CAR_Public/000119.MBX                  C L A S S   A C T I O N   R E P O R T E R

                Wednesday, January 19, 2000, Vol. 2, No. 13

                                Headlines

3COM CORPORATION: California Ct Dismisses Adler's Securities Complaint
3COM CORPORATION: Company Moves to Dismiss Amended Reiver Complaint
3COM CORPORATION: Discovery Continues in 1997 Hirsch & Kravitz Suits
3COM CORPORATION: Euredjian Suit Scheudled for Trial in October 2000
3COM CORPORATION: Motion to Dismiss Gaylinn Securities Suit Sub Judice

3COM CORPORATION: Shareholder Derivative Actions Die in Delaware Court
BOARD OF ASSESSORS: Appel. Ct Oks Challenge to Tax Exemption for Temple
CALIFORNIA AMPLIFIER: Will Defend Vigorously Securities Suits in CA
CIRCUIT CITY: Arbitration Agreement Barring Class Actions Unenforceable
DOJ: Appropriations Provision Blocks Future Liability for Overtime Pay

FIRST NY STUCCO: Homeowners Sue over Defective Stucco Siding Material
FIRST UNION: PA Ct Oks Settlement & Atty. Fees for Lawsuit under FDCPA
LUCENT TECHNOLOGIES: Harvey Greenfield Files Securities Suit in NJ
LUCENT TECHNOLOGIES: Journal Tells Investors 2 Ways to Profit from Woes
MOBIL OIL: Australian Aviation Companies Sue over Fuel Contamination

MOBIL OIL: Lawsuit Will Go Ahead Despite $15 Mil Support Program
NAVIGANT CONSULTING: Pomerantz Haudek Alleges Improper Insider Trading
READ RITE: Contests Vigorously Consolidated Securities Complaint in CA
TOBACCO LITIGATION: U.S. Lawyer Says New Zealand Govt Should Sue MNCs
TOYS”R”US: ECaveat.com Looks to Resolve Complaints Re Holiday Purchases

* 5 Judges to Hear Big Cases Against New York City, Officials Propose
* Supreme Court Orders Lower Courts to Restudy Rulings Re Equal Pay

                              **********

3COM CORPORATION: California Ct Dismisses Adler's Securities Complaint
----------------------------------------------------------------------
In October 1998, a securities class action lawsuit captioned ADLER V.
3COM CORPORATION, ET AL., Civil Action No. CV777368 (ADLER), was filed
against 3Com and certain of its officers and directors in the California
Superior Court, Santa Clara County, asserting the same class period and
factual allegations as the REIVER action. The complaint alleges
violations of Sections 25400 and 25500 of the California Corporations
Code and seeks unspecified damages. The action is in discovery. No trial
date has been set.


3COM CORPORATION: Company Moves to Dismiss Amended Reiver Complaint
-------------------------------------------------------------------
In December 1997, a securities class action captioned REIVER V. 3COM
CORPORATION, ET AL., Civil Action No. C-97-21083JW (REIVER), was filed
in the United States District Court for the Northern District of
California. Several similar actions have been consolidated into this
action, including FLORIDA STATE BOARD OF ADMINISTRATION AND TEACHERS
RETIREMENT SYSTEM OF LOUISIANA V. 3COM CORPORATION, ET AL., Civil Action
No. C-98-1355. On August 17, 1998, the plaintiffs filed a consolidated
amended complaint that alleges violations of the federal securities
laws, specifically Sections 10(b) and 20(a) of the Securities and
Exchange Act of 1934, and which seeks unspecified damages on behalf of a
purported class of purchasers of 3Com common stock during the period
from April 23, 1997 through November 5, 1997. In July 1999, the court
dismissed the complaint and granted the plaintiffs the right to file an
amended complaint. Plaintiffs have filed an amended complaint, and
defendants have filed a motion to dismiss.


3COM CORPORATION: Discovery Continues in 1997 Hirsch & Kravitz Suits
---------------------------------------------------------------------
Report by 3Com Corporation to the Securities and Exchange Commission
filed as of January 10, 2000 discloses the following securities lawsuits
in California:

On March 24 and May 5, 1997, securities class action lawsuits, captioned
HIRSCH V. 3COM CORPORATION, ET AL., Civil Action No. CV764977 (HIRSCH),
and KRAVITZ V. 3COM CORPORATION, ET AL., Civil Action No. CV765962
(KRAVITZ), respectively, were filed against 3Com and certain of its
officers and directors in the California Superior Court, Santa Clara
County. The complaints allege violations of Sections 25400 and 25500 of
the California Corporations Code and seek unspecified damages on behalf
of a class of purchasers of 3Com common stock during the period from
September 24, 1996 through February 10, 1997. The actions are in
discovery. No trial date has been set.


3COM CORPORATION: Euredjian Suit Scheudled for Trial in October 2000
--------------------------------------------------------------------
On February 10, 1998, a securities class action captioned EUREDJIAN V.
3COM CORPORATION, ET AL., Civil Action No. C-98-00508CRB (EUREDJIAN),
was filed against 3Com and several of its present and former officers
and directors in United States District Court for the Northern District
of California asserting the same class period and factual allegations as
the HIRSCH and KRAVITZ actions. The complaint alleges violations of the
federal securities laws, specifically Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and seeks unspecified damages. The
plaintiffs have filed an amended complaint. 3Com has filed an answer to
the amended complaint. The trial is scheduled for October 2000.


3COM CORPORATION: Motion to Dismiss Gaylinn Securities Suit Sub Judice
----------------------------------------------------------------------
On May 11, 1999, a securities class action captioned GAYLINN V. 3COM
CORPORATION, ET AL., Civil Action No. C-99-2185 MMC (GAYLINN), was filed
against 3Com and several of its present and former officers and
directors in United States District Court for the Northern District of
California. Several similar actions have been consolidated into the
GAYLINN action. On September 10, 1999, the plaintiffs filed a
consolidated complaint that alleges violations of the federal securities
laws, specifically Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, and seeks unspecified damages on behalf of a purported
class of purchasers of 3Com common stock during the period from
September 22, 1998 through March 2, 1999. 3Com has filed a motion to
dismiss.


3COM CORPORATION: Shareholder Derivative Actions Die in Delaware Court
----------------------------------------------------------------------
In October 1998, two shareholder derivative actions purportedly on
behalf of 3Com, captioned SHAEV V. BARKSDALE, ET AL., Civil Action No.
16721-NC, and BLUM V. BARKSDALE, ET AL., Civil Action No. 16733-NC, were
filed in Delaware Chancery Court. The complaints allege that 3Com's
directors breached their fiduciary duties to 3Com through the issuance
of and disclosures concerning director stock options. 3Com is named
solely as a nominal defendant, against whom the plaintiffs seek no
recovery. 3Com and the individual defendants filed a motion to dismiss,
and on October 25, 1999, the Court issued an order dismissing these
actions.


BOARD OF ASSESSORS: Appel. Ct Oks Challenge to Tax Exemption for Temple
-----------------------------------------------------------------------
The petitioners sought review of a determination by the Nassau County
Board of Assessors (Board) that a "Temple" which had been chartered in
the State of California was exempt from real estate taxes on its
property located in Nassau County. The trial court granted the Temple's
motion to dismiss, finding that the petitioners lacked standing to
challenge the Board's determination and that the Board's determination
was neither arbitrary nor capricious. The Appellate Division reversed.

The court explained that "taxpayers in a community have standing to
challenge an agency's determination that a property within the
community's borders is exempted from the tax roles.... The decrease in
the tax base that occurs when a property is improperly exempted from
taxation has been found to constitute a cognizable injury to such
taxpayers.... Thus, the Supreme Court erred when it found that the
petitioners did not have standing to challenge the instant exemption."

The court then explained that the Board's granting a tax exemption to
the Temple was not "rationally supported by the evidence contained in
the record." The Temple had been required to obtain a "special use
permit" before the property could be used for any purpose other than a
single-family residence. The Temple's application for a special use
permit had been denied by the local Zoning Board of Appeals.
Accordingly, its use of the property as a religious center was "illegal
and acted as a complete bar to the granting of its application for a tax
exemption...." The court further noted that the court could not rely on
the "parsonage exception" embodied in Real Property Tax Law @ 462, since
the Temple had not submitted an application for such exemption.

Matter of Juliet Colella, et al. v. Board of Assessors of the County of
Nassau, et al., New York Law Journal, Nov. 18, 1999, p. 31, col. 2,
App.Div., 2nd Dep't, by Ritter, J.P.; Santucci, Thompson and Goldstein,
JJ. (New York Law Journal, January 5, 2000)


CALIFORNIA AMPLIFIER: Will Defend Vigorously Securities Suits in CA
-------------------------------------------------------------------
In its report to the Securities and Exchange Commission filed as of
January 11, 2000, California Amplifier Inc. discloses that on June 11,
1997, the Company and certain of its directors and officers had two
legal actions filed against them, one in the United States District
Court, Central District Of California, Entitled Yourish V. California
Amplifier, Inc., Et Al., Case No. 97-4293 CBM (Mcx), and the other in
the Superior Court for the State of California, County of Ventura,
Entitled Yourish V. California Amplifier, Inc. Et Al., Case No. CIV
173569. On June 30, 1997, another legal action was filed against the
same defendants in the Superior Court for the State of California,
County Of Ventura, Entitled Burns, Et Al., V. California Amplifier,
Inc., Et Al., Case No. CIV 173981.

The above mentioned actions are purported class actions on behalf of
purchasers of the common stock of the Company between September 12, 1995
and August 8, 1996. The actions claim that the defendants engaged in a
scheme to make false and misleading statements and omit to disclose
material adverse facts to the public concerning the Company, allegedly
causing the Company's stock price to artificially rise, and thereby
allegedly allowing the individual defendants to sell stock at inflated
prices. Plaintiffs claim that the purported stockholder class was
damaged when the price of the stock declined upon disclosure of the
alleged adverse facts. On September 21, 1998, the Federal legal action
was dismissed in the United States District Court. The U.S. COURT of
Appeals upheld the dismissal for the Ninth Circuit on October 8, 1999.
The State legal action remains in the Superior Court for the State of
California. The current trial date is March 21, 2000.

California Amplifier Inc. and its legal counsel are currently evaluating
the aforementioned claims. Based upon the analysis performed to date,
the Company, its directors and officers, plan to vigorously defend
themselves against these claims in State court.


CIRCUIT CITY: Arbitration Agreement Barring Class Actions Unenforceable
-----------------------------------------------------------------------
A California court of appeal has refused to enforce a one-sided
arbitration agreement that deprived the arbitrator of the power to hear
class actions, finding the agreement to be "unconscionable," i.e.,
unfair or oppressive.

                              Facts

Robert Ramirez was employed by Circuit City Stores, Inc., in Fresno,
California, where he installed equipment in automobiles. When he applied
for the job, he was required to sign the "Circuit City Dispute
Resolution Agreement," in which he agreed to resolve any claims he might
have arising out of his application, his employment, or the end of his
employment by final and binding arbitration before a neutral arbitrator
and in accordance with the company's dispute resolution rules and
procedures.

Ramirez had no choice but to sign the arbitration agreement if he wished
to apply for a job with Circuit City. The agreement also stated that
unless he withdrew his application within three days, he would be bound
by the agreement's terms.

The rules and procedures were contained in a separate document
consisting of nine single- spaced, typed pages. Among other things, the
rules required employees to arbitrate any and all employment-related
disputes they had against the company, including any claims arising from
age discrimination or violations of civil rights or the Fair Labor
Standards Act. Rule 9 deprived the arbitrator of the power to hear class
actions, a provision that, according to the company, meant an individual
employee could not seek relief against the company by participating in a
class action, pursued through either the courts or arbitration.

The rules and procedures also covered the filing and prosecution of
claims. They limited "discovery," i.e., the exchange of information, and
required claims to be filed within one year after the date the employee
knew or should have known the facts underlying his claim. The rules put
the burden of proof on the employee. To win, the employee had to prove
by a majority of the evidence that Circuit City's conduct was in
violation of applicable law.

The rules described the relief available to an employee, which included
(1) certain forms of injunctive (or court-ordered) relief, (2)
reinstatement, (3) full or partial back pay and fringe benefits for up
to one year from the point that the employee should have known the law
was being violated, (4) up to 24 months of pay if reinstatement wasn't
practical or reasonable under the circumstances, or (5) money damages in
accordance with applicable law. Punitive damages were limited to an
amount equal to any monetary award made under items or (4) or $ 5,000,
whichever amount was greater.

The rules stated that the parties would share the arbitration costs and
that the employee would pay his own attorneys' fees. If the employee
won, however, the arbitrator had the discretion to require the company
to pay the employee's costs and award him reasonable attorneys' fees.

Ramirez filed a class-action suit against Circuit City, claiming the
company had violated the Labor Code and the California Code of
Regulations and had committed unfair and unlawful business practices.
Specifically, he alleged that the company:

* had failed to pay its employees at least twice the minimum wage
  although it had required them to provide many of the tools used in
  the installation process;
* had required its employees to work overtime but had not paid them
  overtime at the rate of one and one-half times the minimum wage; and
* had misreported the statements of its employees' gross and net
  earnings.

Ramirez sought "restitution" (i.e., to be restored to the position he
should have been in), money damages, injunctive relief, and attorneys'
fees.

Circuit City responded to Ramirez' complaint and then filed a petition
to compel arbitration, relying on the alternative dispute resolution
agreement. The trial court, however, denied the company's request,
finding that the agreement was unconscionable and unenforceable.

                     Appellate court's opinion

The appellate court first explained the nature of unconscionable
agreements. They typically involve contractual provisions that operate
in a harsh and one-sided manner without any justification. They have
both a procedural and a substantive element. The procedural element
focuses on two factors: oppression and surprise. Oppression arises from
the inequality of bargaining power that results in no real negotiation
and an absence of meaningful choice. Surprise involves the extent to
which the terms are hidden in a printed form drafted by a party in a
superior bargaining position. The substantive element looks into whether
the one- sidedness of an agreement is justified on the basis of
objective factors.

The court of appeal found that the agreement before it was an "adhesion
contract," i.e., a standardized contract that, drafted and imposed by
the party of superior bargaining strength, left to the other party only
the opportunity to agree to it or reject it. The court pointed out that
adhesion contracts are not, in and of themselves, unenforceable, but the
manner in which their terms are drafted and the language and style in
which they appear are subject to an unconscionability analysis. The
contracts can satisfy the procedural element of unconscionability if the
party with the weaker bargaining power has no ability to negotiate the
terms, no meaningful choice other than to agree to the terms stated by
the party in the stronger bargaining position, and may have no real
ability to comprehend the terms to which he is agreeing.

To be considered for a position with Circuit City, Ramirez had no choice
but to sign the arbitration agreement, as the court found. There was no
evidence that he had been given the choice to "opt out" of the
agreement. The company contended that he had a choice in that he had
been free to choose not to apply for a job. The court responded that
such an argument ignored the realities of the marketplace and that
persons such as Ramirez, applying for an entry-level job, presumably
need a job and lack much in the way of salable skills. The company was
in a position to provide the needed job.

The court further commented that although persons familiar with
employment rights and employment law probably could understand the
nature of the rights they would be giving up by agreeing to the
arbitration agreement, it was not realistic to presume that persons such
as Ramirez -- seeking work and applying for positions not requiring
specialized education -- would have the background to understand the
significance of the rights they were giving up. The court stated:

[A] meaningful choice requires more than the choice, for applicants such
as Ramirez, between foregoing the possibility of employment or applying
for a job but agreeing to what, superficially, appears to be a fair
means of resolving employment disputes.

The court concluded that the procedural element of unconscionability was
present.

The court of appeal further held that the terms of the agreement were
not evenhanded. An agreement that requires the weaker party to arbitrate
any claims he may have but permits the stronger party to seek remedies
through the courts is presumed to be unconscionable, according to the
court.

Circuit City argued that its arbitration agreement wasn't one-sided but
required both parties to arbitrate their claims. The court, however,
pointed out that one of the procedural rules explained that the disputes
that were subject to arbitration were any and all employment- related
legal disputes, controversies, or claims of an employee and that nothing
was said about the company's claims against employees.

In addition to the arbitration agreement's unilateral nature, the court
found it was suspect for other reasons. It limited or eliminated an
employee's ability to obtain relief against the company by participating
in a class action. Furthermore, the agreement's limitations on punitive
damages tended to undermine the accepted purpose of those damages -- to
punish wrongdoing and deter future misconduct, according to the court.
The agreement discouraged the prosecution of employees' claims that were
encouraged by law. The court noted that the agreement made discretionary
awards of costs and attorneys' fees that by law were mandatory and also
made a complaining employee potentially liable for the company's costs
and attorneys' fees, a liability that wasn't authorized by law.

The court of appeal therefore held that Circuit City's arbitration
agreement was unconscionable and unenforceable. Ramirez v. Circuit City
Stores, Inc., No. A085701, 1999 WL 1129013 (Cal. Ct. App., Dec. 10,
1999).

                            Bottom line

When employees have no meaningful choice about whether to sign an
arbitration agreement that binds them but not the company, bars class
claims, and limits punitive damages, it appears much more likely that a
California court will refuse to compel arbitration of their claims under
such an agreement. Copyright 2000 M. Lee Smith Publishers LLC
(California Employment Law Monitor, January, 2000)


DOJ: Appropriations Provision Blocks Future Liability for Overtime Pay
----------------------------------------------------------------------
On the heels of a 500 million class-action suit filed by Department of
Justice attorneys claiming they are entitled to back overtime pay, the
DOJ is taking action to prevent future liability for overtime hours.

DOJ attorneys and some members of Congress condemned the action,
claiming it violates federal wage laws.

Deep within the Judiciary Appropriations Act for Fiscal Year 2000 is a
provision that denies the use of appropriated funds for "premium pay" to
any individual employed in the DOJ as an attorney, including the
assistant United States attorney. The provision in the appropriations
act effectively exempts all DOJ attorneys from statutes requiring
overtime payment for hours in excess of the normal workweek.

"What this legislation basically says is that from here forward,
attorneys in the DOJ will be exempt from the overtime requirements that
are associated with normal federal employment," according to Edward
Lynch, a former senior researcher for the Civil Service Subcommittee of
the House Committee on Government Reform.

Lynch said the DOJ wanted this legislation put in the appropriations
bill to protect itself against future liability for overtime pay in case
the attorneys prevail in the class-action suit. The language was written
in a specific format so that it would not have any effect on the pending
case, Lynch told FEDHR in an interview.

The agency's argument for denying overtime pay, Lynch said, is that
attorneys in the private sector are regularly required to work more than
40 hours per week. "Some employees consider themselves professionals and
have no qualms about working professional hours," he said. "Normally
that is what the DOJ counts on in getting its attorneys to work overtime
hours."

Many federal employees, he said, expect to work more than 40 hours per
week and do not expect to be paid for the extra hours. "If political
appointees, for example, started talking about suing for retroactive
overtime pay, they would be out on the street tomorrow and there would
be no issue there," Lynch said.

He said there would probably be a "fair bit of rebellion if there were
real cutbacks in overtime pay for some employees," though.

Robert Van Kirk, lead counsel for the nearly 8,000 attorneys who have
joined the class-action suit against the DOJ, called the agency's action
"shameful." (Federal Human Resources Week, December 29, 1999)


FIRST NY STUCCO: Homeowners Sue over Defective Stucco Siding Material
---------------------------------------------------------------------
Homeowners in a Purchase, New York, subdivision have filed lawsuits
alleging that the synthetic stucco siding material on their homes is
defective and has caused substantial damage to their homes. The cases
were filed against the homeowners', builders and the manufacturers of
the siding material. These suits are believed to be the first filed in
New York claiming damage caused by synthetic stucco.

The complaints allege that the plaintiffs' homes were damaged by
defectively designed synthetic stucco, also known as Exterior and
Insulation Finishing Systems or EIFS. Because the materials were not
properly installed and do not include a drainage system, they have
allowed water to seep in and become trapped between the walls of the
homes, causing significant damage.

EIFS is a multi-layered exterior wall system consisting of a finish
coat, a base coat, mesh and insulation board; all of which is
mechanically (or with an adhesive) secured to plywood or another
substrate. The product has been used in construction in the United
States since 1969, but was rarely used in residential construction until
the early 1990's.

According to homeowner Marcie Klein, one of the New York plaintiffs, "If
I had known that the siding material would result in such damage I would
never have chosen to use it." Mrs. Klein's home has suffered significant
damage due to water intrusion and water entrapment caused by the faulty
EIFS siding.

According to attorney Gary E. Mason, "These first cases represent the
tip of the iceberg of synthetic stucco cases in New York and surrounding
states. Despite the industry's early representations that this was a
limited problem, it has proven to be a problem of national dimension."

Indeed, several hundred individual cases and class actions have been
filed across the country in recent years against EIFS manufacturers and
builders. In North Carolina, a class action settlement with six EIFS
manufacturers was recently announced. As a result of those settlements,
many owners of EIFS homes in North Carolina will be able to recover as
much as $6 dollars per square foot of synthetic stucco on their homes.

The plaintiffs in the New York cases are represented by Stephen
Harfenist of the law firm of Freidman & Harfenist in Lake Success, New
York and by Gary E. Mason of Cohen, Milstein, Hausfeld & Toll in
Washington, D.C.

Contact: Gary E. Mason, Esq. at 202-408-4600 or by e-mail at
gmason@cmht.com or Stephen Harfenist, Esq. at 516-775-5800 or by e-mail
at sjhart@aol.com


FIRST UNION: PA Ct Oks Settlement & Atty. Fees for Lawsuit under FDCPA
----------------------------------------------------------------------
Class action claimants who challenged First Union Mortgage Corp. under
the Fair Debt Collection Practices Act will each receive approximately
900 under a settlement agreement recently approved by the U.S. District
Court for the Eastern District of Pennsylvania. Class counsel will
receive 200,000 for their successful efforts. Smith, et al. v. First
Union Mortgage Corp., et al., No. 98-CV-5360 (E.D. Pa. 12/1/99).

Believing that First Union Mortgage Corp. and Hutchens, McCalla, Raymer
& Echevarria violated the FDCPA, Gene Christopher Smith filed a class
action on behalf of himself and 288 First Union customers that received
virtually identical debt collection notices. Smith raised numerous FDCPA
claims in the complaint including flat-rating and failure to include the
mandatory 30-day validation notice.

Initially, the plaintiffs included claims for declaratory and injunctive
relief. However, the parties reached a settlement and submitted it for
preliminary approval to the court and sought provisional class
certification. The District Court found that the class satisfied Fed. R.
Civ. P. 23's requirements of numerosity, commonality, typicality and
adequacy of representation but failed to fulfill the perquisites of Rule
23(b). The District Court questioned the settlement's treatment of the
class of future debtors who received an improper letter from the
defendants and the settlement's ceiling for attorney's fees. The court
delayed ruling on the motions and ordered the parties to redefine the
class. (See Consumer Financial Services Law Report, Aug. 20, 1999, p.
8).

The plaintiffs followed the court's advice and Judge Jay C. Waldman
preliminarily approved the parties' settlement agreement on Aug. 23,
1999. The plaintiffs then filed an unopposed motion for approval of
class action settlement and award of incentives to the representative
plaintiffs with the District Court. Upon final review, the court held
that class certification was appropriate and that the proposed
settlement was reasonable, fair and adequate.

                         Settlement Terms

The settlement provides that class counsel pay 10,000 from the
settlement fund in administrative expenses to the settlement
administrator and 7,500 to each of the two representative plaintiffs.
Under the settlement agreement, each class member will receive
approximately 900. Further, the agreement provides an award of 200,000
to co-lead counsel for attorney's fees and 18,435 for reimbursement of
expenses incurred by counsel.

The court opined, "Absent a settlement, this case would have entitled
considerable motion practice involving reasonably complex issues
resulting in significant time and expense. Any trial would almost
certainly be lengthy and involve the expenditure of even greater
resources." The District Court added that the action involved "open and
fairly debatable legal questions and an appreciable risk in establishing
legal liability particularly as to defendant First Union."

Noting that only one class member opted out of the settlement, the
District Court stated that the settlement was "within a reasonable range
in view of the likelihood of any significantly better recovery and all
of the attendant risks of litigation."

                         Attorney's Fees

After approving the award of incentives to the representative
plaintiffs, the court reviewed the reasonableness of the attorney fees
in the settlement. The District Court stated that had counsel prosecuted
their meritorious FDCPA litigation until conclusion, they would have
received an award calculated under the lodestar fee method. Under the
settlement, however, the amount of attorney's fees sought was less than
70 percent of the lodestar figure. Thus, the court held the request for
attorney's fees was reasonable and supported by appropriate
documentation.

The District Court approved the class settlement and awarded attorney's
fees and then dismissed the action with prejudice and without costs.

Francis & Mailman P.C. of Philadelphia and Donovan Miller LLC of
Philadelphia represented the plaintiffs. Fine, Kaplan and Black of
Philadelphia represented HMRE. Stevens & Lee of Philadelphia and Pope &
Hughes of Towson, Md., represented First Union. (Consumer Financial
Services Law Report, December 29, 1999)


LUCENT TECHNOLOGIES: Harvey Greenfield Files Securities Suit in NJ
------------------------------------------------------------------
The Law Firm of Harvey Greenfield announced that it has filed a class
action lawsuit in the United States District Court for the District of
New Jersey on behalf of purchasers of securities of Lucent Technologies,
Inc.

The said complaint alleges, among other things, that Lucent and certain
of its senior officers violated the federal securities laws by issuing
to the investing public false and misleading statements concerning the
Company's deteriorating financial condition and its inability to control
costs and maintain profit margins.

Contact: Harvey Greenfield, Esq. at the Law Firm of Harvey Greenfield,
60 East 42nd Street, Suite 2001, New York, NY 10165, telephone
212-949-5500, or toll free 877-949-5500, facsimile 212-949-0049, or by
e-mail at hgreenf@banet.net


LUCENT TECHNOLOGIES: Journal Tells Investors 2 Ways to Profit from Woes
-----------------------------------------------------------------------
A couple of weeks ago, Lucent Technologies Inc. (LU/NYSE) issued a
warning that profits would come in well below analysts expectations. The
company expects to report earnings for its fiscal first quarter, ended
Dec. 31, in the range of 36 cents to 39 cents a share, compared with 48
cents a year ago and well below Wall Street's forecast of 54 cents a
share. On the news, the stock dropped 22%. After the decline, many of
Wall Street's biggest firms issued a downgrade on the stock. Is it just
me, or were these analysts offering too little, too late? Lucent took
the fifth, so to speak. On the news, investors shaved one-fifth of
Lucent's market capitalization -- convincingly too, as 178 million
shares changed hands on Jan. 7, a record for the most shares traded on a
single company in a single day.

The problem with Lucent is company specific, not industry specific.
Lucent is having problems with manufacturing constraints and a failure
to anticipate changes in customers' purchasing plans.

According to news reports, the company 'failed to produce optical
networking and fibre-optic products fast enough to keep up with soaring
industry demand and failed to anticipate some shifts in its customers'
buying habits. Lucent also failed to deliver its newest, more powerful
optical networking product that would compete with one of Nortel Network
Corp.'s products, giving Nortel a chance to create a sizable lead.'

Given the size and speed at which change takes place in this market, the
idea that Lucent's manufacturing time for its most sophisticated
products would drag out, requiring more people to do more testing, did
not play well on Wall Street.

The company did say it expected stronger growth in the second half of
2000. But that assumes it can win back the customers that have moved to
competitors.

To make matters worse, a class action lawsuit was filed against Lucent,
claiming the equipment maker previously made false statements about its
financial condition. So company management stumbled.

According to National Post (formerly The Financial Post) of January 18,
2000, that means Lucent will be more volatile over the near to medium
term, which opens the door to some interesting option strategies for
aggressive investors who like to bet on an underdog.

The first strategy, the article says, is the 'falling for dollars' trade
we have talked about with other companies. Step up to the plate with a
company that has fallen on hard times. Given the short-term increase in
volatility, you can expect to receive a higher premium for the options.
The falling for dollars trade is really a covered call write, in which
you buy the stock and sell an at-the-money or slightly out-of-the-money
call. If premiums have expanded because of the increased volatility,
then we would expect to earn a higher rate of return than would be
available under normal circumstances. The falling for dollars trade
assumes that Lucent options are trading with an implied volatility that
overstates future volatility. Buying the stock and selling covered
calls, then, should provide the investor with an excellent risk adjusted
rate of return. That being said, a couple of questions need to be asked
before any specific option trade is implemented. The first is one of
full disclosure. Are you comfortable that all the bad news is out? Do
you have some concern that there may be other company-specific issues
that Lucent management has yet to make public?

Often after such a dramatic sell-off the company will issue fresh news
releases, with very negative commentary. This happens because management
feels that with the stock already hammered, shareholders are best served
if management can shed all the skeletons in the closet.

The most recent dart was a rumour that the U.S. Securities & Exchange
Commission would audit the company because of accounting irregularities.
The rumour has been denied by the company.

The second question relates to duration. Is this particular event a
one-time factor, or can we expect the problems to linger over the long
term? If Lucent competitors are able to gain market share and, more
importantly, a technological advantage, is it possible that Lucent will
end up being an also-ran in this industry? That's not the most likely
scenario, but it is a risk.

Assuming one can get comfortable with the answers to the aforementioned
questions, then one can take a bullish position on Lucent, the article
goes on. The covered call write makes sense as a low-risk alternative,
with a better than average rate of return. The strategy would involve
the purchase of the stock at, say, $54 per share against the sale of the
July 60 calls at $5.875. The out-of-pocket cost for the stock is $48.125
($54 less $5.875 per share in premium equals $48.125). The six-month
return if called away at $60 per share is 24.6% ($60 per share divided
by $48.125). If the stock remains the same, your return is 12.2%, and
your downside breakeven is $48.125.

The other strategy, according to the article, is the outright purchase
of long-term Lucent call options (i.e. January 2002 LEAPS), especially
if one believes this to be a blue-chip company that will survive and
prosper in the second half of the year. With any call buying strategy
one assumes that the options are understating future volatility. That
may be the case, if the stock does make a full recovery. Only time will
tell.

With this position, the options of choice would be the Lucent January
(2002) 60 calls trading at $15.25.

The article says that option premiums are expected to fall slightly as
the stock begins to settle into a trading range. Before a long call
position, it would be nice to see the options trading with an implied
volatility of 45%, closer to the historical norm for the stock. Lucent
options are currently trading with an implied volatility of 59%.

If premiums fall to that level a couple of weeks from now, that would be
the ideal time to look at a long-term call buying strategy, the article
says, assuming one likes the long-term outlook for the stock. Even with
some patience, the long call position will produce decent profits only
if Lucent stages a recovery in the second half of 2000. Going into 2001,
according to the article, one will begin to see the value of one’s
options erode as time becomes a more critical factor, and if the stock
hasn't seen improvement by the end of September, 2000, better to exit
any long call position and take a loss. (National Post (formerly The
Financial Post), January 18, 2000)


MOBIL OIL: Australian Aviation Companies Sue over Fuel Contamination
--------------------------------------------------------------------
Agence France Presse reports that aircraft operators have launched a
class action against Mobil Oil Australia Ltd. over a fuel contamination
crisis which has grounded two thirds of the country's light aviation
industry. The action was initiated by lawyers for two aircraft operators
-- with many more expected to join -- after the Australian government
this week ordered the world's biggest oil company to prepare a
compensation plan for the businesses affected. Their aircraft are among
5,000 piston-driven planes grounded by a Civil Aviation Safety Authority
(CASA) directive issued on January 10 because of contaminated Mobil
avgas which blocks their fuel systems.

Search and rescue aircraft, firefighting support services, flying
doctors, regional charter services, flying schools, freight companies
and crop dusting companies have all been affected. Even some RAAF
transport aircraft were grounded.

Amid growing anger in the industry and in regional Australia over
Mobil's perceived failure to respond, acting Prime Minister John
Anderson gave it until close of business on January 18 to indicate how
it will assist businesses. "I have indicated clearly to Mobil that I
think they need to address not just the cost of rectifying the problem,
but clearly the economic cost to individual businesses," Anderson said
on January 17.

The aviation industry puts the mounting bill for the worst ever fuel
crisis at more than 33 million USD a month.

According to the report, Mobil has refused to say how it will respond to
demands by the government or industry, but said compensation for
aviation companies affected by the crisis may take years to resolve. But
it has agreed to deploy engineers to test grounded aircraft once CASA
approves a test currently under review by an independent chemist, and
the industry was hoping to discover if it works. Mobil corporate affairs
manager Alan Bailey said while the company was seriously considering the
claims for compensation it was a very complex issue which could drag on
for years. "It's going to take some time to resolve and there may well
be questions of the commercial impacts on various stakeholders in the
aviation industry that will take a long time to sort out in entirety,"
he said.

Lawyer Simon Liddy of Ebsworth and Ebsworth partners, which initiated
the class action in the Federal Court, said the case would allow a
number of similar claims to be resolved simultaneously. "It is a far
more efficient and constructive process for the many people seeking
compensation," Liddy said in a statement. The case will begin in the
Federal Court on January 21. (Agence France Presse, January 18, 2000)


MOBIL OIL: Lawsuit Will Go Ahead Despite $15 Mil Support Program
----------------------------------------------------------------
According to AAP Newsfeed of January 18, a class action by aircraft
operators affected by Australia's worst fuel contamination crisis will
proceed against Mobil Australia, despite the oil giant's promise on
January 18 of a $15 million aid package. The class action was launched
in the Federal Court by Sydney commercial law firm Ebsworth and
Ebsworth, on behalf of a New South Wales flying school. More aviators
are expected to join the action when it goes to court on January 21.

The aircraft operators are suing Mobil for an undisclosed amount of
compensation over the fuel crisis, which has grounded 5,000 aircraft
across Australia. The lawsuit will cover the cost of cleaning and
repairs to engines and income and wages lost because of the crisis.

The Civil Aviation Safety Authority (CASA) issued a directive to ground
all affected aircraft on January 10, a move which operators believe
could cost the aviation industry up to $50 million.

The package, while welcomed by the federal government, opposition and
aircraft owners and operators, will not stop a class action in the
Federal Court against Mobil. Ebsworth and Ebsworth solicitor Rebekah Gay
said the class action would proceed, even though Mobil announced a
program to give affected customers up to $10,000 per aircraft.

The company plans to establish a further program to address business
losses resulting from the crisis. "At this stage we don't have any
details about the $15 million package," Ms Gay said. "We don't know
whether it will cover all the costs people have suffered. "Until we know
the details about the package and the compensation package, we will
proceed with the action." Ms Gay said while all the operators which had
shown an interest in joining the class action had been from NSW, the
lawsuit had the potential to cover Australia.

Lawyers had not yet decided how much compensation to seek, she said. "We
haven't quantified the losses. "It will not be easy to do that. It is a
complicated process."

Ms Gay said bringing the lawsuit could be a lengthy process. "It depends
largely on what approach Mobil takes," she said. "Obviously it is in the
interests of the industry to resolve it as soon as possible. "We plan to
speak to Mobil to try and resolve it quickly."

AAP Newsfeed reports that Mobil Oil Australia unveiled on January 18 the
first plank in its program to tackle the Avgas contamination crisis,
announcing a $15 million assistance scheme for customers suffering
financial hardship due to the fuel problem. However, the company
strenuously denied the program in any way amounted to an acknowledgement
of liability.

Announcing the program in Melbourne, Mobil fuels marketing director Paul
Wherry said the company was in the process of establishing a further
scheme to address the business losses resulting from the contamination
issue, which has grounded planes across the country. The program is
being finalised, with details expected to be released next week. The
company would not put a figure on the size of the second package.

The scheme is available to Mobil Avgas customers and their employees
facing immediate financial hardship as a result of the fuel crisis,
Mobil said.

Mobil will manage the program with the assistance of a company with
experience in claims administration.

Mr Wherry said claims for the financial hardship support program will be
limited to $10,000 per aircraft and will be considered to meet
customers' urgent financial needs. He said while the safety of Mobil
customers was paramount, and the company was working with CASA and the
federal government to resolve the problem, it was apparent that the
process would take some time. "And our immediate priority is to handle
the urgent hardship needs of our aviation customers and their
employees," he said.

The announcement of the assistance package came just hours before the
expiry of a federal government deadline for the company to come up with
a compensation arrangement.

Federal Transport Minister John Anderson said Mobil had recognised its
moral obligation to compensate the aviation industry for the
contaminated fuel. He had given Mobil until the close of business on
January 18 to come up with a compensation package.

Many general aviation companies were having financial difficulties as a
result of Avgas contamination with employees stood down or on reduced
hours.

Mobil said information on how to file and progress the claims will be
provided through its aviation agents and distributors, on its website at
http://www.mobil.com.auand through the Mobil Aviation Customer
Helpline.

Chief Pilot at NationWide Air Charter, Peter Allen (Allen), said he was
pleased to be getting some financial assistance. "I just hope it comes
through quick smart because I'm thinking 'How am I going to pay the rent
and electricity?'" he said.

Meanwhile the Civil Aviation Safety Authority (CASA) is expected to
announce details of a test that should determine whether planes can fly
again. (AAP Newsfeed, January 18, 2000)


NAVIGANT CONSULTING: Pomerantz Haudek Alleges Improper Insider Trading
----------------------------------------------------------------------
Pomerantz Haudek Block Grossman & Gross LLP announced last January 14,
2000 that it has filed a class action suit against Navigant Consulting,
Inc., formerly known as Metzler Group, Inc. and several of the Company's
senior officers on behalf of all those who purchased Navigant common
stock during the period between May 6, 1999 and November 19, 1999,
inclusive.

According to the lawsuit, Navigant issued a series of false and
misleading statements during the Class Period in order to give the
appearance that the Company was growing at a materially faster rate than
it actually was. To achieve this appearance, defendants allegedly
undertook a scheme to acquire smaller companies and improperly account
for these business combinations when they failed to restate Navigant's
interim 1998 financial statements to give effect to the acquired
company's contributions to Navigant's financials.

In addition, it was revealed on December 17, 1999 that Navigant's ousted
Chief Executive Robert P. Maher had sold 605,684 shares of Navigant
common stock (approximately 80% of his entire holdings) from November 5,
1999, through November 21, 1999. Maher's sale occurred immediately prior
to the disclosure that several of Navigant's top officers had partook in
$17 million of improper loans, including a $10 million personal loan to
Maher, which caused Navigant's stock price to decline dramatically. On
November 22, 1999, Navigant's price per share closed at $14.25 per
share, a 45% drop from the prior day's close of $26.00 per share.

For more details on this announcement, you may contact Pomerantz Haudek
Block Grossman & Gross LLP, New York Andrew G. Tolan, Esq. Phone: (888)
476-6529 or (888) 4-POMLAW or via e-mail: agtolan@pomlaw.com


READ RITE: Contests Vigorously Consolidated Securities Complaint in CA
----------------------------------------------------------------------
In December 1996, a purported class action complaint was filed in the
Superior Court of the State of California, Santa Clara County, by Joan
D. Ferrari and Mark S. Goldman against the Company and certain of its
officers and directors. The complaint in the Ferrari State Action
alleges that during a purported class period of April 19, 1995 January
22, 1996, defendants made materially false and misleading statements
concerning the Company's business condition and prospects, in violation
of the California Corporations Law, the California Civil Code (those
sections prohibiting fraud), and the California Business and Professions
Code. The plaintiffs in the Ferrari State Action seek damages of an
unspecified amount. In May 1997, the Superior Court entered an order
sustaining the demurrers of certain defendants to the California
Corporations Code cause of action and overruling the demurrers of
Read-Rite Corporation and certain other defendants to that same cause of
action; and (2) sustaining the demurrers of all defendants as to the
remaining causes of action.

In January 1997, a purported class action complaint was filed in the
United States District Court for the Northern District of California by
Ferrari and Goldman against the Company and certain of its officers and
directors (the "Ferrari Federal Action"). In May 1997, a purported class
action complaint was filed in the United States District Court for the
Northern District of California by James C. Nevius and William Molair
against the Company and certain of its officers and directors (the
"Nevius Federal Action"). The court consolidated the Ferrari Federal
Action and the Nevius Federal Action into one action, In re Read-Rite
Corp. Securities Litigation (the "Consolidated Action"), and plaintiffs
thereafter filed a consolidated complaint.

The consolidated complaint alleges that from April 19, 1995 to January
22, 1996 (the "Ferrari Class Period") and from March 2, 1996 to June 19,
1996 (the "Nevius Class Period"), defendants made false and misleading
statements about the Company's business condition and prospects. The
consolidated complaint alleges violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and SEC Rule 10b-5, and seeks
damages of an unspecified amount.

In August 1998, the court in the Consolidated Action granted defendants
motion to dismiss but granted plaintiffs leave to file an amended
complaint. In January 1999, plaintiffs filed their amended complaint. In
March 1999 defendants moved to dismiss that amended complaint with
prejudice. In June 1999 the court heard oral argument on defendants'
motion to dismiss. That motion is currently under judicial
consideration.

Read Rite Corp. claims that there has been no discovery to date in the
federal actions and no trial is scheduled in any of these actions.
Accordingly, both on its own behalf and pursuant to indemnification
agreements between the Company and the named individual defendants, the
Company intends to continue to defend each of these actions vigorously.


TOBACCO LITIGATION: U.S. Lawyer Says New Zealand Govt Should Sue MNCs
---------------------------------------------------------------------
The New Zealand government should take legal action against
multinational tobacco companies, according to a United States-based
Whakatane lawyer, Richard Akel.

Last year, most American states, not including Florida, settled for S206
billion (Z402.42 billion) in compensation from the tobacco companies
instead of continuing their legal battle to recover medical costs caused
by tobacco smoking.

Mr Akel said the US Federal government had filed a lawsuit and other
countries were hurrying to follow suit. "I think the question is: has
the government, in paying for health costs, actually been subsidising
the tobacco industry?" he asked. Mr Akel, in New Zealand for a holiday,
works for a New York firm which is currently co-counsel in a class
action against tobacco companies. (AAP Newsfeed, January 18, 2000)


TOYS”R”US: ECaveat.com Looks to Resolve Complaints Re Holiday Purchases
-----------------------------------------------------------------------
Austin, Texas-based ECaveat.com announced its free unbiased complaint
resolution services will place high priority on all complaints against
Toys "R" Us resulting from holiday purchases. ECaveat.com will work on
behalf of consumers for free, attempting to resolve their complaints
within 48-72 hours.

ECaveat.com claims that it is attempting to create a win-win for
consumers and the toy giant by helping consumers resolve complaints
against Toys "R" Us. Although ECaveat.com does not currently have any
formal agreements with Toys "R" Us, the company has dedicated portions
of its staff to deal specifically with complaints directed at the toy
company. The Company says it has refused several offers from other class
action firms seeking to partner with it; it believes that few, if any,
class action lawsuits actually benefit businesses or their respective
consumers.

Founded in December of 1998, ECaveat.com is a customer service
organization offering free services for consumers to resolve complaints
against any e-business. Based in Austin, Texas, the Internet property is
located on the World Wide Web at http://www.ecaveat.com


* 5 Judges to Hear Big Cases Against New York City, Officials Propose
---------------------------------------------------------------------
To streamline the city's overburdened courts, administrators are
starting a pilot program in Manhattan that will assign all major
lawsuits filed against the city and state to a select group of five
judges. The cases are among the most politically divisive and
far-reaching in the state, covering matters like welfare, homelessness,
treatment of the mentally ill, foster care and the environment, among
others.

Court officials said the pilot project would allow the small group of
underused judges, known as appellate term judges, to focus their time
and energy on this handful of time-consuming cases. Other Supreme Court
justices, the officials said, would then be freed to focus on quickly
resolving the thousands of routine civil cases that now move at a
snail's pace through the state's clogged courts.

But more than 20 State Supreme Court justices met in a Manhattan
courtroom to organize opposition to the proposal. One judge who attended
the unusual meeting said the new system was a clear attempt to control
which judges decided politically important cases. Three other judges who
attended the meeting said they opposed the plan, but they would not
speculate on what had motivated it.

Under the pilot program, the five appellate term judges -- who now
handle low-level appeals cases -- will be randomly assigned to major
lawsuits filed against the state and city governments. Those appellate
judges are chosen by two senior judges appointed by Gov. George E.
Pataki -- Jonathan Lippman, the state's chief administrative judge, and
Betty Weinberg Ellerin, the presiding judge of the State Supreme Court's
Appellate Division in Manhattan.

Under the old system, those cases were randomly assigned among the
roughly 45 Supreme Court justices in Manhattan.

Lawyers and advocacy groups for the poor warned that the new system
would result in politically important cases being given to judges who
are more favorable to the state and possibly the city. "This is reverse
judicial shopping making sure that these cases will go to the judges
least likely to be sympathetic," said Doug Lasdon, a lawyer who
successfully filed class-action lawsuits against the city that resulted
in judges overturning policies toward the homeless and foster children.

But Judge Lippman dismissed that argument as "silly," and said the
governor's office and political consideration had nothing to do with the
proposal. The judge, a registered Democrat from Westchester County, said
the cases would still be randomly assigned among the five judges, a
group that he called anything but conservative.

The four justices now serving as appellate term judges are Stanley
Parness, William P. McCooe, William Davis and Phyllis Gangel-Jacob. All
are Democrats who were elected in Manhattan. Although the pilot program
took effect on Dec. 6, no new cases have been assigned under it.

Appellate term judges have no set term and serve as long as the chief
administrative judge wishes. They are chosen from the ranks of Supreme
Court justices, who typically serve 10-year terms. There is one vacant
appellate position that Judge Lippman said he planned to fill quickly.

The judges who opposed the plan did not dispute that the four appellate
term judges now serving include liberals. But they said those judges
could be far more sympathetic toward the state's and city's arguments in
divisive cases than Manhattan judges have been in the past.

For the last several years, rulings by Manhattan State Supreme Court
justices have repeatedly frustrated efforts by the Pataki and Giuliani
administrations to implement initiatives on welfare, homelessness and
sex shops.

For example, Justices Elliott Wilk and Helen E. Freedman in December
1999 delayed Mayor Rudolph W. Giuliani's plan to make homeless families
work in exchange for shelter. They said the plan threatened foster care
for children whose parents failed to meet workfare and other welfare
requirements.

Steven Banks, deputy director of the Legal Aid Society's civil division,
said that Governor Pataki's proposed 1997 welfare changes included a
measure requiring all legal challenges to be heard in Albany County, an
area with more Republican judges. The Legislature refused to enact it,
he said.

Mr. Banks questioned why the new system was being put in place in New
York City at a time of mounting challenges against how city agencies
provide services to the poor.

Judge Lippman said the proposal had nothing to do with recent decisions
and was part of a series of streamlining efforts announced a year ago.
Similar changes have already been implemented in courts handling
matrimonial, business and other cases, he said.

Court administrators who spoke on the condition of anonymity said that
the pool of Manhattan judges was already so skewed -- only 2 of the
roughly 45 judges are Republicans -- that it would be largely impossible
to pack the panel with conservatives at the governor's behest. They also
said that the real issue was that some judges were upset because under
the plan they would no longer handle high-profile, precedent-setting
cases.

But other senior court officials said that while the proposal was
probably not politically motivated, it should die anyway. From an
appearance perspective, they said, the move could be seen as judges that
are less establishment being excluded from the process. (The New York
Times, January 4, 2000)


* Supreme Court Orders Lower Courts to Restudy Rulings Re Equal Pay
-------------------------------------------------------------------
The Supreme Court on January 18 surprisingly ordered lower courts to
restudy rulings that said states and their agencies must abide by a 1963
federal law requiring employers to give men and women equal pay for
equal work. The court said those rulings should be reconsidered in light
of its decision that said state employees are not protected by a federal
law banning age bias. The issue involves a case at Illinois State
University, where female professors alleged in a 1995 class-action suit
that the school pays them less than their male colleagues. (Washington
(AP), January 18, 2000)


                               *********


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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Washington, DC.  Theresa Cheuk and Peter A. Chapman, editors.

Copyright 1999.  All rights reserved.  ISSN 1525-2272.

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