Defendants'

improper insider sales during the January 15, 1998 to February

12, 1990 trading window are detailed as follows:

Defendant Shares Proceeds

Richard Simon 70,000 Exceeding $1.4.million.

Alban Lang 20,000 Exceeding $420,000

hello Simon 50,000 Exceeding $1 million

Total 140,000 Exceeding $2.92 million

The Class Period Ends — Simon Reports Disastrous Financial Results For The Second Fiscal Quarter And Simon Stock Tumbles

34. The Company failed to fully disclose the lull

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extent n77. the problems it was encountering until April 2, 1998,

when Simon. released the following report:

SIMON TRANSPORTATION REPORTS PROJECTED LOSSFOR SECOND FISCAL QUARTER

SALT LAKE CITY, April 2 /PRNewswire/ -- SimonTransportation Services, inc. (Nasdaq: SIMN) todayannounced that based upon preliminary results theCompany expects to report a net income loss ofbetween $1.5 and $2.0 million ($.24 and $.36 pershare) for the quarter ended March. 31, 1998.

Chairman, President, and Chief Executive OfficerRichard D. Simon stated: 'The expected loss isattributable to a revenue shortfall, increasedexpenses associated with driver wages, and claimsexpense due to unusually severe accident experience.Revenue is expected to be a pproximately $6 millionbelow our expectation because of fewer tractors than..anticipated in. our fleet, a significant number oftractors without drivers, lower than ex pected revenueper mile, and soft freight demand from our largecustomers. The driver wage increase we implementedin January has not been recovered through an increasein freight rates,. in February, we believed thatfreight rates would increase immediately. In •fact,revenue per mile was lower in March than in Januaryand February, which is the opposite of most years.

• Also, the number of unseated trucks in our fleetincreased significantly in March. To address thedriver issue, the Company has approved an additionaldriver wage increase of $.02 per mile effective April15, The wage increase is expected to assist inrecruiting and retaining drivers, but it will have animmediate, negative impact on earnings until freightrates can be raised.

35. In reaction to the foregoing release, Simon's

stock tumbled 5 5/16 to $9 1/8, a one day drop of 39%.

36. On April 3, 1998, george E. Baum & Co., a co-1

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1

managing company in Simon 's secondary offering, lowered its

rating on the Company to "underperform" from "buy."

37. On April 4, 1998, the Salt Lake Tribune reported.

that Simon stock plummeted the day before:

SIMON TRUCKING SHARES FALL ON EXPECTED QUAIV2ER LOSS

Simon Transportation Services, Inc. shares fellsharply Friday after the West Valle y City-basedtrucking concern revealed it expected to report aloss of $1.5 million to $2 million for its secondfiscal quarter ended March 31.

The trucking company in early February cautionedinvestors that its earnings for the quarter would bebelow analysts' expectations, a warning that alsoresulted in an abrupt sell-off of Simon. shares.

On Friday, the company's stock plunged 39percent, closing at $9.12, down $6.94 cents. Earlierin the day, Simon shares traded at an all-time low of$5.50.

The company expects to report a loss per shareof 24 cents to 36 cents for the quarter.

"The Company has been performing well until onlyrecently," says Gonna Bergschncidcr, a securitiesanalyst with George K. Baum in Kansas City, Mo. "Thenews was disappointing and the company certainly hassome challenges ahead of it."

Beroschneider, who on Friday lowered her ratingon Simon to "underperform" from "buy", says theproblems likely will take. sometime to solve.

They are going to continue to have some wagepressure," she says, noting there is a drivershortage industry wide.

38. Simon's stock price has not recovered from the •

disastrous results and as of December 2, 1.958 the stock traded

20

at $6.25 a share.

False and Misleading Information

39. During the Class Period, defendants materislly

misled the investing public, thereby inflating the price of

Sim.on securities, by publicly issuing false and misleading

statements and omitting to disclose material facts necessary to

make defendants statements, as set forth herein, not false and

misleading. Said statements and omissions were materially

false and misleading in that they failed to disclose material

adverse information and misrepresented the truth about the

company.

40. During the Class Period, each Individual

Defendant occupied a position that made him privy to non-public

information concerning Simon. Because of this access, each of

these defendants knew that the adverse facts specified herein.

were being concealed and that the public statements being made

by [he Company were false.

41. The market for Simon 's activities was open,

well-developed . and efficient at all relevant times. As a

result of these materially false and misleading statements and

Lailures to disclose the full truth about Simon and its

business, earnings momentum and fUture prospects, Simon common

stock traded at artificially inflated prices during the entire

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1

1 Class Period, reaching a Class Priod high of $24 3/4 per

share, until the Line the adverse information described above

was finally provided to and digested by the securities markets.

Plaintiffs and other members of the Class purchased or

otherwise acquired Simon securities relying upon the integrity

uf the market price of Simon stock and market information

relating to Simon, or in the alternative, upon defendants'

false and misleading statements, and in ignorance of the

adverse, undisclosed information known to defendants, and have

been damaged thereby.

1 Defendants' Knowing or Reckless Disregard of theFalse and Misleading Financial Statements

42. Defendants' false representations and material

omissions were made with scienter. in that: defendants knew or

recklessly disregarded that the public documents and statements

issued or disseminated by Simon were materially false and

1 misleading as described. above; knew. or were reckless in not1

knowing that Lhe false financial results would be issued or

disseminated to the investing public; and knowingly and

substantially participated in the preparation and/or issuance

or dissemination. of such statements or documents. The

following factors indicate that defendants made the1

misrepresentations. knowingly or with reckless disregard for the

Lruth:

22

a. Throuuhout the Class Period, defendant

Richard Simon sou ght to maintain the price of Simon. common

stock so that he could, at the same time, sell at least 70,000

shares for net proceeds in excess of 51.4 million.

L. Throughout the Class Period, defendant Lang

sought to maintain the price of Simon common . stock so that he

could, at the same time, sell at least 20,000 shares for net

Droceeds in excess of $420,000.

c. Throughout the Class Period, defendant

Kelle Simon sought to maintain, the price of Simon common stock

so that he could, at the same time, sell at least 50,000 shares

for net proceeds in excesS of $1 million.

iRpna - ab5.atu.torSafe Harbor.

43. The statutory safe harbor provided for forward-

looking statements under certain circumstances does not apply

to any of the allegedly false statements pleaded in this

complaint. Many of the statements pleaded herein were not

specifically identified as "forward-looking statements' when

made, To the extent there were any forward looking statements,

there were no meaningful cautionary statements identifying the

important then-present factors that could and did cause actual

results to differ materially from those in the purportedly

forward-looking statements. Alternatively, to the extent that

23

the staLuLey safe harbor does apply to any forward-lookIng

statements pleaded herein, defendants are liable for those

false forward-looking statements because at the time each of

those forward-looking statements was made, the particular

speaker knew tnat the pa=icular forward-looking statement was

false or misleading, and/or the forward-looking statement was

authorized and/or approved by an executive officer of Simon who

knew that those statements Wefe false when made.

44. Any warnings contained in the press releases and

the financial statements quoted herein were generic statements

of the kind of risks that affect any transportation company and

misleadingly contained no specific factual disclosure of any of

the particular looming problems with Simon which placed Simons

profitability and growth at risk.

COUNT 1

VIOLATIONS OF SECTION I0(b) OF THE EXCHANGE ACTAND RULE 10b-5 PROMULGATED THEREUNDER

AGAINST ALL DEFENDANTS

45. Plaintiffs repeat and reallege each and every

allegation contained in the foregoing paragraphs as if fully

set forth herein except for those allegations alleging fraud..

46. At all relevant times, the defendants,

individually and in concert, directly and indirectly, by the

use and means of instrumentalities of interstate commerce.

24

and/or of the mails, engaged and participated in a continuous

course of conduct whereby they knowingly and/or recklessly made

and/or failed to correct public representations which were or

had become materially false and misleading regarding Simons

financial results and operations. This continuous course of

conduct resulted in the defendants causing Simon to publish

public statements which they knew, or were reckless in not

knowing, were materially false and misleading, in order to

artificially inflate the market price of Simon stock and which

operated as a fraud and deceit upon the members of the Class.

47. Defendant Simon is a direct participant in the

wrongs complained of herein. The Individual Defendants are

liable as direct participants in and as controlling persons of

the wrongs complained of herein. By virtue of their positions

of control and authority as officers and directors of Simon,

the Individual Defendants were able to and did, directly or

indirectly, control the content of the aforesaid statements

relating to the Company, and/or the failure to correct those

statements in a timely fashion once they knew or were reckless

in not knowing that those statements were :no longer true or

accurate. The Individual Defendants caused or controlled the

preparation and/or issuance of public statements and the

failure to correct such public statements containing

25

misstatements and omissions of material facts as alleged

herein.

48 The Individual Defendants had actual knowledge

of the facts makirg the material statements false and

misleading, or acted with reckless disregard for the truth in

that they failed to ascertain and to disclose such facts, even.

though same were available Lo them.

49. In ignorance of the adverse facts concerning

Simon 's business operations and earnings, and in reliance on

the integrity of the market, plaintiff and the members of the

C.,ass acquired Simon common stock at artificially inflated

prices and were damaged thereby.

• 50. Had pIaintiff and the members of the Class known

of the materially adverse information not disclosed by the

defendants, they would not have purchased Simon common stock at

all or not at the inflated prices paid.

51. fly virtue of the foregoing, defendants have

violated Section 10(b) of the 1934 Act and Rule 10b-5

promulgated thereunder.

COUNT II

VIOLATION OF SECTION 20(a) OF THE EXCHANGEACT AGAINST THE INDIVIDUAL DEFENDANTS

52. PlainLiffs repeat and reallege each and every

allegation contained in the foregoing paragraphs as if fully

26

sot forth herein except for those alleging frond.

53. This count is asserted against the Individual

Defendants and is based upon Section 20(a) of the 1934 Act.

.04. The Individual Defendants, by virtue of their

offices, directo -rships, stock ownership and specific acts were,

at the time of the wrongs alleged herein and as set forth in

Count 7, controlling persons of Simon within the meaning of

Section 20(a) of the 1934 Act. The Individaal Defendants had

the power and influence and exercised the same to cause Simon.

to engage in the illegal conduct and practices complained of

herein by causing the Company to disseminate the false and

misleading information referred to above. Moreover, the

Individual Defendants owned or controlled substantial amounts

of the Company's stock.

55. The Individual Defendants' position made them

privy to and provided them with actual knowledge of the

material facts concealed from plaintiff and the Class.

55. By virtue of the conduct alleged in Count l, the

Individual Defendants are liable for the aforesaid wrongful

conduct and are liable to plaintiff and the Class for damages

suffered.

27

PRAYER FOR RELIEF

WHEREFORE, plaintiffs demand judgment:

1. Determining that the instant action is a proper

class action maintainable under Rule 23 of the Federal Rules of

Civil Procedure;

2. Awarding compensatory damages and/or rescission as

appropriate against defendants, in :favor of plaintiff and all

members of the Class for damaees sustained as a result of

defendants wrongdoin7;

3. Awarding plaintiff and members of the Class the

costs and disbursements of this suit, including reasonable

attorneys', accountants' and experts' fees; and

4. Awarding such other and further relief as the

Court may deem just and proper.

DATED the 5 day of December, 1998HENRIKSEN & HENRIKSEN, P.C.

BY5(;) • . • 'ark-e„ )

C. Richard Henr ksen,

320 South 500 EastSalt Lake City, Utah 84102Phone: (801) 521-4145Fax: (801) 355—U246

CATANZARITE LAW CORPORATION• Kenneth J. Catanzarite, Esq.

Ralph Ascher, Eng.im Travis Tice, Esq.

• 28

Richard Verge_ de Dios, Esq.2331 W. Lincoln AvenueAnaheim, California 92801Phone: (714) 620-5544Fax: (714) 520-0680

LAW OFFICES OF .7,IONKL Z. GLANCYLionel 2, Clancy, Esq.Peter A. Binkow, Esq.Michael Goldberg, Esq.L801 Avenue of the Stars #303Los Angeles, California 90067Phone: (310) 201-9150Fax: (310) 201-9160

Attorneys for Plaintiff

1

1 29

JURY DEMAND

PlairIffs 171F:rehy demand a = . ial by jury.

DA r'RD this 3 day of Decembcr, 1998HENRIKSEN .5: NENR:KSEN, P.C.

(7/-n ///

By,C. Richard He)riksen, da, Esq.

320 South 500 FastSalt Lake City, Utah 84102Phone: (801) 521-4145Fax: • (801) 355-0246

CATANZARITE LAW CORPORATIONKenneth J. Catanzarite, Esq.Ralph Ascher, Esq.Jim Travis Tice, Esq.Richard Verge]. de Dios, Esq.2331 W. Lincoln AvenueAnaheim, California 92.801Phone: (714) 520-5544Fax: (714) 520•••068.0

LAW OFFICES OF LIONEL Z. GLANCYLionel .2. Glancy, Esq.Peter A. Binkow, Esq.Michael Goldberg, Esq.1801 Avenue of the Stars #308Los Angeles, California 90067Phone: (310) 201-9150Fax: (310) 201 9160

Attorneys for Plaintiff

30