CAR_Public/000114.MBX                C L A S S   A C T I O N   R E P O R T E R

                Friday, January 14, 2000, Vol. 2, No. 10

                                 Headlines

BOARD OF ED.: Parent at Brockton, MA Sues over Education Reform Failure
BOHARIC: IL Judge Overturns State Law on Fees From Telephone Cos
CERIDIAN CORP: Savett Frutkin and Milberg Announce MN Securities Suit
DEBT COLLECTORS: 7th Cir Again Looses Ire at Abuse Of Class Actions
FARMERS INSURANCE: Contractor Rejects Offer For (Bleep)-Load Of Money

HELMS, U.S.: High Court Hears Arguments On School Internet Access
HOLOCAUST VICTIMS: Poland to Fight Proposed Limits on Comp for Seizures
INMATES LITIGATION: Judge Tells NYC to Assure Schooling in Rikers Jail
MCINTOSH SAWMILL: Logging Co’s Sawmill Is Illegal, Georgia Ct Rules
MERIT ENERGY: Canadian Ct Denies Class Status for Shareholders’ Suit

PAYDAY LENDERS: Edelman, Combs Sues 3 IL and 1 in High-Interest Lenders
RACIAL PROFILING: Ct Limits AZ Suit Re Hispanic Looking Drivers
TOBACCO LITIGATION: Big Tobacco Reads The Smoke Signal for Going Online
TOBACCO LITIGATION: FL Governor Bush Wants Upfront Cash from Settlement
WAR VICTIMS: Senator Wants Japan to Compensate for U.S. Victims Of War

WAR VICTIMS: Sp Ct in Japan Rejects Claims by Korean Conscripts in WWII

* NJLJ Says Lawyers Lack Guidance on the Dishonesty of Overbilling

                            ********

BOARD OF ED.: Parent at Brockton, MA Sues over Education Reform Failure
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Petite and ponytailed, Julie Hancock is an energetic 11-year-old who
plays softball, is a cheerleader, and is learning to play the French
horn. While it seems the popular and bright sixth-grader at Hancock
Community School represents all that is right with education, she is
going to be the lead plaintiff in a lawsuit that will try to show the
courts all that is wrong. "I want to help Brockton get the money we
really need for books and smaller classrooms," said Hancock, on being
the new torchbearer for better education. "I want to make sure we make
it through, even though we don't have as much money as richer towns."

Seven years after a landmark ruling poured billions of dollars into
schools across Massachusetts, Hancock and her father, Maurice, are
joining a dozen other plaintiffs who say education reform has not yet
worked. In reopening the McDuffy case, named for then-sixth-grader Jami
McDuffy, they join a fierce debate over whether education reform has
truly done enough to close the gap between less affluent districts such
as Brockton and top performers such as Harvard, Newton, and Wellesley.

Critics of the case believe the plaintiffs will have a hard time
convincing a judge that the billions spent on education reform have not
improved even the most challenged districts. "Since the last case, the
Commonwealth has spent $6 billion in new money, and it's hard to
understand how that hasn't been considered living up to their
obligation," said State Education Commissioner David P. Driscoll. "Other
than that, we'll have to see how it plays out; what the issues are in
respect to education adequacy and quality."

But most of the McDuffy plaintiffs feel the state has not done enough to
ensure their school districts are fairly funded, adequately equipped,
and properly staffed to be competitive on the MCAS exam. "These are
children from different towns saying, 'We're not getting the education
the Commonwealth ought to be providing,' " said Michael Weisman,
attorney for the students and their parents. "It has become clear that
the Education Reform Act is not accomplishing what has to be
accomplished; schools are still overcrowded, teachers are not adequately
trained, and the MCAS results are abysmal. The buck stops with the
state."

And with the education reform funding formula set to expire this year,
districts such as Brockton and Lowell fear their schools will be left
financially wanting if their voices are drowned out by wealthier
districts with more political clout in the Legislature.

"I will keep fighting to improve our schools. If the threat of court
action can help in that fight, then this legal challenge can play a
constructive role in improving the quality of education in the
Commonwealth," said Senate President Thomas F. Birmingham.

Led by Weisman, the plaintiffs filed a "motion for further relief" with
the Supreme Judicial Court on Dec. 22. So far four communities have
signed on to the suit, with at least a dozen more expected to join. The
case will be renamed "Hancock v. the Board of Education" and several
students are expected to testify.

The case, however, begins with Julie Hancock, as it did nearly nine
years ago with freckle-faced Jami McDuffy. Jami's father, Scott, was a
member of the Brockton School Committee; Maurice Hancock now sits on the
committee. Both fathers are employed by the Brockton Fire Department and
they are good friends.

As Maurice Hancock walked through the Hancock School (no relation) one
day last week, he pointed to the gym converted to an art class and
storage area, and poked his head into a storage room turned into offices
and a conference area. Although average class size is about 25 now, down
from a high of nearly 60 in one class in the early 1990s, more needs to
be done in his district, Hancock said.

"We were down so low before education reform, it took us much longer to
build up and get new materials and hire enough teachers just to keep our
heads above water," he said. "So now, even though billions have been
spent on education reform, districts like ours - with diverse
populations and low real estate values - still don't have the chance to
compete with the Lincolns of the world. And we think the suit is an
appropriate way to make the state do the right thing to make our
districts better."

In 1993, a judge ruled in favor of the McDuffy plaintiffs, saying the
state owed cities and towns more of a moral and financial commitment to
bring depressed school districts, such as Lowell, in line with stellar
performers such as Lexington.

Two months after the verdict, the Education Reform Act was signed into
law and many credit the McDuffy case as a key catalyst.

Now, seven years later, Jami McDuffy hopes the case not only wins again
but has an even more substantial impact. A sophomore at Stone hill
College, McDuffy, 19, wants to be a teacher in her hometown, where she
learned so many lessons about education, politics, the challenges of
being in class with 57 students, and, most importantly, how to be a
symbol of change.

"I was proud of what I stood for," she said. "I was in the sixth grade
and all these television cameras were following me around. I would say
things like, 'I just hope my books don't fall apart anymore. . .' I
think my teachers did a reasonably good job with the supplies and
circumstances they were in, and I guess it left an impression on me."

McDuffy said she hopes that by the time she becomes a teacher, education
will be more equalized - as promised - and no other 11-year-old will
have to be the flag-bearer for fairness.

"I'm just hoping that all the promises that were made to equalize
opportunities will be met some day," she said. "I know we're still not
up there with the Westwoods of the state, but I know improvements have
happened, and I hope it continues to increase." (The Boston Globe
January 13, 2000)


BOHARIC: IL Judge Overturns State Law on Fees From Telephone Cos
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The ruling on January 11 by Circuit Judge Robert V. Boharic could leave
Mayor Richard M. Daley's budget $ 44 million short. City and state
officials said they would appeal directly to the Illinois Supreme Court.

The 1998 Telecommunications Municipal Infrastructure Maintenance Fee Act
lets Chicago impose a 2 percent fee on wireless and landline telephone
companies for putting equipment on streets, alleys and other public
rights of way. Other towns can impose a 1 percent fee. The law requires
that the fees be passed on to consumers.

The law was challenged by PrimeCo Communications. Boharic ruled it
should be exempt since wireless companies have no equipment on public
rights of way. He went on to find the law unconstitutional.

PrimeCo attorney Caesar Tabet said cities would have to stop imposing
the fee immediately, but city and state officials said they expected to
keep charging the fee until the high court decides the case. (Chicago
Daily Law Bulletin January 12, 2000)


CERIDIAN CORP: Savett Frutkin and Milberg Announce MN Securities Suit
---------------------------------------------------------------------
The following was released on January 13 by Savett Frutkin Podell &
Ryan, P.C. and Milberg Weiss Bershad Hynes & Lerach:

SUMMARY NOTICE OF CLASS ACTION, CONDITIONAL CLASS CERTIFICATION,
SETTLEMENT AND FAIRNESS HEARING

TO: ALL PURCHASERS OF CERIDIAN CORPORATION ("CERIDIAN") COMMON STOCK
DURING THE PERIOD JANUARY 23, 1996 THROUGH AUGUST 26, 1997, INCLUSIVE.

This Notice is given pursuant to Rule 23 of the Federal Rules of Civil
Procedure and the January 3, 2000 Order of the United States District
Court for the District of Minnesota, Third Division. The purpose of this
Notice is to inform you that the action brought in the Court as a class
action on behalf of the purchasers of Ceridian common stock during the
period January 23, 1996 through August 26, 1997, inclusive, has
concluded in a proposed settlement of $ 5,175,000, before any award of
attorneys fees and costs. The action alleged violations of the federal
securities laws and Minnesota law. If you purchased the common stock of
Ceridian during the period January 23, 1996 through August 26, 1997,
inclusive, you may be eligible to share in the settlement, and your
rights will be affected by the proposed settlement.

On January 13, 2000, a Notice, including a Proof of Claim and Release,
was mailed to potential class members. That Notice contains important
information regarding the rights of class members and a form that must
be completed to share in the settlement. If you believe you are a member
of the class as defined above, and if you have not received a copy of
the Notice by mail, you may request a copy free of charge by mailing
your request to: Claims Administrator, Ceridian Securities Litigation,
P.O. Box 2370, Minneapolis, MN 55402-0370.

PROOF OF CLAIM AND RELEASE FORMS MUST BE FILED BY CLASS MEMBERS BY JUNE
26, 2000.

Lead counsel for the Plaintiff Class in this matter are Savett Frutkin
Podell & Ryan, P.C., 325 Chestnut Street, Suite 700, Philadelphia, PA
19106 (215) 923-5400 and Milberg Weiss Bershad Hynes & Lerach, 100 Pine
Street, Suite 2600, San Francisco, CA 941l1 (415) 288-4545.

A HEARING ON THE FAIRNESS OF THE SETTLEMENT AND CLASS COUNSELS' REQUEST
FOR THE ATTORNEYS FEE AND EXPENSES WILL BE HELD ON MARCH 21, 2000 AT THE
UNITED STATES COURTHOUSE IN MINNEAPOLIS, MN.

For more information, please contact the Claims Administrator, in
writing, at the address listed above.

DO NOT TELEPHONE THE CLERK OF COURT REGARDING THIS NOTICE

Dated: January, 13, 2000 BY THE ORDER OF THE COURT UNITED STATES
DISTRICT COURT DISTRICT OF MINNESOTA

CONTACT: Claims Administrator, Ceridian Securities Litigation, P.O. Box
2370, Minneapolis, MN 55402-0370


DEBT COLLECTORS: 7th Cir Again Looses Ire at Abuse Of Class Actions
-------------------------------------------------------------------
Displaying impatience with the all-too-common abuse of the class
action," a federal appeals court panel has blasted three debtors who
sued a company that stuffs envelopes for a collection agency.

In an opinion released January 11, a panel of the 7th U.S. Circuit Court
of Appeals said the debtors should have been sanctioned for what amounts
to malicious prosecution." The panel said the debtors should not have
included the envelope-stuffing company or a shareholder of the
collection agency as defendants in a lawsuit alleging violations of the
Fair Debt Collection Practices Act, 15 U.S.C. sec1692.

The joinder of these defendants illustrates the all-too-common abuse of
the class action as a device for forcing the settlement of meritless
claims and is thus a mirror image of the abusive tactics of debt
collectors at which the statute is aimed," Chief Judge Richard A. Posner
wrote for the panel.

Joining in the opinion were Judges Daniel A. Manion and Ilana Diamond
Rovner. Patricia White, et al. v. Jerome Goodman, et al., Nos. 98-4180,
98-4328 and 98-4329.

Plaintiff Patricia White was represented before the 7th Circuit by
Daniel A. Edelman, while the other two plaintiffs were represented by
Cathleen M. Combs. Edelman and Combs are name partners in Edelman, Combs
& Latturner, a Chicago firm that represents consumers in class-action
suits.

The White opinion was issued a week after Posner and Rovner in an
unrelated case took aim at what they apparently considered to be an
example of the misuse of the class-action method of litigation. In the
earlier case, Posner and Rovner joined Judge Frank H. Easterbrook in
tossing out a settlement reached in a class-action suit accusing Equifax
Check Services Inc. of violating the Fair Debt Collection Practices Act.

In an opinion written by Easterbrook, the panel said the settlement
would have benefited the plaintiffs' attorney and the class
representative at the expense of the class members. Lawrence Crawford v.
Equifax Payment Services Inc., et al., Nos. 99-1973 and 99-2122.

In the opinion in the White case, the 7th Circuit panel affirmed a
decision by U.S. District Judge James B. Moran to dismiss two suits that
had been brought against North Shore Agency Inc. One of those suits had
been filed by White after she received a letter from the collection
agency demanding payment of the princely sum of $ 18.45" to
Book-of-the-Month Club, the panel said.

The panel said other defendants named in White's class-action suit were
Book-of-the-Month Club, the company that stuffs and mails envelopes for
North Shore and a North Shore shareholder named Jerome Goodman. The
panel said Book-of-the-Month Club has an arrangement with North Shore in
which the agency attempts to collect debts from customers who have not
paid for their books.

The panel said North Shore probably sues some delinquent customers on
behalf of Book-of-the-Month Club just so that the club does not get a
reputation as being a particularly easy mark for people who like to get
their books free." But because debts to the club are small, the panel
said, North Shore's collection efforts apparently are limited in most
situations to sending a series of dunning letters to the customer. The
panel said White's suit was consolidated with a similar -- but more
limited -- action that had been brought against North Shore by two other
debtors.

The panel made it clear it believed that Goodman and the
envelope-stuffing company should not have been included as defendants in
the consolidated case. So far as the joinder of defendants other than
North Shore and Book-of-the-Month Club is concerned, the suits are
frivolous and the plaintiffs, represented by an experienced practitioner
in consumer finance litigation, should have been sanctioned for what
amounts to malicious prosecution," the panel said. The Fair Debt
Collection Practices Act is not aimed at the shareholders of debt
collectors operating in the corporate form unless some basis is shown
for piercing the corporate veil, which was not attempted here, Aubert v.
American General Finance Inc., 137 F.3d 976, 979-80 (7th Cir. 1998), or
at companies that perform ministerial duties for debt collectors, such
as stuffing and printing the debt collector's letters." On the merits of
the plaintiffs' claims, the panel rejected the allegation that North
Shore was guilty of flat-rating."

Flat-rating is the practice of providing a form that creates the false
impression that someone besides the creditor is participating" in
collecting a debt, the panel said. The panel said the practice's name
stems from the fact that the form's provider presumably charges a flat
rate for the form.

Flat-rating is prohibited by the Fair Debt Collection Practices Act
because of the signal, conveyed by turning over a debt for collection,
that the creditor does not intend to drop the matter," the panel said.
Congress' concern was that such deception might induce debtors to
abandon legitimate defenses," the panel said. Whether the concern was
well founded is not for us to say." The panel said the act also bars a
creditor from falsely suggesting that a third party is involved in the
collection of a debt. The panel, however, said the fact that
Book-of-the-Month Club does not initially assign a debt to North Shore
does not make the collection agency a flat-rater in violation of the
Fair Debt Collection Practices Act.

It is ironic that the named plaintiffs in a class action directed
against a debt collector should be accusing the debt collector of being
insufficiently aggressive in its efforts to collect debts owed by the
members of the class; but in any event the claim was correctly
dismissed," the panel said.

The panel also rejected the claim that consumers were deceived by a
dunning letter in which North Shore said it was required to inform
Colorado residents of certain rights they had under state law. The panel
said the debtors contended that including that information in the letter
implies that nonresidents of Colorado do not have similar rights,
whereas in fact the Fair Debt Collection Practices Act itself confers
similar rights on debtors." In other words, the reader of the paragraph
is assumed to react by saying to himself, Since I'm not a resident of
Colorado, I guess I have no right to limit further communications from
this pesky debt collector,' " the panel said. But the panel said that
scenario is fantastic conjecture." A recipient of such a letter who
lives outside Colorado would be more likely to assume that the paragraph
had nothing to do with him," according to the panel.

And the panel indicated that the Fair Debt Collection Practices Act goes
just so far to protect consumers. The Act is not violated by a dunning
letter that is susceptible of an ingenious misreading, for then every
dunning letter would violate it," the panel said. The Act protects the
unsophisticated debtor, but not the irrational one." (Chicago Daily Law
Bulletin January 12, 2000)


FARMERS INSURANCE: Contractor Rejects Offer For (Bleep)-Load Of Money
---------------------------------------------------------------------
Farmers Insurance Group agreed to pay millions to settle a whopping
judgment that has saddled Simi Valley condo owners, but the offer was
turned down by the debtor, homeowners attorneys announced on January 12.

The insurance company told ZM Corp. in mediation Jan. 7 it would
consider paying "a (bleep)-load of money" in order to settle a $7.3
million judgement, Jim Lingl, attorney for the the Le Parc Homeowners
Association, told homeowners. Only the Arcadia contractor reneged on the
deal, he said. "At the mediation session, ZM made a settlement offer
that Farmers Insurance agreed to settle," Lingl said. "Farmers was
prepared to put a lot of money on the table -- I can't say how much
because of confidences (incurred by) mediation but it was many, many
millions of dollars."

A ZM attorney said earlier he would settle the six-year dispute for more
than $5 million -- but that Farmers never offered the money. Farmers
officials said they don't discuss matters of mediation and declined to
comment.

"It was withdrawn," Glenn Campbell, a ZM attorney, said of the offer.
"They didn't pick it up, they sat on it for five days, planning our
destruction.

"Screw 'em." Lingl made his announcement to more than 100 Le Parc
homeowners clustered in semidarkness around a community swimming pool.
Robert Long, representing the Le Parc Community Association, confirmed
the offer.

During the meeting, homeowners were informed that Farmers was willing to
pay the $166-a-month assessments already paid by residents since October
toward the debt. Farmers' attorneys had won an automatic stay on further
payments pending the results of one of many appeals.

Lingl said legislation is being introduced in Sacramento that would
retroactively limit the liability of Le Parc homeowners and prevent such
an occurrence from ever happening again.

The Le Parc saga began in 1998 with an arbitration ruling that
determined the Le Parc Homeowners Association broke a contract with ZM
and slandered the contractor during earthquake repairs in 1994, thereby
ruining his business.

The dispute became a legal sinkhole after the courts ordered the special
assessment and allowed a receiver to defer months of maintenance and
utilities dues in order to pay the contractor. A class-action suit was
filed against Farmers, the former Le Parc insurance provider, last
month.

Lingl said Campbell told him that if Farmers is willing to shell out $3
million and Le Parc homeowners another $2 million -- payable for 10
years at $68 a month -- ZM would wash its hands of the affair. But the
offer does not allow residents time to notify a public meeting and vote,
Lingle said. (Ventura County Star (Ventura County, Ca.) January 13,
2000)


HELMS, U.S.: High Court Hears Arguments On School Internet Access
-----------------------------------------------------------------
The Clinton administration's plan to spend $ 800 million to provide
Internet connections in all public and parochial schools may be affected
by the Supreme Court's determination as to whether a school computer can
remain religiously neutral. The court heard arguments in the case Dec. 1
(Mitchell v. Helms, U.S., No. 98-1648, argued 12/1/99).

At issue in Mitchell v. Helms is the Elementary and Secondary Education
Act of 1965 that gives public school districts federal money for special
services and instructional equipment and requires that the funds be
shared with all private schools in the district.

The controversial aspect of the law has grown due to the Clinton
administration's proposal to link all classrooms, including those in
parochial schools, to the Internet in order to enhance the quality of
education and teach children the skills needed to survive and prosper in
an e-business world.

Private and parochial schools in Louisiana's Jefferson Parish received
books, supplies, and later computers under a federal program authorized
by the 1965 law. The case was argued one day short of the 15th
anniversary of what was originally a general lawsuit involving all
public assistance that could go to parochial schools.

But over the years the suit evolved to focus on the question of
providing computers and other equipment. Louisiana taxpayers complained
about the funds for computers going to religious schools. And last year,
the Fifth Circuit ruled that the 1965 law violated the separation
between church and state.

The Clinton Administration sided with the parochial school parents who
appealed the ruling, arguing that the high-tech assistance was a neutral
policy that did not support claims of religious indoctrination.

University of Utah Law Professor Michael McConnell, representing seven
Jefferson Parish Catholic school parents, argued that computers can be
used for strictly nonreligious purposes.

But Lee Boothby of Washington, D.C.'s Boothby &Yingst, representing Mary
Helms and Marie Schneider, parents who initially challenged the program,
said that it would be impossible to tell whether religious schools are
using government provided computers for strictly secular purposes.

Justice Stephen Breyer expressed doubt that the court could ban
computers from being given to private schools absent evidence that they
were being used for religious purposes. He added that in four years of
discovery, the attorneys for the taxpayers had not uncovered any
evidence that Jefferson Parish parochial schools had been using their
government-financed computers for religious purposes.

Court watchers said that the justices seemed to be split on the matter,
with O'Connor and Kennedy seen as swing votes. During the arguments,
Scalia appeared to be more sympathetic to allowing public funding of
Internet access, and Souter and Stevens seemed the most skeptical.

The decision will also tie into other related but separate issues such
as school vouchers. The court is expected to rule on the case by late
June. (The Internet Newsletter including legal.online, December 1999)


HOLOCAUST VICTIMS: Poland to Fight Proposed Limits on Comp for Seizures
-----------------------------------------------------------------------
Poland's government pledged on January 13 to fight a proposed
legislative amendment that could exclude tens of thousands of Polish
emigres in the United States and other countries from compensation for
property seized by the former Nazi and communist regimes.

The restriction, added to a compensation bill by a parliamentary
committee, would limit payments to Polish citizens who have lived in
Poland for five years at the time the law takes effect. Committee
members said the original bill would expose Poland to huge claims the
country count not afford to pay.

The Solidarity-led government's chief spokesman, Krzysztof Luft, said
the government would stick to its original proposal for broader
eligibility, including people ''who lost their property, went to live
abroad and have a different passport today, or their heirs.'' ''Such is
the government draft, and we still support it,'' he said. Luft was
responding in part to complaints by some members of the U.S. Congress,
who sent a letter to government and parliamentary leaders calling the
amendment ''arbitrary and discriminatory.''

The Polish daily Rzeczpospolita, in a report from Washington, said the
letter was sent by the Congressional Commission on Security and
Cooperation in Europe. Signatories included the commission's chairman,
Representative Christopher H. Smith, and Senator Frank Lautenberg, both
from New Jersey.

Foreign Ministry spokesman Pawel Dobrowolski said the government was
aware of anger over the amendment and suggested the battle is far from
over. ''This is still not a final phase. This is only a parliamentary
committee's decision,'' he said.

The parliament sent the measure to a special committee in October, where
the amendment was proposed by deputes from the Polish Peasants Party.
They got backing from some Solidarity legislators who said they feared
the original wording would leave the cash-strapped government swamped in
claims.

Because the communist regime seized farms and factories across the
country, as well as all of central Warsaw, some predict that Poland
could face as many as 170,000 claims totaling dlrs 27 billion to dlrs 32
billion. That is about equal to Poland's annual federal budget.

Government officials did not specify how they would fight the amendment,
but the Solidarity-led coalition has been forced in the past to put
pressure on rebellious Solidarity party lawmakers to get legislation
approved.

Attempts to pass similar bills have collapsed at least twice previously,
reflecting Poland's continuing difficulty in coming to terms with its
communist past despite its largely successful political and economic
reforms.

The current government-backed draft would offer 50 percent compensation
to people whose property was seized between 1939 and 1962.

The government proposes to pay compensation in bonds or return the
equivalent of half of confiscated property if it still exists and has no
new private owner. National parks and monuments would be exempt. Two
class-action suits, one in New York by 11 American Jews and one in
Chicago by four plaintiffs, have sought compensation from the Polish
government for seized property.

The Chicago case was dismissed in September, while the New York case is
still pending. (AP Worldstream January 13, 2000)


INMATES LITIGATION: Judge Tells NYC to Assure Schooling in Rikers Jail
----------------------------------------------------------------------
A federal judge has told New York City officials to devise a plan to
educate all school-age inmates held on Rikers Island. The ruling came in
a class action suit filed in 1996 by the Legal Aid Society on behalf of
inmates between the ages of 16 and 21.

The lawyers who filed the suit acknowledged that since then, the Board
of Education and the city's Department of Correction have made
improvements by adding an academy, providing more instructors and
starting a program in which teachers tutor inmates in their cells. But
they said the ruling by Judge Constance Baker Motley of United States
District Court in Manhattan shows that some inmates eligible for an
education at Rikers are still not receiving sufficient educational
services.

The plaintiffs' lawyers are especially critical of the city for what
they claim is a continuing failure to provide special-education programs
for everyone who needs them, though school officials say up to 40
percent of all education-eligible male inmates require such instruction.

Judge Motley's brief ruling, which will be followed by a formal opinion,
orders the city to submit a plan for "full and complete educational
facilities and services to all eligible Rikers Island inmates" by April
14. The plaintiffs have until June 12 to file objections to the city's
plan.

"There have been ad-hoc improvements, because this lawsuit has forced
the two agencies to finally talk to each other," said Mary Lynn Werlwas,
who represented the school-age inmates along with another Legal Aid
lawyer, Dori Lewis. "The big problem is there is still not a coherent
system for the Board of Education and the Department of Correction to
work together to provide education to the inmates."

Janice Birnbaum, an assistant corporation counsel who defended the city,
disputed Legal Aid's assertions and said the plan that Judge Motley
ordered the city to submit will detail measures that have already been
instituted to improve educational services.

"The city's position, truthfully, is that pretty much effectively right
now, the current provision of educational services on Rikers Island more
than meets the letter of the law," Ms. Birnbaum said.

She acknowledged that before the suit was filed, instruction was not
always available to inmates who were segregated from the general
population or restricted to their cells. Since the cell-study program
was started last September, she said, teachers have been reaching those
students and providing homework materials. In addition, a new academy,
Horizons, was founded in 1998 and last year had a daily attendance of
146 students in 6 of Rikers' 10 jails.

Ms. Birnbaum also strongly rejected the assertion that special education
programs are lacking, saying, "We dispute that and we don't think that's
right."

Ms. Birnbaum said that class size was rarely larger than 18 students per
teacher, far smaller than the ratio in the city's public schools. She
also lauded teachers in the jail. "I can't pretend that Rikers Island is
the garden spot of the city and teachers are flocking to Rikers Island,
but I can say that the quality of the teachers on Rikers is very high,"
she said.

Because 52 percent of Rikers' inmates leave within two weeks of entering
the jail, Legal Aid lawyers could not say how many education-eligible
inmates are not receiving instruction.

Department of Correction officials, however, said the vast majority of
those who take classes are enrolled in Horizons and three other high
school-equivalent institutions that in 1999 had an average daily
attendance of about 1,100.

When the suit was filed, Legal Aid lawyers noted there were 2,854
inmates between the ages of 16 and 21 on Rikers Island. Last year, the
average population for that age group was 1,531, 540 of them ages 16 and
17.

The average daily population of all inmates in the 10 jails that
comprise Rikers was 14,416 in 1999.

Those eligible for an education include 16- and 17-year-old inmates, who
are required by city law to attend classes full time. Educational
services must also be offered to inmates between 18 and 21 who do not
have a high school diploma.

The Legal Aid lawyers argue that, despite the improvements at Rikers,
many deficiencies remain, including fluctuating space for teaching and a
failure to provide some segregated inmates with instruction. In
addition, Gloria Ortiz, the principal of Horizons Academy, said in a
deposition related to the lawsuit that on 20 occasions during the
1998-1999 school year, inmates in wheelchairs who are housed in an
infirmary were unable to attend class because of a lack of guards to
escort them.

Richard Organisciak, superintendent of alternative adult- and
continuing-education schools and programs for city schools, said
providing continuing education for all eligible inmates is difficult in
a prison, where disturbances, the constant turnover of inmates, and
students' special needs create problems unknown in a regular school
setting. Yet school officials have worked to enhance education, he said,
while minimizing disruptions.

"We are getting better at this, given the variety of intervening factors
that make it very difficult to provide consistent educational services,"
he said. "We have evidence to show that our inmates there are getting
higher quality attention, materials and support for their educational
needs." (The New York Times January 13, 2000)


MCINTOSH SAWMILL: Logging Co’s Sawmill Is Illegal, Georgia Ct Rules
-------------------------------------------------------------------
A Superior Court judge ruled on January 11 that a Camden County logging
company cannot operate a sawmill on a piece of land it owns next to a
McIntosh County church. Superior Court Judge Paul Rose issued a summary
judgment for the plaintiffs, two dozen Meridian residents.

Meridian residents filed suit in May asserting that the county had not
enforced its own zoning laws in allowing Drury Logging Co. to operate on
land zoned forest-agriculture. The residents had also sued over a barge
constructed on the site last summer, but the barge was moved to the
Meridian dock a short distance from the church and put into service.

Lawyer Hal Wright, who represented the plaintiffs, said there is nothing
wrong with the logging operation or a sawmill but that neither could
take place at the property on Georgia 99 under the current zoning. 'The
issue was whether the county was following their own regulations,'
Wright said.

Because there had been no similar cases filed in Georgia, Wright said he
had to cite cases from other courts in other states that found a sawmill
is a manufacturing operation and not forestry, Wright said.

Stanley Drury, who owns Drury Logging, had announced plans to build a
sawmill on the site last year but later canceled those plans. Building
Inspector Jimmy Amerson said Drury had not sought a building permit
since.

Wright said the County Commission could ultimately rezone the property
to allow for industrial use, but Parkinson said he and other residents
would oppose such a change. 'I don't think McIntosh County would allow
that rezoning,' he said.

The McIntosh County Commission and the county building and zoning
inspector were named in an earlier suit filed by Meridian residents
seeking to have a barge removed from near their homes and a local
church. (The Florida Times-Union (Jacksonville, FL) January 12, 2000)


MERIT ENERGY: Canadian Ct Denies Class Status for Shareholders’ Suit
--------------------------------------------------------------------
Merit Energy Ltd. confirms that on January 7, 2000, the Court of Queen's
Bench of Alberta declared that the lawsuit filed by three former
shareholders of Belfast Petroleum Inc. seeking rescission and/or damages
from Merit in connection with Merit's acquisition of Belfast cannot
proceed as a representative, or "class" action. As a result of this
decision, the claim has been amended so that it is being brought by
certain specific plaintiffs only, and not on behalf of a "class", and
the damages being claimed have been reduced from $25.3 million to $8.8
million. The Company continues to actively defend this action.

As a further result of the above decision, an additional plaintiff has
filed a statement of claim seeking rescission and/or damages in the
amount of $1.5 million from Merit in connection with the Belfast
acquisition. This statement of claim has not been served on the Company.
Merit has also been advised that a statement of claim has been filed in
Ontario seeking rescission and/or damages from it in connection with the
issuance by it of "flow-through" common shares on August 17, 1999. This
statement of claim has not been served on the Company. In the event that
either of the above claims is served, Merit shall defend the action
vigorously.

In respect of its ongoing disposition program, Merit announces that on
January 7, 2000 it closed an asset sale for consideration of $7.9
million. Further, merit has entered into agreements to sell additional
properties for total consideration of $14.2 million. In aggregate, these
additional properties, together with the aforementioned disposition,
represent approximately 700 barrels of oil equivalent per day of
production, net to Merit. The proceeds from these asset sales will be
used to pay down indebtedness.


PAYDAY LENDERS: Edelman, Combs Sues 3 IL and 1 in High-Interest Lenders
-----------------------------------------------------------------------
The Chicago law firm of Edelman, Combs & Latturner has filed class
action lawsuits against four more high-interest "payday lenders," three
in Illinois and one in Indiana.

The Illinois lenders are:
* Illini Cash Advance
* Great American Cash Advance
* Cash For Payday Inc.

The Indiana lender is:
* ACE Cash Express, Inc.

Illini Cash Advance makes what are nominally two-week loans at 520%
interest. Great American charges 521%. Cash for Payday charges 677%. Ace
Cash Express charged 456%.

All of the complaints allege violation of the Truth In Lending Act, as
well as the making of unconscionable loans and violation of the Illinois
Consumer Fraud Act through the making of unconscionable loans without
proper disclosures. The cases are Donnelly v. Illini Cash Advance, 00 C
94, Burgin v. Great American Cash Advance, 00 C 96, and Davis v. Cash
for Payday Inc., 00 C 34, filed in the federal district court in
Chicago, and Rowings v. Ace Cash Express, Inc., IP 99-1887 C-B/S, filed
in the federal district court in Indianapolis.

Contact: Daniel A. Edelman of Edelman, Combs & Latturner, 312-739-4200,
toll-free, 800-644-4673, or fax, 312-419-0379


RACIAL PROFILING: Ct Limits AZ Suit Re Hispanic Looking Drivers
---------------------------------------------------------------
A federal appeals court sharply limited the scope of a lawsuit accusing
the Border Patrol of targeting Hispanic-looking drivers in southern
Arizona.

In an 11-0 ruling, the 9th U.S. Circuit Court of Appeals dismissed a
suit that claimed Border Patrol officers engaged in racial profiling in
eight Arizona counties, commonly stopping motorists because of their
appearance and without reason to suspect any wrongdoing.

They sought no damages, only a court order prohibiting stops of drivers
without reasonable suspicion of wrongdoing.

The court allowed two plaintiffs to seek damages on their own behalf but
said they cannot act as representatives in a class-action suit "that
would restructure the operations of the Border Patrol and that would
require ongoing judicial supervision."

The ruling did not address the allegations that Hispanics were targeted,
a practice long prohibited by federal court rulings.

The court oversees federal courts in nine Western states. A lawyer for
the drivers said he would appeal to the Supreme Court.

The ruling "means that the ability of minorities to stop these kinds of
abusive practices has diminished greatly," said attorney Armand Salese.
(Chicago Tribune December 22, 1999)


TOBACCO LITIGATION: Big Tobacco Reads The Smoke Signal for Going Online
-----------------------------------------------------------------------
Carl Mortished finds out why BAT wants more government controls on
smoking.

Why don't you sell cigarettes over the Internet? Martin Broughton, chief
executive of BAT, is brought up short by this question. The idea of
tobacco.com ought to appeal to a company that has been almost deserted
by investors. There is a silence ... "Well, watch this space," he says.
"Tell me more." "No, I shan't," he responds.

Pressed further, Broughton says that BAT has been mulling over the idea,
but his attitude remains ambivalent. Cigarettes over the Web are as much
a threat as an opportunity. Another weapon with which the Government,
doctors, lobbyists and lawyers could beat up the already bruised giant
that is BAT.

Search the Internet for the word "cigarette" and you will find plenty of
mail-order retailers, mostly American and many on Native American
reservations - RedNationTobacco.com, Big Bear Discounts.

Their gambit is a tax-free puff. And the possible spread of unregulated
offshore tobacco e-tailers to Europe and this island is something that
BAT worries about, even if the Government has yet to notice the smoke
signals.

BAT's chief has not broached the subject with ministers, but that is
scarcely surprising. New Labour's romance with business has its limits.
Drug companies, beer barons and even arms dealers all have their routes,
albeit circuitous, to Downing Street, but tobacco, it seems, is a stench
ministers cannot abide.

"They have gone deliberately confrontational. They say: we are going to
pass legislation, but we don't want to talk to you. We will talk to
everybody and anybody except you."

BAT, and the other members of the smoker's club, Imperial Tobacco and
Gallaher, have been retaliating in the courts, in particular a recent
unsuccessful challenge to the Government's early adoption of EU
advertising restrictions. They are now resigned to fighting their case
in Brussels, but what irritates Broughton more than the restrictions is
lack of access to the policymakers. He points out that the Government
has a big stake in the tobacco business and clearly he resents being
treated like a drug-dealer at the school gate.

Broughton recognises the concern about smoking among under-16s. "We
proposed putting the age up to 18 because that is what it is in most
countries. The UK is out on a limb at 16, but they won't change. They
think, because the proposal comes from the tobacco industry, there must
be some devious motive."

Could there be an element of mischief? BAT's proposed 18 limit somehow
became linked to the Government's plans to reduce the homosexual age of
consent to 16. But behind the sniping is a larger issue that Broughton
believes the Government is ducking. It has to do with civil liberties
and regulating an industry that will not go away. No one contemplates
banning tobacco and at the moment, as Broughton points out, the
Government has the best of both worlds.

"It takes the profit but does not have the responsibility of running it.
The UK Government makes more money out of tobacco in this country than
BAT does worldwide."

Tobacco is a golden goose, but the Treasury is force-feeding it. Regular
rises in tobacco duty have opened the door wide to smugglers - BAT
claims it is now 18-20 per cent of the market. And smuggling is skewing
tobacco consumption figures. "The Government says, 'See what success we
have had in driving down consumption'. But consumption is static - the
share of big tobacco is going down, while the share of the fringe
element is going up."

The cigarettes may be Benson & Hedges or Embassy or products from Serbia
or China, all sourced abroad. Step forward the Internet, an ideal
opportunity to expand this parallel market. According to BAT, it has
already started with occasional fly-by-night retailers in Gibraltar or
Spain exploiting the price differential. "Our problem with the Internet
is trying to prevent distributors from selling to minors and getting us
into trouble. The access controls are just not there. We are trying to
find ways to make sure the Internet can be used in a responsible way to
ensure no one without proper access is there."

It could be a perfect marketing solution - targeting adult smokers
directly without the expense and controversy of advertising in public.

The irony is that BAT, a keen supporter of the people's right to choose
to smoke, desperately wants the Government to exercise more control, not
less. In addition to age limits, Broughton is challenging the Government
on another taboo subject. "We don't think that kids should smoke and we
think there are other things that can be done. ID cards."

As he sees it, the anti-smoking campaigners have created a bogeyman: big
tobacco. But big tobacco, in the form of BAT, Philip Morris, Gallaher
and Imperial, is the solution, says Broughton. It is more able to
control distribution, restrict access to children, and pay the statutory
rent to big tobacco's biggest stakeholder: the Treasury.

If the Chancellor does well out of tobacco, investors have had a torrid
time. Battered by litigation fears and a stock market that has almost
abandoned all interest in food and household product manufacturers, the
stock price of BAT has halved in 12 months, making "big tobacco" Pounds
7 billion smaller. In Florida, a class action by smokers alleging injury
is wending its way through the courts. Now, in its second phase, a jury
is to consider damages and the defendants, including BAT's subsidiary,
Brown & Williamson, are challenging its right to award a lump sum,
potentially hundreds of billions of dollars.

In the circumstances, Broughton might be forgiven for looking around for
some other product to sell. But investors have told BAT to focus, not
diversify. The demerger of BAT's insurance arm is two years old and
Broughton insists that tobacco still offers growth opportunities. "Maybe
in ten years' time it will be fair to say it has gone ex-growth. In
1996, we set ourselves the objective of becoming the largest
international tobacco company within ten years."

BAT is gunning for Philip Morris, but dethroning the Marlboro Man may
take more than a bit of extra spend in the ad department. The Pounds 5
billion takeover of Rothmans in April means that BAT now sells almost
one out of every six cigarettes worldwide.

BAT used the opportunity to close down cigarette plants, reducing costs
and boosting its margin. The process could be replicated and Broughton
is keeping a watching brief on every significant tobacco manufacturer.
That includes the recent comedy of Gallaher's failed attempt to
intervene in the merger of France's Seita and Tabacalera of Spain. He
muses that the French and Spanish have now created a world-leading cigar
company. "They have not stated this as a strategy, but I could see a
second stage - why be in the cigarette business? Is it not better to be
a world leader in cigars than a fringe player in cigarettes." Would BAT
be a buyer? "We are interested in any of these opportunities," says
Broughton.

If Broughton is right, big tobacco is going to get a lot bigger before
the last smoker stubs out his cigarette, a development that may force
ministers to rethink their relations with the industry. "We don't expect
the Government to like us, but perhaps, eventually, they will come to
respect us." They may have little choice. (The Times (London) January
13, 2000)


TOBACCO LITIGATION: FL Governor Bush Wants Upfront Cash from Settlement
-----------------------------------------------------------------------
Gov. Bush needs legislative approval to sell investors half of future
tobacco revenues rather than risk receiving less money.

Like a lottery winner who wants his winnings in a lump sum today rather
than getting payments over time, Gov. Jeb Bush wants to turn some of the
future proceeds from the state's windfall tobacco settlement into
upfront cash.

Florida is expected to get $ 17.4-billion from tobacco companies during
the next 30 years as a result of a 1997 lawsuit settlement. But that
figure is just an estimate; the payments are tied to the tobacco
companies' domestic cigarette sales.

Bush is worried that major lawsuits against the tobacco companies and
declining sales could leave Florida with far less than originally
estimated.

Bush's answer? He wants to sell half of Florida's future revenues to
investors. The investors would assume the risk that the tobacco
companies would actually make payments totaling $ 8.3-billion.

In return, the governor's office estimates that the state could get $
2.4-billion in upfront cash. The state would put that money into a
special fund, invest it and earn interest. Assuming a decent rate of
return, the governor's office estimates that the $ 2.4-billion would
grow to at least the original $ 8.3-billion during the next 30 years.

Bush said that his plan was prompted by a shortfall this year. The state
learned last month that this year it will receive $ 71-million less than
expected. The state is using the tobacco money to finance health and
human service programs. Bush said his plan ensures that the income
stream for those programs is more stable.

"There is a real concern that this money won't be around," Bush said
during a news conference. "We're diversifying our risk away from the
tobacco companies."

There are reasons to worry. Some of the tobacco money is being used for
an anti-smoking campaign. If successful, the number of smokers - and
thus cigarette sales - would drop. Bush also pointed to a South Florida
class-action lawsuit against tobacco companies. A jury last year found
that the industry hid the effects of smoking and could be held liable
for smoking-related illnesses. Though damages have not yet been awarded,
the prospects of a huge judgment that could potentially bankrupt the
industry caused tobacco stocks to fall.

Bush also is concerned that the tobacco companies might be unable to
make payments if the federal government follows in the footsteps of
states, which sued the tobacco companies to recover medical costs
incurred treating poor people with smoking-related illnesses.

The governor would have to get approval for his plan from both the
Legislature and Cabinet. There, the reaction is mixed.

Comptroller Robert Milligan said that although he is willing to consider
the plan, he wants to see evidence that this year's shortfall was more
than a temporary blip. He said the state might be trading one set of
risks for another: There's no guarantee that the market will hold up and
that the $ 2.4-billion in upfront cash would earn enough interest over
time to equal the $ 8-billion in future revenue the state would be
giving up.

"I've not yet seen the logic, the rationale for this. Someone's
seat-of-the-pants assessment isn't what I would call solid rationale,"
said Milligan, a member of the Cabinet. "There certainly are some risks.
The question is, do we want someone else to assume those risks at a cost
to us, what is that cost and does it make sense?"

Lawmakers of the governor's party were willing to consider the idea but
wanted more information.

"It's a bird in hand," said Republican House Speaker John Thrasher, who
added that the Florida class-action lawsuit could "wreck the tobacco
industry."

"It's worth looking at," he said.

State Rep. Tom Feeney, an Oviedo Republican who is slated to succeed
Thrasher, agreed.

"Right now we have all of our risk in one basket - the tobacco
companies," Feeney said. "I think the governor's suggestion ... makes
sense."

But Senate Majority Leader Jack Latvala, R-Palm Harbor, said Milligan is
right to urge a cautious approach.

"We need to take a close look before we jump out on this," said Latvala.
"It needs a lot of study."

Meanwhile, Democrats were wary. Senate Democratic Leader Buddy Dyer said
he worries that lawmakers will dip into the $ 2.4-billion rather than
investing it over the long term.

"I want to be mindful that they don't get the 2-billion bucks and then
give it out in tax breaks the year before Jeb runs for re-election," he
said.

Dexter Douglass, general counsel to the late Gov. Lawton Chiles and a
chief player in the state's tobacco lawsuit, was even more critical. He
said Bush's plan might amount to a sweetheart deal for the tobacco
companies. The companies could "buy" the state's future revenues as a
way to pay the state a fraction of what they owe. The companies would
reduce their long-term liability - a move that would help them with
shareholders, Douglass said.

"It would be a good deal for whoever buys it," Douglass said. "Nobody
connected with the settlement ever seriously considered this." (St.
Petersburg Times January 13, 2000)


WAR VICTIMS: Senator Wants Japan to Compensate for U.S. Victims Of War
----------------------------------------------------------------------
On the 58th anniversary of the Japanese attack on Pearl Harbor, a
leading Republican senator stepped up demands for Japan to heal old war
wounds and compensate U.S. World War II veterans who endured war crimes
at the hands of their Japanese captors. Sen. Orrin Hatch, a Republican
from Utah, released a letter he sent to Secretary of State Madeleine
Albright demanding that the State Department press the government of
Japan to compensate survivors of the Bataan Death March in the
Philippines and slave labor in Japan.

"A 55-year-old injustice imposed on our military forces held as
prisoners of war in Japan during World War II has yet to be corrected,"
Hatch wrote. "What is also troubling is that the administration (has)
taken no action to press Japan to right the wrong." The Bataan Death
March claimed the lives of more than 10,000 American and Filipino
prisoners of war in April 1942. Survivors suffered torture and
starvation in prison camps or were forced to serve as slave laborers for
Japanese companies until the end of the war.

Hatch is chairman of the influential Senate Judiciary Committee and one
of six Republican contenders for the presidential nomination in the 2000
election. He vowed to pressure the administration of President Bill
Clinton and the government of Japan "until fair and complete justice is
achieved." "If necessary, I will schedule hearings before the Senate
Judiciary Committee," Hatch threatened in a statement released to the
media.

Hatch's move is the latest salvo in a growing effort by some World War
II veterans and sympathetic leaders in the U.S. Congress to seek justice
from Japan and heal old war wounds. Last month, Sen. Dianne Feinstein, a
California Democrat, began a new legislative push to declassify and
release all United States government documents related to Japanese war
crimes during World War II. Earlier this fall, members of the U.S. House
of Representatives and the Senate submitted bills that would make
Japanese companies subject to damage suits from victims of forced labor
and other unjust practices during World War II. The two bills, if
enacted into law, would likely lead to an increase in the number of
suits filed by former U.S. POWs against Japanese companies over forced
labor. The bills would also open the way to more suits from victims of
medical experiments by the Imperial Japanese Army's Unit 731.

As many as 17 lawsuits have already been filed in the U.S. by former
POWs against Japanese companies over their wartime forced labor on the
basis of state laws. In California, a new law allows victims of slave
labor to sue multinational corporations like Mitsubishi Corp. and Nippon
Steel Corp. for damages in state courts.

But while these veterans have a new legal approach, they do not have an
easy case. In the 1950s the U.S. government had extensive knowledge of
prison atrocities but needed Japan as an ally in Asia. Thus in 1951, it
signed the San Francisco peace treaty with Japan that appears to give
away the rights of these victims. "We cannot do anything about
(compensation) now," argued Shunji Yanai, the Japanese ambassador to the
U.S., at a news conference in November. "The U.S. Congress cannot say it
is not aware of the San Francisco treaty."

Even so, scores of former POWs, now in their 70s and 80s, have filed
class-action law suits against Japanese companies, hoping for apologies
and compensation. The veterans and their lawyers take heart from an
ongoing effort by the German government and a German industry fund to
compensate forced laborers of the Nazi era. U.S. lawyers prosecuting a
massive class-action suit on behalf of the surviving victims are very
near an agreement with Germany for several billions of dollars in
restitution. Meanwhile, the Japanese companies being sued in U.S. courts
are taking shelter under the San Francisco treaty.

Recently, however, Mitsubishi admitted that compensation and an apology
were moral issues that deserve investigation. In his letter to Albright,
Hatch hailed the German effort to make amends for the victims of the
Nazi holocaust and the U.S. government's voluntary restitution of
Japanese-Americans who were interred in camps during the war. "It is my
hope and expectation that the Japanese government will now make amends
... I am certain that the injustices these brave men suffered can be
corrected," Hatch said. (Asian Political News, December 13, 1999)


WAR VICTIMS: Sp Ct in Japan Rejects Claims by Korean Conscripts in WWII
-----------------------------------------------------------------------
The Supreme Court rejected a suit demanding that the Japanese government
apologize and pay compensation to eight Koreans, four of them deceased,
who were punished as war criminals for serving as civilian employees in
the Japanese military during World War II. The top court's First Petty
Bench, upholding a high court ruling, rejected the plaintiffs' argument
that Japan should pay compensation in accordance with society's basic
sentiments as Japan has no legislation to compensate foreigners
conscripted into its military. Presiding Judge Motoo Ono said such basic
sentiments do not exist, rejecting their demand for a total of 14
million yen. But Ono showed sympathy to the Koreans, saying, "In light
of the seriousness of the suffering the plaintiffs have gone through, we
can understand they are dissatisfied with the absence of legal
measures."

The plaintiffs were four former civilian employees conscripted into the
Imperial Japanese Army and the bereaved families of four other such
conscripts.

According to the suit, the conscripts were sent to Thailand during the
war to supervise the construction of a railway linking Thailand with
Burma, now Myanmar, by Allied prisoners of war. The Koreans were
detained by the Allies after the war as Class-B and -C war criminals.
They were later sentenced to death or given long prison terms, the suit
said. One of the conscripts was executed. "We were forcibly conscripted
by the Japanese army and detained for a long time as war criminals after
the war. But we didn't receive any compensation from Japan or South
Korea," one of the plaintiffs said in the suit.

The Tokyo District Court ruled against the plaintiffs in September 1996
and the ruling was upheld by the Tokyo High Court in July 1998. The
courts determined that only the Diet could decide whether the Japanese
government should pay compensation to Korean servicemen and employees of
Japan's wartime military. The district court ruling was the first on
Class-B or -C war criminals of Korean origin who were conscripted into
the imperial military. The high court acknowledged a need for new laws
to deal with the issue, because war criminals of Korean origin suffer
immense disadvantages compared with Japanese war criminals. Under the
1952 San Francisco Peace Treaty, Koreans who were forced to take
Japanese citizenship during Japanese colonial rule had that citizenship
revoked, making them ineligible for Japanese government war pensions.
(Asian Political News, December 27, 1999)


* NJLJ Says Lawyers Lack Guidance on the Dishonesty of Overbilling
------------------------------------------------------------------
Lawyers' fees are controlled, supposedly, by one elementary rule, RPC
1.5(a), which says they shall be reasonable. That rule is tested -- and
too often breached -- every day.

In "Blue-Chip Bilking," a recent study in the Georgetown Journal of
Legal Ethics, Lisa Lerman names 16 partners at large firms, each of whom
allegedly stole more $100,000 from clients and/or partners in the past
10 years through billing or expense fraud. The subject has many facets.

While even the most sophisticated client may fail to detect overbilling,
it is the inexperienced and uninformed who are the most likely victims.
Big business organizations and other wealthy clients negotiate lawyer
fees and expenses; they may obtain competing bids, even dictate the cost
of various services, e.g., paralegal services. Unsophisticated clients
have no fee-controlling capacity; they trust lawyers to treat them
fairly. When that trust is abused, the entire bar is tarnished.

Lawyers' fees are controlled, supposedly, by one elementary rule: They
shall be reasonable. RPC 1.5(a). That rule is tested and too often
breached -- every day.

The major influence on lawyer billing practices has been the movement of
the profession, during several decades, from one operated with a
dominant interest in service, ethics, reputation and skill to one with a
dominant interest in business, with money as the measure of success.

Many lawyers, of course, do not accept that measure, especially
small-town lawyers, small-firm lawyers, solo practitioners, prosecutors,
defense counsel, public defenders, and legal service providers -- a list
not intended to be comprehensive. Surveys show that these lawyers put
service, challenging work, congenial, supportive associates and respect,
well ahead of monetary concerns. These are the true professionals.

Boston College Law Dean Dan Coquillette recognized them in an interview
a few years ago: "When the profession begins to lose its self-respect,
it is devastating to these lawyers. It makes a tremendous difference to
them that they are professionals and not just pursuing a business. ...
When the big ethical disputes come before the ABA, it is not the
partners in the big law firms who espouse the highest principles, but
the small lawyer groups, because to them being a lawyer is very
important."

The effects of using business practices to shape the practice of law are
easily documented.

Bar associations, interested in the business-like management of law
offices and a wider understanding of the value of lawyers' services,
once adopted fee schedules to cover common transactions. The purpose:
improving income and lessening competition. Brethren who charged lower
fees were frowned upon. These schedules were abolished when it was
recognized that they violated the antitrust laws.

Separate billing of overhead costs, such as postage and telephone,
became the rule, thus adding these items to basic fees which previously
included them. Copy machines provided an easy way to keep clients
informed and impressed with copies of pleadings, briefs, correspondence,
etc. -- separately and profitably billed. One New York firm touted its
copy machines as "major profit centers."

Advertising, a marketplace, business-getting device, long shunned by
lawyers as unbecoming, was generally forbidden by ethics rules. It
became available to lawyers because the Federal Communications
Commission would not distinguish law practices and business
organizations, ruling that advertising provided an important source of
public information that could not be prohibited.

                    Imitating the Business World

Lawyers now hawk their wares everywhere. Advertising, almost always
loaded with inflated rhetoric, has been a leading force in the bar's
descent to the marketplace, where it rubs shoulders with and shares the
ethics of a business crowd that is interested almost exclusively in
getting and spending money.

Business teachings stressed the importance of tracking lawyers' time,
using hourly rates for billing purposes as a way to increase income.
Lawyers responded enthusiastically, charging hourly rates that varied
widely and still do.

Those with fee-controlling clients, such as insurance defense lawyers,
might be held to $90 per hour or less. Uncontrolled lawyers may charge
$150, frequently much more. Fees respond to competition and one's own
views of one's monetary value. Firms impose some discipline, but rates
are the province of partners reacting to competition and anticipated
profit shares.

Hourly fees generate more than rate problems. Hours charged may
represent generous estimates. Usually, hours are calculated quarterly
and rounded, more often up than down. A 10-minute telephone call is
billed as 15 minutes. Minimum times may be adopted for these calls as
well as for correspondence, regardless of actual time spent.

Law firm associates are required to produce large amounts of annual
billable hours; 2,000 hours is standard, 2,500 possible. This
requirement ensures firm profits. An associates' 2,000 hours, charged at
$75 per hour (a conservative figure), produces a very tidy,
business-like income of $150,000, likely at least double the associate's
salary.

The pressure to produce 2,000 billable hours causes predictable,
hard-to-distinguish from fraud, malpractice. Generating 2,000 billable
hours is not easy. It may require an expenditure of 3,000 actual hours,
or about 60 hours per week, if an associate works 52 weeks per year.
Associates, fearful of consequences if they fail to produce, are tempted
to pad their records. They may exaggerate time spent, for example, in
research, or include time spent on matters unrelated to their firm as
billable time. Partners themselves, as "Blue-Chip Bilking,"
demonstrates, may pad.

Paralegals now perform many tasks that lawyers once performed. Big firms
employ dozens of them. Like lawyer-associates, they represent profitable
investments. Paid perhaps an average of $15 to $20 per hour, their
services may be billed -- separately from lawyer fees -- at as much as
$90 per hour.

Business organizations charge what the traffic will bear. No law
prohibits that. The rule is caveat emptor. While that is not the rule
for lawyers, it appears to be one for those whose hourly rate techniques
are described here.

Contingent fees often fail the "reasonableness" test. New Jersey
regulates these fees, restricting them to allowable percentages on a
sliding scale. But the rule of reasonableness still applies --
theoretically. The fact is that lawyers, almost universally, charge the
maximum permitted percentage in every case. Cases with different risks
are not distinguished. An accident case involving clear liability, in
which the only issue is "How much?," costs clients as much as one
involving complex liability issues.

                          Fee Sharing

Our rules permit the confidential sharing of fees by certified attorneys
with those who refer cases to them. Referrers are not required to
contribute services and have no responsibility for the conduct of
litigation. A standard split is a lucrative one for referrers --
probably 30 percent, a finder's fee to make even business executives
blush.

Bribing public officials to get business is unlawful -- unless disguised
by another name: "campaign contributions." Business organizations have
used them effectively for generations. Lawyers have aped them,
successfully purchasing lucrative appointments and retainers with
campaign contributions. The ABA has tried to bar them as unethical, but
has been unable to convince its governing body to bite the bullet.

Rules are only as effective as their enforcement. Enforcement sometimes
depends on judges, but judges have proven to be unreliable reasonable
fee calculators.

Frequently, in class action suits, excessive portions of recoveries are
allocated to lawyers instead of damaged parties, An example is the
tobacco settlement.

Lawyers and judges lack adequate guidelines for fixing fees. Ethics
rules and judicial opinions list factors to be considered, such as time,
result, novelty, skill, and customary charges (RPC 1.5), but all of
these factors are subject to widely varying, subjective interpretations
as well as manipulation.

Fee rules could be enforced through random audits by Supreme Court
ethics committees. They have never undertaken that responsibility,
except in the relatively few cases initiated by disgruntled clients.

RPC 8.3 provides: "A lawyer having knowledge that another lawyer has
committed a violation of the Rules of Professional Conduct that raises a
substantial question as to that lawyer's honesty, trustworthiness or
fitness as a lawyer in other respects, shall inform the appropriate
professional authority."

This rule, if obeyed, could curb fraudulent and unethical billing
practices. It is honored only in the breach.

A strong current effort aims to improve the professionalism of lawyers
everywhere. Dishonesty is the opposite of professionalism. The effort
should be directed in part to the improvement of fee practices.
Education can help.

Most of all, lawyers need much more guidance than that provided by RPC
1.5. That rule needs conscientious application in actual situations so
that its correct meaning becomes clear. And courts must take much more
interest in the proper enforcement of the rule, an interest much
lacking. (The author is a retired Burlington County assignment judge and
former president of the State Bar Association whose column appears
monthly in the Law Journal.) (New Jersey Law Journal, January 3, 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

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
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Copyright 1999.  All rights reserved.  ISSN 1525-2272.

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