CAR_Public/000112.MBX                C L A S S   A C T I O N   R E P O R T E R

               Wednesday, January 12, 2000, Vol. 2, No. 8

                               Headlines

ADAM’S MARK: Hotel Chain Alleged of Racial Bias Donates to Black Group
COMPUTER LEARNING: Settles Securities Suits in Different States
COMPUTER LEARNING: Will Defend Vigorously Suits by Students & Employees
GOLDEN STATE: DA Ct Oks Settlement for Shareholder Suit over Merger
HAYT HAYT: PA Law Firm Sued over Debt Collection Practices

HIGH-RISE CONDOMINIUM: Angry Residents under Blast in Japan Plan to Sue
HMO: Aetna to Streamline Global Operations in Face of Investors’ Chill
HOLOCAUST VICTIMS: Germany Praised for Confronting Its Past Horrors
MICROSOFT CORP: Loses Sp Ct Ruling on Stock Purchase for Temp Workers
MICROSOFT CORP: Mainers Seek Damages; Millions of PC Owners May Join

MICROSOFT CORP: Settles with Caldera Antitrust Suit over DR and MS DOS
NATIONAL COUNCIL: KS Ap Ct Tosses Antitrust Charges over Workers’ Comp.
SEATTLE POLICE: Suits Brewing In Wake Of Wto Riots
TELEPHONE COS: 9th Cir Hears Case Removed to Fd Ct Re Charges for FUSF
THOUSAND TRAILS: May Be Sued by Property Purchasers in Different States

TOBACCO LITIGATION: High Court Refuses To Hear Unions' Medical Claims
TOBACCO LITIGATION: Transcript on Talk; Attitude toward Case by DOJ
URBACK: Commercial Drivers Lose Challenge to NY Tax on Thruway Fuel-Use

* 99' Jury Awards Totaled Nearly $9 Billion

                              *********

ADAM’S MARK: Hotel Chain Alleged of Racial Bias Donates to Black Group
----------------------------------------------------------------------
The Adam's Mark hotels donated $ 50,000 on January 10 to Black College
Reunion a month after the U.S. government accused the luxury chain of
discriminating against black guests during the annual gathering.

The head of the hotel chain's parent company acknowledged that the
company needs to win back public confidence in the wake of a suit filed
by the Department of Justice and a class-action suit filed by five black
hotel guests. "We've been accused in a way that's almost a conviction,"
Fred Kummer, chairman and CEO of the St. Louis-based HBE Corp., said
during a check presentation at city hall.

Black College Reunion is an annual event that attracts as many as
100,000 black college students for a weekend of sun, surf and partying
in the Daytona Beach area. This year's reunion starts March 31. Kummer
said he will personally manage the hotel during the reunion weekend.
(St. Louis Post-Dispatch January 11, 2000)


COMPUTER LEARNING: Settles Securities Suits in Different States
---------------------------------------------------------------
On March 13, 1998, a class action lawsuit was filed against Computer
Learning Centers Inc. in the United States District Court for the
Central District of California on behalf of all purchasers of the
Borrower's Common Stock from October 31, 1997 through March 10, 1998.
Over the following two months, eight additional similar cases were filed
in United States District Courts: two in the Central District of
California; five in the Northern District of Illinois; and one in the
Eastern District of Virginia.

The complaints alleged violations of the Securities Exchange Act of
1934, including allegations that the Company was experiencing
"operations difficulties" and failed to disclose the alleged
difficulties. The complaints also alleged that Company insiders realized
profits by trading their shares of Company stock while in possession of
material adverse information. All of the complaints were filed on behalf
of classes of shareholders of Company Common Stock beginning as early as
March 11, 1997 and ending as late as April 7, 1998. All of these
shareholder lawsuits were consolidated and transferred to the United
States District Court for the Eastern District of Virginia. The Company
entered into a settlement agreement with the plaintiffs in February
1999, whereby the Company settled these allegations and agreed to
compensation to members of the plaintiffs' class. The terms of the
settlement, which received final judicial approval on July 9, 1999 and
have been approved by the plaintiffs, provided for the payment of $3.0
million in cash ($2.35 million was covered by the Company's insurance
policy) and the issuance of 550,000 shares of CLC Common Stock, subject
to certain price protection features, which resulted in an additional
463,152 shares of CLC Common Stock being issued to guarantee a total
settlement of $7.5 million. The Company's $650,000 cash portion of the
settlement agreement was paid in April 1999, and the remaining $2.35
million cash obligation was paid in June 1999.

On April 16, 1999, the United States District Court for the Eastern
District of Virginia modified a confidentiality order that had been
entered in the case. The modification permitted the Company's counsel to
share with the United States Securities and Exchange Commission material
that the Company had obtained in discovery from certain third parties
who had been trading in the Company's common stock. The Company sought
the modification of the confidentiality order because the Company
believes that the material in question might evidence violations of
federal securities laws by those third parties.


COMPUTER LEARNING: Will Defend Vigorously Suits by Students & Employees
-----------------------------------------------------------------------
Computer Learning Centers Inc. discloses the following litigation which
is pending in its type 8-K report to the Securities and Exchange
Commission, filed as of January 5, 2000:

On May 5, 1998, a class action lawsuit was filed against Computer
Learning Centers Inc. in the Superior Court of New Jersey in Bergen
County, New Jersey. The complaint alleges, among other things, that the
Company's Learning Centers in New Jersey failed to provide certain
educational services and resources, misrepresented certain information
respecting services, resources, occupational opportunities and student
outcomes and violated certain provisions of the New Jersey Consumer
Fraud Act. On November 19, 1999, the Court certified a class consisting
of all persons who, during the six years immediately preceding the
commencement of this action had enrolled in a course or courses of
study, education or training provided by the Borrower at its New Jersey
locations for which they incurred tuition expenses. On December 6, 1999,
Computer Learning filed a motion with the Appellate Division of the
Superior Court of New Jersey to appeal the November 19, 1999 decision to
certify a class.

Between June 1, 1998 and October 31, 1999, Computer Learning was named
as defendant in eight other lawsuits in California, Texas, Virginia,
Michigan and New Jersey by individual students or groups of students who
formerly attended one of the Borrower's Learning Centers. In two of
these lawsuits, various officers and directors of the Borrower have also
been named as defendants. The complaints allege, among other things,
that the Borrower's affected Learning Centers failed to provide
plaintiffs with certain educational services and resources and
misrepresented certain information respecting services, resources,
student outcomes and violated certain provisions of the applicable state
consumer laws.

During the second quarter of fiscal 2000, two of these cases were
settled resulting in payments to the former students of immaterial
amounts. In the third quarter of fiscal 2000, one case in Virginia was
also settled. Settlement expenses are combined with legal fees and
included within general and administrative expenses in the consolidated
financial statements. The Borrower is unable to estimate the outcome of
the other five matters or any potential liability.

On July 9, 1999, a class action lawsuit was filed against the Borrower
in the Court of Common Pleas in Philadelphia County, Pennsylvania, on
behalf of all students who attended the Learning Center located on
Market Street in Philadelphia within six years of July 9, 1999, who have
not obtained employment in a computer-related job through the Borrower's
placement services. On August 2, 1999, the case was removed to the
United States District Court for the Eastern District of Pennsylvania.
On October 12, 1999, the United States District Court for the Eastern
District of Pennsylvania remanded the case to the Court of Common Pleas
in Philadelphia County, Pennsylvania. The complaint alleges, among other
things, that this Learning Center failed to provide certain educational
services and resources, misrepresented certain information respecting
services, resources, occupational opportunities and student outcomes,
and violated certain provisions of the Pennsylvania Unfair Trade
Practices and Consumer Protection Law.

In addition to the lawsuits discussed above, the Company is a defendant
in a number of civil lawsuits involving current and former employees.

The Company intends to defend itself vigorously in the lawsuits referred
to above.

The report says that the fiscal year of the Company ends on 31 January.
It says that the audited consolidated statement of income and retained
earnings of the Borrower for the fiscal year of the Borrower ended
January 31, 1999, and the audited consolidated statement of cash flows
of the Borrower for such fiscal year, and the audited consolidated
balance sheet of the Borrower as at the end of such fiscal year; and the
statement of income and retained earnings of the Borrower for the
quarterly accounting period of the Borrower ended October 31, 1999, and
for the current fiscal year of the Borrower through the end of such
quarterly accounting period, and the statement of cash flows of the
Borrower for such quarterly accounting period and for the current fiscal
year of the Borrower through the end of such quarterly accounting
period, and the balance sheet of the Borrower as at the end of such
quarterly accounting period.


GOLDEN STATE: DA Ct Oks Settlement for Shareholder Suit over Merger
-------------------------------------------------------------------
Golden State Bancorp Inc., the No. 2 U.S. thrift, won a Delaware judge's
approval on January 10 of a settlement of shareholder suits over its
acquisition by a San Francisco-based thrift owned by financier Ronald O.
Perelman.

Perelman's First Nationwide Holdings Inc. agreed in February 1998 to pay
$ 2.5 billion for control of Golden State in a so-called reverse merger.
Perelman and associates wound up with as much as 45% of the combined
thrifts' stock. Shareholders were slated to split the remaining 55%.

Three Golden State shareholders quickly filed suit in Delaware Chancery
Court, contending they weren't getting enough of a stake in the new
thrift for their shares. They later agreed to settle their class-action
suits after Perelman and Golden State officials released more financial
details about the transaction and an expert's report on the fairness of
the acquisition.

While the settlement didn't result in more money for Golden State
shareholders, Chancery Court Chief Judge William B. Chandler III said
investors benefited from having access to the updated fairness opinion.
"This court has noted that even a meager settlement that affords some
benefit to stockholders" is worthy of approval, the judge said in an
11-page decision. But given the "modest benefit to shareholders,"
Chandler chopped the $ 1.3-million fee requested by lawyers for Golden
State shareholders to $ 500,000. "In my opinion, an award of $ 500,000
is generous in the circumstances of this case," the judge said.

The Chancery Court settlement also resolves several similar cases filed
in state court in Los Angeles over the acquisition, lawyers involved in
the case said.

San Francisco-based Golden State operates 352 California Federal Bank
branches in California and Nevada.


HAYT HAYT: PA Law Firm Sued over Debt Collection Practices
----------------------------------------------------------
A Philadelphia law firm has been hit with a class action suit in U.S.
District Court by consumers who say the firm uses unfair and deceptive
practices in collecting debts, including sending out letters from
non-lawyers that threaten the filing of a lawsuit.

Hayt Hayt & Landau was sued for allegedly violating the federal Fair
Debt Collection Practices Act, as well as Pennsylvania's Unfair Trade
Practices and Consumer Protection Law and the deceptive acts and
practices statutes of other states. The suit was filed by attorneys
James A. Francis and Mark D. Mailman of Francis & Mailman and Michael D.
Donovan of Donovan Miller on behalf of anyone who received one of the
allegedly deceptive form letters from the Hayt firm within the past six
years.

The lead plaintiff in the suit, Robert F. Fry Jr. of Philadelphia, was
the subject of collection efforts by Chrysler Financial, which in turn
hired the Hayt firm to collect the $ 9,511 debt. Fry claims that the
first letter he received from the Hayt firm used threatening language
and a tone that "was obviously intended to evoke immediate payment from
the consumer." In violation of federal law, the suit says, the letter
failed to effectively advise Fry that he had the right to dispute the
validity of the alleged debt. Although the letter contained the
validation language mandated by the law, the suit says that language was
"contradicted, overshadowed and obscured . . . so as to confuse or make
uncertain what the least sophisticated consumer's rights are under the
law." The first paragraph of the letter said that the firm had been
instructed to secure payment of the outstanding balance and demanded in
all capital letters that Fry make "payment in full at this time or
contact our office immediately." "The least sophisticated consumer would
never proceed to the validation language further down the page," the
suit alleges. An unsophisticated consumer would also interpret the
letter as being authorized or issued by an attorney, the suit says,
when, in fact, the only individual's name on the letter was "Shawn Fox,"
identified as an "account representative."

The suit alleges that the Hayt firm "acted in a false, deceptive and
unethical manner when it designed, compiled and furnished the letter
knowing that it would be used to create the false belief in consumers
that an attorney in a large, established law firm was personally
participating in the collection of a debt when in fact no such attorney
was so participating."

The case is Fry v. Hayt Hayt & Landau, 00-cv-0114. (The Legal
Intelligencer January 11, 2000)


HIGH-RISE CONDOMINIUM: Angry Residents under Blast in Japan Plan to Sue
-----------------------------------------------------------------------
In Sakai, Osaka, local residents claim that high-rise condominium
buildings are responsible for blasts of wind as strong as typhoons that
buffet their homes and plan to sue the buildings' owners and builders.

Strong gusts are created when winds hit the sides of tall buildings and
then are funneled between the buildings, clobbering nearby residents and
their houses, the residents claim.

Totally vexed by the damage and suffering vented on them by the gusts,
two families in Sakai, Osaka Prefecture, will file a suit seeking 90
million yen in damages from the companies.

According to the complaint due to be filed with the Osaka District
Court, the families of a 73-year-old licensed tax accountant and a
44-year-old company employee moved into neighboring houses in the city
in 1986 and 1983, respectively.

In 1994, Marubeni Corp., the developer of the condominiums, and Takenaka
Corp., the company that built them, held an explanatory session for the
local neighborhood association in the area about the planned
construction of a condominium complex consisting of one 12-story and two
20-story buildings.

Residents had already voiced concern over possible wind damage caused by
the high-rise buildings. In response, the companies made an agreement
with the neighborhood association to the effect that compensation would
be provided if gusts attributed to the buildings damaged neighboring
houses.

Construction of the condominiums began in February 1995, and was
completed in March 1997. Residents in the area started to suffer from
trouble caused by strong winds even before the construction was
completed.

According to the complaint by the plaintiffs, the gusts were so strong
that they had trouble walking in front of their houses. The gusts also
overturned laundry poles and blew shoes off verandas. A number of people
were reported to have been blown off their bicycles in the area. The
plaintiffs have suffered every year since then, especially during the
period from November to March, when strong seasonal wind blows. On 31
days in a two-year period, gusts reached 17.2 meters per second -- the
average wind speed of a typhoon. The maximum wind speed recorded was
24.6 meters per second, and this at a time when there were no typhoons
in the area.

When the No. 7 Typhoon of Sep. 22, 1998 hit the Kansai area, the
accountant had about 140 roof tiles from his house blown off and had a
leak for the first time since he had lived in the house. An iron-barred
glass door in the entrance was also smashed, exposing the interior to
the rainstorm.

The other plaintiff also lost scores of roof tiles in the typhoon. His
house, which had a terrible leak, was shaken badly with each blast of
wind. Theirs were the only houses in the neighborhood to lose rooftiles
to the storm.

However, the developer and the construction company refused to mend the
roofs unless the residents submitted a letter to the effect that the
damage had nothing to do with the "building gusts." The residents were
forced to have lawyers intervene in the negotiations to get the roofs
fixed.

Both the plaintiffs now want to move out of the area. A spokesperson for
the Marubeni Corp. has denied the allegation that the damaged roof tiles
were attributed to the gusts, insisting instead that the damage was
caused by the typhoon. (Mainichi Daily News December 15, 1999)


HMO: Aetna to Streamline Global Operations in Face of Investors’ Chill
----------------------------------------------------------------------
Seeking to increase shareholder value, Aetna, the nation's largest
health insurer, announced on January 10 it plans to combine global
operations into two main units serving its health and financial
businesses.

The Hartford, Conn.-based company also said it is considering spinning
off its online health division into a separate company to take advantage
of Wall Street's fascination with so-called dot-com ventures.

The company said that Michael J. Cardillo, president of Aetna U.S.
Healthcare will oversee the worldwide health unit, while Thomas J.
McInerney, president of Aetna Financial Services, will head the
financial services branch. Both men are seen as possible successors to
Richard Huber as chairman and chief executive officer, analysts said.
"The new structure is designed to strengthen the linkage between the
international businesses and their domestic counterparts, increasing the
sharing of technology and product expertise," Huber said in a statement.

The CEO has used acquisitions, including the recent $ 1 billion purchase
of Prudential's health insurance business, to make Aetna the largest
health insurer in the United States.

But the company and its competitors are facing class-action lawsuits and
possible new laws to further empower consumers. And that has chilled
investors' enthusiasm for health-care stocks.

Shares of Aetna, for example, have lost more than 40 percent of their
value in the past year. But health division executives believe the
Prudential acquisition ultimately will bolster the bottom line.
Moreover, Aetna has inaugurated a national campaign to give consumers a
glimpse into the future of health care in this country.

Through its "health.e.nation" tour, which utilizes IBM technology in an
800-square-foot, multimedia mobile exhibition, the company is showing
its agents, human resources department heads from corporate America,
politicians and members of the public how technology can improve managed
care in the years ahead.

The exhibition van, which stopped last week outside Prudential's South
Florida headquarters in Plantation, features case histories of consumers
whose potentially serious health problems were detected through analysis
of their medical records collected by an Aetna affiliate, United States
Quality Algorhythms. "We use this information to keep track of whether a
person has had regular screening, such as a mammogram or pap smear, and
to look for potential problems in many areas," said Dr. Valerie Beckles,
an Aetna medical director for South Florida.

The database can identify patients in a practice or employees at a
company who are candidates for intervention in 65 specific disease
categories. For example, Beckles said, doctors in the network are sent a
list of diabetics in their practice, suggesting they remind the patients
to have an eye examination to detect potential complications early.

A portion of the exhibit makes three touch screens available to sample
the information provided by the InteliHealth Web site, which is a joint
venture with Johns Hopkins Health System and is one of the most-visited
Internet health sites. (Sun-Sentinel (Fort Lauderdale, FL), January 11,
2000)


HOLOCAUST VICTIMS: Germany Praised for Confronting Its Past Horrors
-------------------------------------------------------------------
According to the Financial Times (London), Germany's agreement to
increase to Dollars 5.2bn the compensation fund for those who worked as
slave and forced labourers during the Nazi era is a significant
breakthrough in the long negotiations towards a conclusive settlement.
Equally, it is part of a powerful movement for nations to confront their
history, and to take moral responsibility for crimes committed against
humanity and actions or inaction that grievously injured their own
citizens and others.

Johannes Rau, Germany's president, eloquently expressed the spirit of
this movement when he said of the compensation agreement: "I know that
for many it is not really money that matters. What they want is for
their suffering to be recognised as suffering, and for the injustice
done to them to be named injustice. I pay tribute to all who were
subjected to slave and forced labour under German rule and, in the name
of the German people, beg forgiveness."

Following the agreement with five central European nations, the state of
Israel, class action lawyers, Jewish survivor groups and German
companies, Chancellor Gerhard Schroder stated starkly that Germany had
been responsible for making the 20th century the "bloodiest" in history.
Since it had "inflicted so much pain upon the world", he added, his
nation had a great obligation to meet its responsibilities.

Germany has made serious efforts for more than four decades to do so,
through the Dollars 60bn previously paid to Holocaust victims, billions
in payments to others, its leadership for stability and peace in Europe,
and its special relationship with Israel, a country born of the horror
it caused. German companies will contribute half the money for the slave
labour settlement. Some have also agreed to open their archives from the
Nazi era to legitimate historical research. In so doing, they are taking
steps towards setting an example of accountability, albeit under the
pressure of class action suits.

More than a dozen other nations, from Argentina, Brazil and Spain to the
Baltic states, have official commissions examining the role their
governments played during the second world war.

Switzerland has published two hard-hitting reports: the first, on how
Swiss banks helped the Nazis use stolen gold to keep their war machine
going; the second, on how and why Swiss authorities closed the border to
refugees attempting to flee Germany. The Swiss Federal Council accepted
the recent refugee report with a statement of regret for its wartime
behaviour. In France, the ongoing work of the Matteloli Commission,
established by President Jacques Chirac, shows the government is willing
to confront the ambiguities of its actions during the Vichy period.

When the facts are revealed, there may at first be embarrassment and
even resentment over the digging up of such shameful events from the
past. But after widespread public discussion, nations are strengthened
by honestly confronting their past, absorbing its lessons, and taking
affirmative steps to help the victims of injustice and promote tolerance
in the future.

Although the Holocaust was a unique act of genocide, inquiries are
increasingly being made into other grave injustices. The work of the
Truth Commission is allowing South Africa to confront the raw experience
of apartheid and those who committed horrors in its name - not for the
purpose of punishment, but in the hope of reconciliation. Chile is
seeking to uncover the fate of the thousands who disappeared under the
Pinochet regime. Guatemala is looking into atrocities committed during
its years of civil war. The US continues to award compensation of
Dollars 20,000 per person to Japanese Americans who were taken from
their homes and forced to live in guarded camps during the second world
war. Each step taken testifies to the healing power of the truth.

Violations of human rights today are no longer considered solely
internal matters. The international community has a voice - whether it
is in Rwanda, East Timor, Iraq or the Balkans. Indeed, a commitment to
avoid another genocide in Europe was one of the factors in Nato's
intervention to stop the Serb atrocities against ethnic Albanians in
Kosovo.

It is not hard to understand why, 55 years after the liberation of the
death camps, the Holocaust still has such resonance. It addresses the
eternal questions of human behaviour: why do people hate? How can they
remain indifferent in the presence of evil? What can be done to prevent
this kind of tragedy from happening again?

It is not enough to examine mistakes of the past; we must absorb their
lessons and act on them in the future. As long as crimes against
humanity continue, remembrance of the Holocaust and suffering
perpetrated by the Nazis is essential. By its recent actions, Germany
has set an example that can be followed by all nations.

The author is the deputy secretary of the US Treasury Department and
Special Representative for Holocaust Issues. (Financial Times (London)
January 11, 2000)


MICROSOFT CORP: Loses Sp Ct Ruling on Stock Purchase for Temp Workers
---------------------------------------------------------------------
The U.S. Supreme Court on January 10 refused to hear an appeal by
Microsoft Corp. that argued for a reduction in the number of temporary
employees the company may have to compensate because they were not
allowed to participate in its stock-purchase plan.

The justices, without comment, let stand a federal appeals court ruling
that had expanded the number of workers represented by the class action
suit.

The Supreme Court's refusal to intervene means that anyone who worked
for Microsoft as an independent contractor or an employee of a temporary
agency since 1987 may be entitled to compensation, according to Stephen
Strong, a Seattle attorney representing the former employees.

Strong said the decision leaves the U.S. District Court in Seattle,
which is currently handling the case, with three main issues to resolve.
First, the court will have to use principles laid out in earlier appeals
court decisions to figure out which individuals in the class action suit
are entitled to compensation from Microsoft. It will also have choose a
formula for determining the compensation that those workers will
receive. Finally, the court still has to resolve some legal disputes
over pension plans and health benefits.

Strong said that although the district court will have to determine
exactly which workers qualify for compensation, the number could be as
high as 10,000 and is likely to be at least several thousand.

Dan Leach, a Microsoft spokesman, said the company was disappointed with
the decision but that it would have little practical impact on the case.
"The case has been moving forward and it continues to move along," Leach
said. "We're looking forward to putting the case behind us."

Lee Trucker, director of Trucker Huss, an employee benefits law firm in
San Francisco, said that although Microsoft may find other avenues for
appeal, it's getting less and less likely.

"The die may very well be cast now in terms of liability for Microsoft,"
Trucker said. "I think that now the battleground for them is narrowing
substantially. There may not be any real significant recourse beyond
this." (San Jose Mercury News January 11, 2000)


MICROSOFT CORP: Mainers Seek Damages; Millions of PC Owners May Join
--------------------------------------------------------------------
Three Portland-area residents have joined a nationwide effort to collect
damages from Microsoft for its monopolization of the personal computer
industry. Barbara and Harvey Melnick of Falmouth and Dr. John Zerner of
Portland sued Microsoft in a lawsuit filed last week in federal court in
Portland.

The lawsuit alleges that Microsoft customers paid artificially high
prices for their computers and the operating systems that run them
because of Microsoft's monopoly.

The number of plaintiffs in all the class-action suits combined is
expected to total in the millions. The primary qualification for
plaintiffs is that they bought a computer with Windows 98 or a variety
of Microsoft's other operating systems.

While each individual probably stands to gain less than $ 100, the
overall cost for Microsoft could end up totaling more than $ 100
million. "Plaintiffs have been running to courthouses all over the
country to reap the benefit of the government's victory," said Hillard
Sterling, an expert in anti-trust and information technology cases with
the Chicago law firm of Gordon and Glickson.

"Microsoft will survive regardless of the legal results from the civil
lawsuits. Nonetheless, the amount at issue raises the eyebrows of
Microsoft executives," Sterling said. Microsoft is the wealthiest
company in the United States, with a market value of about $ 500
billion.

Harvey Melnick, a manager at Sweetser Children's Services in Portland,
said he and his wife don't like the way Microsoft operates. "Our
experience has been that Microsoft hasn't played fair in a lot of ways,"
Melnick said. Melnick and his wife were candidates to join the lawsuit
because they bought a computer this year with Windows 1998 already
installed. They were asked to join the case by their lawyer, Robert
Mittel, who is also the lawyer bringing the class-action suit in Maine.

Severin Beliveau, a Portland lawyer representing Microsoft in Maine,
said Microsoft's initial goal is to get all the lawsuits combined into a
single case. "If they have to fight these cases in each state, it could
be very expensive," he said. "It will be less expensive if it is one
case." He said the civil cases were expected after U.S. District Judge
Thomas Penfield Jackson ruled against Microsoft in November. Jackson
ruled that Microsoft has used its monopoly power to stifle competition
and harm consumers. "Some innovations that would truly benefit consumers
never occur for the sole reason that they do not coincide with
Microsoft's self-interest," Jackson wrote.

Jackson stopped short of ruling that Microsoft broke anti-monopoly laws.
He is expected to rule on that issue in February.

Meanwhile, Microsoft and the Justice Department are discussing the
possibility of settling the lawsuit.

Sterling said all the civil cases should serve as motivation for
Microsoft to reach a settlement with the Justice Department rather than
waiting for Jackson's ruling.

Individuals standing to gain the most money from the civil lawsuits are
the lawyers bringing the cases. But Jim Keenan, an attorney with
Bernstein, Shur, Sawyer and Nelson who serves as a legal and business
consultant to high-tech companies, said there's more at stake than just
a big payoff for lawyers. "This is the way to hold Microsoft
accountable," Keenan said. (Portland Press Herald December 28, 1999)


MICROSOFT CORP: Settles with Caldera Antitrust Suit over DR and MS DOS
----------------------------------------------------------------------
Caldera Inc. and the Microsoft Corporation announced on January 11 that
they had settled a suit that had accused Microsoft of anticompetitive
practices. Under the terms of the settlement, Microsoft will pay Caldera
an undisclosed sum.

Microsoft said it would record a one-time charge of about 3 cents a
share against earnings in the quarter ended March 31. That would total
at least $154 million based on the number of outstanding shares, and the
actual figure is likely to be considerably higher.

"That's a rather nice settlement," said G. Gervaise Davis III, a
founding partner of Davis & Schroeder, an intellectual property law firm
in Monterey, Calif. "The fact that they settled it for that kind of
money indicates that Microsoft felt it had a serious risk."

The case was scheduled to go to trial on Feb. 1. Caldera, based in Orem,
Utah, contended that Microsoft intentionally made Windows incompatible
with DR DOS, a competitor to MS-DOS, the underlying system for Windows.
"We are pleased with the settlement or we wouldn't have done it," said
Bryan Sparks, the chief executive of Caldera.

Jim Cullinan, a spokesman for Microsoft, said the company was satisfied
with the settlement. "We are pleased to put this issue in our rearview
mirror and focus on the future," he said.

Caldera was started in 1994. DR DOS, which stands for Digital Research
Disc Operating System, was originally developed by Digital Research
Inc., which later merged with Novell. Caldera bought DR DOS from Novell
in 1996. A year and a half ago, Caldera spun off two companies: Caldera
Systems Inc., which develops Linux software for servers, and Lineo Inc.,
which develops Linux software for Internet appliances and other devices.
Now that the lawsuit against Microsoft has been settled, Mr. Sparks
said, Caldera Inc., now just a holding company, will probably cease to
exist. (The New York Times January 11, 2000)


NATIONAL COUNCIL: KS Ap Ct Tosses Antitrust Charges over Workers’ Comp.
-----------------------------------------------------------------------
Amundson & Associates Art Studio Ltd. v. NCCI

In affirming a district court ruling, the Kansas Court of Appeals has
determined the "filed rate doctrine" bars antitrust suits alleging
competitive injury resulting from the payment of a rate filed with a
state, or federal, regulatory agency. Amundson & Associates Art Studio
Ltd. et al. v. National Council on Compensation Insurance Inc. et al. ,
No. 81,028 (KS Ct. App., Sept. 17, 1999).

                             Background

Amundson & Associates Art Studio Ltd. filed a class action against the
National Council on Compensation Insurance Inc. and a number of
insurance companies (collectively NCCI) challenging their conduct in
managing the "residual" market for workers compensation insurance in
Kansas. Amundson alleged the NCCI violated the Kansas Antitrust Act by
conspiring to fix costs associated with the residual market.

Most employers buy workers comp insurance in the "voluntary market,"
where they purchase insurance at the prevailing rate based on their
individual circumstances. Employers considered high risk typically must
obtain workers comp insurance from the residual market. The Kansas
legislature has mandated that every insurance company writing workers
comp insurance in the state participate in the plan for the equitable
apportionment of these high-risk employers.

NCCI is a corporation owned and operated by its 700 member insurance
carriers. It is a rating organization licensed in Kansas to develop and
file proposed rates for the insurance commissioner's approval.

Most insurers in the state participate in the National Workers'
Compensation Pool to mitigate their risks in the residual market. NCCI
chooses certain insurers to act as servicing carriers. These carriers
accept the risks required by the plan, thereby fulfilling the obligation
of all companies participating in the pool. They issue policies, collect
premiums, investigate and pay claims, and provide other services to
residual market policyholders.

The servicing carriers then reinsure 100 percent of their assigned risks
with the pool companies so any loss experienced is allocated to every
insurer writing workers' compensation insurance in Kansas, based on each
company's market share. The cost of losses in this market then is
treated as an expense in setting a company rates.

As compensation for performing their duties, these service carriers are
awarded fees (a servicing carrier allowance) in the form of a percentage
of the premiums paid by the employers purchasing insurance in the
residual market.

Amundson alleged that the servicing carrier allowance was excessive
because NCCI selected servicing carriers and determined the allowance by
mutual agreement rather than by competitive bidding. Amundson filed a
petition alleging damages as a result of the price-fixing conspiracy
among the defendants, asserting violation of the Kansas antitrust laws
and seeking treble damages. It also asserted common law fraud, unjust
enrichment and a civil conspiracy.

NCCI filed a motion to dismiss based on the filed rate doctrine. The
district court agreed and concluded that Amundson's allegations were an
impermissible collateral attack on rates approved by the insurance
commissioner and thus barred by the filed rate doctrine. The court
stated that to allow Amundson to challenge the rates under the provision
of the antitrust laws would infringe upon the authority of the insurance
commissioner. The district court indicated that no matter how Amundson
framed the issue, it was challenging the rates established by the
insurance commissioner; Amundson appealed.

                  Kansas Court of Appeals Decision

The Kansas Court of Appeals acknowledged that the express language of
the Kansas antitrust statutes explicitly allows an action for antitrust
against entities that attempt to control the cost or rates of insurance.
However, the appellate court noted the antitrust statutes were passed in
1897 at a time when Kansas laws did not provide for the regulation of
insurance rates. With the enactment of the insurance rating laws, the
Kansas legislature gave the insurance commissioner, not the marketplace,
the power to control insurance and insurance companies.

The appeals court wrote, "It is a settled rule of statutory construction
that where an irreconcilable conflict exists between statutes, the
latest enactment will be held to supersede, repeal or supplant the
earlier by implication; the latter must prevail."

The appeals court said it did not believe that with its comprehensive
regulatory schemes the Kansas legislature intended that the approved
rates could be collaterally attacked. In this case, the court said the
insurance code, in conjunction with the filed rate doctrine, supersedes
the Kansas Antitrust Act.

The appellate court noted that by this decision, it was not ruling on
the issue as to whether the Kansas Antitrust Act is never applicable to
the insurance industry by private parties. (Antitrust Litigation
Reporter, November 1999)


SEATTLE POLICE: Suits Brewing In Wake Of Wto Riots
--------------------------------------------------
The legal fallout from the World Trade Organization protests is far from
over. The Seattle city attorney's office is pursuing cases against
hundreds of protesters. And many protesters who claim they were abused
by the police are likely to bring their own suits against the Police
Department.

More than 500 people were arrested during the first week of December.
Most were charged with failure to disperse and pedestrian interference.
Eleven people were charged with felonies, including burglary, assault,
malicious mischief and possession of stolen property. And a handful of
others were charged with violating the mayor's emergency curfew or
possession of a gas mask.

Initially City Attorney Mark Sidran's office considered negotiating a
plea agreement for all the misdemeanor cases, but is now handling them
individually, said Michael Finkle, a supervising attorney in the
criminal division of the office. Finkle said his office has been
recommending that prosecution be deferred for protesters who agree to
certain terms, which he declined to specify.

But Oakland solo practitioner Katya Komisaruk said the proposed penalty
is worse than what protesters would get if they went to trial and lost.
She predicted that without a deal, the courts will be swamped with
hundreds of trials in February.

Komisaruk, a representative of the National Lawyers Guild, is part of a
legal support team for Seattle attorneys representing the WTO
protesters. She said the attorneys assisting the demonstrators are eager
for a court battle. " Public defenders and the private bar are doing
dances of glee" at the chance to go to trial, Komisaruk said. "These are
perfect First Amendment cases."

Many protesters contend that the charges against them are unfounded. For
example, Mark Westlund, communications director of San Francisco's Rain
Forest Action Network, said members of his group were nabbed by
plainclothes police and charged with obstructing a pedestrian
thoroughfare or aggressive panhandling.

Westlund's group was part of a coalition of organizations, dubbed the
Direct Action Network, that spent nine months organizing for the WTO
protests. Others in the coalition included the Berkeley-based Ruckus
Society, San Francisco's Global Exchange and Earth First.

Komisaruk was part of Direct Action's legal team. She said that once
protesters were arrested they were not allowed to see their attorneys.
"We stood out in the rain over 16 hours trying to see our clients,"
Komisaruk said, adding that the protesters were chanting "We want our
lawyers now, they're standing outside the door."

Several protesters allege that they were physically abused during and
after their arrests. Komisaruk said the police restrained one woman and
"slammed her face into the ground." And she said some men were held
horizontally and rammed into a door.

The accusations have gotten worldwide attention. London-based Amnesty
International has called for the establishment of an independent
commission of inquiry to investigate police use of force during the WTO
demonstrations.

The human rights group said in a press release that some people sent to
King County jail "were allegedly strapped into four-point restraint
chairs as punishment for non-violent resistance or asking for their
lawyers."

In another alleged incident, a woman "was stripped naked by four woman
guards, while a male guard outside watched," the release said. "She
further had her arms and legs folded behind her and was held down on the
floor with the full weight of the two guards on top of her."

Pam McCammon, a media relations officer with the Seattle Police
Department, said that if protesters "are serious enough to feel they
were mistreated, there are channels through which they can file a
complaint."

No suits have been filed against the Police Department, but Komisaruk
said the legal community "is trying to figure out if one large class
action or smaller suits" should be filed. She noted that there is a
three-year statute of limitations in Washington for injury tort suits.

"There are few guarantees in law," Komisaruk said, but "I would bet any
money" that civil suits will be filed. (The Recorder December 29, 1999)


TELEPHONE COS: 9th Cir Hears Case Removed to Fd Ct Re Charges for FUSF
----------------------------------------------------------------------
A class action lawsuit challenging telephone companies' practice of
passing universal service costs on to customers was properly removed to
federal court and dismissed, AT&T, MCI Worldcom Network Services, and
Pacific Bell argued to the Ninth Circuit U.S. Court of Appeals. They
also urge the appellate panel to affirm the imposition of sanctions
against plaintiff's counsel for filing a frivolous motion. Evanns v.
AT&T Corp. et al., No. 99-55165 (9th Cir., briefs filed July 8, 1999;
Aug. 2, 1999; Aug. 16, 1999; and Oct. 7, 1999).

                             Background

Joseph Evanns' class action lawsuit against MCI, AT&T, and Pacific Bell
was originally filed in California Superior Court for Los Angeles County
on July 10. The essence of the lawsuit was that the defendants
unlawfully included charges for the Federal Communications Commission
(FCC)-mandated universal service fund (FUSF) in their bills to
customers. The suit challenged the legality of the FUSF itself, and the
pass-through of charges to customers. MCI was served on July 17, and
AT&T was served on July 20, 1998. MCI removed the action to federal
court on Aug. 13, 1998, and AT&T joined in the removal six days later.

They each filed motions to dismiss the complaint pursuant to Federal
Rule of Civil Procedure 12 (b)(c) on Aug. 20, 1998. The motions argued
that Evanns' claims were preempted by the filed tariff doctrine, which
bars claims asking a court to judge a filed tariff's validity or seeking
to change federally tariffed rates. Only the FCC has the authority to
take such actions.

On the same day as the motions to dismiss, Evanns moved for a default
judgment, charging that Aug. 19 was the last day for the defendants to
have responded to the complaint. When presented with letters from the
defendants establishing that their motions had been timely filed, and
AT&T's notice that it would move for Rule 11 sanctions against
plaintiff's counsel, Evanns persisted with his default motion and also
filed a motion to remand the matter.

The district court denied both his motions, and on AT&T's motion for
sanctions, ruled that Evanns' attempts to enter default failed because
he did not make reasonable inquiry, since he filed the motion after AT&T
had filed its responsive pleading. In addition, his argument was
premised on a meritless reading of the Federal Rules of Civil Procedure.
The court awarded attorneys' fees to AT&T to compensate for the time
spent responding to the motion.

                      Arguments to the Ninth Circuit

In his argument to the Ninth Circuit, Evanns presented several issues to
the court including whether the district court erred by: (1) denying the
plaintiff's request to enter defaults; (2) denying plaintiff's motion to
remand to the superior court; (3)granting the defendants' motion to
dismiss; and (4)failing to hold the actions and conduct of the
defendants to be illegal. As to the remand issue, he insisted that the
lawsuit was a common law action under California law. He argued that the
filed tariff doctrine was inapplicable because the charges at issue for
universal service referred to an additional charge, which was not a
charge for tariff usage or for a service. He submitted to the court that
the USF charge was unlawful, and the district court's granting of the
defendants' motions to dismiss condoned the unlawful charge. As to
sanctions, he claimed that the district court's levy of sanctions
against plaintiff's counsel constituted reversible error, in view of the
court's erroneous consideration of the date when the plaintiff's motion
was filed, and his counsel's good-faith advocacy of the law.

The defendants, in separate briefs, but presenting similar arguments,
urged affirmance of the district court's ruling. They vigorously
challenged Evanns' arguments, some of which were raised for the first
time on appeal. AT&T couched its argument by saying, "Evans seeks to
accomplish here precisely what he is forbidden to do pursuant to the
filed tariff doctrine i.e., (1) invade the jurisdiction of the FCC...;
and (2) obtain a rebate of the lawful tariffed rate."

MCI pointed out that Evanns chose the wrong forum and improperly asked
the appeals court to review the FCC's rulings on appeal from the
district court. Moreover, contrary to Evanns' assertions, the lawsuit
plainly attacked federally filed tariffs under federal law, and the case
was properly removed to federal court.

AT&T took aim at Evanns' challenge to the district court's denial of his
motion for default, urging that his "argument is so spurious as to
warrant the imposition of additional sanctions on appeal." The district
court's ruling was correct, and there was no legitimate argument under
the facts or the law which Evanns could present in good faith to the
appeals court, said AT&T.

Evanns is represented by Egon Mittleman in Beverly Hills, CA. AT&T is
represented by James D. Gustafson of Claypool, Gustafson & Goostrey, LLP
in Los Angeles. (Telecommunications Industry Litigation Reporter,
November 1999)


THOUSAND TRAILS: May Be Sued by Property Purchasers in Different States
-----------------------------------------------------------------------
Report of Thousand Trails Inc. to the Securities and Exchange Commission
filed as of January 3, 2000 (type 8-K) says that the Company is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of Washington and is qualified to transact
business as a foreign corporation in each jurisdiction where the Company
conducts business or owns or leases property.

The report also discloses that the Company may face lawsuits as
described below:

                         Foxwood Purchasers

Certain Foxwood purchasers are claiming breach of promises for the
timely completion of improvements. Total exposure should not exceed $4
million. A class action lawsuit has not been filed as of this date.

                       Indian Point Purchasers

A ruling by the Mississippi Supreme Court in 1992 held that membership
contracts sold in Mississippi are subject to the Mississippi Timeshare
Act. As NACO did not comply with the Mississippi Timeshare Act in
connection with its sale of membership contracts at the Indian Point
campground, these membership contracts are purportedly subject to
rescission at the option of the purchasers. To date, no purchasers have
requested rescission of their contracts based on this court ruling.

                       Beech Mountain Purchasers

Certain individuals have threatened a class action lawsuit claiming that
lots they purchased at the Beech Mountain Resort are wetlands and are of
no value. Most purchases were made over 13 years ago. All purchases were
made on-site, with each individual purchaser viewing his/her lot before
signing a contract. There is no lawsuit filed as of this date.

        Village H Property Owners Association (Virginia Landing)

The Village H POA is threatening a lawsuit regarding the closure of the
Virginia Landing campground during the winter months.


TOBACCO LITIGATION: High Court Refuses To Hear Unions' Medical Claims
---------------------------------------------------------------------
The U.S. Supreme Court handed the nation's cigarette companies a
significant -- if unsurprising -- victory on January 10, refusing to
consider lower court rulings that union health funds in New York, Oregon
and Pennsylvania cannot sue the tobacco industry to recover money
expended treating smoking-related illnesses.

The high court, without comment, upheld decisions last year by federal
appeals courts in New York, San Francisco and Philadelphia. All three
had ruled that the health funds were too far removed from any harm
caused by cigarettes to be entitled to sue and recover damages.

For example, Judge Edward Becker of the U.S. 3rd Circuit Court of
Appeals in Philadelphia said, "The tortured path that one must follow
from the tobacco companies' alleged wrongdoing to the funds' increased
expenditures demonstrates that the plaintiffs' claims are precisely the
type of indirect claims" that the legal doctrine of proximate cause "is
intended to weed out."

A federal appeals court in Chicago recently ruled the same way and
numerous federal trial courts have said that such suits by union health
and welfare funds are not legally viable.

Columbia University law professor John Coffee Jr. said: "It looks like
this line of cases has dwindled to a complete failure," although he
acknowledged that some lower federal courts still might permit such
cases to proceed.

Indeed, federal district judges in Washington and Brooklyn, N.Y., have
permitted similar cases to go forward, as did a state court judge in San
Diego.

So far, only one suit filed by a union trust fund has gone to trial and
the companies prevailed after a jury trial in federal court last year in
Akron, Ohio.

Coffee and other analysts noted that the Supreme Court only accepts
about 5% of the cases presented to it each year and, because appeals
courts have agreed on the issue so far, it would have been unusual for
the court to take the case.

The Supreme Court's refusal to review the cases "wasn't unexpected, but
it doesn't eliminate the remaining cases," nor was it a ruling on the
merits, said Matthew Myers, president of the Campaign for Tobacco Free
Kids.

Still, the cigarette companies hailed the result as a strong sign that
suits of this kind have little merit. "Frankly, it's hardly a surprise
that the U.S. Supreme Court declined to grant review of the decisions
given that all the circuit courts that have ruled on these cases have
come to the same conclusion: The suits do not state a valid legal claim
against the industry and should be dismissed," said Steven B. Rissman,
Philip Morris' senior assistant general counsel.

The three cases at issue on January 10 were patterned after similar
claims lodged by state attorneys general throughout the nation, starting
in 1994. The state suits yielded settlements of $ 246 billion and
agreements by the cigarette companies to curb some of their marketing
practices. In several of those cases, the states won preliminary rulings
from judges that permitted the cases to go forward, creating sufficient
threat to the industry to encourage it to reach the large settlements.

All of the union health and welfare funds alleged that the industry had
conspired since the mid-1950s to conceal information about the health
hazards of their products and defrauded them into paying to treat union
members who had become sick smokers.

January 10's action by the court has no impact on a Justice Department
suit, based on similar contentions, that was filed against the industry
in September.

The industry also still faces hundreds of individual claims and a class
action suit on behalf of all Florida smokers. Last year, a state court
jury ruled that the cigarette companies were responsible for injuries to
thousands of smokers. The suit is now in the penalty phase and analysts
have speculated that the industry could face punitive damages of tens of
billions of dollars.

Moreover, it was disclosed on January 10 that cigarette industry sales
have declined in recent months, at least in part because of price hikes
levied by the companies to finance the massive settlements with the
states.

Tobacco Free Kids announced that the industry's first set of year 2000
payments under the settlement are likely to be 13% lower than expected
because of the "volume adjustment" provision of the November 1998
national settlement. The provision provides for reduced payments to the
states based on the decline in the number of cigarettes sold in the
United States by major cigarette companies from 1997 to 1999.

"We believe that the downward volume adjustment is actually good news,"
said Kathryn K. Vose, speaking for the tobacco free campaign. "It shows
that cigarette price increases imposed after the tobacco settlement are
working to begin reducing cigarette consumption in the U.S." (Los
Angeles Times January 11, 2000)


TOBACCO LITIGATION: Transcript on Talk; Attitude toward Case by DOJ
-------------------------------------------------------------------
    MR. BROOKES: Well, dealing with fire-safe cigarettes first, Philip
Morris -- people may have noticed there's an article in the New York
Times I read this morning about Philip Morris possibly making a
disclosure about a fire-safe cigarette. And if they have managed to
create the technology, then I offer them my sincere congratulations. It
is very difficult to make very effectively a smokeable fire-safe
cigarette.

We obviously do have some cigarettes already on the market that meet the
government's NIST test, NIST test. And one of those is a product that we
make, Capri Lights. But it's very difficult to know whether or not we
are working against the right standard -- there are a lot of people who
criticize the NIST standard -- and there are a lot of other technical
reasons why it's been very difficult to make progress here. And we are
watching very closely the developments in California where California
has insisted upon fire-safe materials being used in furnishings, which
is of course the complementary way of addressing this problem, and a
very important one.

So far as nicotine-free cigarettes are concerned, you are right to say
there was one tried. It was called Next. It did -- it was not a
commercial success. I think nicotine is an intrinsic part of the smoking
experience, and a cigarette without nicotine is unlikely to attract much
custom frankly. But we do still in Brown & Williamson manufacture the
cigarette with the lowest level of nicotine today in the marketplace --
it's called Carlton Ultra. It's the lowest in tar and the lowest in
nicotine, and that's a brand that we offer and continue to offer to the
American public.

    MR. LIPMAN: The tobacco industry has said that it will not settle
the Justice Department case against it. How firmly committed is Brown &
Williamson to this no-settlement policy?

    MR. BROOKES: Totally committed. The lawsuit really has absolutely no
legal validity whatsoever. Mass tort litigation is not the way to
resolve some of the important public health issues surrounding the
tobacco industry. It was politically opportunistic as a lawsuit. It also
masked a very important development, which was the decision by the
Justice Department to withdraw from its five-year criminal investigation
of the tobacco industry after countless millions of dollars had been
spent fruitlessly in that review. There were no indictments handed down
against a tobacco company after a five-year detailed criminal
investigation. And the announcement that they were pulling out of that
investigation actually occurred on the same day as they launched the
federal lawsuit. So I think I can confirm that we have every intention
of fighting that lawsuit, and will succeed in doing so.

    MR. LIPMAN: Many people expect the tobacco industry will have to
post bond on punitive damages in the Engle (ph) case, a sum that could
total billions of dollars. How will the companies deal with that?

    MR. BROOKES: Well, again, I suspect the person who asked that
question was aware, or may have been aware, that there is a gag order
that has been issued by the judge prohibiting either party, either
plaintiffs or the defendants from discussing that trial openly in
public. So I am afraid I really won't be able to give a direct response
to that question.

But there have been many analysts who -- stockholder -- stock analysts
who have reviewed this issue, and have published papers on it, and I
would recommend that the questioner actually look at those analysts'
reports, because they broadly are fairly sanguine about the outcome of
the lawsuit and the issue of damages.

    MR. LIPMAN: Well, generally speaking -- not talking about the Engle
(ph) case or any specific case -- how has of the various settlements and
lawsuits affected the bottom line of Brown & Williamson and the other
tobacco companies? The bottom line.

    MR. BROOKES: The bottom line?

    MR. LIPMAN: Yes.

    MR. BROOKES: Well, certainly the settlement of the master settlement
agreement with states attorneys general had a very significant impact on
the bottom line of Brown & Williamson -- actually turned it red in 1998.
But -- and it will continue to do so. We are now having to put a premium
on all of our products to pay the states attorneys general our share of
the $250 billion over 25 years. That forces the prices of our products
up above the price that can be offered by imports, and imports are now
flooding into this marketplace and taking away share from the domestic
manufacturers. So that I think is going to be seen longer term as a bad
thing generally, because importers are not necessarily signed up to the
master settlement agreement, and therefore probably are not required to
make payments to the states attorneys general, and that links to the
general reduction in consumption of cigarettes in the marketplace as a
result of the steep price increases we have seen -- 14 percent reduction
I believe over the base line for 1998 -- has meant that the payments
that we will be making to the states attorneys general has gone down by
the same amount. That's something that concerns them obviously. It
concerns us because we are seeing our market taken by imports. And it's
an issue that we really need to sit down with the attorneys general,
understand and try to deal with.

    MR. LIPMAN: Is there anything that the industry can do to stop the
stream of lawsuits? And is there any consideration by the industry in
again seeking federal legislation to basically put an end to these
lawsuits?

    MR. BROOKES: Well, I think we gave that a fairly good old college
try for the June 20th, 1997 agreement. I think we probably were
massively naive in hoping that we could have that very -- that agreement
legislated. We just really I think underestimated just how hot a
political issue it would be once it hit Congress, particularly when the
administration, having constantly said that they were going to be
supportive of this deal, walked away from it as soon as it was
announced. So I think it was doomed to failure. And I fear, frankly,
that we probably have lost heart for that process for the future. So I
think we will struggle on. We are consistently winning decisions in the
courts of appeals, the federal courts of appeal. The Supreme Court's
decision was very helpful not to review those cases from the trades
union trust funds. And we consistently win decertifications in federal
court of class actions. So I frankly am reasonably optimistic longer
term that these lawsuits will recede. It just seems like a massive
undertaking right now. But they have traditionally -- there have
traditionally been waves of litigation against the industry when some
new political event has occurred which encourages plaintiffs' lawyers to
renew their fight against us. And this is a very big wave. But I don't
think it's -- I think it will recede like all previous waves. And we are
anticipating that by opening ourselves up to our critics, to invite them
in to see if we can't find solutions outside the courts to resolve these
very important public health issues that remain.

    MR. LIPMAN: If Brown & Williamson and other tobacco companies are
interested in really turning a new page, why not agree to all of the
provisions that were in the June 20th agreement voluntarily?

(Alarm sounds.) We'll wait and see if that -- go ahead and answer -- we
will see if that is a real alarm or just a test. Generally they are
tests.

    MR. BROOKES: Okay, very good. Okay. Well, the June 20th agreement
was an agreement. There was consideration on both sides for a collective
result which as I said went much further than anyone at the time thought
was possible in the public health community. But it was necessarily an
agreement -- a meeting of both sides to try to resolve these difficult
problems. And the consideration for the concessions that we were willing
to make, obviously as you've said earlier, was the elimination of the
lawsuits against us -- in particular the class actions and the exposure
that we have to punitive damages. That has gone away. There is no
likelihood of that ever being brought back I think before Congress. So
without that consideration, frankly we can't make the concessions that
we were willing to make in June. (Federal News Service January 11, 2000)



URBACK: Commercial Drivers Lose Challenge to NY Tax on Thruway Fuel-Use
-----------------------------------------------------------------------
Owner-Operator Independent Drivers Assoiation V. Urbach

A proposed class action challenged the constitutionality of New York Tax
Law @ 523, which requires the collection of a tax on fuel use on
commercial vehicles based on miles driven on the State Thruway.
Plaintiff, an independent truckers organization, argued that the
fuel-use tax violated the Commerce Clause of the U.S. Constitution. It
maintained that the collection of the tax was not fairly related to any
services provided by the State in connection with interstate travel over
the thruway, as the tax collected was not used for the maintenance or
operation of the thruway. Therefore, the tax was an undue burden on
interstate commerce. The court ruled that the tax was constitutional, as
plaintiff could not meet the threshold of demonstrating that two groups
were treated differently and as the tax was fairly related to additional
services provided by the State.

IA PART 55

Justice J. Solomon

OWNER-OPERATOR INDEPENDENT DRIVERS ASSOCIATION v. URBACH QDS:22701801 -
This proposed class action challenges the constitutionality of New York
Tax Law @ 523, which requires the collection of a tax on fuel use on
commercial vehicles based on their miles driven on the Governor Thomas
E. Dewey Thruway, also known as the New York State Thruway ("Thruway").
Defendant Michael H. Urbach, the former Commissioner of the New York
State Department of Taxation and Finance ("Department") moves to dismiss
the proposed class action complaint for failure to state a cause of
action (CPLR 3211[a] [71), and for lack of subject matter jurisdiction
due to plaintiffs' failure to exhaust administrative remedies (CPLR
3211[a][2]).

                          Factual Background

Plaintiff Owner-Operator Independent Drivers Association ("Association")
is a business association of persons and entities who own and operate
motor carrier equipment. The Association, which was founded in 1973 and
has over 40,000 members, is a not-for-profit corporation which is
incorporated and has its principal place of business in the State of
Missouri. The individual plaintiffs, Raymond L. Kasicki and Harry
Kijowski, reside in Ohio and New York, respectively. Both of them
operate tractor trailers on highways of the State of New York.

The challenged statute was enacted by the Laws of 1994, Chapter 170, @
8, effective January 1, 1996. The statute provides a tax on fuel use
"for the privilege of operating any qualified motor vehicle upon the
public highways of this state." Tax Law @ 523(a). The fuel use tax
("FUT") applies to vehicles engaged in either intrastate or interstate
commerce. The FUT is only collected on fuel consumed while driving on
the public highways in New York. The operator of a motor carrier
purchasing fuel within the State is entitled to a credit or refund for
the tax paid for such fuel at the pump when the fuel is consumed outside
the State. Tax Law @ 524. The operator of a motor carrier which
purchases fuel outside the State but consumes the fuel within the State
is required to pay the FUT to New York.

                           Discussion

Since defendant moved to dismiss prior to answering, all of plaintiffs'
allegations are presumed to be true. Weinbaum v. Cuomo, 219 AD2d 554
(1st Dept 1995), appeal dismissed 87 NY2d 917 (1996).

Plaintiffs assert that New York's FUT violates article I, section 8,
clause 3 of the United States Constitution (the "Commerce Clause"),
which is referred to as the negative or dormant Commerce Clause. The
basis for this argument is that plaintiffs have paid fuel use taxes of
30 cents per gallon n1 of fuel consumed while traveling the Thruway, and
have paid tolls to the Thruway Authority - an independent agency that
receives no funds from the State for the construction, maintenance or
operation of the Thruway - for their use of the Thruway. Plaintiffs'
position is that the tolls collected pay for all material services
provided to commercial vehicles operating on the Thruway. n2 Plaintiffs
maintain that the Department's collection of FUT on account of miles
driven by commercial vehicles on the Thruway is not fairly related to
any services provided by the State of New York in connection with
interstate travel over the Thruway, since the FUT collected is not used
for the maintenance or operation of the Thruway. Therefore, plaintiffs
assert, the collection of FUT on the basis of miles driven by commercial
vehicles on the Thruway is an undue burden on interstate commerce.

n1 While defendant asserts that the FUT is actually 16 cents per gallon,
and that plaintiffs, have actually included a Petroleum Business Tax in
their calculation (Affirmation of Patricia L. Brumbaugh, PP 16, 19), the
amount of the FUT is not a material factual issue.

n2 Plaintiffs' assertion is based on the 1997 Annual Report of the
Thruway Authority, which states that the Authority is "self-supporting
from tolls and other sources" and that "the Authority is solely
responsible for its finances." New York State Thruway Authority 1997
Annual Report, at 16, 28.

"The negative, or dormant [Commerce] Clause invalidates only State
measures which 'unjustifiably * * * discriminate against or burden the
interstate flow of articles of commerce.'" Tamagni v. Tax Appeals
Tribunal of State of New York, 91 NY2d 530, 539, cert denied _US_, 119 S
Ct 340 (1998), quoting Oregon Waste Sys. v. Department of Envtl. Quality
of State of Oregon, 511 US 93, 98 (1994). As the Court of Appeals stated
in Tamagni, a court's first step in analyzing any law subject to
scrutiny under the negative Commerce Clause 'is to determine whether it
'regulates evenhandedly with only "incidental", effects on interstate
commerce, or discriminates against interstate commerce' * * As we use
the term here, 'discrimination' simply means differential treatment of
in-state and out-of-state economic interests that benefits the former
and burdens the latter" (id., at 99, quoting Hughes v. Oklahoma, supra,
441 US, at 336). If there is no differential treatment of identifiable,
similarly situated in-State and out-of-State interests, there is no
dormant Commerce Clause violation.

Tamagni v. Tax Appeals Tribunal of State, supra, 91 NY2d, at 539. Put
another way, "the first step in the dormant Commerce Clause inquiry * *
* is to identify the interstate market that is being subjected to
discriminatory or unduly burdensome taxation." Id. at 540.

The tax at issue here does not operate to the disadvantage of any
identifiable interstate market. The tax applies in exactly the same
manner with respect to intrastate and interstate users of New York's
roadways. Both interstate and intrastate drivers are taxed based on
in-state fuel usage and solely on such in-state usage; there is no
differential treatment of intrastate and interstate commercial
interests. Additionally, fuel usage on the Thruway is not treated
differently than fuel usage on any other New York State roadway.
Accordingly, plaintiffs cannot meet the threshold of demonstrating that
two groups have been treated differently so as to improperly burden
interstate commerce.

Even assuming, arquendo, that plaintiffs had met this threshold inquiry,
plaintiffs' claim fails under Complete Auto Transit, Inc. v. Brady, 430
US 274, rehg denied 430 US 976 (1977) ("Complete Auto"). In Complete
Auto, supra, the Supreme Court set forth the test to determine whether a
particular tax violates the Commerce Clause. The Court explained that a
tax will be sustained against a Commerce Clause challenge if the tax "is
applied to an activity with a substantial nexus with the taxing State,
is fairly apportioned, does not discriminate against interstate
commerce, and is fairly related to the services provided by the State."
Id. at 279. Here, plaintiffs' challenge to Tax Law @ 523 fails under the
fourth prong of the Complete Auto standard, since the tax is "fairly
related to the services provided by the State."

The "fair relation" prong of the Complete Auto test, requires no
detailed accounting of the services provided to the taxpayer on account
of the activity being taxed, nor, indeed, is a State limited to
offsetting the public costs created by the taxed activity. If the event
is taxable, the proceeds of the tax may ordinarily be used for purposes
unrelated to the taxable event. Interstate commerce may thus be made to
pay its fair share of state expenses and " 'contribute to the cost of
providing all governmental services, including those services from which
it arguably receives no direct "benefit'".

Oklahoma Tax Commn. v. Jefferson Lines, Inc., 514 US 175, 199 - 200,
rehg denied 514 US 1135 (1995), quoting Goldberg v. Sweet, 488 US 252,
267 (1989) (emphasis in original). In Oklahoma Tax Commn. v. Jefferson
Lines, Inc., supra, the Court upheld a tax on interstate bus ticket
sales, illustrating that the bus terminal may not catch fire during the
sale, and no robbery there may be foiled while the buyer is getting his
ticket, but police and fire protection, along with the usual and usually
forgotten advantages conferred by a State's maintenance of a civilized
society, are justifications enough for the imposition of a tax.

Oklahoma Tax Commn v. Jefferson Lines, Inc., supra, 514 US, at 200. Here
too, plaintiffs may never need the services of the fire or police
departments, but these services are available if needed. See, New York
State Thruway Authority v. Dufel, 129 AD2d 44, 47 (3d Dept 1987)
(discussing the joint efforts of the State and Thruway Authority to
address emergencies relating to operation of the Thruway and its
commercial traffic following collapse of Thruway bridge); see also,
Brooks v. Forsythe, 189 AD2d 26 (3d Dept 1993); Hutley v. N.Y.S. Thruway
Authority, 139 Misc 2d 868 (Ct Cl 1988). At a minimum, though,
plaintiffs have no doubt used local and access roads, which are not
funded by the Thruway Authority. n3 Even assuming plaintiffs' claim is
true - i.e., that the full cost of the Thruway is covered by the tolls
imposed - the State provides other services that may be paid for through
the FUT.

n3 This court rejects plaintiffs' assertion that whether commercial
vehicles derive any benefit from local police, fire and ambulance
services, and local roads and access roads not funded by the Thruway,
raises a factual issue that cannot be considered on a motion to dismiss.
Plaintiffs' Memorandum of Law in opposition, at 17.

Moreover, plaintiffs acknowledge that "there is almost a perfect
correlation between the use of the road and the amount of the tax paid.
Plaintiffs' Memorandum of Law in Opp., at 15. "When the measure of a tax
is reasonably related to the taxpayer's activities or presence in the
State-from which it derives some benefit * * * the taxpayer will
realize, in proper proportion to the taxes it pays, * * * [the benefit]
of living in an organized society, established and safeguarded by the
devotion of taxes to public purposes.'" Commonwealth Edison Co. v.
Montana, 453 US 609, (1981), quoting Carmichael v. Southern Coal & Coke
Co., 301 US 495, 522 (1937). Therefore, to the extent that this Court
need reach the Complete Auto test, defendant has met its burden of
showing that the FUT imposed on the use of the Thruway is fairly related
to the services provided by the State. See, D. H. Holmes Co. v.
McNamara, 486 US 24, 32 (1988) (provision of police and fire protection,
together with other civic services, satisfied Complete Auto test).
Plaintiffs derive a substantial benefit from the State for the use of
its highway system; the tolls paid for the use of the Thruway do not
cover these additional benefits and expenses to the State. Since the FUT
is fairly related to these additional benefits and services, it survives
plaintiffs' constitutional challenge.

In view of the foregoing, this Court need not address the issue oil
exhaustion of administrative remedies with respect to a refund of the
taxes paid.

The procedural posture of defendant's motion is a motion to dismiss the
complaint. Plaintiffs assert that at this stage of the proceeding, on a
motion to dismiss, the only issue before the Court is whether the Court
has jurisdiction of the matter and not whether or not the plaintiffs are
entitled to a favorable declaratory judgment. Plaintiffs' Memorandum in
Opposition, at 5, n. 4. To the contrary, if no issue of fact is raised
by the pleadings, or if the facts are conceded, a proper case is
presented for judgment on the merits on defendant's motion to dismiss
the complaint. Law Research Service, Inc. v. Honeywell, Inc., 31 AD2d
900, 901 (1st Dept 1969). The proper relief here is a declaration in
defendants' favor. See, Friedman v. Board of Educ. of East Ramapo Cent.
School Dist., 259 AD2d 461 (2d Dept 1999).

Accordingly, it is Ordered that defendant's motion to dismiss is
granted; and it is further Adjudged and Declared that Tax Law @ 523 does
not violate the Commerce Clause. This constitutes the decision, order
and judgment of the court.  (New York Law Journal, November 23, 1999)


* 99' Jury Awards Totaled Nearly $9 Billion
-------------------------------------------
The 10 largest jury awards to individuals and families last year totaled
nearly $9 billion nearly three times the amount from a year earlier,
according to a legal publication. Last year's total was $8.9 billion. In
1998, it was $2.8 billion and in 1997 the top 10 jury awards amounted to
$750 million.

All 10 of the 1999 awards topped $100 million, and two were more than $1
billion. The list included only awards to individuals and families and
did not include class action lawsuits or litigation between
corporations, according to Lawyers Weekly USA, which has compiled the
list since 1989.

''Something totally unparalleled in history is going on in our legal
system,'' publisher Thomas Harrison said this week. ''Jurors are
suddenly feeling empowered not just to compensate injured people but to
change the face of corporate America.''

The biggest verdict on the 1999 list was awarded by a Los Angeles jury
to a group of six people burned when their 1979 Chevy Malibu was
rear-ended by a drunken driver and exploded into flames. General Motors
Corp. was ordered to pay $4.9 billion, an amount later slashed to $1.1
billion by a judge.

But even though large awards are frequently changed, the figures show
juries are sending corporations a message about the price of being
negligent, said Carlton Carl, spokesman for the Attorney Trial Lawyers
Association.

''I think it sends a message to the corporations involved that you can't
do that,'' he said. ''You can't sacrifice people's lives for a few extra
bucks of profit.'' Others said they found the results reflect a
disturbing trend. ''It's a sign that the litigation explosion is not
only continuing but expanding exponentially,'' said Robert Pambianco,
chief of policy for the Washington Legal Foundation, a watchdog group
that supports tort reform. ''It's just further evidence that suing
someone has become the preferred means of solving disputes.''

Pambianco said too often huge verdicts have little to do with the facts
of the case and more to do with jurors' emotions. ''The jury verdicts
are in many cases increasingly disconnected from reality and often based
on things and arguments that really don't have much to do with the
case,'' he said.

Also included in the 1999 list was a $1.2 billion award to the family of
32-year-old Jennifer Cowart, who suffered burns on 93 percent of her
body and later died from a go-cart accident at a Pensacola, Fla.,
amusement park. Evidence presented in the trial indicated Johnson Kart
Manufacturing Co. of Milwaukee had placed a defective gas cap on the
vehicle's engine.

In July, a Philadelphia jury ordered Ira Einhorn to pay $907 million to
the family of his live-in girlfriend, Holly Maddux, a Philadelphia woman
murdered in 1977. A lawyer for the family said the point was not
necessarily to recover the money, but to prevent Einhorn who was
convicted in absentia of the murder and is fighting extradition in
France from profiting from any book or movie deals about the case. (AP
Online January 11, 2000)


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S U B S C R I P T I O N  I N F O R M A T I O N

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