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               C L A S S   A C T I O N   R E P O R T E R

              Wednesday, January 26, 2000, Vol. 2, No. 18

                              Headlines

ASBESTOS LITIGATION: Settlement by 18 Makers Helps MS More Than Others
BAKER HUGHES: Schiffrin & Barroway Files Securities Suit in Texas
CA: Class Action Prompts Change; Catch-22 for Disabled Children Ends
CAMPBELL SOUP: Cohen, Milstein Files Securities Suit in New Jersey
CONNING CORP: Discloses Filing of Securities Complaint in Sp Ct NY

DOJ: Who's Fighting Whom In Action On OT Pay
FIRST NATIONAL: Heller, Horowitz Files Securities Suit in West Virginia
GOLDEN STATE: DE Judge OKs Settlement for Securities Suit; Chops Fees
HEMPSTEAD VOTING: Sp Ct Upholds Ruling of Bias against Blacks in System
HMOs: Earnings Fall; The Christian Science Monitor Talks on Crisis

INDIAN HEAD: Attys. Walk Out Of Arbitration Hearing for Employees’ Case
LEGATO SYSTEMS: Beatie, Osborn Files Securities Suit in California
LEGATO SYSTEMS: Bernstein Liebhard Files Securities Suit in CA
LEGATO SYSTEMS: Cohen, Milstein Files Securities Suit in California
LEGATO SYSTEMS: Kohn, Swift Files Securities Lawsuit in CA

LEGATO SYSTEMS: Wechsler Harwood Files Securities Suit in CA
LIFE FINANCIAL: Cauley, Steven Files Securities Lawsuit in CA
LUCENT TECHNOLOGIES: Finkelstein, Thompson Files Securities Suit in NJ
MA MUTUAL: Levin Denies Cert. of Class over N-Pay Insurance Policies
MICROSOFT CORP: Judge Slams Brakes for Class Cert over Unfair Practices

MICROSOFT CORP: Three Mainers Are Among Many Suing over Monopoly Power
MOBIL OIL: Aust Aircraft Owners to Have Fuel Test Kits by Jan. 25
PAYDAY LENDERS: Senate Voted for Georgia Legislature for a Crack Down
PUBLISHERS CLEARING: 25 States File Separate Suits over Sweepstakes Ad.
SUNTERRA CORP: Bernstein Liebhard Files Securities Suit in Florida

SUNTERRA CORP: Milberg Weiss Files Securities Suit in Florida
TYCO INT’L: Ct in NH Considers Consolidation of Securities Suits
VERITY, INC.: Keller Rohrback Files Securities Suit in California

* Clinton opposes high court review of HIV inmate policy
* Corp’s Pitfalls in Directors' & Officers' Indemnification Agreements
* Tasmanian Govt Says Tampon Tax May Breach Discrimination Act

                           *********

ASBESTOS LITIGATION: Settlement by 18 Makers Helps MS More Than Others
----------------------------------------------------------------------
Eighteen asbestos makers have agreed to pay $160.6 million to settle
lawsuits from nearly 4,000 people, a settlement with awards based on
where the victims lived, rather than on how sick the asbestos made them.

The biggest awards go to residents of four Mississippi counties,
according to a sealed agreement obtained by The Associated Press.

The Mississippi residents got $263,000 each, while Ohio, Indiana and
Pennsylvania residents who were hurt just as badly got $14,000 each.
Texas residents got $43,000 each.

The case involved residents from across the United States who filed two
lawsuits in Jefferson County Circuit Court nearly two years ago. Late
last year, both sides agreed to settle both cases and consented to a
settlement agreement

The plaintiffs' lawyers, Robert A. Pritchard of Pascagoula and Robert G.
Taylor II of Texas, could not be reached Monday to explain the
inequities in the settlement awards. A woman in Pritchard's office said
he did not do media interviews, while Taylor did not return a call left
with his office.

Under the terms of the agreement dated Nov. 23, 1999, the 18 companies
agreed to pay $160.6 million to 3,898 plaintiffs who asserted asbestos
was the reason for their health problems.

The 246 residents of Mississippi's Jefferson, Copiah, Claiborne and
Holmes counties received $263,000, or nearly 19 times more than
residents of Ohio, Pennsylvania and Indiana who had similar afflictions.
The estimated 2,645 residents of Ohio, Indiana, Pennsylvania will
receive $ 14,000 under the settlement. The 202 residents of Texas who
were part of the suit will receive $43,500, or six times less than what
the residents of the four Mississippi counties received. Another 805
Mississippians will receive $45,000, $63,000 and $36,437.

An analysis of the total showed that if the plaintiffs received the
money equally, each plaintiff would receive approximately $41,000.

Asbestos, which can cause health problems when inhaled, is a white flaky
substance widely used during the 1940s and 1950s for insulation and in
shipbuilding. It has been known to cause lung cancer and asbestosis, a
lung-scarring disease. (The Associated Press, January 24, 2000)


BAKER HUGHES: Schiffrin & Barroway Files Securities Suit in Texas
-----------------------------------------------------------------
Schiffrin & Barroway filed a class action lawsuit in the United States
District Court for the Southern District of Texas on behalf of all
purchasers of the common stock of Baker Hughes, Inc. from July 24, 1998
through December 8, 1999, inclusive.

The complaint charges Baker Hughes and certain of its officers and
directors with issuing false financial statements that caused its stock
to trade at artificially inflated levels.

For more additional information on the aforementioned securities
lawsuit, you may contact Schiffrin & Barroway, LLP (Stuart L. Berman,
Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at
info@sbclasslaw.com


CA: Class Action Prompts Change; Catch-22 for Disabled Children Ends
--------------------------------------------------------------------
For years, poor families with disabled children were forced by a
governmental Catch-22 to make an agonizing choice: accept food stamps
and give up the family car or keep the car and forgo the stamps. Rule
denied food stamps to families when their car was worth more than
$4,650.

In an about-face, state and federal officials admitted they were wrong.
In a tersely worded announcement, the officials told county welfare
offices there was a new interpretation of the regulations; no longer
would families be confronted with a Hobson's choice between a car they
needed for medical visits and food they needed to stave off hunger. They
can keep the car and still get the stamps. The decision, advocates said,
will affect thousands of poor people.

The change was prompted by a class-action lawsuit brought by the Western
Center on Law and Poverty, but in the end the turnaround was based more
on compassion. "Frankly, I thought the regulations were pretty stupid
and so did my staff," said Rita Saenz, the new California Department of
Social Services director. "We told the federal government we just didn't
want to do this anymore. These families needed to be served, they needed
to get their food stamps, and we were willing to go to the mat about
it."

Single mother Kendra Anderson from Oceanside is one of those the change
is aimed at. She chose to keep her car to ensure her quadriplegic
daughter could get to the hospital quickly. The decision plunged the
family of five into homelessness.

In San Francisco an unemployed father with a child who suffered from a
debilitating bone disease also opted for the car, believing it was his
only hope for a job. His family was denied food stamps and, because they
were otherwise eligible, welfare.

In Hesperia in the High Desert, Feliciana Moreno bought a 1991
Oldsmobile knowing she needed reliable transportation for the 55-mile
trip to the hospital that was treating her son for a rare facial
disease. She was notified that her welfare and food stamps would
immediately be cut off.

                A Consequence of Conflicting Regulations

What had victimized such families was a collision of political agendas
and a series of unintended conflicts in government regulations. Some of
the situation grew out of the backlash against welfare recipients and
the image of the "welfare queen" in her Cadillac. Singer Guy Drake
popularized the image in his 1970s-era song lyrics: "I've never worked
much/In fact I've been poor all my life/ . . . But I've always managed
to somehow/ Drive me a brand new Cadillac."

A regulation affecting food stamps -- government coupons that are
exchanged for food -- and other assistance denied benefits to any family
that owned a car valued at more than $ 4,650. An exception was made if
the vehicle was used to transport a disabled family member.

As that regulation was being put in place in the 1980s, there was an
effort in California to cut governmental red tape in the Supplemental
Security Income program, which provides aid to the blind, aged and
disabled, by melding food stamps with SSI benefits. Those who received
SSI automatically got a food allowance.

But here was the rub: The disabled child in the family was entitled to
SSI. The rest of the family, if poor, was served by two other programs,
welfare, or CalWORKS, and food stamps. Since the child was already
getting SSI and a food allowance, he or she was not considered part of
the family that was separately applying for food stamps and welfare.

Because the child, in the eyes of government, was not part of the
family, the family was not entitled to the exemption for the car that
was used to ferry the child to the doctor.

Most families that had disabled children also had vehicles valued at
more than $ 4,650, often because they were vans outfitted with costly
wheelchair lifts.

                       Family Keeps Van, Loses Home

"I remember when the social worker told me my daughter was not
considered a member of my household," Kendra Anderson recalled in an
interview. "I said, 'What do you mean; she lives with me. I'm her
mother. I have to take care of her. She doesn't walk, doesn't crawl,
doesn't talk. She's legally blind. I need a reliable car.'" The social
worker told her she was sorry, the $ 14,000 van Anderson was buying on
time was too expensive. Anderson said she toyed with the idea of selling
the vehicle, but the payments she owed on it were more than its Blue
Book value.

Her decision to keep the car was costly. The county denied the family
welfare and food stamps, a determination that ultimately caused them to
lose the lease on a rental house. "For months we lived in a single motel
room," Anderson said. "It had a sink, a closet, a bathroom and two
beds." On other occasions they moved in with friends.

Eventually Anderson decided to seek help from a legal aid attorney who
passed the case on to the Western Center, which handles poverty issues.
At the Western Center attorney Emma Leheny was gleeful, thinking she had
just been given a case that was a slam-dunk. "I started like a house
afire, I thought it was so unfair," she remembered. "Then I stopped dead
in my tracks. . . . The law was on the government's side."

Meanwhile, in the High Desert, legal aid attorney Amy Stump was reaching
the same conclusion as she researched the law for Moreno, who had been
threatened with the loss of aid when she purchased the Oldsmobile on
credit for $ 7,500.

Stump said Moreno had needed the vehicle for her son, age 7, who
suffered from hemifacial microsomia, a rare condition causing the bones
in half of his face not to grow properly. The single mother, who worked
full time, lived in a rural area where there was no public
transportation. "So we went to a hearing and the county worker made a
statement that for this purpose her son was a nonperson," Stump
recalled. She remembered trying every legal argument she could think of,
but eventually the sympathetic judge suggested they needed to figure out
a way to reduce the value of the car. Moreno was able to keep her
benefits, when he skirted the regulation and decided the car needed body
work that dropped its actual value below the $ 4,650 threshold.

Anderson was not as lucky. A hearing in her case went against her, and
Leheny decided to challenge the regulations in a class-action suit.
"This was definitely a gamble," Leheny said. "It was one of those things
where you just shake your head and say somebody somewhere has to be
impressed by the reality of the situation."

By that time, Robert Capistrano, a Bay Area legal aid attorney, was
ready to go with a similar case, that of the father of the child with
the bone disease. That family owned a car valued at $ 6,800. "It's just
an amazing, absurd story," he said.

Shortly after the cases were filed, Saenz said, officials in the
Department of Social Services looked at the issue and decided to ask the
U.S. Department of Agriculture, which finances the food stamp program,
to change its position.

Attorneys for the state told the USDA, she said, of "our concerns and
our willingness to do whatever it took to get this rule changed, and
they responded. I want to give them credit for that. . . . They
responded to our request."

Even better, federal officials agreed to reinterpret their regulations,
a decision that meant the new changes would take effect immediately.

"I think everybody who got involved in one of these cases got really
angry," Stump said. "Nobody should have had to go through what these
people had to go through." (Los Angeles Times, January 24, 2000)


CAMPBELL SOUP: Cohen, Milstein Files Securities Suit in New Jersey
------------------------------------------------------------------
The law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C. and Berger &
Montague, P.C. filed a lawsuit in the United States District Court in
New Jersey on behalf of purchasers of Campbell Soup Company common stock
during the period between November 18, 1997 and January 8, 1999.

The securities lawsuit charges Campbell and certain of its key officers
and directors with violations of the federal securities laws by, among
other things, misrepresenting and/or omitting material information
concerning the Company's improper recording of revenue from its
condensed soup sales. As alleged in the Complaint, Campbell claimed to
have "sold" product to major distributors or resellers when in actuality
Campbell never shipped the product to its customers. Campbell claimed
these phantom sales in order to meet Wall Street's earnings estimates
for the Company and therefore artificially inflate the price of
Campbell's stock. On January 11, 1999, the Company announced that
purported "major cost saving initiatives in supply chain operations"
would result in lower soup shipments for the second quarter ending
January 31, 1999. Upon the release of this news, the Company's stock
price dropped from a high of $53.93 on January 8, 1999 to close at
$46.37 on January 11, 1999, with over 5.9 million shares changing hands.

For additional information concerning this lawsuit, you may contact
Either of the following: Andrew N. Friedman or Robert Smits at
888/240-0775 or 202/408-4600 (1100 New York Avenue, N.W., Suite 500 West
Tower, Washington, D.C. 20005) or Sherrie R. Savett, Esq., Stuart J.
Guber, Esq., Michael T. Fantini, Esq., at 888/891-2289 or 215/875-3000
(1622 Locust Street, Philadelphia, PA 19103).


CONNING CORP: Discloses Filing of Securities Complaint in Sp Ct NY
------------------------------------------------------------------
Conning Corporation (NASDAQ:CNNG) announced on January 24 that it has
learned of a complaint purporting to be a shareholder class action that
has been filed in the Supreme Court of the State of New York, naming the
Company and Metropolitan Life Insurance Company (MetLife) as
co-defendants. The complaint follows the announcement of MetLife's
proposal to acquire all of the outstanding shares of common stock not
already controlled by MetLife for $10.50 per share in cash, subject to
certain conditions. MetLife acquired a beneficial interest of
approximately 61% of Conning as a result of its January 6, 2000
acquisition of GenAmerica Corporation, Conning's indirect majority
owner.

The complaint alleges that MetLife's proposal to acquire the remaining
equity interest of Conning fails to offer a fair price to Conning's
shareholders and lacks adequate procedural protections. Additionally,
the complaint alleges that as a result of MetLife's proposal, the
defendants have engaged in acts of self-dealing and breaches of
fiduciary duty in connection with the proposed transaction.

The complaint has not yet been served on Conning; however, the Company
believes the plaintiff's claims relating to Conning are without merit.


DOJ: Who's Fighting Whom In Action On OT Pay
--------------------------------------------
When the Department of Justice finds itself in the kind of trouble it
usually visits upon others, the result can be like tumbling through
Alice's looking glass.

How better to explain the bizarre situation in which the DOJ Civil
Division has put together a team of lawyers to defend against a lawsuit
in which they also have a waiver permitting them to join the other side
as plaintiffs.

                           Down the Rabbit Hole

But then, there are waivers galore in the class action brought by the
department's current and former staff lawyers seeking years of overtime
back pay. For example, the class is represented by the Washington pit
bull firm Williams & Connolly, which often finds itself going up against
DOJ lawyers. Despite the firm being declared conflict-free, an outside
lawyer was brought in to represent plaintiffs who might feel
uncomfortable as clients of their frequent adversary.

The case gets curiouser and curiouser. No one is quite sure how, but
from the get-go the plaintiffs had a slew of damning DOJ documents even
before discovery began -- some circulated at the highest levels. And,
although the staff lawyers may be among the best and brightest, they
claim they have been kept in the dark on personnel matters.

For years they accepted at face value their supervisors' assertions that
they are professionals and thus not eligible for overtime pay -- a
bald-faced lie, according to the suit. The issue has simmered below the
surface at DOJ, with memos at the attorney general-deputy attorney
general level discussing ways to get around the fact that they should be
paying $ 40 million to $ 50 million a year in overtime.

They even discussed how to slip in legislation that would exempt DOJ
lawyers from eligibility for such pay. John Doe v. U. S. , 98-896-C, U.
S. Court of Federal Claims.

That awakened a slumbering giant. Within three weeks of class
certification in August, more than 4,000 current and former DOJ lawyers
around the country opted in as plaintiffs. More than 12,000 are eligible
-- anyone who worked after Nov. 25, 1992, six years before the suit was
filed.

The issue for many is more than overtime pay. DOJ attorneys have long
complained that the pay gap between private-firm lawyers and those in
the government has grown ever wider.

The class action even has its own Web site at http://www.dojclass.com
which includes documents. Those who qualify can opt in merely by
clicking on the appropriate area and filling in pertinent information.

U. S. Claims Judge Robert Hodges made it an opt-in case, saying he
preferred that government lawyers affirmatively stick their necks out.
He noted that government lawyers routinely put people on the spot as
witnesses and should be able to take the heat themselves.

Probably the biggest problem for Justice is that for years it has kept
two sets of books. One is a straightforward time sheet recording
eight-hour days and 40-hour weeks, signed by each individual.

The other is a more realistic record of actual time worked -- detailed
to two decimal places -- usually 50- to 60-hour weeks, for impressing
Congress at budget time, advancing careers, and calculating awards of
attorney fees.

There's one curious rub the government might avoid in arguing its case:
Human nature being what it is, surely some staff lawyers puffed up their
overtime to please supervisors who wanted the numbers any way they could
get them.

A DOJ spokeswoman declined to comment, citing pending litigation. That
means she couldn't say whether the litigation team expects to work on
the case strictly for eight hours a day, 40 hours a week.

Or will they work long hours -- keeping two sets of time sheets --
trying to shoot down a case that might benefit them financially if they
lose?

"I certainly don't know if they have [worked overtime]," says Robert Van
Kirk, lead plaintiffs attorney. "But I've been getting faxes on the case
from DOJ at 8:30 p.m."

The plaintiffs say working overtime is a matter of policy. A DOJ manual
says staff attorneys "should expect to work in excess of regular hours.
" As employees, they are covered by the Federal Employee Pay Act of
1945, which means that they should get overtime pay.

The Justice Department says overtime was not ordered or approved. But
the Claims Court has ruled that "ordered or approved" is tacit when the
overtime work is done with the "full knowledge, encouragement and
inducement" of supervisors. And when there are two sets of records, the
overtime is considered approved. Byrnes v. U. S. , 163 Ct. Cl. 167
(1963).

One document already filed reveals that the 94 U. S. attorney offices
are ranked according to overtime, prompting supervisors to encourage
lawyers to work long hours. The plaintiffs also complain that if they
want to take an hour or so off occasionally, they have to fill out leave
slips -- in 15-minute increments.

"It's professionalism with a one-way ratchet," says Van Kirk, himself a
former lawyer in the Civil Division. "You can work as many hours as you
want, but not fewer than 40."

One former high-level Justice lawyer, Fran M. Allegra, wrote last year
in a DOJ memo: "I believe it is problematic (some might use the term
unconscionable) for the department to continue not to pay its attorneys
overtime knowing full well that the overtime statute applies. . . . .

"Sooner or later, an intrepid attorney will develop a class action on
this issue and major problems will result." That was in Allegra's
transition memo when he left DOJ to become a judge on the very court
where the case was filed. He is said to be opting in.


FIRST NATIONAL: Heller, Horowitz Files Securities Suit in West Virginia
-----------------------------------------------------------------------
The following was announced by Heller, Horowitz & Feit, P.C. on January
24:

A class action entitled Debra Gariety, et al. v. Grant Thornton, LLP,
et. al., Civ. Action No. 2:99-0992 (S.D.W. Va.), was filed on November
8, 1999 on behalf of shareholders of First National Bank of Keystone
("Keystone Bank") in the United States District Court for the Southern
District of West Virginia. The class action relates to claims arising
from the failed Keystone Bank, which was taken over by the Office of the
Comptroller of the Currency on September 1, 1999, due to alleged massive
fraud whereby one-half of Keystone Bank's purported$1.1 billion in
assets were non-existent or greatly overvalued.

The class action has named as defendants Keystone's outside auditors
(Grant Thornton, LLP, and Herman & Cormany), officers and directors
(Michael Graham, Billy Jean Cherry, Terry Lee Church, Estate of J. Knox
McConnell, Louis J. Pais, Michael F. Gibson, Andrew L. Rago, Julian G.
Budnick, Gary Ellis), certain brokers (Diversified Capital Markets,
Michael Patterson, Inc., Michael Patterson, and E. E. Powell & Co.,
Inc.) J&J Construction Company and Hermie Church, and John Doe sellers
of Keystone stock.

The Complaint asserted the following claims: (i) violation of Section
12(1) of the Securities Act of 1933; (ii) violation of Section 20A of
the Exchange Act of 1934; (iii) violation of Section 10(b) of the
Securities Exchange Act of 1934; (iv) violation of Sections 20(a) of the
Exchange Act of 1934 and 15 of the securities Act of 1934; (v) violation
of West Virginia Uniform Securities Act, W. Va. Code section
32-4-410(a)(2), Ohio Rev. Code section 1707 and/or Pennsylvania
Securities Act of 1972, 70 P.S. section 1-501; (vi) violation of West
Virginia Uniform Securities Act, W. Va. Code section 32-4-410(b); (vii)
violation of West Virginia Securities Act, W. Va. Code sections 32-3-301
and 32-4-410(a)(1), Ohio Revised Code section 1707, and/or Pennsylvania
Securities Act of 1972, 70 P.S. sections 1-201 and 1-502; (viii) breach
of fiduciary duty; (ix) fraud; (x) constructive fraud; (xi) negligent
misrepresentation, and (xii) civil conspiracy.

The class action was initially filed on behalf of Keystone Bank
shareholders who purchased Keystone stock between on or about June 1,
1999 and September 1, 1999. The Class Period is a period beginning on or
about January 1, 1995 and continuing until September 1, 1999.

On January 10, 2000, plaintiffs filed a motion for leave to add named
plaintiffs and defendants, extend the trading period covered to on or
about April 19, 1999, drop claims regarding the sale of unregistered
securities, and amplify the allegations in the Complaint.

Contact: Heller, Horowitz & Feit, P.C. SIGMUND S. WISSNER-GROSS
212/685-7600


GOLDEN STATE: DE Judge OKs Settlement for Securities Suit; Chops Fees
---------------------------------------------------------------------
Golden State Bancorp Inc. has won approval of a settlement of
shareholder suits alleging that investors didn't get enough for their
shares in a $2.5 billion acquisition of the California thrift by a San
Francisco-based financial institution owned by financier Ronald
Perelman.

William Chandler III, a judge on the Delaware Court of Chancery,
approved the disclosure settlement Jan. 7, but he chopped $800,000 out
of the $1.3 million in fees that lawyers for Golden State shareholders
sought in the case.

The Golden State dispute is part of a trend in which Chancery Court
judges roll back requested attorneys fees in so-called disclosure cases.
In those actions, shareholders are given more information about a
challenged transaction but don't receive any more money.

"It has been long-standing Delaware precedent that there has to be a
relationship between a fee award and the benefits conferred," said Andre
Bouchard, a corporate law specialist at Bouchard Friedlander &
Maloneyhuss.

"The court has been applying those precedents to the actual
circumstances of these cases in the last few years and reached the
conclusion that the benefits weren't that great," he said.

Bouchard believes that more opposition to the size of fee awards in
disclosure cases may be the reason for the reduced fees.

"When there is opposition to fee awards, it sort of refocuses and
concentrates the court's analysis on its precedents and on the need for
benefits commensurate with the fee being sought," he said.

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

A trio of Golden State shareholders filed suit in Wilmington, arguing
they weren't getting enough of a stake in the new thrift for their
shares.

The shareholders later agreed to settle their class actions after
Perelman and Golden State officials released more financial details
about the transaction and an updated fairness opinion from investment
bankers.

Even though the settlement didn't result in more money for Golden State
shareholders, Chandler said investors benefited from the updated
fairness opinion.

"Even a meager settlement that affords some benefit to stockholders" is
worthy of approval, the judge held in a 12-page decision.

But given the "modest benefit to shareholders," the appropriate fee
award in the case is $500,000, Chandler concluded.

The settlement also resolves several similar cases filed in state court
in Los Angeles over the Golden State acquisition, according to lawyers
involved in the case. (The Recorder, January 24, 2000)


HEMPSTEAD VOTING: Sp Ct Upholds Ruling of Bias against Blacks in System
-----------------------------------------------------------------------

The United States Supreme Court on January 25 let stand a federal
appeals court ruling that the town of Hempstead's system of electing
members at large to the Town Board discriminated against blacks.

The town had asked the Supreme Court to review the lower court decision,
but the justices refused, effectively forcing the town to hold a special
election to establish a new Town Board, with members selected by voters
in six districts.

The Supreme Court's denial of the request for an appeal leaves standing
the decision of the Court of Appeals for the Second Circuit, which by a
3-to-1 vote upheld a 1997 ruling by Judge John Gleeson of United States
District Court in Brooklyn. Judge Gleeson found that the Hempstead Town
Board was in violation of the Voting Rights Act of 1965.

In the appeal, the town's leaders contended that the case was about
politics, not race. They argued that blacks who ran for election in
Hempstead lost their races not because they were black, but because they
ran as Democrats, who are outnumbered 3 to 2 in Hempstead by
Republicans.

Under the at-large election system, all six board members are elected by
all Hempstead residents. Board members do not represent individual
districts. About 12 percent of the town's 725,000 residents are black.

Judge Gleeson wrote in his decision that Hempstead's voting system
"invidiously excluded blacks from effective participation" in town
politics, and he ordered the town to draw up the six districts.

Town leaders have also said that the plaintiffs' case was disproved by
last November's at-large election, in which Dorothy Goosby, a black
Democrat who was among those who filed the class-action suit, was
elected to the board. Ms. Goosby drew the largest number of votes in a
field of several candidates. In the same election, two other Democrats
were also elected in a town that has always been ruled by Republicans.
(The New York Times, January 25, 2000)

AAP Newsfeed reported on January 25 that Mr Howard rules out further GST
exemptions. He derided the Tasmanian government's view, based on legal
advice, that women could pursue a class action against the Commonwealth.
"If people hunt around you can find somebody who will express an opinion
like that about just about every aspect of government behaviour," he
said.

Mr Howard said he had seen nothing to suggest there was anything
discriminatory about the GST. "We haven't set out to discriminate
against anybody. What we've set out to do is give this country a tax
system for the 21st century," he said. "If we're going to spend all of
our time debating in isolation the minutiae of the tax's application to
a particular item we will lose sight of the overall national benefit,
because every time you exempt something you open up pressure to exempt
something more. "Once that happens, then the whole system begins to
unravel."

Canada exempted sanitary products from the GST but Mr Howard said
Canada's GST was the worst example of a GST to follow. A better example
of a successful GST was New Zealand's. (AAP Newsfeed, January 25, 2000)


HMOs: Earnings Fall; The Christian Science Monitor Talks on Crisis
------------------------------------------------------------------
After a promising first quarter in 1999, HMOs saw their earnings fall
again from $ 274 million to $ 97.5 million in the second quarter, said
Weiss Ratings Inc. of Palm Beach Gardens, as reported by Broward Daily
Business Review on January 24, 2000. In the first quarter, industry
losses were largely confined to small HMOs. Then in the second quarter,
many medium-sized HMOs reported red ink.

The losses of small HMOs with less than 100,000 members tripled from $
51 million in the first quarter to $ 155 million in the second, while
medium-sized HMOs with 100,000 to 250,000 members experienced a reversal
from a $ 2.5-million profit in the first quarter to a loss of $ 90
million in the second.

Weiss says that large, publicly traded HMOs are doing well, but an
assessment of hundreds of smaller private companies show a possibility
of continuing troubles for the industry as a whole. Weiss provides
independent financial ratings on HMOs.

An article in the Christian Science Monitor says that HMOs, once
considered the great saviors of the US health-care system, are now
facing their broadest financial crisis since they emerged in the 1980s.
Ascendant during a time of soaring medical costs, managed-care systems
were supposed to hold down prices while boosting quality. Today,
however, a growing customer backlash against HMOs' level of care has led
Congress and more than states to consider letting patients sue their
providers.

That, combined with other financial pressures - ranging from the price
of new "wonder drugs" to the increasing cost of caring for America's
aging population - points to a crisis in America's managed care, experts
say, with many HMOs already failing. It's a trend that has pushed health
care back into the spotlight more than at any time since the failed
Clinton health initiatives of 1994.

"Managed care was going to swoop in and solve the nation's health care
problems, but that promise is now going down the tubes," says Martin
Weiss, chairman of Weiss Ratings Inc., which assesses HMOs.

"These organizations are waking up to the fact that it is expensive to
take care of people," adds Mr. Weiss.

* In New England, Harvard Pilgrim Health Care went into state
   receivership after losing an estimated $ 177 million in 1999.

* In Texas, 14 HMOs posted their worst-ever financial performance for
  the third quarter of 1999, losing $ 87.8 million - two-thirds of
  their total deficit for 1998.

* Among the nation's 322 smaller HMOs, half continued to lose money in
  1999, a net loss of $ 51 million.

* In the last quarter for which statistics are available, profits for
  all HMOs dropped 64 percent.

"America is aging and super new technologies and miracle drugs are
coming on board," says Douglas Sherlock, a health analyst at the
Sherlock Company in Gwynedd, Pa. "But all these things are driving up
medical and health costs substantially."

A third key factor in financial problems for HMOs, say experts, has been
the pressure for them to consolidate with other HMOs. In many cases,
that has caused financial strain as they attempt to compete.

"In order to become big and become a major part of the market, many HMOs
tried to hold down premiums and offer benefits at lower prices than
competitors," says Mark Peterson, editor of "The Managed Care Backlash,"
a compilation of 36 articles for the Journal of Health Politics, Policy
and Law. "Many, in fact, were holding back on normal premiums over a
period of years to do this. Then they found they had to boost prices
because costs are soaring and that has hurt solvency."

                            Too Much Regulation?

According to the Christian Science Monitor, from the HMOs' perspective,
overregulation has meant that they have little or no flexibility to
lower costs or avoid treatments that are too expensive. Moreover, they
say many Americans have become more aware of new drug treatments and
technologies through television advertising, and they are demanding such
drugs from doctors.

"Many people who decide to push for expensive treatments would not be
doing so if they had to pay for them out of their own pocket," says Don
Young, chief operating officer for the Health Insurance Association of
America. "But they figure, 'What the heck, if my insurance company is
picking up the tab, I will go ahead and try it.' They don't realize that
those costs are eventually going to come back and bite them as higher
insurance premiums."

Not all HMOs are hurting, though. Observers say those that operate on a
not-for-profit basis, as well as those that have managed themselves
well, have prospered.

"Across the country, a lot of groups have banded together ... but not
changed their health-care delivery for the better," says Robby Pearls,
head Kaiser Permanente, a not-for-profit provider that has grown
significantly in recent years. "What the American public is reacting
against is that often such groups don't get their act together very well
to serve people better."

Now, with 33 states and Congress deciding this year whether to pass laws
on HMOs, observers say a major question is at hand: Do Americans want
health care left to market forces, controlled by regulation, or some
combination of the two?

"America is entering a crucial period in its discussion of how it wants
to conduct its health care," says Susan Pisano, spokeswoman for the
Washington-based American Association of Health Plans. "How we answer
the concerns before us right at this juncture will determine the future
of health care in America."

Both the US House and Senate have passed versions of a national
patients' bill of rights - the House version includes a patient's right
to sue. Conference committee members will try to iron out those
differences in coming weeks.

"How Congress reconciles this crucial point of how and whether people
can seek legal retribution for things gone wrong will have much to say
about how solvent managed-care organizations will be able to remain in
the future," says Don Young of the Health Insurance Association of
America. In some places, the debate has already had an effect. "The
threat of these lawsuits has sent stock prices dropping by 20 to 30
percent," says John Colley Jr., former director and chairman of Blue
Cross/Blue Shield of Virginia (now Trigon Inc.). "HMOs are in a no win
situation."

                         Deferring to Consumers

Fueling the debate are recent class-action lawsuits against 16 HMOs
alleging a wide range of improprieties - from denied treatment to
inappropriate drugs. Some of these actions resulted in wrongful deaths
and injury, prosecutors say. Other critics note that last month, the
Institute of Medicine released data showing that the number of
accidental deaths under medical care is between 40,000 to 98,000 a year,
the article says.

To avoid being taken to court, physicians are performing more needless
operations.

"If I am an HMO and am being threatened with being sued, losing millions
while being turned into a criminal, I am going to stop questioning the
procedures that consumers want, no matter how costly they are," says Mr.
Colley. "I am just going to pay the bill and turn it over to the
employer, which basically is just passing on the higher costs back to
the consumers."

This spiralling cycle of higher costs and higher prices has raised
concern in the White House and out on the campaign trail that more
Americans will be priced out of health care.

Democrat Bill Bradley has called health care "an American birth right"
and wants to add all of the nation's uninsured to a program that now
covers 9 million government workers and their families. Vice President
Al Gore would include families earning up to $ 41,000 in an existing
program for low-income kids, and the Clinton administration is
forwarding a plan to provide prescription-drug coverage for the elderly.

Meanwhile, HMOs are taking the offensive to let the public know the
benefits of their organizations.

"There are a lot of doomsday scenarios out there," says Ms. Pisano. "But
if you look at the history of managed care, not only is it the only
system yet devised where the incentive is to do right thing for
patients, but it also has continued to evolve to be able to bring best
of modern medicine to patients while dealing with changing consumer
needs and employer preferences."

Regardless, say some observers, HMOs must necessarily evolve and change
to respond to the will of the free market.

"The basic story line is that we have moved in the direction of
emphasizing the private market to sort out issues of cost, control, and
management," says Mr. Peterson, editor of the health journal articles.
"That has brought a lot of instability, unpredictability and turmoil, as
well as innovation and new ideas and new institutions.

"They both come together," he adds. "We are likely to see a lot of
financial collapse of health-insurance plans, physicians groups, and
hospitals before we get to more solid ground." (The Christian Science
Monitor, January 25, 2000)


INDIAN HEAD: Attys. Walk Out Of Arbitration Hearing for Employees’ Case
-----------------------------------------------------------------------
Attorneys representing the Indian Head Naval Surface Warfare Center
walked out of an arbitration hearing that was held to address the
agency's alleged ongoing mismanagement.

A representative of the American Federation of Government Employees,
which filed the case, said the attorneys' conduct was the most egregious
he had ever seen."The arbitrator was livid," said Bill Milton, director
of representation and education for AFGE Local 1923. "They're going to
lose the hearing. They have no chance of winning."

The hearing was part of an ongoing battle between AFGE and Indian Head.
Last year, federal arbitrator Hugh Jascourt issued several decisions in
favor of the union, but management has repeatedly failed to comply,
Milton claimed.

"This whole place is just littered with managers who don't have a clue,"
he said. "They are grossly mismanaging the work force."

The Navy claimed in a statement that it has complied with past
decisions. The agency added that an October award issued by Jascourt
constituted a final decision, and that he "does not have jurisdiction to
hear any further complaints involving non-compliance."

"Having made this argument concerning Mr. Jascourt's lack of
jurisdiction, the Navy will appeal to the Federal Labor Relations
Authority any determination by the arbitrator that indicates that he has
jurisdiction," the agency said.

Navy attorneys left Jascourt's hearing after he refused to issue an
immediate ruling on the issue of jurisdiction.

According to Milton, Indian Head still owes employees millions of
dollars in back pay, attorney fees and other awards. He was confident
the agency would lose its current case, which could cost at least
another 40,000.

"The Pentagon must step in and remove people who have violated
contracts," he said.

In December 1997, the union offered to settle for 500,000 a major class
action arbitration case in which the agency had for years been
improperly compensating employees for overtime, Milton said. But the
facility refused and ended up being ordered to pay more than 1.2 million
in back pay, liquidated damages and interest.

Capt. John Walsh, commander of Indian Head, publicly acknowledged his
agency's misconduct at an "All Hands" forum in October. He noted that
Jascourt found a "continuous pattern of violative conduct" that was
"contrary to the interest of effective government."

"We have been ordered to cease and desist from failing to comply with
directions of arbitrator Jascourt and from engaging in future similar or
like violative action," Walsh said. "Stated simply, the agency's conduct
violated a number of arbitration awards, some of a long standing nature,
and thus, violated the Federal Service Labor Relations Statute."

Walsh promised to take disciplinary action against any supervisors who
failed to comply with arbitration awards. He also admitted his failure
to work "hand-in-hand" with the union.

"I have not lived up to that promise, and I know that it was wrong," he
said. But Milton claimed Indian Head still refuses to cooperate with the
union.

"We have more cases pending arbitration now than we did a year ago," he
said. "We're going to have another six cases pending come the end of
February."

AFGE has urged the Pentagon to conduct an investigation of the Maryland
naval base. The union represents 800 employees at the facility. (Federal
Human Resources Week, January 18, 2000)
LEGATO SYSTEMS: Beatie, Osborn Files Securities Suit in California
------------------------------------------------------------------
Beatie and Osborn LLP filed a lawsuit in the federal court in California
against Legato Systems, Inc. and its officers. The lawsuit was filed on
behalf of investors who acquired Legato common stock between the close
of trading on October 20, 1999 and January 19, 2000

The lawsuit alleges that Legato and its officers concealed Legato's
badly fledgling growth to prevent a decline in the price of Legato stock
in order to allow the officers to engage in insider trading (reaping
more than $11.5 million in proceeds) and to use Legato's stock, that was
trading at an artificially high price, to purchase other companies.
Legato's problems were concealed by (i) accounting schemes that inflated
the Company's third quarter 1999 results; and (ii) the issuance of
positive statements to the public and analysts. As a result of
defendants' efforts, numerous analysts issued ``Buy'' or ``Strong Buy''
recommendations during the Class Period. On January 19, 2000, the fraud
was discovered by the Company's accountants, who subsequently required
Legato to restate its 1999 third quarter results and disclose the
Company's slower growth rate. When the Company announced its intention
to restate its third quarter results, the price of Legato's shares
declined by almost 50%.

For additional information on the above mentioned suit, you may contact
Eduard Korsinsky, Esq. or Ben Coleman, Legal Assistant Beatie and Osborn
LLP 599 Lexington Avenue - 42nd Flr New York, NY 10022 Telephone: (800)
891-6305 Fax: (212) 888-9664 or through E-mail: bandolaw@aol.com
Internet: http://www.bandolaw.com


LEGATO SYSTEMS: Bernstein Liebhard Files Securities Suit in CA
--------------------------------------------------------------
Bernstein Liebhard & Lifshitz, LLP commenced a securities class action
lawsuit, on behalf of purchasers of the common stock of Legato Systems,
Inc., between October 21, 1999 and January 19, 2000, inclusive, in the
United States District Court for the Northern District of California.

The complaint charges Legato and certain of its directors and executive
officers with violations of the Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder. The complaint alleges that the defendants
issued materially false and misleading information concerning Legato's
business, earnings growth and profitability in order to use the inflated
stock as currency to acquire other companies in stock swap transactions.
Certain Company insiders took advantage of the artificially inflated
stock price to sell over $11.5 million worth of their own stock.

As part of the scheme to inflate the Company's profits and thereby its
stock price, defendants caused Legato to improperly recognize revenue
during the third quarter of 1999 and throughout the Class Period. On
January 19, 2000, defendants revealed the truth and announced that
Legato would restate its results for the third quarter and would fall
well short of forecasted earnings for the fourth quarter of 1999. When
the truth was disclosed, Legato's stock price plunged more than $29 per
share from a Class Period high of over $79 per share.

For more details concerning this securities class action lawsuit, you
may contact Mr. Mark Punzalan, Director of Shareholder Relations at
Bernstein Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, New
York 10016, 800-217-1522 or 212-779-1414 or through e-mail:
Legato@bernlieb.com


LEGATO SYSTEMS: Cohen, Milstein Files Securities Suit in California
-------------------------------------------------------------------
The law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C., filed a
lawsuit in the United States District Court for the Northern District of
California on behalf of all persons who purchased the common stock of
Legato Systems, Inc. between October 21, 1999 and January 19, 2000,
inclusive.

The lawsuit charges Legato Systems, Inc. and certain of its officers and
directors with violations of the federal securities laws by making
misrepresentations about Legato's business, earnings growth and
financial statements and its ability to continue to achieve profitable
growth. The complaint alleges the Individual Defendants (senior officers
of Legato) engaged in the scheme in order to use Legato's artificially
inflated stock as currency to fund the Company's acquisitions and to
profit from $11.5 million in insider trading proceeds. The complaint
asserts that in order to inflate the price of Legato's stock, the
defendants caused the Company to falsely report its results for the
third quarter of 1999 and continued to attempt to improperly recognize
revenue throughout the Class Period.

On January 19, 2000, Legato revealed that it would restate its third
quarter earnings and that it would fall far short of forecasted earnings
for the fourth quarter of 1999. This revelation caused Legato stock to
plummet to $29 per share in after-hours trading, a decline of 63% from
its Class Period high of $79.25.

For more details concerning this complaint, you may contact any of the
following attorneys: Steven J. Toll (stoll@cmht.com), Matthew J. Ide
(mide@cmht.com) or Tamara J. Driscoll (tdriscoll@cmht.com) of Cohen,
Milstein, Hausfeld & Toll, P.L.L.C., 999 Third Avenue, Seattle,
Washington 98104. PH.: 888/240-1238 or 206/521-0080.


LEGATO SYSTEMS: Kohn, Swift Files Securities Lawsuit in CA
----------------------------------------------------------
Kohn, Swift & Graf, P.C. filed a class action lawsuit in the United
States District Court for the Northern District of California on behalf
of those persons and entities who purchased the common stock of Legato
Systems, Inc. between October 21, 1999 and January 19, 2000, inclusive.

The complaint charges Legato and certain of its officers and directors
with violations of the Securities Exchange Act of 1934 Sections 10(b)
and 20(a), and Rule 10b-5 promulgated thereunder. If you purchased
Legato stock during the Class Period, you have 60 days from January 20,
2000 to move the court to serve as a lead plaintiff, provided you meet
certain legal requirements.

For additional information, please contact Michael J. Boni, Esq. Kohn,
Swift & Graf, P.C. 1101 Market Street Suite 2400 Philadelphia, PA 19107
(800) 275-4014 or (215) 238-1700, or through E-mail: mboni@kohnswift.com



LEGATO SYSTEMS: Wechsler Harwood Files Securities Suit in CA
------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP filed a securities class action
lawsuit on January 21, 2000 in the United States District Court for the
Northern District of California on behalf of those persons and entities
who purchased the securities of Legato Systems, Inc. between October 21,
1999 and January 19, 2000, inclusive.

The complaint charges Legato and certain of its officers and directors
with violations of the Securities Exchange Act of 1934 Sections 10(b)
and 20(a), and Rule 10b-5 promulgated thereunder. The complaint alleges
that Legato made misrepresentations about its financial statements,
revenues, and its earnings growth rate. On the basis of the Company's
false statements and misrepresentations, Legato's stock price soared
during the Class Period, allowing the Company to use its inflated stock
as a currency for acquisitions, while Company officials received over
$11 million from insider sales. On January 20, 2000, only one week after
the CFO assured concerned analysts that Legato's revenues and earnings
would meet expectations, the Company shocked the investment community
when it announced that it would restate its third quarter earnings
downwards(due to improper recognition of revenues) and miss its fourth
quarter estimates. The stock price plummeted from its Class Period high
of $79.25 per share to trade as low as $28.00 per share on January 20,
2000.

For more details on this matter, please contact WECHSLER HARWOOD
HALEBIAN & FEFFER LLP, John Halebian, Esq, at jhalebian@whhf.com or
Ramon Pinon, IV, Paralegal ramon_pinoniv@whhf.com at 488 Madison Avenue,
New York, New York 10022 with telephone number 877-935-7400 (toll free)
or 212-935-7400


LIFE FINANCIAL: Cauley, Steven Files Securities Lawsuit in CA
-------------------------------------------------------------
The Law Offices of Steven E. Cauley, P.A. filed a class action lawsuit
in the United States District Court for the Central District of
California on behalf of all purchasers of common stock of Life Financial
Corp. during the period June 24, 1997 through March 3, 1999, inclusive.

The complaint charges Life Financial and certain of its officers and
directors with violations of Sections 11 and 15 of the Securities Act of
1933. The action arises out of an initial public offering of 2,900,000
shares of Life Financial Common stock pursuant to a materially false and
misleading Registration Statement and Prospectus declared effective by
the SEC on June 24, 1997 and a subsequent series of false and misleading
statements concerning Life Financial's reported financial results during
the Class Period. These financial statements materially inflated
interest income, net income, earnings per share, and shareholders'
equity. On March 3, 1999, Life Financial restated its Class Period
financial results, thereby admitting that the financial statements for
the fiscal years 1996 and 1997 and the first, second and third quarters
of the fiscal year, 1998, including those in the Registration Statement,
contained material misstatements. By March 4, 1999, Life Financial
stock, which sold for $11.00 per share on the offering, sold for $3.875
per share. The stock currently sells for less than $5 per share.

For further information concerning this lawsuit, please contact Law
Offices of Steven E. Cauley, P.A., 2200 N. Rodney Parham Road Suite 218,
Cypress Plaza Little Rock, AR 72212; E-mail: cauleypa@aol.com or call
1-888-551-9944 - toll free.


LUCENT TECHNOLOGIES: Finkelstein, Thompson Files Securities Suit in NJ
----------------------------------------------------------------------
Finkelstein, Thompson & Loughran has filed a class action lawsuit in the
United States District Court for the District of New Jersey on behalf of
a class of persons and entities, other than Defendants, who purchased
Lucent Technologies, Inc. common stock between October 27, 1999 and
January 6, 2000, inclusive.

The Complaint alleges that Lucent and certain of its officers and
directors have violated certain provisions of the Securities Exchange
Act of 1934, and that Defendants made misrepresentations about the
Company's business, earnings growth, and financial statements, as well
as its ability to continue to achieve profitable growth. The Complaint
further alleges that, as a result of Defendants' misrepresentations and
omissions, the price of Lucent's common stock was artificially inflated
throughout the Class Period, and that one Lucent officer sold at least
95,000 shares of Lucent common stock at artificially inflated prices,
thereby reaping at least $6.5 million in proceeds.

On January 6, 2000, Lucent revealed that results for the first fiscal
quarter would fall short of analysts' expectations. Contrary to the
Company's representations during the Class Period, demand for Lucent's
products was declining, profit margins were falling, and costs were
increasing. These revelations caused the price of Lucent common stock to
fall to $52.19, a decline of 38% from its Class Period high.

For more information about this lawsuit, you may contact, Donald J.
Enright or Mila F. Bartos with Finkelstein, Thompson & Loughran,
toll-free at 888-333-4409, or at 202-337-8000, or by e-mail at
DJE@FTLLAW.com or MFB@FTLLAW.com If you wish to learn more about
Finkelstein, Thompson & Loughran, you can visit their Web page at
http://www.FTLLAW.com


MA MUTUAL: Levin Denies Cert. of Class over N-Pay Insurance Policies
--------------------------------------------------------------------
A Philadelphia Court of Common Pleas judge has denied class
certification to a group of plaintiffs who alleged Massachusetts Mutual
Life Insurance Co. persuaded them to buy whole life "N-Pay" insurance
policies using misleading sales presentations and marketing materials.

An "N-Pay" policy is often referred to as a "vanishing premium" method.
Basically, an N-Pay policy could shorten the number of years a
policyholder has to pay premiums out-of-pocket. "The 'N' in N-Pay
represents the year after which future dividends plus the current
balance of paid-up additions (based on current dividend scale, which is
not guaranteed) are sufficient to pay all future premiums," Judge
Stephen E. Levin explained in a footnote. Levin denied class status
because he said the class lacked commonality in both its contract and
fraud-based claims. "The court agrees that plaintiff's and the class'
contract claims lack sufficient commonality because class-wide
adjudication of the contract claims would require the court to consider
the circumstances surrounding the issuance of each N-Pay policy," Levin
wrote in his 23-page opinion. The court also said the fraud-based claims
did not meet the commonality requirement of class certification because
the claims were not based on a single communication from MassMutual.
"Here, defendants communicated with plaintiffs by oral sales
presentations and written marketing material, all utilizing a variety of
brochures, documents, charts and illustrations," Levin wrote in Solomon
v.

Massachusetts Mutual Life Ins. Co. Class certification has now been
denied in three cases of this type against Mass Mutual around the
country. New Jersey and New York courts have both ruled against
plaintiffs in factually similar cases. E. David Chanin and Vaughn C.
Williams of Tannenbaum & Chanin represented MassMutual in the case.
Paoli attorney Mark C. Rifkin of Rifkin & Associates represented the
plaintiffs and said although he hasn't spoken with his clients yet, an
appeal of the decision is most likely. "It would be my recommendation
that we appeal the decision," Rifkin said Friday. Plaintiff Mark Solomon
and the other potential class members were seeking class status for
claims of breach of contract, fraud, negligent misrepresentation,
violation of Pennsylvania Unfair Trade Practice and Consumer Protection
Law and unjust enrichment claims.

The suit was filed on behalf of MassMutual whole life policyholders who
were asked by the insurance company to make payments beyond the stated
number of years and/or whose policies have not yielded the stated
returns. The fraud class included any policyholder who owned a
MassMutual policy issued at any time since February 1990. The plaintiffs
alleged MassMutual misled them by providing deceptive illustrations or
schedules that showed that the policyholders would have to pay premiums
for a "finite" time period, after which the "earnings on the accumulated
funds and dividends on the policy would cover future premiums. "Solomon
alleged that MassMutual persuaded policyholders to buy whole life
policies by misrepresenting or omitting the following:

* The number of "out-pocket-payments" the policyholder would have to
pay.
* The fact that "life insurance is not an investment."
* The fact that the insurer would use part of the policyholder's payment
for
  certain charges.
* The true rate of return.
* The comparison of the policy to other methods of investment.

In November 1992, Solomon bought a whole life policy from MassMutual
that used the N-Pay concept. In May 1992, MassMutual had added to its
illustration a statement to prospective policyholders that said, "We
strongly recommend you look at an illustration showing a lower dividend
scale. "Solomon's policy stated in part that dividends were not
guaranteed and were subject to change. His illustration, however, did
not contain the language the company added in May. An expert for the
class also testified that the illustrations given to policyholders did
not include excess interest rate, the potential change in dividends
MassMutual expected or the insurer's investment portfolio.

In determining whether Solomon and others similarly situated could be
certified as a class, Levin analyzed each prerequisite for class
certification: numerosity, commonality, typicality, adequacy of
representation and fair and efficient method of adjudication. To satisfy
the numerosity requirement, the class had to be "both numerous and
identifiable. "MassMutual argued that the class could not meet the
numerosity requirement because it was "vastly overbroad." The court
agreed, but said the class could be managed by narrowing it to
purchasers of policies purchased under the N-Pay concept. The narrowed
group therefore met the numerosity requirement. On the issue of
commonality, Solomon argued that the class met the requirement because
the insurance company "presented uniform sales presentations, sales
materials, and policy illustrations which" misled potential policy
purchasers. But the court disagreed with that reasoning, ruling that
resolving the contract claim for the entire class would necessitate
individual inquiries. "The court can not decide the class' contract
claim based on the illustrations alone because the material information
MassMutual allegedly omitted from its illustrations was disclosed in
other written materials or in MassMutual agents' customized sales
presentations," Levin wrote. The court also said the fraud-based claim
lacked commonality because "individual issues of reliance upon and the
materiality of MassMutual's misrepresentations and omissions predominate
over common issues of defendant's knowledge about the assumptions
underlying its sales illustrations. "The court then said that because
the class failed to meet the commonality requirement, the typicality
requirement could not be met. Having already decided the class could not
be certified, Levin did not analyze the fourth and fifth requirements
for class certification. (Copies of the 23-page opinion in Solomon v.
Massachusetts Mutual Life Ins. Co. , PICS NO. 00-0105, are available
from The Legal Intelligencer. Please refer to the Pennsylvania Instant
Case Service order form on Page 11.) (The Legal Intelligencer, January
24, 2000)


MICROSOFT CORP: Judge Slams Brakes for Class Cert over Unfair Practices
-----------------------------------------------------------------------
San Francisco Superior Court Judge Stuart Pollak has slammed the brakes
on quick class certification involving multiple complaints accusing
Microsoft Corp. of unfair business practices.

Pollak on January 21 told a courtroom packed with plaintiffs attorneys
-- many with pending cases and others just curious -- that before a
class can be certified, coordination of the 20-plus lawsuits must take
place. "I don't believe we should proceed with class certification until
the issue of coordination is dealt with," said the judge. "I think we
should put everything on hold."

That said, Pollak asked plaintiffs' counsel to work out an arrangement
between themselves over the issue of lead counsel.

In court documents, lawyers for Townsend and Townsend and Crew, which
filed the first case against Microsoft in February 1999, have alleged
collusion between San Diego's Milberg Weiss Bershad Hynes & Lerach; San
Francisco's Lieff, Cabraser, Heimann & Bernstein; and a Microsoft
outside counsel in determining who should be lead counsel. Microsoft's
attorneys returned fire by accusing Townsend of rushing matters so the
firm could be named lead counsel.

Pollak suggested that the lawyers tone down the rhetoric. "I'm not
pleased to see this litigation getting started with the kind of
exchanges that are reflected in these moving papers as to what the
attorneys are saying to each other," he said.

Not wanting to get in middle of a shoot-out between plaintiffs' counsel,
Pollak on Friday turned over his courtroom to them to begin working
toward a resolution of the lead counsel question.

Pollak also set aside Townsend's ex parte petition to become lead
counsel. Instead he and all parties agreed to return Feb. 7 for further
proceedings.

Pollak was appointed by Presiding Judge Alfred Chiantelli as the motion
judge to handle coordination of the 23 cases filed against Microsoft.
Attorneys for the Redmond, Wash., software giant have said Microsoft
prefers the cases to be consolidated in San Diego.

Townsend partner Daniel Furniss told Pollak that the issue of lead
counsel could be negotiated, but that shouldn't hinder the class being
certified. "There are a lot of egos involved, but let's not let that
stand in the way of getting things worked out and the class certified,"
said Furniss. To which Stephen Bomse, a Heller Ehrmann White & McAuliffe
partner and Microsoft's San Francisco counsel, replied, "I always wanted
to stand up before a judge and say: 'I couldn't have said it better
myself.'"  (The Recorder, January 24, 2000)


MICROSOFT CORP: Three Mainers Are Among Many Suing over Monopoly Power
----------------------------------------------------------------------
Three Mainers from the Portland area are suing Microsoft for allegedly
using its monopoly power to drive up the price they paid for their
computers and the operating systems that run them. The lawsuits, filed
by Barbara and Harvey Melnick of Falmouth and Dr. John Zerner of
Portland, are among at least 40 that have been filed around the country
since a federal judge ruled in November that Microsoft is a monopoly.

The ruling stemmed from a lawsuit brought by the U.S. Department of
Justice and 19 states. "Plaintiffs have been running to courthouses all
over the country to reap the benefit of ethe government's victory," said
Hillard Sterling, an expert in anti-trust and information technology
cases with the Chicago law firm of Gordon and Glickson.

The number of plaintiffs in all the class action suits combined is
expected to total in the millions. Each plaintiff stands to gain less
than $100, but the total cost for Microsoft could reach more than $100
million.

With a market value of about $500 billion, Microsoft is the wealthiest
company in the United States.

One of the Maine plaintiffs, Harvey Melnick, said his and his wife's
experience "has been that Microsoft hasn't played fair in a lot of
ways." The Melnicks joined the case at the request of their attorney,
Robert Mittel, who is bringing the class action suit in Maine. They
qualified to join the lawsuit because they bought a computer this year
with Windows 98 already installed.

Severin Beliveau, a Portland lawyer representing Microsoft in Maine,
said the company hopes to get all the lawsuits combined into a single
case. "If they have to fight these cases in each state, it could be very
expensive," he said. He said the civil cases were expected after the
federal ruling in November that "some innovations that would truly
benefit consumers never occur for the sole reason that they do not
coincide with Microsoft's self-interest."

U.S. District Judge Thomas Penfield Jackson is expected to rule by
February on whether Microsoft broke anti-monopoly laws.

Settlement discussions with the Justice Department are underway.
Sterling, the anti-trust expert at Gordon and Glickson in Chicago, said
all the civil cases could give Microsoft more reason to pursue that
option. (The Associated Press, December 28, 1999)


MOBIL OIL: Aust Aircraft Owners to Have Fuel Test Kits by Jan. 25
-----------------------------------------------------------------
Up to 300 fuel contamination testing kits were expected to reach
aircraft owners overnight, with the prospect that many grounded light
planes will be able to fly on January 25. After a day of frustration in
the Mobil dirty fuel saga, with few testing kits being dispersed, the
Civil Aviation Safety Authority (CASA) expects better news. The kits are
to be sent by courier to piston-engine aircraft owners around eastern
Australia, many of whom have had to cope with the grounding of their
planes since before Christmas.

CASA director Mick Toller said he expected he would be able to announce
an approved engine-cleaning method would be made available for those
planes which prove positive to contamination. He said seven of
Australia's top aeronautical engineers had given their last-minute
comments on the final draft and these were very useful.

Mr Toller said the cleaning process was not easy and would take a day
and a half to complete for a fairly simple aircraft and longer for
others.

Mobil's fortunes plunged to a new low as class actions were lodged
against the oil giant. In the Federal Court, Melbourne law firm Maurice
Blackburn Cashman lodged a claim by companies operating some 500
aircraft. Detailing the action, solicitor Brendan Murphy dismissed a $15
million hardship fund set up by Mobil as akin to putting a "Band-Aid on
a haemorrhage".

Federal treasurer Peter Costello said the still unresolved Mobil fuel
crisis would have economic consequences for more than just the aviation
industry. "It's very difficult for the operators, it will have an effect
on their businesses and an effect on the economy generally," Mr Costello
told Melbourne radio 3AW.(AAP Newsfeed, January 25, 2000)

Aust Mobil says it will pay for the cleaning of its customers's aircraft
fuel systems affected by its contaminated avgas. "In order to get our
customers safely back into operation as soon as possible, Mobil staff
will be working closely with aircraft maintenance organisations at major
airports to streamline the cleaning process," Mobil corporate affairs
manager Alan Bailey said in a statement. Mobil said it was also
providing the test kits and would pay for the costs associated with
carrying out the testing. It said in its statement that it was pleased
the Civil Aviation Safety Authority (CASA) had approved cleaning
procedures for aircraft fuel systems.

Mobil is under pressure from its avgas customers, who have been critical
of the oil company's response to the crisis.


PAYDAY LENDERS: Senate Voted for Georgia Legislature for a Crack Down
---------------------------------------------------------------------
Targeting so-called "payday lenders," the Senate voted 48-4 on January
24 to make it a felony to violate the state usury limit on more than 10
separate loans per year.

Sen. Don Cheeks (D-Augusta), sponsor of the bill, said unlicensed
lenders are charging up to 1,500 percent annual interest on short-term
loans often made just days before the borrower receives a paycheck.
Borrowers are expected to repay the loans within days, with heavy fees
and interest rates tacked on. The state usury law prohibits interest in
excess of 5 percent per month.

"We intend to protect our citizens from unscrupulous lending predators
who would otherwise stalk their prey," said Cheeks, chairman of the
Senate Banking Committee. "The attorney general needs this legislation
to bring class action suits against these lenders."

Jeff DeSantis, a spokesman for Attorney General Thurbert Baker, said
Cheeks, not Baker, initiated the bill.

"We're not pushing the bill, but if there's a new crime on the books and
we're given jurisdiction, we'll prosecute it," he said.

Violation under the proposed legislation would be punishable by
imprisonment of up to 10 years or a fine of up to $ 1,000 per unlawful
loan. The tough anti-usury penalties in the bill would not apply to
representatives of licensed financial institutions, credit unions, small
loan companies or credit card companies.

Jet Tooney, lobbyist for the Georgia Community Financial Services
Association, said Cheeks was trying to criminalize an industry that
merely needs regulation.

A House bill by Rep. Robert Reichert (D-Macon) would require "payday
loan" operators to be licensed by the state Department of Banking and
Finance. (The Atlanta Journal and Constitution, January 25, 2000)


PUBLISHERS CLEARING: 25 States File Separate Suits over Sweepstakes Ad.
-----------------------------------------------------------------------
Minnesota and 24 other states have filed separate lawsuits against
Publishers Clearing House, claiming false advertising by the sweepstakes
giant that sends its ''Prize Patrol'' minivan out on Super Bowl Sunday.

''Publishers Clearing House's deceptive sweepstakes solicitations are
designed to convince consumers that they are on the verge of winning big
and that additional orders of magazines or goods are needed to improve
their chances of winning,'' Minnesota Attorney General Mike Hatch said
on January 24.

The Port Washington, N.Y.-based company also misrepresents that it has a
''personal relationship with consumers'' and induces people into
believing that they are guaranteed winners of multimillion dollar
prizes, when they were winners of $1 or costume jewelry, according to
the lawsuit.

Christopher L. Irving, director of consumer affairs at Publishers
Clearing House of Port Washington, N.Y., denied the allegations and said
the majority of people who return their sweepstakes entries do so
without ordering. ''The majority of our millionaire winners, 23 of 30,
did not order with their winning entry,'' Irving said.

Suing Monday were Colorado, New York, North Carolina, New Jersey,
Illinois, Ohio, New Mexico, Oklahoma, Vermont, Oregon, Pennsylvania,
West Virginia, Louisiana, Georgia and California. Similar complaints
already had been filed in nine states.

Hatch's office was contacted by more than 240 people about what they
considered deceptive practices by Publishers Clearing House. The
lawsuit, filed in Ramsey County District Court, seeks injunctive relief,
restitution for consumers and civil penalties of $25,000 per violation.
Hatch also is seeking a supplemental civil penalty of $10,000 for each
violation against a senior citizen.

Irving said the company does not target any age group or demographic.
''The audience that we seek is the United States population,'' he said,
adding that the company sells everything from Rolling Stone magazine to
Glenn Miller tapes.

The states sued on January 24 because a hearing was scheduled January 25
in a proposed settlement of a class-action lawsuit against the company.
The attorneys general feared a settlement might keep them from suing in
the future. Hatch and others think the class action does little for
people victimized by misleading sweepstakes contests and doesn't do
enough to prohibit similar practices in the future.

One of the lawyers who filed that suit, Steven A. Katz, expected
consumers to collect between $14 million and $16 million in that case.
The deadline for filing a claim was Nov. 5. The ''fairness hearing'' to
finalize the case is scheduled for Tuesday in U.S. District Court in
East St. Louis, Ill.

Of the 43 million consumers eligible in the class-action lawsuit, about
100,000 people responded, Irving said.

Last month, President Clinton signed into law a measure designed to help
protect people from sweepstakes scams.

The Deceptive Mail Prevention and Enforcement Act bars sponsors from
implying that buying products can increase entrants' chances of winning
big prizes, requires prominent display of messages that no purchase is
required and bars telling recipients that they have won a prize unless
they actually have. It also imposes million-dollar fines on sweepstakes
companies that violate the law.

The states that had sued Publishers Clearing House earlier were Arizona,
Connecticut, Florida, Michigan, Missouri, Texas, Wisconsin, Washington
and Indiana.

Publishers Clearing House was founded in 1953 and has been holding
sweepstakes since 1967. The company has given out about $137 million in
major prizes and awards, Irving said. In 1997 and 1998, the company had
annual sales of about $375 million. (AP Online, January 25, 2000)


SUNTERRA CORP: Bernstein Liebhard Files Securities Suit in Florida
------------------------------------------------------------------
A securities class action lawsuit was commenced on behalf of purchasers
of the common stock of Sunterra Corporation (NYSE:OWN) ("Sunterra" or
the "Company"), between October 4, 1998 and January 19, 2000, inclusive,
(the "Class Period"), in the United States District Court for the Middle
District of Florida.

The complaint charges Sunterra and certain of its directors and
executive officers with violations of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that
the defendants issued materially false and misleading information
concerning Sunterra's business, earnings growth and profitability and
materially overstated the Company's revenues and earnings throughout the
Class Period. On January 20, 2000, defendants revealed the truth and
announced that Sunterra's fourth quarter results would be in the range
of $.01 to $.08 per share, as compared with $.31 per share in the prior
year and that the Company would be taking a massive charge of$38-$45
million to write off delinquent receivables improperly left on the
Company's books. When the truth was disclosed, Sunterra's stock price
plunged more than $2 per share or 35.35% to an all-time low.

Contact: Mr. Mark Punzalan, Director of Shareholder Relations at
Bernstein Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, New
York 10016, (800) 217-1522 or 212-779-1414 or by e-mail at
Sunterra@bernlieb.com


SUNTERRA CORP: Milberg Weiss Files Securities Suit in Florida
-------------------------------------------------------------
The following was announced on January 21 by the law firm of Milberg
Weiss Bershad Hynes & Lerach LLP:

Notice is hereby given that a class action lawsuit was filed on Jan. 21,
2000, in the United States District Court for the Middle District of
Florida, on behalf of all persons who purchased the common stock of
Sunterra Corp. ("Sunterra" or the "Company")(NYSE:OWN) between Oct. 4,
1998, and Jan. 19, 2000, inclusive (the "Class Period").

The complaint charges Sunterra and certain of its senior officers and
directors with violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The
complaint alleges that defendants issued a series of materially false
and misleading statements concerning the Company's financial condition,
revenues and earnings. Because of the issuance of a series of materially
false and misleading statements the price of Sunterra common stock was
artificially inflated during the Class Period.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP Boca Raton Office
Kenneth Vianale Maya Saxena The Plaza 5355 Town Center Road Suite 900
Boca Ration, Fla. 561/361-5000 or New York Office Shareholder Services
Dept. 1-800-320-5081 E-Mail: endfraud@mwbhlny.com


TYCO INT’L: Ct in NH Considers Consolidation of Securities Suits
----------------------------------------------------------------
A U.S. District Court in New Hampshire is expected to consider
consolidating several lawsuits against Tyco International Ltd. (NYSE:
TYC) next month into one class action suit.

Suits have been filed in Florida, New Hampshire and New York. A Judicial
Panel on Multidistrict Litigation will determine which court will hear
the case if class action status is granted.

Filed on behalf of investors who bought Tyco stock between Oct. 1, 1998,
and Dec. 8, 1999, the suits allege Tyco and executive officer Dennis
Kozlowski issued a series of false and misleading statements concerning
the companys revenue growth rate.

Tyco, which has offices in Fort Lauderdale, sells fire and security
systems, health products and telecommunications services. (Miami Daily
Business Review, January 24, 2000)


VERITY, INC.: Keller Rohrback Files Securities Suit in California
-----------------------------------------------------------------
Keller Rohrback L.L.P. has filed a class action complaint alleging
violations of federal securities laws on behalf of those persons who
purchased or otherwise acquired Verity, Inc. securities between December
1, 1999 and December 14, 1999, inclusive.

Verity, Inc. develops, markets and supports knowledge retrieval software
products for corporate intranets and extranets, online publishers
e-commerce providers, original equipment manufacturers and independent
software vendors. The Company's products manage text-based information
residing on its customers' networks, making corporate content reusable
across intranets, the Internet, and on CD-Rom.

The complaint charges that the officers and directors of Verity rendered
false and misleading statements and/or omissions concerning the present
and future financial condition and business prospects of the Company, as
well as the financial benefits that would flow to Verity and its
shareholders.

For more details on this securities complaint, you may contact Keller
Rohrback L.L.P. (Lynn L. Sarko or Elizabeth A. Leland, Esq.) toll free
at 800/776-6044, or via e-mail at investor@kellerrohrback.com


z Clinton opposes high court review of HIV inmate policy
--------------------------------------------------------
The Clinton administration is urging the U.S. Supreme Court to leave
intact a ruling that allows Alabama to exclude HIV-positive prison
inmates from a range of prison activities because of the possibility
that they might spread the virus to others.

If the high court accepts the administration's advice, the Alabama
Department of Corrections will get a green light to deny HIV-positive
inmates equal access to work-release details, drug and alcohol
rehabilitation, vocational training, organized recreational activities
and worship services.

Two other states, Mississippi and South Carolina, have similar policies.

In a brief submitted Dec. 17, the Justice Department argued that the
11th U.S. Circuit Court of Appeals might have ruled too broadly in
Onishea v. Hopper, but its reasoning was correct and its decision should
not be reviewed.

The Supreme Court is expected to decide shortly - perhaps by Jan. 18 -
whether it will hear the case, which now goes under the moniker Davis v.
Hopper, reflecting the fact that the lead plaintiff is no longer in
Alabama's custody.

The inmates' lawsuit presents a question of how to assess whether HIV
poses a "significant risk" to others even when reasonable accommodations
are taken into account (see AIDS Policy & Law, Oct. 15, 1999, p.1). The
suit was filed under the federal Rehabilitation Act, but the same
standards also apply to the Americans with Disabilities Act.

In an 9-3 ruling last April, the 11th Circuit held that "when the
adverse event is the contraction of a fatal disease, the risk of
transmission can be significant even if the probability of transmission
is low: death itself makes the risk 'significant.' "

The court held that, as a matter of law, HIV presents a "significant
risk" whenever an event occurs that creates a theoretical opportunity
for HIV transmission to occur, provided that the danger is rooted in
sound medical opinion (see AIDS Policy & Law, April 30, 1999, p.1).

For example, the court upheld the exclusion of HIV-positive inmates from
participation in work-release details because of the possibility that a
corrections officer might be knocked unconcious in a vehicle accident
while driving an inmate to an outside work detail, and the inmate might
use that opportunity to intentionally infect the guard with HIV.
Likewise, supervised worship services posed a risk of transmission
because inmates might inject drugs or engage in violent behavior. (AIDS
Policy and Law, January 21, 2000)


z Corp’s Pitfalls in Directors' & Officers' Indemnification Agreements
----------------------------------------------------------------------
The financial protection afforded to directors and officers under state
indemnification statutes, such as Section 145 of Delaware's General
Corporation Law, depends to a great extent on the provisions in
corporate charters, by-laws, or other agreements that corporations adopt
in order to give effect to those indemnification provisions which are
largely permissive and depend upon some form of express corporate
implementation.

In the four recent 1999 cases that are discussed in this article, the
Delaware Chancery Court, the nation's leading business court involved in
the resolution of directors' and officers' indemnification disputes,
ruled in each case in favor of the complaining officers and directors
with respect to their claims under the respective indemnification
provisions at issue in those cases. In all four of the cases, the
parties disagreed as to the proper interpretation of corporate by-laws
or other agreements that implemented indemnification rights and duties
of the directors, officers, and the corporation. While these cases turn
on their unique facts, their rulings, largely in favor of the
complaining directors and officers, can certainly be construed as
placing a greater burden on the corporation in "getting it right" when
indemnification provisions are drafted.

             Indemnification and the Right to Select Counsel

The earliest of these four decisions by the Delaware Court of Chancery
addressed the always important issue concerning the ability of an
officer or director of a Delaware corporation to use counsel of his
selection to represent him in litigation and to obtain advancement of
litigation expenses for that selected counsel. In Chamison v.
HealthTrust Inc., the plaintiff in that action, Alan Chamison, served as
director of an entity called EPIC Holdings Inc.. The defendant in the
case, HealthTrust Inc.-The Hospital Company (HealthTrust), acquired EPIC
and agreed as part of the acquisition to provide the full
indemnification rights that are available under Delaware law, including
the advancement to officers and directors of litigation expenses. The
right to the advancement of litigation expenses was an issue because a
derivative action had been brought against EPIC in which it was alleged
that the EPIC board, including Chamison, had violated their fiduciary
duties in approving the sale to HealthTrust. It was contended by the
plaintiff in the underlying derivative action that the allegedly
inadequate price paid for EPIC was the product of the agreement by
HealthTrust to repurchase certain stock appreciation rights awarded to
key EPIC officers as incentive bonuses for their efforts on behalf of
EPIC. Significantly, before the HealthTrust acquisition of EPIC,
Chamison as a director of EPIC had filed an action against EPIC and the
other members of the EPIC board and obtained an order that enjoined the
proposed buyback of the stock appreciation rights.

Shortly after the filing of the derivative action, HealthTrust agreed to
comply with its indemnification obligations to the EPIC directors,
including Chamison. Additionally, Chamison had indemnification rights
from another source, American Medical Holdings Inc. (AMH), a holding
company for American Medical International Inc. (AMI), of which Chamison
was also an officer. It was AMI's substantial interest in EPIC that led
to Chamison's appointment to the EPIC Board as AMI's designated
representative. After a series of subsequent corporate acquisitions, the
successor to AMH, Tenet Healthcare Corporation, also agreed to honor its
indemnification obligations to Chamison.

The nub of the dispute between Chamison and HealthTrust related to
HealthTrust's initial insistence that Chamison be represented by the law
firm that was representing the other EPIC directors in the derivative
action. Chamison contended that he had two unique defenses in the
underlying derivative action that distinguished him from the other EPIC
directors who were defendants: his lack of pecuniary interests in the
stock appreciation rights buyback, and (2) his assertion that the value
of the stock appreciation right buyback had been misrepresented to him
by EPIC's CEO. Accordingly, Chamison used his own separate counsel to
represent him in the underlying derivative action and HealthTrust
declined to advance the expenses for those attorneys. Not
insignificantly, Chamison's separate counsel succeeded in having the
derivative plaintiff dismiss all claims against Chamison with prejudice.

The substance of Chamison's claim in the Chancery Court was that he was
entitled to at least contribution, if not complete indemnification, from
HealthTrust for the costs incurred and paid by Tenet in defense of the
underlying derivative action. While a portion of the court's decision
dealt with the issue of the right of contribution from HealthTrust in
view of Tenet's payment of Chamison's litigation expenses, the more
significant indemnification issue concerned whether Chamison had the
right to select his own counsel to represent him in view of his alleged
unique defenses that distinguished him from other EPIC directors, and to
be indemnified by HealthTrust for those separate expenses.

The court began its analysis of the obligation of HealthTrust to
Chamison with the recognition that the issue was one purely of contract,
namely HealthTrust's indemnification agreement, and that that contract
contained a valid provision giving HealthTrust the right to select
counsel who would represent those directors with a right to
indemnification. However, at the same time the court held that under
Delaware law, there is an implied covenant of good faith and fair
dealing in every contract, and each party to such a contract has made an
implied covenant "to interpret and to act reasonably upon contractual
language that is on its face reasonable." The Chancellor recognized that
the Delaware courts apply the implied covenant concept only in narrow
circumstances but, as discussed below, considered its application
appropriate in the case of Chamison's indemnification rights and the
right to separate counsel. The court explained the operation of the
implied covenant concept as follows:

This implied covenant is a judicial convention designed to protect the
spirit of an agreement when, without violating an express term of the
agreement, one side uses oppressive or underhanded tactics to deny the
other side the fruits of the parties' bargain. It requires the Court to
extrapolate the spirit of the agreement from its express terms and based
on that "spirit," determine the terms that the parties would have
bargained for to govern the dispute had they foreseen the circumstances
under which their dispute arose. The Court then implies the extrapolated
term into the express agreement as an implied covenant and treats its
breach as a breach of the contract. The implied covenant cannot
contravene the parties' express agreement and cannot be used to forge a
new agreement beyond the scope of the written contract.

In applying the implied covenant concept to HealthTrust's argument that
Chamison had waived his right to indemnification by refusing to use the
law firm selected to represent all of the EPIC directors, the court
analyzed the admittedly unique defenses of Chamison in the underlying
derivative action within the context of the contract language permitting
HealthTrust to select counsel for which litigation expenses were sought.
The court recognized that the indemnification agreement contained no
language that limited HealthTrust's ability to select Chamison's defense
counsel. Accordingly, the court held that without limiting language,
HealthTrust had broad discretion in applying the indemnification
contract provisions at issue. However, in the court's view HealthTrust
abused that discretion by "trying to force Chamison to accept a defense
that was markedly inferior to an existing and known alternative."
Further, the court observed, that there is no language in 8 Del. C. @
145 which suggests that a corporation's counsel selection clause
"trumps" a director's right to utilize his best legal defenses.

Indeed, @ 145's purpose -- to enable Delaware companies to attract
competent directors by offering them indemnification for suits arising
from their service to the company -- runs counter to the notion that an
indemnitor could, through a counsel selection clause, foist a
less-than-the-best defense upon an indemnitee. HealthTrust's contractual
indemnification of Chamison invoked the same obligations and served the
same purposes as @ 145. Therefore, I conclude that their agreement did
not contemplate sacrificing a director's defensive options to
HealthTrust's counsel selection prerogative.

The court also discussed the fact that HealthTrust eventually offered to
pay for separate counsel for Chamison at a point much closer to trial,
which Chamison also declined. The court rejected HealthTrust's argument
that Chamison's refusal to accept those lawyers constituted a breach of
the indemnification agreement. That argument failed because the new
counsel selection was proposed when HealthTrust knew that the trial date
in the derivative action was fast approaching and that Chamison's own
firm had spent considerable time and effort in his defense. By insisting
initially that Chamison use the same counsel as the other EPIC
directors, the court viewed that "oppressive behavior" as the basis for
estopping HealthTrust to assert that Chamison breached the
indemnification agreement by rejecting the later proffered counsel.

Thus, the Chancery Court held in favor of the director's claim for the
indemnification of the expenses he was forced to incur by the retention
of separate counsel who were required to provide Chamison with a proper
defense in the underlying action.

         Disclosure in the Negotiation of Indemnification Agreements

The second indemnification decision decided by the Chancery Court
shortly after Chamison highlights what duties, if any, an officer of a
Delaware corporation has to disclose information to his company when
negotiating an indemnification agreement, and conversely, what questions
as a practical matter, the corporation should be asking in that
negotiation context. In Greco v. Columbia/HCA Healthcare Corp., the
plaintiff, Samuel A. Greco, was a Senior Vice President of Financial
Operations of the defendant, Columbia/HCA Healthcare Corp. until
Columbia, which was faced with mounting pressure from a criminal
investigation, decided to terminate through voluntary severance
agreements, several high-level officers, including Greco. As part of the
termination process for Greco, he and Columbia negotiated a severance
agreement, which provided, inter alia, for indemnification, the
advancement of litigation expenses, and insurance coverage in accordance
with the applicable corporate charter provisions that addressed those
subjects.

The crux of the defense by Columbia to the advancement of Greco's
litigation expenses was that Greco had consulted certain lawyers in
connection with the negotiation of his severance agreement with Columbia
and should have disclosed the identities of those lawyers to Columbia.
The key lawyer whose identity had not been disclosed, at least in
Columbia's theory of the case, was a New York attorney who represented
Florida Software Systems Inc. (FSS), a Columbia vendor. FSS was owned
and controlled by a personal friend of Greco and, significantly, FSS
sued Columbia after Greco had departed from Columbia. Before the FSS
action against Columbia had been filed, Columbia had advanced litigation
expenses to Greco in accordance with his severance agreement and the
company's charter provisions on indemnification. Indeed, at the request
of Columbia, Greco had attempted to resolve the differences between FSS
and Columbia before FSS filed suit.

On the same day that Columbia filed a third-party complaint against
Greco in the FSS litigation, it notified Greco that it would not honor
the terms of the severance agreement with Greco by advancing litigation
expenses in either the criminal investigation (for which Columbia had
been previously advancing litigation expenses to Greco), or the
litigation expenses that Greco would be incurring in response to the
third-party complaint brought against him that same day by Columbia.

In analyzing Columbia's refusal to comply with its indemnification
obligations to Greco, the court focused on the three legal defenses
advanced by Columbia based on Greco's failure to identify the counsel on
which he had relied in the severance agreement negotiations:

(1) Greco's non-disclosure was fraudulent concealment;
(2) Greco's non-disclosure violated the implied covenant of good faith
and fair
    dealing; and
(3) Greco's non-disclosure constituted "reprehensible conduct" which
barred
    recovery under the unclean hands doctrine.

First, as to the argument of fraudulent concealment, Columbia's theory
was predicated on the assertion that as an officer of Columbia when he
was negotiating the severance agreement, Greco had an obligation as a
corporate fiduciary to disclose all material facts related to the
negotiations. The Vice Chancellor responded to that argument by pointing
out that Greco was in the process of being terminated. Accordingly, his
interests in the negotiation of the severance agreement were from the
beginning of that process adverse to those of Columbia and, thus, did
not implicate his fiduciary duties to the company:

I am at a loss as to why Greco had a duty to disclose the identity of
those to whom he looked for legal advice. Columbia was on notice that
any attorney for Greco would be duty bound to seek as much protection
and benefit for Greco as possible in the context of the severance
agreement negotiations. The officer negotiating with Greco on behalf of
Columbia in fact believed Greco was consulting with an attorney and that
officer had legal and employee relations resources at his disposal to
address any proposals Greco brought to the table.

Furthermore, with respect to the fraudulent concealment argument, the
court observed that there was nothing in the record, other than
speculation, to establish that had the fact of the attorney involvement
been made known to Columbia, there would have been any different outcome
with respect to the terms for indemnification and advancement of
litigation expenses that were ultimately agreed to by the parties.

Second, the essence of Columbia's argument based upon the violation of
the implied covenant of good faith and fair dealing was that Greco "may"
have disclosed confidential information to his attorney that "may" have
assisted FSS in its litigation against Columbia. The court found the
record devoid of any evidence to support that argument and summarily
rejected it.

Third, the court also rejected the unclean hands argument. The court
found nothing "reprehensible" in Greco's reliance upon an attorney who
had a relationship with FSS. The court did not believe it unusual for a
lay person such as Greco not to recognize any adverse or improper
implications arising from his retention of counsel who had a
relationship with an adversary of Columbia, especially before FSS had
filed suit against Columbia.

In short, the Chancery Court rejected all of Columbia's defe
nses to Greco's claims for the advancement of his litigation expenses.

                   The Requirement of Good Faith

Once again, in the third of these recent Delaware decisions VonFeldt v.
Stifel Financial Corp., the plaintiff officer/director, Dewayne R.
VonFeldt, was successful in his claim for indemnification in spite of
the Chancery Court's rejection of part of his interpretation of the
applicable corporate indemnification provisions. In VonFeldt the
principal indemnification issue concerned whether the corporate
defendant's by-laws contained an implicit requirement that the director
or officer seeking indemnification must act in good faith as a
prerequisite to obtaining the benefits of indemnification.

The plaintiff, VonFeldt, argued that the Stifel by-laws did not import
such a requirement. Specifically, VonFeldt contended that because
Stifel's indemnification by-law was more expansive than 8 Del. C. @
145(a) and in view of the fact that it did not explicitly incorporate a
requirement the director act in good faith in order to obtain the
benefits of indemnification, it was unnecessary for him to show that his
actions, for which he sought indemnification, were undertaken in good
faith.

The court rejected that argument. Referring to an earlier decision by
the Delaware Supreme Court in the same case, the Chancellor observed
that the Supreme Court had determined that Section 145 serves the dual
policies of "'allowing corporate officials to resist unjustified
lawsuits, secure in the knowledge that, if vindicated, the corporation
will bear the expense of litigation'" and "'encouraging capable women
and men to serve as corporate directors and officers, secure in the
knowledge that the corporation will absorb the cost of defending their
honesty and integrity.'" Thus, the Chancellor viewed the Delaware
Supreme Court as having determined that a fundamental predicate for
receiving the benefits of indemnification is the good faith of the
officers, directors, or employees who seek such benefits under Section
145.

The court also observed that even though Section 145(f) permits
indemnification on terms other than those set forth in the other
subsections of the indemnification statute, such other indemnification
must nevertheless be consistent with the policies expressed in other
parts of Section 145. Having determined that good faith is a
prerequisite to the entire indemnification statutory scheme in Delaware,
the court held that a Delaware corporation could not vitiate that
essential feature of the indemnification statute pursuant to the
permissive provisions of Section 145(f).

Having lost the first round on whether there was a good faith
requirement at all, VonFeldt nevertheless won the second and third
rounds, and thereby the right to indemnification because the court was
convinced that Stifel, not VonFeldt, had the burden of demonstrating
that VonFeldt had not acted in good faith and that based upon the facts
of record, there was no credible evidence supporting the contention that
he had not acted in good faith. In this regard, the court observed that
Stifel's indemnification by-law provision was quite broad and mandated
indemnification to the fullest extent permitted by Delaware law. The
court reasoned that by adopting such a broadly phrased mandatory
indemnification provision, the corporation had effectively assumed the
burden of demonstrating why indemnification should not be awarded.
Indeed, the court, which issued its decision after trial, held that even
if the burden had been placed on VonFeldt rather than Stifel, VonFeldt
would have been entitled to the indemnification he sought because of the
failure of Stifel to adduce any credible evidence that VonFeldt had not
acted in good faith, and because Stifel pursued a litigation strategy
that led VonFeldt to believe that the issue of good faith would not be
raised at trial.

In sum, the corporate officer/director drew a split decision on the
corporate by-law interpretive disputes, but prevailed on the facts as
applied to the corporate by-laws.

                      A Duty to Advance Expenses

Finally, in the most recent of these four indemnification decisions, the
Court of Chancery in Dunlap v. Sunbeam Corp. determined that the
corporate by-law of the defendant Sunbeam, required it to advance
litigation expenses to two of its former officers and directors, even
though those officers might eventually reimburse Sunbeam if they were
unsuccessful in their defense of underlying derivative and class
actions.

As with the other three cases, the litigation that was filed by two
former Sunbeam directors and officers, Al "Chainsaw" Dunlap and Russell
Kersh, developed because of a dispute concerning the wording in the
corporate by-laws and other agreements implementing the indemnification
rights permitted under 8 Del. C. @ 145(a). The essence of the dispute
between the plaintiff former officers/directors and Sunbeam related to a
portion of the relevant Sunbeam by-law dealing with indemnification that
stated:

The Corporation shall indemnify any person against any and all
judgments, fines, amounts paid in settling or otherwise disposing of
threatened, pending, or completed actions, suits or proceedings....
Expenses so incurred by any such person in defending or investigating a
threatened or pending civil or criminal action or proceedings shall at
his request be paid by the Corporation in advance of final disposition
of such action or proceeding....

Sunbeam contended that this by-law provision only required it to
indemnify its directors for "judgments" in the underlying actions and
not for the advancement of expenses incurred by the directors, such as
attorneys' fees (which were quite substantial with respect to Messrs.
Dunlap and Kersh), that were being incurred in the underlying actions.

In analyzing this argument, the court first observed that it made no
sense to contend that the two sentences from the above-quoted Sunbeam
by-law above could be read in concert to be limited to judgments because
there would never be an occasion when the corporation would be in a
position to "advance" the monetary amount for an as yet to be determined
judgment. Further, the court held that the use of the word "expenses" in
the second sentence when read in context was logically meant to
encompass expenses such as attorneys' fees that were incurred in
connection with defending an action before the judgment was entered. In
so ruling, the court rejected Sunbeam's argument that the absence of any
specific reference to the payment of attorneys' fees indicated an intent
not to cover such "expenses."

Notwithstanding its decision that the Sunbeam by-law required the
payment of advancements to Dunlap and Kersch, the court also addressed
another supplementary agreement between Dunlap and Kersh and Sunbeam,
that according to the contentions of Dunlap and Kersh provided them with
an independent basis for the advancement of their attorneys' fees. This
agreement, the Forbearance Agreement, had been drafted after Dunlap and
Kersh were terminated by Sunbeam and was a type of litigation standstill
agreement between Dunlap and Kersh on the one hand and Sunbeam on the
other. As part of the Forbearance Agreement, there was a provision that,
according to Dunlap and Kersh, required Sunbeam to advance litigation
expenses being incurred by the two directors in the underlying actions.
Because the Forbearance Agreement provided that any indemnification
payments would be made in accordance with Sunbeam's by-laws and Delaware
law, Sunbeam argued that there could be no advancements in view of its
earlier argument, which the court had rejected, concerning the effect of
its by-laws in precluding the advancement of litigation expenses. Having
rejected Sunbeam's antecedent by-law argument, the court also rejected
its equally strained construction of the Forbearance Agreement language.

Finally, the court analyzed the dispute between Dunlap/Kersh and Sunbeam
within the general context of 8 Del. C. @ 145(c), the mandatory
provision of Section 145, that requires a Delaware corporation to
indemnify an officer or director in the event that the officer or
director is successful on the merits in the underlying action. Sunbeam
argued that it made no sense to permit the advancement of the litigation
expenses to Dunlap and Kersh, if it had the power to demand the
repayment of such advancements, in the event Dunlap and Kersh were
ultimately unsuccessful on the merits in the underlying actions. The
court rejected that argument by pointing out that when Section 145(c)
was read in conjunction with the Sunbeam by-laws and the Forbearance
Agreement, it was only logical that Dunlap and Kersh should enjoy the
benefit of receiving the advancements because "in light of the time
value of money, a request for advancement is a quite sensible request
for interim financing of litigation costs; it is not absurd at all."

Accordingly, the corporate officers/directors in this action again
prevailed on a dispute regarding the proper interpretation of corporate
by-laws and other agreements as to indemnification provisions.

                               Conclusion

The above four decisions underscore the importance of detailed
consideration by all interested parties of the terms and conditions of
agreements between officers, directors and corporations that implement
Section 145 indemnification rights and duties. Indemnification by-laws
are often drafted in general form/boiler-plate outlines without careful
consideration of specific concerns such as those raised by the corporate
defendants in the above cases. On the other hand, the negotiation of
collateral agreements providing for indemnification such as in Greco and
Dunlap is often undertaken in an environment that requires prompt action
and in an atmosphere where the relationship between the officer or
director and the company may be in some state of deterioration if not
completely adversarial. Both of these circumstances operate against
careful consideration of the full implications of such agreements.

The teaching of these four recent Chancery Court rulings is that a
little more time and effort in the drafting phases, especially by the
corporations, could have obviated at least some of the litigation. --

The Chamison case underscores the premium that an officer or director
should place on including language in an indemnification agreement that
will provide him with the option for counsel selection rather than
leaving the corporation with the choice, at least in situations like
Chamison, where the defenses of directors may be different or adverse.
It is clear from the Chamison decision that the Chancery Court will
apply the indemnification statute, 8 Del. C. @ 145, in a fashion that
will enable an officer or director to pursue a course of action that
will provide him with the best defenses available. In the Chamison case,
Chamison was fortunate in being able to demonstrate that his position
was clearly distinct from the other EPIC directors and that he,
therefore, should have been able to select his own counsel. In other
cases, the factors supporting the need for separate counsel may be more
subtle. In those cases, a clearly worded indemnification agreement
permitting the officer or director to select his own counsel in
situations where a good faith basis exists to support the selection of
separate counsel, would obviously avoid unnecessary litigation. --

In the Greco case, the corporation could easily have required the
requisite disclosure from its officers and directors in order to avoid
what it later considered a conflict of interest on the part of Greco. --

The VonFeldt case counsels in favor of more specificity in corporate
indemnification by-laws as well with respect to the good faith
requirement for directors and officers. Corporate agreements of all
types address not infrequently burden of proof requirements in the event
of disputes among the contracting parties. Clearly, to the extent a
corporation adopts by-laws that implement broad indemnification benefits
for officers and directors, it is now prudent for the corporation to
require such beneficiaries of those provisions to bear the burden of
establishing their entitlement to such benefits. --

Finally, to the extent that a corporation does not want to adopt
expansive rights to the advancement of litigation expenses to officers
and directors, Dunlap makes clear that the corporation can adopt by-law
provisions or other agreements that explicitly give the corporation
broad discretion to endorse or reject advancements depending on the
circumstances of a particular case. The failure to do so in Dunlap led
again to unnecessary litigation. (Corporate Officers and Directors
Liability Litigation Reporter, December 13, 1999)


z Tasmanian Govt Says Tampon Tax May Breach Discrimination Act
--------------------------------------------------------------
Taxing tampons could breach the Commonwealth Sex Discrimination Act, the
Tasmanian government said on January 24. In a letter to federal
Treasurer Peter Costello, Cabinet secretary and spokesperson for women
Fran Bladel said applying the GST to women's sanitary products was
inequitable.

Mrs Bladel said such products, which were not liable to sales tax, were
a necessity of life due to the physiological fact that women menstruated
for about 35 to 40 years. She said the appliciation of the GST could
well amount to discrimination under the 1984 Sex Discrimination Act
because the federal government was treating women less favourably than
men by imposing a tax on a characteristic that only applied to women.

By way of analogy, if a woman was discriminated against in the context
of breastfeeding, the law would accept she was being discriminated
against because of her gender. "I am advised that a prima facie case of
discrimination can be made out under sections 5(1) and 5(2) of the act
and that it is open for women to take a class action under section 69,"
she said.

Mrs Bladel said similar pads and liners used for incontinence were
GST-exempt. This could lead to women using incontinence products as an
alternative, she said. She said she was concerned that the government
had not adequately consulted women about the GST.

There had been no assessment of how the GST would impact differently on
men and women. (AAP Newsfeed, January 24, 2000)


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