CAR_Public/000314.MBX                C L A S S   A C T I O N   R E P O R T E R

                Tuesday, March 14, 2000, Vol. 2, No. 51

                              Headlines

AETNA INC: Fends Off Takeover Offer; Plans Split and Business Practices
ANALYTICAL SURVEYS: Weiss & Yourman Files Securities Suit in Indiana
AOL: Whittington, von Sternberg Files Suit for Texas Consumers of 5.0
ASBESTOS LITIGATION: LA Jury Returns Death Verdict against Flexitallic
BAKER & HOSTETLER: Falls & Veach Files Securites Lawsuit in Tennessee

CIGNA CORP: Discloses 3 Lawsuits Re Health Care Delivery & Payment
CINAR CORPORATION: Weiss & Yourman Files Securities Suit in New Jersey
DAIRY QUEEN: Settles Franchisees Case Filed '94 Re Alternative Sourcing
GUN MANUFACTURERS: Cuomo Says HUD Gun Buybacks to Continue with Funding
MARRIOTT HOTEL: Affiliate's Tender Offer Is Not Merger, DE Court Rules

MCI WORLDCOM: May Pay $100M to Settle Suit on High Casual Calling Rate
PROCTER & GAMBLE: Savett Frutkin Files Securities Suit  in Ohio
PROCTER & GAMBLE: Strauss & Troy Files Securities Suit in Ohio
PROCTER & GAMBLE: Wolf Haldenstein Files Securities Suit in Ohio
SAFETY-KLEEN CORP: Wechsler Harwood Files Extended SC Securities Suit

TOBACCO LITIGATION: 26 Cases Scheduled for Trial against RJ Reynolds
TOBACCO LITIGATION: 34 Union Trust Funds Cases Vs. RJ Reynolds Pending
TOBACCO LITIGATION: Asbestos Cos. Ask RJ Reynolds to Share Compensation
TOBACCO LITIGATION: Flight Attendants Fight on for Damage Awards
TOBACCO LITIGATION: Flight Attendants' Suit on Secondhand Smoke Settled

TOBACCO LITIGATION: Health Care Insurers Appeal against RJ Reynolds
TOBACCO LITIGATION: MSA Settles Govt. Health-Care Cost Recovery Cases
TOBACCO LITIGATION: Named in 12 Antitrust Lawsuits by Wholesalers
TOBACCO LITIGATION: Public Entities Have Filed Claims Vs. RJ Reynolds
TOBACCO LITIGATION: RJ Reynolds Doesn't See Need for Bond Re Engle Case

TOBACCO LITIGATION: RJ Reynolds Reports on Growers' Case Filed in Feb.
TOBACCO LITIGATION: RJ Reynolds Says 45 Purported Class Actions Pending
TOBACCO LITIGATION: RJ Reynolds Says Class Cert. Mostly Sought in State
TOBACCO LITIGATION: RJ Reynolds Says Few Complaints Have Been Certified
TOBACCO LITIGATION: RJ Reynolds under Investigation Re Leaf Purchase

TOBACCO LITIGATON: Native American Tribes Appeal Case Vs. RJ Reynolds
VITAMIN PRICE-FIXING: More Than 200 Companies Opt out of Settlement

                             *********

AETNA INC: Fends Off Takeover Offer; Plans Split and Business Practices
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Struggling to keep control of its business, Aetna Inc., the nation's
largest health insurer, has rejected a $9.9 billion takeover offer and
announced plans to split the 147-year-old company into independent
health care and financial services companies this year. Each new company
would have its own stock.

Aetna also said it would sell some of its overseas health care units and
use the money to reduce debt and buy back stock later this year. Aetna
wants to placate worried investors who have driven its stock price down,
leading to the replacement of its chief executive late last month. Less
than a week after that leadership change, Aetna confirmed reports that
it had received an offer to discuss a takeover from Wellpoint Health
Networks, a health insurance company based in California, and the ING
Group, a Dutch financial services company.

Securities analysts said the announcements by the Aetna board were
unlikely to satisfy investors who have been clamoring for a breakup of
the company and sale of the pieces, possibly in an auction.
"Shareholders are not likely to be thrilled," said Todd Richter, an
analyst with Banc of America Securities. "I would expect the stock to go
down on this news."

The unhappiness would probably be shared by Southeastern Asset
Management, a money management firm based in Memphis that announced
early March that it had bought 6 percent of Aetna's shares and was
pressing for measures that would quickly push up the stock price.

Other investors said they needed more information from Aetna about why
the ING-Wellpoint offer was rejected, the size of the international
units to be sold, how the money will be used, any plans for stock
buybacks, the timetable for splitting the company and management's
earnings projections.

Wall Street analysts have raised concerns about Aetna's ability to
absorb the huge, money-losing health care unit of the Prudential
Insurance Company, which it bought last August for roughly $1 billion,
and to deal with a rash of lawsuits by lawyers who specialize in class
actions as well as patients' rights bills in Congress that would make it
easier to sue health insurers.

Over the last two weeks, Aetna's stock, which had fallen from $99.25
last May to $38.50 in February, rebounded after the company confirmed
reports that it had received the offer to discuss a sale of the company
for $70 a share, or about $9.9 billion. But the Aetna board decided
unanimously to decline the ING-Wellpoint offer.

"We are going to take the route of improving our services and building
value for shareholders," said William H. Donaldson, chief executive of
Aetna, in a telephone interview. A founder of the Donaldson, Lufkin &
Jenrette securities and banking firm and a former chairman of the New
York Stock Exchange, Mr. Donaldson replaced Richard L. Huber as chief
executive of Aetna on Feb. 25. Mr. Donaldson said the $70, which was
mentioned but not actually offered in a letter last month from ING and
Wellpoint, "significantly understates the value of our company and does
not reflect the current value or future potential of our core
businesses."

In private talks with large investors, Aetna officials have argued that
the health care unit and the financial services unit each have assets
worth $9 billion, which would suggest a value of more than $100 a share
for the combined company's stock. But some analysts question many of the
company's estimates.

If Aetna were divided, Larry Mayewski, senior vice president of the A.
M. Best Company, an insurance company credit ratings firm, said a
stand-alone financial services unit could attract more takeover offers.
Mr. Mayewski said problems in health care had held the credit rating of
the financial side of the business, which includes pensions, group life
insurance, annuities, and investment advisory services, to A, compared
with a top rating of A++.

Wellpoint, however, appears to be the only company interested in the
health care unit, which accounts for 70 percent of Aetna's revenues.

Mr. Richter said investors would now watch to see if ING and Wellpoint
try to force Aetna to negotiate by making a formal bid. ING declined to
comment. In a statement, Wellpoint said it was "disappointed" by Aetna's
rejection.

Company officials said that in addition to splitting the company in two,
Aetna plans to move away from the increasingly unpopular restrictions of
its traditional health maintenance organizations and give its customers
more choices and more control over their own care. A growing number of
health plans have taken similar steps.

Aetna is also considering changes in rules that require doctors either
to accept low-paying H.M.O. patients or drop all patients in less
restrictive Aetna health plans. The rules have so infuriated doctors
that some have sued to force a change in Aetna's business methods.

Aetna is also considering taking on new partners for its Internet
operations in an attempt to catch investor interest in e-commerce
companies. Like other health insurers, Aetna is increasingly using the
Internet for communications with doctors, hospitals and employers using
its health plans. It also has a joint venture in a consumer information
Web site with Johns Hopkins University.

The company said that it was completing plans to develop commercial uses
on the Internet for the health care information it collects on 22
million customers. Aetna also said it would sell some overseas units
that have had disappointing results. One candidate may be a joint
venture in Brazil that had weak earnings last year. But Aetna is not
planning to sell all its overseas operations, which analysts have said
might bring $4 billion.

The company said it had not decided who would head the new companies and
whether one or both would remain in Hartford, where Aetna has its
headquarters and where it employs 11,400 people. But it plans to speed
up its cost-cutting program, including a hiring freeze and the
elimination of some layers of management after the split into two
companies. Mr. Donaldson said there would be no large-scale layoffs in
Connecticut, however.

Governor John G. Rowland advised Mr. Donaldson in a letter early March
that the state would use its regulatory powers to insist that the
company keep "a continued significant corporate and physical presence in
Connecticut." Aetna is the third-largest employer in Connecticut, after
the Stop 'N' Shop grocery chain and the United Technologies Corporation.

Mr. Richter of Banc of America said the split into two companies would
probably be tax free to Aetna shareholders. He said the split would have
tax advantages as compared with an auction, which could trigger capital
gains tax liabilities. (The New York Times, March 13, 2000)


ANALYTICAL SURVEYS: Weiss & Yourman Files Securities Suit in Indiana
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A class action lawsuit against Analytical Surveys, Inc. (NASDAQ:ANLTE &
ANLT) and its senior officers was commenced in the United States
District Court for the Southern District of Indiana, Indianapolis
Division, seeking to recover damages on behalf of defrauded investors
who purchased ASI securities.

The complaint charges ASI and its top executives with violations of the
antifraud provisions of the Securities Exchange Act of 1934. The
complaint alleges that throughout the class period defendants issued
materially false and misleading financial statements that inflated
reported revenues, earnings and earnings per share.

Contact: Moshe Balsam, (888) 593-4771 or (212) 682-3025, via Internet
electronic mail at wynyc@aol.com or by writing Weiss & Yourman, The
French Building, 551 Fifth Avenue, Suite 1600, New York City 10176.


AOL: Whittington, von Sternberg Files Suit for Texas Consumers of 5.0
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Whittington, von Sternberg, Emerson & Wilsher, L.L.P. has filed two
class action cases against America Online (NYSE: AOL) for Texas
consumers. The first case was filed in State District Court in
Galveston, Texas on March 8, This lawsuit alleges that the installation
of AOL 5.0 deletes and modifies essential files on users' computer
systems which may result in the users' inability to access non-AOL
Internet service providers ("ISPs"), as well as other glitches that
render the users' computers unstable or inoperative. The class, if
certified, would involve AOL users in Texas who installed AOL Version
The total number of consumers affected by the problems are not yet
known, but would number in many thousands or more.

On March 9, 2000, a national class action lawsuit was filed in Federal
Court in Beaumont, Texas and claims that AOL violated the Federal
Computer Fraud and Abuse Act by releasing AOL Version 5.0 which is
software that, without an adequate warning, made significant
configuration changes to consumers' computers. Plaintiffs also allege
that AOL knowingly caused the transmission of a computer program (AOL
Version 5.0) which caused damages to consumers' computers. The lawsuit
also claims that the installation of AOL 5.0 deletes and modifies
essential files on users' computer systems which may result in the
user's inability to access non-AOL Internet service providers ("ISPs")
as well as additional problems that render the users' computers unstable
or inoperative.

Houston, Texas attorney John G. Emerson, Jr., a partner in the firm of
Whittington, von Sternberg, Emerson & Wilsher, L.L.P., stated: "Texas
consumers of Version 5.0 have reported a range of problems following the
installation of AOL Version 5.0. We are coordinating this litigation
with several other law firms in the United States and hope to achieve
swift and just relief."

For more information about the Texas litigation, contact: John G.
Emerson, Jr. of Whittington, von Sternberg, Emerson & Wilsher, L.L.P.,
at 713-789-8850, or fax, 713-789-0033, or email,
je-mlaw@worldnet.att.net


ASBESTOS LITIGATION: LA Jury Returns Death Verdict against Flexitallic
----------------------------------------------------------------------
A jury in Louisiana returned a verdict of $1,072,000 to the family of
Earlon Nunez as compensation for the death and physical pain caused by
his exposure to products containing asbestos manufactured by Flexitallic
Inc., a manufacturer of asbestos gaskets, and other leading
manufacturers of asbestos-containing products. The verdict is believed
to be the first ever asbestos-related death verdict taken against
Flexitallic.

According to Alan B. Rich from the law firm of Baron & Budd, lead
counsel for the Nunez family, "Day after day a family in America learns
-- painfully, that exposure to asbestos, kills. Earlon Nunez died five
months after he was diagnosed with mesothelioma, but the real tragedy is
that Mr. Nunez's death was preventable. Mr. Nunez and his family have
sounded a call for justice here in Louisiana, and I hope it's been heard
by Flexitallic and every other company whose products continue to take
loved ones from us prematurely."

Until recently, Flexitallic was a member of the Center for Claims
Resolution (CCR), a consortium of twenty manufacturers of asbestos
products formed in 1988 to handle asbestos-related claims by sharing
litigation and settlement costs and assembling experts to work in their
behalf. Last year, the Third Circuit Court of Appeals overturned a class
action settlement which would have insulated CCR members from lawsuits
for asbestos-related injuries. Instead of relying on the CCR's
resources, Flexitallic mounted its own defense and assembled a select
cadre of experts for the Nunez case. Rick Nemeroff of Baron & Budd,
co-counsel for the Nunez family, said that "Mesothelioma is a
particularly pernicious disease. Symptoms can occur anywhere from twenty
to thirty or more years after exposure to asbestos. There is no cure,
but there is the hope that the heavy price paid by Mr. Nunez and his
family will save others because of greater awareness."

Mr. Nunez, a mechanic in Abbeville, Louisiana, died of mesothelioma,
caused by exposure to asbestos. As with other victims of this cancer,
Mr. Nunez was occupationally exposed to asbestos. A Navy veteran, Mr.
Nunez spent ten years as a sailor working as a boilerman below the decks
of several ships, including the USS Kyes. Evidence introduced at trial
indicated that Mr. Nunez's job required him to routinely replace gaskets
containing asbestos which were manufactured by Flexitallic.

The jury reached its verdict after determining that Mr. Nunez suffered
an asbestos-related injury that led to his death. The jury also found
"by a preponderance of the evidence" that Mr. Nunez was exposed to
asbestos- containing products manufactured by, among other companies,
Flexitallic, and that their negligence contributed to his death.

The jury awarded $600,000 for the physical pain and suffering and mental
anguish Mr. Nunez endured before his death. $190,000 was awarded for
loss of enjoyment of life as well as for medical expenses and lost
wages. Jurors also awarded his wife of twenty-three years, Christine,
$282,000 for her loss of support and companionship. In total, the jury
awarded $1,072,000 to the Nunez family. Mr. Nunez is also survived by
his son Frank Price, a paramedic in Abbeville.

Judge Byron Hebert, of the 15th Judicial District, Vermillion Parish,
presided over the seven-day trial. Jennifer A. Kinder and Lawrence
Gettys from Baron & Budd also served as co-counsel for the Nunez family.



BAKER & HOSTETLER: Falls & Veach Files Securites Lawsuit in Tennessee
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The law firms of Falls & Veach, with offices in Nashville, Tennessee and
Asheville, North Carolina, and Tew, Zinober, Barnes, Zimmet & Unice of
Clearwater, Florida announced that several class actions have been filed
in the United States District Court for the Middle District of Florida
at Orlando against Baker & Hostetler, L.L.P., Frank M. Mock, and Jeffrey
E. Decker. The plaintiffs are investors who lost money in a leasing
investment program promoted by Alliance Leasing Corp. (Alliance) in
1998. The lawsuits allege that the defendants aided and abetted the
fraud of Alliance, violated the securities laws, and otherwise engaged
in tortious misconduct.

The lawsuits filed include (1) a class action lawsuit that seeks to
represent all Alliance investors throughout the country who invested in
the Alliance leasing program between April 20, 1998 and October 7, 1998
(the "Class Period"), and (2) individual class action lawsuits that seek
to represent Alliance investors who invested in the Alliance leasing
program during the Class Period and who are residents of the following
states: Florida, Georgia, North Carolina, Massachusetts, Ohio, Illinois,
Tennessee, Arkansas, Michigan, Minnesota, Missouri, Oklahoma, Arizona,
Texas, and California.

Contact: H. Naill Falls Jr., Falls & Veach, 3422 Woodmont Boulevard,
Nashville, TN 37215; Phone: 615/242-1800; Facsimile: 615/242-1823;
E-mail: falls.veach@home.com


CIGNA CORP: Discloses 3 Lawsuits Re Health Care Delivery & Payment
------------------------------------------------------------------
In its report to the SEC, Cigna Corp disclose 3 lawsuits that the
Company faces. The Company says that these were filed after the managed
care industry was publicly targeted in September 1999 by a group of
plaintiffs' trial lawyers. The lawsuits challenge in general terms the
mechanisms used by managed care companies in connection with the
delivery of or payment for health care services. The complaints allege
violation of federal law, but do not claim that any of the alleged
practices resulted in any specific injury or that any member was denied
coverage for services that should have been covered.

The three cases are described below. They are in preliminary stages and
the Company intends to defend each of them vigorously.

(1) Pickney v. CIGNA Corporation and CIGNA Health Corporation was filed
    November 22, 1999 in the United States District Court for the
    Southern District of Mississippi. A plaintiff who seeks to
    represent a class consisting of all present and former enrollees in
    any CIGNA health plan filed the complaint. In addition, the
    plaintiff purports to represent a subclass of subscribers who had
    coverage through their employers' health benefits plans governed by
    the Employee Retirement Income Security Act ("ERISA"). The
    plaintiff seeks attorneys' fees, injunctive relief and unspecified
    damages (including statutory treble damages) under the Racketeer
    Influenced and Corrupt Organizations Act ("RICO").

    The complaint alleges violations of ERISA and RICO based on alleged
    misrepresentations and omissions in CIGNA's advertising, marketing
    and member materials. The plaintiff claims the Company
    intentionally concealed information from its health plan members
    concerning the various ways in which benefit payment and coverage
    decisions are made and the methods by which providers of medical
    services are compensated.

(2) Petersen v. CIGNA Corporation was filed December 17, 1999 in the
    United States District Court for the Eastern District of
    Pennsylvania by a plaintiff who purports to represent subscribers
    to HMOs operated by CIGNA. The plaintiff dismissed this case and,
    on February 2, 2000, filed a similar action in the same court
    naming CG Life as defendant. The complaint seeks injunctive relief
    and unspecified damages, and attorneys' fees under ERISA. The
    plaintiff alleges that the Company falsely represented that
    physicians would direct medical care, and did not disclose methods
    by which providers of medical care are compensated.

(3) Mangieri v. SIGNA Corporation, Connecticut General Corporation,
    Edward Hanway, et al. was filed December 7, 1999 in the United
    States District Court for the Northern District of Alabama by a
    physician who purports to represent physicians and physician groups
    compensated by CIGNA for services provided to CIGNA HMO members. On
    January 19, 2000, the plaintiffs amended the complaint to add as
    defendants Aetna, Inc., Humana, Inc. and certain officers and
    subsidiaries of those defendants. The complaint asserts claims
    under RICO and seeks unspecified damages (subject to trebling),
    injunctive relief, punitive damages and attorneys' fees. The claims
    are based on allegations relating to the ways in which CIGNA
    contracts with and compensates providers of medical services, and
    the ways in which CIGNA structures, administers and covers medical
    benefits, including pharmacy benefits.

CIGNA indicates in the report that it does not believe that any
litigation currently threatened or pending involving CIGNA will result
in losses that would be material to results of operations, liquidity or
financial condition.


CINAR CORPORATION: Weiss & Yourman Files Securities Suit in New Jersey
----------------------------------------------------------------------
The Law Firm of Weiss & Yourman announces that a class action lawsuit
against CINAR Corporation (NAS DAQ:CINR) and its senior executives was
commenced in the United States District Court for the District of New
Jersey seeking to recover damages on behalf of defrauded investors. If
you purchased CINAR shares between March 3, 1999 and March 6, 2000,
please read this notice.

The complaint charges CINAR and its top executives with violations of
the antifraud provisions of the Securities Exchange Act of 1934. The
complaint alleges that throughout the class period defendants
misrepresented the Company's financial information and inflated revenues
and earnings. The complaint further alleges that CINAR and its senior
executives profited by selling the Company's shares to the public
without disclosing the wrongdoing.

Contact: Weiss & Yourman Jack I. Zwick, (888) 593-4771 or (212) 682-3025
wynyc@aol.com The French Building 551 Fifth Avenue, Suite 1600 New York
City 10176


DAIRY QUEEN: Settles Franchisees Case Filed '94 Re Alternative Sourcing
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International Dairy Queen, Inc. (IDQ) and its "Dairy Queen" franchisees
announced on March 10 the settlement of a class-action lawsuit filed in
April of 1994 by five of its franchisees, who complained that IDQ was
unreasonably preventing "Dairy Queen" franchisees from purchasing food
products and supplies from alternative sources. In 1996, the case was
converted into a class action involving about one-third of the "Dairy
Queen" franchisees in the United States.

The proposed settlement, preliminarily approved on March 10 in the
United States District Court for the Middle District of Georgia - Macon
Division, calls for a commitment from International Dairy Queen to
contribute an average of nearly $5 million annually during the next six
years to the franchise system's national sales promotion programs.

In another major term of the settlement, IDQ will pay a total of more
than $ 6 million to the Dairy Queen Operators' Cooperative to provide
for the continued availability of alternative sources of food products
and supplies for the "Dairy Queen" system's stores.

Current and former "Dairy Queen" franchisees will be notified of the
settlement terms this month. Both IDQ and the participating franchisees
will then ask the court to finalize the agreement.


GUN MANUFACTURERS: Cuomo Says HUD Gun Buybacks to Continue with Funding
-----------------------------------------------------------------------
Housing and Urban Development Secretary Andrew Cuomo said that HUD will
continue funding gun buyback programs around the nation, after the House
Appropriations Committee dropped plans to block nearly $2.6 million in
HUD funds already awarded for buybacks of about 50,000 guns in 80
cities.

The Committee's action has reversed its plans to pass legislation
killing the HUD buyback funding. The action came amidst the Clinton
Administration's efforts to win Congressional approval of measures to
combat gun violence.

President Clinton praised HUD's gun buyback initiative in an interview
aired on CNN. The President said: "I was just stunned to hear that there
are a number of Republicans in the House of Representatives that want to
stop us from doing the gun buyback program. I can't imagine why they
want to stop that. A lot of cities with Republican mayors have done gun
buyback programs. And its totally voluntary -- you bring in a gun, you
get a certain amount of money, you gather the guns up and you destroy
them. You're taking that many out of circulation. So those are the kinds
of things I think ought to be done."

Cuomo welcomed the Appropriations Committee decision to drop plans to
pass legislation barring HUD funding of the gun buybacks.

HUD approved $2.6 million in gun buyback funding earlier this year for
the 80 cities under its Drug Elimination Grant Program, and plans to
approve more funding in the future. The buybacks, which are run by local
police departments, have taken place so far in Louisville, KY and
Watervliet, NY, with the rest scheduled to take place in the next few
weeks and months.

Congresswoman Carolyn McCarthy of New York, whose husband was murdered
and whose son was seriously wounded by a gunman on the Long Island Rail
Road, spoke on the House floor in opposition to the attempt to halt
HUD's gun buyback program. "The daily gun violence in this country is a
national problem," McCarthy said. "It calls for a national solution. The
American people know that 13 children are killed every day by gun
violence. Meanwhile the Congress does nothing.... Clearly, HUD Secretary
Cuomo has the authority to conduct the buyback program."

Congresswoman Jan Schakowksy of Illinois said: "Every gun that we take
off our streets could be a life saved. This is a common sense way of
getting at least some of the guns out of our vulnerable communities. I
applaud HUD for initiating this program and look forward to its full
implementation."

The following expressed support for HUD's gun buyback initiative when it
was announced last year: Senator Paul Sarbanes of Maryland, Ranking
Member of the Senate Banking, Housing and Urban Affairs Committee;
Senator Frank Lautenberg of New Jersey, Ranking Member of the Senate
Budget Committee and a Member of the VA-HUD Appropriations Subcommittee;
Senator Barbara Boxer of California, Member of the Budget Committee;
Congressman Patrick Kennedy of Rhode Island; Congresswoman Carolyn
McCarthy of New York; Handgun Control, Inc.; the National Education
Association; Physicians for Social Responsibility; the American Public
Health Association; the Educational Fund to End Handgun Violence; the
National Association of African Americans in Housing; and officials from
numerous housing authorities.

The buybacks are designed to reduce the toll of gun violence, which each
week claims an average of 600 lives and injures another 1,800 people in
crimes, accidents and suicides around the United States.

HUD gun buyback funds will be used by housing authorities and police
departments to buy back guns for a suggested price of $50 each -- either
in cash or in the form of gift certificates for food, toys, or other
goods. To reduce the availability of guns, all guns purchased with HUD
funds will be destroyed, unless it is determined that a gun was stolen
or is needed for an ongoing law enforcement investigation. Stolen
weapons will be returned to their lawful owners.

The basic premise of the gun buybacks is to give people the opportunity,
for a limited period of time, to exchange their guns for something of
value with no questions asked. There are variations on the inducements
offered, but the most successful programs offer money, some type of
vouchers or tickets, or food coupons in exchange for weapons.

In addition, the buyback initiative is designed to foster cooperation
between local communities and law enforcement agencies, as well as to
educate people regarding gun safety and responsible gun ownership.

The gun buyback initiative is one of several actions the Clinton
Administration is pursuing to reduce deaths and injuries caused by guns
each year across the nation. Other parts of the Clinton Administration's
gun safety agenda include:

  -- A $30 million Community Gun Safety and Violence Reduction
Initiative that President Clinton proposed in his Fiscal Year 2001
Budget. The initiative, which would be administered by HUD, would fund
computerized mapping of gun violence to help law enforcement agencies
better protect the public, education and outreach programs to promote
responsible safety measures by gun owners, and innovative community
activities to reduce both gun crimes and accidents. If Congress approves
funding for the initiative, local governments, law enforcement agencies,
public housing authorities, community organizations, and other groups
would be eligible to compete for HUD grants to support gun violence
reduction activities in the communities the Department serves.

  -- A $280 million national firearms enforcement initiative that is
also part of the President's proposed budget. The initiative would hire
500 new ATF agents and inspectors to target gun criminals, hire more
than 1,000 prosecutors at all levels of government, fund new gun tracing
and ballistics testing systems to catch more gun criminals, fund local
media campaigns to discourage gun violence, and expand the development
of "smart gun" technologies.

  -- Negotiations between the Clinton Administration and gun
manufacturers, designed to make changes in the design, distribution and
marketing of guns. If negotiations fail, HUD could support a
class-action lawsuit by the nation's public housing authorities against
gun manufacturers.

Public Housing Authorities (HAs) Receiving HUD Funds for Gun Buybacks:

ALABAMA
HA of the City of Foley -- Foley  $ 1,430
Prichard HA -- Prichard    $ 7,500
HA of the City of Talladega -- Talladega $ 2,680

ARIZONA
HA of City of Flagstaff -- Flagstaff  $ 5,005

ARKANSAS
HA of the City of Camden -- Camden  $ 30,030

CALIFORNIA
San Francisco HA -- San Francisco  $ 71,500
HA of the County of Marin -- San Rafael  $ 4,290

CONNECTICUT
HA of the City of Hartford -- Hartford  $ 14,300
The New Britain HA -- New Britain  $ 7,150
HA of the City of Stamford -- Stamford  $ 71,500
HA of the City of Meriden -- Meriden  $ 7,150
HA of the City of Norwalk -- S. Norwalk  $ 10,000

FLORIDA
Metro Dade Housing Agency -- Miami  $ 71,500
Tampa HA -- Tampa    $ 71,500

GEORGIA
HA of Savannah -- Savannah   $ 7,150
HA of the City of Augusta -- Augusta  $ 14,300
HA of the City of Rome -- Rome   $ 3,575
HA of the City of Cordele -- Cordele  $ 9,295
HA City of Atlanta -- Atlanta   $ 7,150
HA of Columbus, Georgia -- Columbus  $ 25,025

HAWAII

Hawaii Housing & Community Development Corporation -- Honolulu  $ 22,880

ILLINOIS
Chicago HA -- Chicago    $143,000
Rockford HA -- Rockford    $ 20,020
Randolph County HA -- Chester   $ 4,290

INDIANA
HA of City of Hammond -- Hamond   $ 5,720
HA of City of Gary, Indiana -- Gary  $ 7,150

KANSAS
Kansas City, Kansas HA -- Kansas City  $ 42,900

KENTUCKY
HA of Princeton -- Princeton   $ 2,860
HA of Columbia -- Columbia   $ 1,144
HA of Frankfort -- Frankfort   $ 2,860
HA of Louisville -- Louisville   $ 28,600
Lexington-Fayette HA -- Lexington  $ 71,500
HA of Martin -- Martin    $ 1,430

MARYLAND
HA of Baltimore City -- Baltimore  $286,000
HA of the City of Annapolis -- Annapolis $ 5,005

MASSACHUSETTS
Spingfield HA -- Springfield   $ 21,450
Malden HA -- Malden    $ 7,250
HA of Worcester -- Worcester   $ 2,038

MICHIGAN
Inkster Housing Commission -- Inkster  $ 57,915
Saginaw Housing Commission -- Saginaw  $ 4,290
Flint Housing Commission -- Flint  $100,100
City of Detroit Housing Department -- Detroit $ 21,450
River Rouge Housing Commission -- River Rouge $ 10,725

MISSOURI
HA of the City of Hannibal -- Hannibal  $ 10,010

NEW JERSEY
HA of Union City -- Union City   $ 14,300
HA City of Bayonne -- Bayonne   $ 5,363 Patterson HA -- Paterson   $
9,009
Newark HA -- Newark    $715,000
HA of the City of Millville -- Millville $ 6,721
HA of East Orange -- East Orange  $ 7,150
HA of the City of Orange -- Orange  $ 10,010
HA of Hoboken -- Hoboken   $ 7,150

NEW MEXICO
HA of City of Las Cruces -- Las Cruces  $ 14,300
NEW YORK
Watervliet HA -- Watervliet   $ 4,290
Plattsburgh HA -- Plattsburgh   $ 7,150
Albany HA -- Albany    $ 7,150
Amsterdam HA -- Amsterdam   $ 1,430
Schenectady Municipal HA -- Schenectady  $ 1,144
The Municipal HA City of Yonkers -- Yonkers $ 14,300
Catskill HA -- Catskill    $ 1,430

NORTH CAROLINA
HA of High Point -- High Point   $ 5,434
HA of the City of Durham -- Durham  $ 14,300
HA of City of Wilmington, NC -- Wilmington $ 14,300

OHIO
Lucas Metropolitan HA -- Toledo   $ 25,025
Stark Metropolitan HA -- Canton   $ 31,460

PENNSYLVANIA
Easton HA -- Easton    $ 2,860

RHODE ISLAND
Woonsocket HA -- Woonsocket   $ 7,150
HA of the City of Pawtucket -- Pawtucket $ 25,740

SOUTH CAROLINA
HA of the City of Fort Mill -- Fort Mill $ 7,250
Beaufort HA -- Beaufort    $ 2,860

TENNESSEE
Knoxville Community Develop Corp. -- Knoxville $ 17,500
Memphis HA -- Memphis    $ 71,500

TEXAS
Corpus Christi HA -- Corpus Christi  $ 35,750
HA City of San Antonio -- San Antonio  $ 36,345
HA of the City of El Paso -- El Paso  $ 13,499
HA of the City of Monahans -- Monahans  $ 7,150
HA of the City of Laredo - Laredo  $ 7,150
HA City of Houston -- Houston   $ 35,750

UTAH
HA of Provo - Provo    $ 21,662

VIRGINIA
Roanoke Redevelopment HA -- Roanoke  $ 21,450

TOTAL      $2,552,829


MARRIOTT HOTEL: Affiliate's Tender Offer Is Not Merger, DE Court Rules
----------------------------------------------------------------------
The Delaware Chancery Court has dismissed claims by the limited partners
of Marriott Hotel Properties, who claimed they did not receive a fair
price for their limited partnership units when an affiliate of the
company's general partner acquired a majority interest. In re Marriott
Hotel Properties II Limited Partnership Unitholders Litigation ,
Consolidated C. A. No. 14961 (DE Ch. Ct., Jan. 24, 2000).

The court allowed the limited partners' claim -- that the general
partner misrepresented future profits -- to proceed.

The plaintiffs are limited partners of the Marriott Hotel Properties II
Limited Partnership. The partnership was formed in 1988 to acquire, own
and operate three hotels and have a 50 percent interest in a fourth. A
total of 745 limited partnership units were sold, while Marriott MHP Two
Corp. was the General Partner and controlled the affairs of the
Partnership. A partnership agreement described the General Partner's
"exclusive right and power to conduct the business affairs of the
Partnership," and the limited partners restricted voting rights.

On April 18, 1996, the general partner's parent company, Host Marriott
Corp., began a tender offer for all outstanding units. Host Marriott's
offer included a stipulation that the limited partners approve
amendments to the partnership agreement. Specifically, Host Marriott
hoped to amend the partnership agreement to allow affiliates of the
general partner to vote units acquired and to remove the prohibition
against the transfer of more than 50 percent of the units within a
12-month period.

Host Marriott had the units appraised and offered $125,000 per unit
after finding their worth ranged from $65,000 to $146,000. The tender
offer also described the availability of excess proceeds to the
partnership once it refinanced its $257 million mortgage debt.

On May 17, 1996, some of the limited partners filed a motion to enjoin
the consummation of the tender offer in the Delaware Chancery Court.
They claimed the price offered was inadequate because it should have
included a control premium. They also argued that the general partner
had a duty to ensure the limited partners received a fair price as a
matter of law or under the partnership agreement. The court denied the
preliminary injunction.

The majority of the limited partners initially rejected Host Marriott's
offer, but after the price was raised to $150,000 per unit, 50.4 percent
of the units were tendered.

After the completion of the tender offer, a class action was filed on
behalf of the limited partners who sold their units to Host Marriott.
The suit argued that they did not receive a fair price for their units.
They claimed:

-- The entire fairness standard should apply to the transaction between
   Host Marriott and the general partner;

-- Host Marriott breached the partnership agreement because the offer
   should have fallen under the general partners' duty of good faith
   under the agreement; and

-- The general partner breached its fiduciary duty by accepting an
   inadequate offer and coercing the limited partners into tendering
   their units.

The chancery court dismissed most of the limited partners' claims. It
ruled that the entire fairness standard did not apply because the
transaction was a not a merger but a tender offer because Host Marriott
was the general partner's parent company. The court rejected the
argument that the partnership agreement was breached because the
agreement did not address the possibility of a transaction between the
general partner and one of its affiliates.

The court also held that the general partner had no fiduciary duty to
protect the limited partners from the offer; however, it found that
further discovery was necessary to determine whether the general partner
acted disloyally in its management of partnership cash in contemplation
of the tender offer.

The Delaware Supreme Court ruled in Shell Petroleum Inc. v. Smith (1992)
that "in extending an offer to the limited partners to buy their limited
partnership Units the general partner owes a duty of full disclosure of
material information respecting the business and value of the
partnership." The chancery court noted that the general partnership
projected the unit distributions would not exceed $30,000 in the 10
years following the tender offer, but once the offer closed, the
unitholders received over $33,000 in that year alone.

The court conceded that an inference could be made that the general
partner misrepresented the projected distributions. (Leveraged Buyouts &
Acquisitions Litigation Reporter, February 2000)


MCI WORLDCOM: May Pay $100M to Settle Suit on High Casual Calling Rate
----------------------------------------------------------------------
MCI WorldCom is close to an agreement to shell out at least $ 100
million to settle a class-action lawsuit over the "arbitrarily" high
rates it sometimes charges its customers. The deal could net as many as
2 million residential and business customers rebates ranging from a few
dollars to a few hundred dollars, say people familiar with the matter.
MCI also would agree to stop the practice.

The pact is expected to be finalized in the next few weeks, though it
could still unravel and the final settlement fee change, people close to
the case say. The company would not comment on the lawsuit or proposed
settlement.

The suit, filed last year in federal court in East St. Louis, Ill.,
centers on MCI's highest rate -- a $ 2.49 surcharge plus 38 cents a
minute -- known as a "casual calling" charge.

While AT&T and other long-distance companies have similar rates, they
say they impose them only when callers use their dial-around services.
Such services let non-subscribers use the carrier by simply dialing
10-10 and a three-digit code.

The lawsuit says that MCI charged the fee "arbitrarily," even on
subscribers, a practice it calls "rate slamming," which is "misleading,
fraudulent and deceptive." Fees were applied on customers who called to
cancel service but had not yet switched to another service, perhaps
because they did not know they had to call the new carrier or local
phone company. In a recent consent decree with the Federal
Communications Commission, MCI agreed to bill the customer at the old
rate until the local phone company makes the switch, or for 120 days.
MCI also agreed to change misleading advertising and pay $ 100,000 when
MCI's dial-around services were congested as a result of computer
glitches.

Although MCI WorldCom will continue to have a casual calling rate, the
company is expected to agree to stop charging it inappropriately, say
people close to the matter.

MCI could be trying to settle all actions against it in a bid to get on
the good side of regulators as it awaits approval for its controversial
acquisition of Sprint. "It can't hurt their cause," says Richard Klugman
of Donaldson Lufkin & Jenrette. (USA TODAY, March 13, 2000)


PROCTER & GAMBLE: Savett Frutkin Files Securities Suit  in Ohio
---------------------------------------------------------------
Savett Frutkin Podell & Ryan, P.C. gives notice that a class action
complaint has been filed in the United States District Court for the
Southern District of Ohio on behalf of a Class of persons who purchased
the common stock of The Procter & Gamble Company (NYSE: PG) at
artificially inflated prices during the period January 25, 2000 through
March 6, 2000 and who were damaged thereby.

The complaint charges Procter with a violation of Section 10(b) of the
Securities Exchange Act of 1934. The complaint alleges that defendant
issued a series of false and misleading statements about Procter's
financial and operating condition, as well as its future prospects which
resulted in artificially inflated stock prices during the Class Period.

Contact: Savett Frutkin Podell & Ryan, P.C. Robert P. Frutkin, Esquire
Barbara A. Podell, Esquire 215/923-5400 or 800/993-3233 E-mail:
sfprpc@op.net


PROCTER & GAMBLE: Strauss & Troy Files Securities Suit in Ohio
--------------------------------------------------------------
A class action lawsuit was filed by the law firm of Strauss & Troy on
March 10, 2000, in the United States District Court for the Southern
District of Ohio, on behalf of all persons who purchased the common
stock of Procter & Gamble. ("P&G") (NYSE: PG) between January 25, 2000,
and March 6, 2000.

The complaint charges Proctor & Gamble with violations of Section 10(b)
of the Securities Exchange Act of 1934 by issuing materially false and
misleading statements during the Class Period that the Company was
experiencing successful financial growth in line with an ambitious
restructuring plan. Instead, it is alleged that earnings were materially
less than announced due to high raw material prices, high product launch
costs in Europe, delay in the approval of the drug Actonel, strong North
American competition in food and beverages, and increased price
competition in the Latin American laundry detergent segment, which facts
were not disclosed to the public.

On March 7, 2000, Procter & Gamble stunned the market when it announced
that its third quarter earnings per share were 10 - 11% below those of a
year ago, rather than the 7 - 9% increase it had led the market to
anticipate, and that the Company expected earnings per share growth for
the fiscal year to be 7%, compared to the 13% originally anticipated.
The market reaction to the news was both swift and disastrous; the price
of Procter & Gamble's common stock plunged approximately 31%.

Contact: Richard S. Wayne, Esq., Strauss & Troy, 150 East Fourth Street,
Cincinnati, Ohio 45202, 800-669-9341 or 513-621-2120 or by e-mail at
classactions@strauss-troy.com


PROCTER & GAMBLE: Wolf Haldenstein Files Securities Suit in Ohio
----------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP announces that it filed a
securities class action lawsuit in the United States District Court for
the Southern District of Ohio on behalf of investors who bought Procter
& Gamble Co. (NYSE:PG) stock between February 15, 2000 and March 6,
2000.

The lawsuit charges Procter & Gamble and certain officers of the
Company, with violations of the securities laws and regulations of the
United States. The lawsuit alleges that defendants issued a series of
false and misleading statements during the Class Period concerning the
Company's financial and operating condition, as well as its future
prospects. The complaint alleges that defendants' false and misleading
statements artificially inflated the price of the Company's stock during
the Class Period.

On March 7, 2000, just prior to the opening of the market, defendants
stunned the investment community by announcing that its third quarter
earnings per share would be 10 to 11% below the prior year, rather than
an increase of 7 to 9% as it had led the market to expect. The Company
also announced that it expected earnings per share growth for the fiscal
year of only 7% and not the 13% that the Company had indicated to the
market as recently as the last few weeks.

The market reacted decisively to the Company's drastic about turn by
dropping Procter & Gamble's stock price approximately 31%.

Contact: Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison
Avenue, New York, New York 10016, by telephone at (800) 575- 0735
(Michael Miske, George Peters, Gregory Nespole, Esq., Fred Taylor
Isquith, Esq. or Shane T. Rowley, Esq.), via e-mail at
classmember@whafh.com or visit website at http://www.whafh.com


SAFETY-KLEEN CORP: Wechsler Harwood Files Extended SC Securities Suit
---------------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP has been retained to extend the
class period for a class action against Safety-Kleen Corp. (NYSE: SK)
and certain of its officers and directors that has been commenced in the
United States District of South Carolina.

The claims are on behalf of shareholders who purchased the common stock
of Safety-Kleen between November 13, 1997 and March 10, 2000, including
those shareholders who acquired the securities of Laidlaw Environmental
Services, Inc. ("Laidlaw" renamed Safety-Kleen Corp.) in connection with
the 1998 merger between Safety-Kleen and Laidlaw.

Contact: Wechsler Harwood Halebian & Feffer LLP 488 Madison Avenue, New
York New York 10022, Robert I. Harwood, Esq., rharwood@whhf.com Daniella
Quitt, Esq., dquitt@whhf.com Frederick W. Gerkens, III, Esq.,
fgerkens@whhf.com Craig Lowther, Shareholder Relations,
clowther@whhf.com 877/935-7400


TOBACCO LITIGATION: 26 Cases Scheduled for Trial against RJ Reynolds
--------------------------------------------------------------------
As of January 24, 2000, 26 cases are scheduled for trial before year-end
2000 against RJR Tobacco. In addition, the Engle case in Florida and the
Whiteley case in California (an individual smoking and health lawsuit)
are in progress, and multiple health-care cost recovery trials are
scheduled in 2000 before Judge Weinstein of the United States District
Court for the Eastern District of New York. Additional cases against
other tobacco company defendants are also scheduled for trial before
year-end 2000. Although trial schedules are subject to change and many
cases are dismissed before trial, it is likely that there will be an
increased number of tobacco cases, some involving claims for possibly
billions of dollars, against RJR Tobacco and RJR coming to trial over
the next year.


TOBACCO LITIGATION: 34 Union Trust Funds Cases Vs. RJ Reynolds Pending
----------------------------------------------------------------------
RJ Reynolds says that although the MSA settled some of the most
potentially burdensome health-care cost recovery actions, many other
such cases have been brought by other types of plaintiffs. As of
February 23, 2000, approximately 34 lawsuits by union trust funds
against cigarette manufacturers and others are pending. The funds seek
recovery of payments made by them for medical expenses of their
participants' union members and their dependents allegedly injured by
cigarettes. The claims in these cases are almost identical, and more
than 30 of the cases purport to be class actions on behalf of all union
trust funds in a particular state.

The defendants in these actions argue, among other things, the settled
law that one who pays an injured person's medical expenses is legally
too remote to maintain an action against the person allegedly
responsible for the injury. In addition, they argue that the traditional
subrogation remedy cannot be supplanted by a direct right of action for
the trust fund that strips defendants of the defenses they would
ordinarily have against the allegedly injured individual.

On March 29, 1999, in the first of these cases to be considered by a
federal court of appeals, Steamfitters Local Union 420 v. Philip Morris,
Inc., the U.S. Court of Appeals for the Third Circuit affirmed a
district court ruling dismissing a case on remoteness grounds. Since
then, the U.S. Courts of Appeals for the Second Circuit (Laborers Local
17 v. Philip Morris, Inc.), the Fifth Circuit (Texas Carpenters Health
Benefit Fund v. Philip Morris, Inc.), the Seventh Circuit (International
Brotherhood of Teamsters Local 734 Health and Welfare Trust Fund and
Central States Joint Board Health and Welfare Trust Fund v. Philip
Morris, Inc.) and the Ninth Circuit (Oregon Laborers v. Philip Morris,
Inc.) all have ruled in favor of the industry in similar union cases. On
January 10, 2000, the United States Supreme Court denied petitions for
certiorari filed in cases from the Second, Third and Ninth Circuits.

Numerous trial court judges also have dismissed union trust fund cases
on remoteness grounds, including, on July 22, 1999, a federal district
court in Washington in Northwest Laborers-Employees Health & Security
Trust Fund v. Philip Morris, Inc., and, on September 28, 1999, an
Arkansas district court in Arkansas Carpenters Health & Welfare Fund v.
Philip Morris, Inc. Nonetheless, some union, or other third party payor,
cases have survived motions to dismiss and may proceed to trial. On
August 2, 1999, a federal district court in New York denied defendants'
motions to dismiss in two separate cases heard together -- National
Asbestos Workers Medical Fund v. Philip Morris, Inc. and Blue Cross and
Blue Shield of New Jersey, Inc. v. Philip Morris, Inc. Most recently, on
December 21, 1999, the federal district court in the District of
Columbia denied defendants' motions to dismiss in three cases
consolidated for pretrial purposes -- Service Employees International
Union Health and Welfare Fund v. Philip Morris, Inc.; S.E.I.U. Local 74
Welfare Fund v. Philip Morris, Inc.; and Holland v. Philip Morris, Inc.

The first and only union case to go to trial to date was Iron Workers
Local No. 17 v. Philip Morris, Inc. This case, in which a class of
approximately 111 union trust funds was certified by a federal district
court in Ohio, went to trial on February 22, 1999, on the counts that
survived motions to dismiss: state and federal RICO claims and civil
conspiracy claims. The federal RICO claim was dismissed during the
trial, and after the conclusion of plaintiffs' case, the court directed
a verdict dismissing RJR from the case. On March 18, 1999, the jury
returned a unanimous verdict for the defendants, including RJR Tobacco,
on all remaining counts. On May 11, 1999, the trial court judge denied
plaintiffs' motion for a new trial. Plaintiffs appealed this ruling to
the Sixth Circuit Court of Appeals. On October 4, 1999, plaintiffs
withdrew their appeal and voluntarily dismissed their case.


TOBACCO LITIGATION: Asbestos Cos. Ask RJ Reynolds to Share Compensation
-----------------------------------------------------------------------
Finally, 12 lawsuits, of which nine remain pending, have been filed
against RJR Tobacco by asbestos companies and/or asbestos-related trust
funds based on the theory that the plaintiffs "overpaid" claims brought
against them to the extent that tobacco use, not asbestos exposure, was
the cause of the alleged personal injuries for which they paid
compensation. One of those cases, Falise v. American Tobacco Co., was
dismissed by the United States District Court for the Eastern District
of New York on November 2, 1999, due to a lack of subject matter
jurisdiction. This case was refiled on November 11, 1999.


TOBACCO LITIGATION: Flight Attendants Fight on for Damage Awards
----------------------------------------------------------------
When cigarette-makers settled a class action suit two years ago filed on
behalf of airline flight attendants who claimed to be victims of
secondhand smoke, it looked as if Big Tobacco had gotten off easy. The
deal would provide $ 300 million in funding for research into secondhand
smoke, and it would pay anti-tobacco lawyers Stanley and Susan
Rosenblatt $ 49 million in legal fees and costs.

But the flight attendants themselves got nothing. And compared with the
multibillion-dollar settlements that various state attorneys general
were reaching with tobacco companies, it looked like a pretty sweet deal
for tobacco.

What the industry apparently didn't bank on at the time was the
Rosenblatts ability to find a half-dozen no less tenacious lawyers to
pick up the fight for individual damage awards for the flight
attendants. And what the Rosenblatts critics may not have noticed were
legal provisions the husband and wife negotiated into the 1997
settlement that may now have put the flight attendants in a highly
advantageous position from which to continue the battle.

In January, Miles McGrane of McGrane & Nosich, one of the six firms the
Rosenblatts selected to handle the individual suits, fired the first
salvo in a battle that could prove substantially more costly than the
industry's first go-round with the Rosenblatts. They have filed more
than 600 suits in Miami-Dade Circuit Court against Big Tobacco, and
expect to file hundreds more before the September deadline.

Even though the flight attendants never got a dime out of the settlement
agreement, many remain grateful to Stanley Rosenblatt, who they say
secured key provisions of the settlement that could well give them a
significant boost in their fight.

Key to their ability to bring their case was the industry's agreement to
waive the statute of limitations on individual claims. The statute of
limitations can be a profound barrier to gaining access to the courts,
says Lawrence O. Gostin, professor of law at Georgetown University. It
was an exceptionally good concession. The agreement also shifts the
burden of proof from the plaintiffs to the defendants, and allows for
non-economic damages such as pain and suffering. It does not, however,
allow for punitive damages.

Certainly not everyone thinks the concessions were so stellar. The
biggest critic is the tobacco industry. There is no real practical
effect, says Daniel W. Donahue, an attorney for R.J. Reynolds Tobacco
Co., "one of the named defendants. All of the traditional defenses we
have always had continue to remain available to us and remain strong."

Other defendants include Phillip Morris Inc., Brown and Williamson and
Lorillard Tobacco Co.

These days the Rosenblatts are spending their days at the Miami-Dade
County Courthouse trying yet another case against the tobacco industry.
That trial, which began in November, is on behalf of ill smokers around
the state. Potential damages are said to run into the $ 200 billion
range. Attorneys involved in that suit are under a court gag order not
to discuss the case with the media.

Meanwhile, across the street in the Concord building, a team of lawyers
from the six different firms handling the flight attendants cases
recently began meeting every Friday at 2:30. The task they face is
onerous. They must convince jurors that, through no fault of their own,
the lives of the affected flight attendants have been irreparably
harmed.

The minutia is endless. Discussions range from who will be in charge of
finding expert witnesses to which cases will be tried first. At a recent
meeting, the topic turned to whether all of their cases should be heard
by one judge, as other mass tort cases have, including those involving
asbestos.

McGrane said that the tobacco industry is going to want to have anyone
but Judge  Kaye. Kaye presided over the original class-action suit filed
by the flight attendants and is handling the case the Rosenblatts are
now trying. The tobacco industry has repeatedly tried to get him to step
down. Tobacco lawyers argue that he too is a member of the class because
he suffers from a heart condition that the jury found can be caused by
cigarette smoke and therefore has a financial incentive to favor the
plaintiffs.

As the lawyers discuss strategy, a picture begins to emerge of what each
brings to the table. It is an eclectic group. Their personalities are as
diverse as their specialties, which range from medical malpractice
defense to corporate law. Some have practiced for decades, others are
still wet behind the ears. Some are tenacious, others are able to
display the kind of sincerity it takes to win over a jury. Like the
Rosenblatts, these attorneys are enthusiastic about launching another
attack against the tobacco industry with its seemingly endless resources
and well-heeled lawyers.

"These cases, while on face value may seem like nothing, when you sit
and listen to the individual flight attendants, its really scary. You
will see how it impacts on their day-to-day life," McGrane says.

Williams, a 45-year-old mother of two, was among 60,000 flight
attendants who made up the first-of-its-kind class-action suit filed in
1991, claiming they fell victim to everything from severe sinus problems
to lung cancer while working on flights that permitted smoking.
Williams, a flight attendant since 1973, has been on disability for
nearly two years. Though she never smoked a day in her life, her voice
is raspy and her coughing is constant. She suffers from chronic
bronchitis, sinusitis and asthma. Her life, she says, has been changed
forever. She takes numerous medications and sees specialists monthly.
She blames her poor health on the fact that for 15 years she flew from
city to city inside sealed cabins in a haze of smoke -- in the words of
another flight attendant, trapped in a container and pulmonarily raped
by people who were addicted to cigarettes.

"I get calls every day from people interested in filing a lawsuit. I
don't know what the final number of cases will be," McGrane says. The
lawyers say that until they began reviewing the settlement agreement
they werent aware of the significant and substantial provisions the
Rosenblatts obtained in the settlement.

Though criticized for not getting any money for the flight attendants,
after the deal was struck Stanley Rosenblatt said the tobacco industry
never would have agreed to assign money directly to any individuals and
any efforts to do so would have been a deal killer.

He later was vindicated by the 3rd District Court of Appeal. In a March
1999 ruling, the court upheld the settlement agreement and wrote: There
is nothing to indicate that the tobacco companies would agree to settle
if the money is to be directly paid to class members. The court went on
to note: None of the defendant tobacco companies have ever voluntarily
or through successful litigation paid any compensation to any individual
plaintiff in any lawsuit to date.

The tobacco industry has said only that it agreed to the settlement for
reasons that had nothing to do with the validity of the claims. "It had
everything to do with our efforts to pass the comprehensive national
legislation relating to tobacco issues," John J. Mulderig, an associate
general counsel for defendant Philip Morris, said in a prepared
statement in January after the individual suits began filtering into the
courts.

Added Donahue, the R.J. Reynolds lawyer: I can tell you without any
question that had it not been that the industry was working to get this
legislation passed, we never would have settled the case.

Regardless of intent, the outcome has Rosenblatts supporters crediting
him with changing the legal landscape for anti-tobacco cases. They say
he has made it easier for more pragmatic attorneys to take these
individual lawsuits to court and gave flight attendants significant
leverage in their claims.

In giving the settlement deal its blessing, the 3rd District noted: The
benefits of this settlement are abundant. The deal does, however, waive
the plaintiffs right to claim punitive damages, which juries sometimes
assess against defendants whose behavior they find truly egregious.
While the appeals court noted that might seem like a big concession, the
judges said such claims were the weakest link in the plaintiffs case and
plaintiffs counsel had a genuine and real reason to fear directed
verdicts in favor of the defendants on these counts.

Bonnie Herzog, a tobacco industry analyst with Credit Suisse First
Boston in New York, questions the value of these individual cases
without punitive damages. The financial implications are limited,
especially considering that the industry has already paid out money
dealing with the same issue. You could argue [the industry] already has
been punished, and it will be interesting to see where it goes.

But the attorneys filing these cases say that even without punitive
damages the verdicts can elicit hefty awards from sympathetic juries.
Indeed, those in the industry have said the payoff could be in the
billions of dollars. "As we are getting to know our clients better, the
cases are worse than we thought in terms of damages," says Steve Hunter
of the Miami firm Angones Hunter McClure Lynch & Williams. He cited
former flight attendant Williams as an example. Her condition has her on
lists of medications, has resulted in her having sinus surgery and
requires her to see two specialists a month.

Another possible vehicle for damages that was discussed by the attorneys
are consortium claims. Such claims figure in the award for damages in an
action for injury or death of a spouse. "Speaking as a spouse, I think
it's something we should do," Wolpe tells his colleagues. "To the extent
it exists, it should be brought. At least our clients need to know it
exists."

Of greater concern right now is how to proceed. With more than 600
lawsuits filed and potentially hundreds more to come, the lawyers will
have to whittle down the cases and find the more pressing ones to take
to court first. In part, that is what these Friday get-togethers are
designed to help them accomplish.

Plaintiffs attorneys agree that the best strategy lies in finding the
strongest case, regardless of whose it is. "We will treat all of our
clients the same, but we will move those clients [who are worse off] 10
feet ahead of the others," McGrane says.

None of the attorneys expect to try hundreds of cases. The first dozen
or so should give them the barometer each side needs to see where the
litigation is going. Should the flight attendants win those cases, it
could force the industry to settle.

Though that's not the picture cigarette-makers are drawing. The tobacco
industry says its going to take 80 years to try these cases. "You and I
know that the first 10 cases will decide how the cards fall," McGrane
says. (Broward Daily Business Review, March 10, 2000)


TOBACCO LITIGATION: Flight Attendants' Suit on Secondhand Smoke Settled
-----------------------------------------------------------------------
Numerous lawsuits have been filed (mostly in Florida) by flight
attendants for personal injury as a result of illness allegedly caused
by exposure to secondhand tobacco smoke in airline cabins (the "Broin II
cases"). These lawsuits follow the resolution of the Broin class action,
under which settlement agreement the industry agreed to contribute to a
fund to research secondhand smoke issues, and further agreed that
individual lawsuits might be brought on behalf of any or all of the
Broin class members. In these lawsuits, each individual flight attendant
will be required to prove that he or she has a disease caused by
exposure to secondhand smoke in airplane cabins, and that they are
legally entitled to recover damages from one or more United States
cigarette manufacturers, including RJR Tobacco. As of February 23, 2000,
502 such suits have been served upon RJR Tobacco. One of these cases,
however, was voluntarily dismissed on February 8, 2000.

The Company reports that defendants, including RJR Tobacco, settled the
class-action suit, Broin v. Philip Morris, Inc., in October 1997. The
Florida Court of Appeal denied challenges to this settlement on March
24, 1999, and subsequently denied motions to reconsider. On September 7,
1999, the Florida Supreme Court dismissed all proceedings, and the
settlement and judgment became final.


TOBACCO LITIGATION: Health Care Insurers Appeal against RJ Reynolds
-------------------------------------------------------------------
Five groups of health-care insurers, as well as a private entity that
purported to self-insure its employee health-care programs, also have
advanced claims similar to those found in the union health-care cost
recovery actions. Two of these "insurer" cases, Williams & Drake v.
American Tobacco Co. and Regence Blueshield v. Philip Morris, Inc., were
dismissed in their entirety on remoteness grounds by federal district
courts in Pennsylvania and Washington. These cases are on appeal in the
Third and Ninth Circuits, respectively. In a third case, Group Health
Plan, Inc. v. Philip Morris, Inc., a federal district judge in Minnesota
dismissed all claims, except a state antitrust claim and a conspiracy
claim.


TOBACCO LITIGATION: MSA Settles Govt. Health-Care Cost Recovery Cases
---------------------------------------------------------------------
RJ Reynolds mentions in its SEC filing that in June 1994, the
Mississippi attorney general brought an action, Moore v. American
Tobacco Co., against various industry members, including RJR Tobacco.
This case was brought on behalf of the state to recover state funds paid
for health care and medical and other assistance to state citizens
suffering from diseases and conditions allegedly related to tobacco use.
By making the state the plaintiff in the case and basing its claims on
economic loss rather than personal injury, the state sought to avoid the
defenses otherwise available against an individual plaintiff. Following
the filing of the Moore case, most other states, through their
attorneys' general and/or other state agencies, sued RJR Tobacco and
other U.S. cigarette manufacturers based on similar theories. The
cigarette manufacturer defendants, including RJR Tobacco, settled the
first four of these cases scheduled to come to trial, those of
Mississippi, Florida, Texas and Minnesota, by separate agreements
between each state and those manufacturers in each case.

On November 23, 1998, the major U.S. cigarette manufacturers, including
RJR Tobacco, entered into the Master Settlement Agreement with attorneys
general representing the remaining 46 states, the District of Columbia,
Puerto Rico, Guam, the Virgin Islands, American Samoa and the Northern
Marianas. The MSA became effective on November 12, 1999, when final
approval of the settlement was achieved in 80% of the settling
jurisdictions. As of February 23, 2000, final approval was achieved in
46 settling jurisdictions. The MSA settled all the health-care cost
recovery actions brought by the settling jurisdictions and contains
releases of various additional present and future claims.

In each state where final approval has been obtained, the MSA released
RJR Tobacco and several of its indemnitees and RJR from: (1) all claims
of the settling states, and their respective political subdivisions and
other recipients of state health-care funds, relating to past conduct
arising out of the use, sale, distribution, manufacture, development,
advertising, marketing or health effects of, the exposure to, or
research, statements or warnings about, tobacco products; and (2) all
monetary claims relating to future conduct arising out of the use of, or
exposure to, tobacco products that have been manufactured in the
ordinary course of business.

                       Monetary Liabilities

In addition to payments made in 1998 and 1999, the MSA calls for four
annual initial industry payments starting in 2000 of up to approximately
$2.5 billion, $2.5 billion, $2.6 billion and $2.7 billion, respectively.
It also requires perpetual annual industry payments, increasing from
$4.5 billion in April 2000 to $8 billion in 2004 and further to $9
billion in 2018 and thereafter. Ten additional industry payments of $861
million are due annually beginning in April 2008. All payments are to be
allocated among the companies on the basis of relative market share and
most are subject to adjustments for changes in sales volume units,
inflation and other factors.

The tobacco companies also agreed to (a) make a one-time payment of $50
million on March 31, 1999 to establish a fund for enforcement of the MSA
and laws relating to tobacco products and (b) fund activities of the
National Association of Attorneys General relating to the MSA at the
cost of $150,000 per year for ten years.

In addition, the MSA calls for the creation of a national foundation
that would establish public education and other programs, and conduct or
sponsor research to, reduce youth smoking; and to understand, and
educate the public about, diseases associated with tobacco-product use.
The tobacco companies agreed to fund the foundation with (1) 10 annual
payments of $25 million, which began on March 31, 1999, (2) further
payments of $250 million on March 31, 1999 and $300 million annually
thereafter for four years and (3) additional annual payments of $300
million beginning in 2004 if, during the year preceding the year when
payment is due, participating manufacturers collectively accounted for
at least 99.05% of the cigarette market. Each of these payments is to be
allocated among the companies on the basis of relative market share.
Other than the $25 million annual payments and the $250 million payment
made on March 31, 1999, the payments for the foundation are subject to
adjustments for changes in sales volume units, inflation and other
factors.

The manufacturers also agreed to pay the litigation costs, including
government attorneys' fees, of the offices of the attorneys general
relating to the settled cases and, subject to certain quarterly and
annual payment caps, the costs and fees of outside counsel to the
jurisdictions. Outside counsel fees are to be determined either by
arbitration or in accordance with a negotiated fee procedure. Awards
determined by arbitration will be paid subject to an aggregate annual
cap on arbitrated attorneys' fees for all these and certain other
settled cases of $500 million. Fees set by the negotiated fee procedure
would be subject to an annual cap of $250 million, and will not exceed a
total of $1.25 billion. As of February 23, 2000, awards determined by
arbitration totaled $9.9 billion, and awards determined in accordance
with a negotiated fee procedure totaled approximately $598 million.
Reimbursement of costs is capped at $150 million for litigation costs,
including government attorneys' fees, of the attorneys' general offices
and at $75 million annually for outside counsels' costs. Payments for
attorneys' fees and costs are to be allocated on a market-share basis.

RJ Reynolds discloses that the payments it made pursuant to all existing
tobacco litigation settlement agreements, including the MSA and four
individual state settlements, aggregated approximately $1.6 billion in
1999 which were primarily funded through price increases. RJR Tobacco
estimates its payments to exceed $2.2 billion in 2000 and to exceed $2.0
billion per year in future years. However, the Company believes these
payments will be subject to adjustments based upon, among other things,
the volume of cigarettes sold by RJR Tobacco, RJR Tobacco's market share
and inflation.

                          Growers' Trust

As part of the MSA, the tobacco companies agreed to work with U.S.
tobacco growers to address the possible adverse economic impact of the
MSA on growers. As a result, RJR Tobacco and the three other major
manufacturers agreed to participate in funding a $5.2 billion trust fund
to be administered by a trustee, in conjunction with a certification
entity from each of the tobacco-growing states. The trust agreement
provides for a schedule of aggregate annual payments, subject to various
adjustments, that are payable in quarterly installments each year for a
period of twelve years, beginning in 1999, and ending in 2010. The
aggregate annual payment by all participating manufacturers is adjusted
each year for inflation and any change in the total domestic cigarette
volume of all participating manufacturers. In general, the annual
payment by each participating manufacturer, including RJR Tobacco, is
based on each manufacturer's relative market share of total domestic
cigarette shipments during the preceding calendar year. Each
manufacturer's annual payment is also subject to a tax-offset
adjustment, as well as additional adjustment if a tobacco-growing state
is unable to obtain final approval of the MSA.

          Other Master Settlement Agreement Obligations

The MSA also contains provisions restricting the marketing of
cigarettes. Among these are restrictions or prohibitions on the use of
cartoon characters, brand name sponsorships, brand name non-tobacco
products, outdoor and transit brand advertising, payments for product
placement, free sampling and lobbying. The MSA also required the
dissolution of three industry-sponsored research and advocacy
organizations.

On April 20, 1999, the Canadian Province of British Columbia brought a
case, similar to the U.S. attorneys' general cases, against RJR Tobacco
and other Canadian and U.S. tobacco companies and their parent
companies, including RJR, in British Columbia Provincial Court. This
lawsuit relies heavily upon recently enacted legislation in British
Columbia that is being separately challenged by Canadian tobacco
companies. An agreement was reached with the government in British
Columbia to litigate the separate constitutional challenges prior to the
health-care cost recovery action. On February 21, 2000, the British
Columbia Supreme Court declared the Cost Recovery Act unconstitutional
and dismissed the action.

On September 22, 1999, the U.S. Department of Justice brought an action
in the United States District Court for the District of Columbia against
various industry members, including RJR Tobacco. The government seeks to
recover federal funds expended in providing health care to smokers who
have developed diseases and injuries alleged to be smoking-related, and,
in addition, seeks, pursuant to the federal RICO statute, disgorgement
of profits the government contends were earned as a consequence of a
RICO racketeering "enterprise." On December 27, 1999, defendants filed a
motion to dismiss challenging all counts included in the action brought
by the DOJ. Briefing on that motion is still underway, with oral
argument currently scheduled for May 15, 2000.


TOBACCO LITIGATION: Named in 12 Antitrust Lawsuits by Wholesalers
-----------------------------------------------------------------
Twelve lawsuits have been filed by tobacco wholesalers who are suing
United States cigarette manufacturers, including RJR Tobacco, and its
parent company, RJR, alleging that cigarette manufacturers combined and
conspired to set the price of cigarettes, in violation of antitrust
statutes and various state unfair business practices statutes, as a
result of which plaintiffs suffered economic injury. In all cases,
plaintiffs are asking the court to certify the lawsuits as class
actions, and to allow the respective plaintiffs to pursue the lawsuits
as representatives of other persons in the United States, and throughout
the world, that purchased cigarettes directly from one or more of the
defendants.


TOBACCO LITIGATION: Public Entities Have Filed Claims Vs. RJ Reynolds
---------------------------------------------------------------------
Other cost recovery suits have been brought by, among others, foreign
countries, local governmental jurisdictions, taxpayers (on behalf of a
government jurisdiction), a university and hospitals. On November 4,
1999, in Allegheny General Hospital v. Philip Morris, Inc., the U.S.
District Court for the Western District of Pennsylvania dismissed a
third-party payor lawsuit filed against the tobacco industry by a number
of hospital and health-care facilities. Most recently, on December 14,
1999, a federal district court in Washington dismissed a similar case --
Association of Washington Public Hospital Districts v. Philip Morris,
Inc. Plaintiffs have appealed this ruling to the United States Court of
Appeals for the Ninth Circuit.

On January 5, 2000, a San Diego Superior Court judge dismissed claims in
two lawsuits: California v. Philip Morris, Inc., Superior Court, Los
Angeles County, California and California v. Brown & Williamson Tobacco
Corp., Superior Court, San Francisco County, California. These lawsuits
were brought by the cities of Los Angeles and San Jose, on behalf of the
people of California, who claim that the tobacco industry violated State
Proposition 65 by failing to warn nonsmokers about the State of
California's conclusions concerning the dangers of environmental tobacco
smoke. The judge did not dismiss certain other California state law
claims.


TOBACCO LITIGATION: RJ Reynolds Doesn't See Need for Bond Re Engle Case
-----------------------------------------------------------------------
Trial continues in Engle v. R. J. Reynolds Tobacco Co., in which a class
consisting of Florida residents or their survivors who claim to have
diseases or medical conditions caused by their alleged "addiction" to
cigarettes has been certified. The trial is divided into three phases.
On July 7, 1999, the jury found against RJR Tobacco and the other
cigarette manufacturer defendants in the initial phase, which included
common issues related to certain elements of liability, general
causation and a potential award of or entitlement to punitive damages.
The second phase of the trial, which currently consists of the claims of
three of the named class representatives, began on November 1, 1999. In
addition, the trial court has ordered that the jury shall determine
punitive damages, if any, on a class-wide basis if there is a finding of
liability in any of the three cases being tried in phase two. RJR
Tobacco and certain other defendants appealed this order to the Florida
Third District Court of Appeal, which left the order intact. On October
29, 1999, RJR Tobacco and certain other defendants filed a petition
asking the Florida Supreme Court to review the appropriateness of
determining punitive damages on a class-wide basis. On November 3, 1999,
the Florida Supreme Court agreed to address the issue and asked for
further briefing by the parties. On December 27, 1999, the Florida
Supreme Court decided not to review that issue at this time. The third
phase will address all other class members' claims in individual trials
before separate juries.

Compensatory damages, if any, would not have to be paid to any plaintiff
until the end of his or her trial and the appellate process. As
currently structured, punitive damages, if any, will not be awarded to
any individual plaintiff until the completion of both the second and
third phases of Engle. RJR Tobacco does not believe it would be
necessary to post bond to stay execution of any judgment awarding
punitive damages until a judgment is entered awarding punitive damages
to an individual plaintiff. However, in a worst case scenario, at the
end of the second phase, the court could enter a judgment for punitive
damages on behalf of the entire class in an amount not capable of being
bonded, resulting in the possible execution of the judgment before it
could be reviewed on appeal. RJR Tobacco believes that the entry of a
judgment for punitive damages on behalf of the entire class would be
contrary to U.S. and Florida law and will take all appropriate actions
to prevent this scenario from occurring.


TOBACCO LITIGATION: RJ Reynolds Reports on Growers' Case Filed in Feb.
----------------------------------------------------------------------
On February 16, 2000, a class-action complaint, DeLoach v. Philip Morris
Cos., Inc., was filed in the United States District Court for the
District of Columbia, on behalf of an estimated 520,000 tobacco growers
and quota holders in the United States. The complaint alleges that the
major tobacco companies conspired among themselves, and with 14
attorneys general and one individual, to subvert and undermine the
longstanding regulatory system administered by the U.S. Department of
Agriculture, pursuant to federal statutes and regulations governing the
production and sale of cigarette tobacco in the United States. The suit
asserts claims for violation of Section 2 of the Sherman Antitrust Act,
breach of fiduciary duty and fraud. The plaintiffs seek damages,
including treble damages, under the antitrust statute, totaling $69
billion.


TOBACCO LITIGATION: RJ Reynolds Says 45 Purported Class Actions Pending
-----------------------------------------------------------------------
In its report to the SEC, RJ Reynolds Tobacco Holdings Inc. gives an
overview of legal actions claiming that lung cancer and other diseases
as well as addiction have resulted from the use of or exposure to RJR
Tobacco's products:

During 1999, 147 new actions were served against RJR Tobacco and/or its
affiliates or indemnitees, and 273 actions were dismissed or otherwise
resolved in favor of RJR Tobacco and/or its affiliates or indemnitees
without trial. On December 31, 1999, there were 541 cases pending, as
compared with 664 on December 31, 1998, 516 on December 31, 1997, and
234 on December 31, 1996.

As of February 23, 2000, 539 cases were pending against RJR Tobacco
and/or its affiliates or indemnitees: 538 in the United States and one
in the Marshall Islands. The U.S. case number does not include 501 Broin
II cases, which are discussed below.

The U.S. cases, exclusive of the 501 Broin II cases, are pending in 41
U.S. states and the District of Columbia. The breakdown is as follows:
109 in West Virginia; 103 in New York; 43 in Massachusetts; 40 in
Florida; 38 in California; 28 in Louisiana; 18 in each of Texas and the
District of Columbia; 10 in Alabama; 9 in each of Iowa, New Mexico and
Pennsylvania; 8 in each of Illinois, Mississippi and New Jersey; 7 in
each of Ohio and Tennessee; 6 in Minnesota; 5 in Nevada; 4 in each of
Indiana, Michigan and Missouri; 3 in each of Arkansas, Georgia, North
Carolina, North Dakota, Oklahoma, South Dakota and Wisconsin; 2 in each
of Arizona, Connecticut, Hawaii, Maryland, New Hampshire, Rhode Island,
South Carolina, Utah and Washington; and 1 in each of Colorado, Kansas,
Kentucky and Maine. Of the 538 active U.S. cases, 146 are pending in
federal court, 387 in state court and 5 in tribal court.

Most of these cases were brought by individual plaintiffs, but many
other cases seek recovery on behalf of third parties or large classes of
claimants.

                       Theories of Recovery

The plaintiffs seek recovery on a variety of legal theories, including
strict liability in tort, design defect, negligence, special duty,
voluntary undertaking, breach of warranty, failure to warn, fraud,
misrepresentation, unfair trade practices, conspiracy, aiding and
abetting, unjust enrichment, antitrust, Racketeer Influenced and Corrupt
Organizations Act, indemnity, medical monitoring and common law public
nuisance. Punitive damages, often in amounts ranging into the hundreds
of millions or even billions of dollars, are specifically pleaded in a
number of cases, in addition to compensatory and other damages. Six of
the 538 active cases in the United States, plus the 501 Broin II cases,
involve alleged non-smokers claiming injuries resulting from exposure to
environmental tobacco smoke.

Forty-five cases purport to be class actions on behalf of thousands of
individuals. Purported classes include individuals claiming to be
addicted to cigarettes, individuals and their estates claiming illness
and death from cigarette smoking, persons making claims based on alleged
exposure to environmental tobacco smoke, African-American smokers
claiming their civil rights have been violated by the sale of menthol
cigarettes, purchasers of cigarettes claiming to have been defrauded and
seeking to recover their costs, and Blue Cross and Blue Shield
subscribers seeking reimbursement for premiums paid.
Approximately 65 cases seek recovery of the cost of Medicaid payments or
other health-related costs paid for treatment of individuals suffering
from diseases or conditions allegedly related to tobacco use. Nine,
brought by entities administering asbestos liability, seek contribution
for the costs of settlements and judgments.

                             Defenses

The defenses raised by RJR Tobacco and/or its affiliates, including RJR,
where applicable, include preemption by the Federal Cigarette Labeling
and Advertising Act of some or all such claims arising after 1969, the
lack of any defect in the product, assumption of the risk, contributory
or comparative fault, lack of proximate cause and statutes of
limitations or repose. RJR has asserted additional defenses, including
jurisdictional defenses, in many of these cases in which it is named.

                      Industry Trial Results

Juries have found for plaintiffs in nine smoking and health cases in
which RJR Tobacco was not a defendant, although, to date, no damages
have been paid and most of the verdicts have been overturned on appeal.
Most recently, on November 1, 1999, the Florida Supreme Court heard the
plaintiff's appeal in Carter v. Brown & Williamson Tobacco Corp., a case
in which a Florida Appeal Court had reversed a jury's 1996 verdict in
favor of the plaintiff in the amount of $750,000. In another Florida
case, Widdick v. Brown & Williamson Tobacco Corp., a Florida Court of
Appeal on January 29, 1999, reversed a jury verdict in favor of the
plaintiff in the amount of approximately $1 million in compensatory and
punitive damages and ordered a new trial in a different location. On
February 9-10, 1999, in Henley v. Philip Morris, Inc., a San Francisco
state court jury awarded an individual smoker $1.5 million in
compensatory damages and $50 million in punitive damages. On April 16,
1999, the trial judge reduced the punitive damages award to $25 million,
but otherwise denied Philip Morris' motions. Philip Morris is appealing
the verdict. On March 30, 1999, in Williams v. Philip Morris, Inc., an
Oregon state court jury returned a verdict against Philip Morris in the
amount of $800,000 in actual damages, $21,500 in medical expenses and
$79 million in punitive damages. Although the judge in this case reduced
the punitive damages to $32 million, Philip Morris is appealing this
verdict as well. In the most recent verdict in a non-RJR Tobacco
individual case, Steele v. Brown & Williamson Tobacco Corp., a jury in
Missouri federal court found on May 13, 1999 that Brown & Williamson was
not liable for the death of the plaintiff.

RJR Tobacco tells investors that the Company ultimately has prevailed in
every individual case that has gone to trial. Investors are informed
that most recently, on May 10, 1999, in Newcomb v. R. J. Reynolds
Tobacco Co., one of three individual cases consolidated for trial in
Tennessee state court, the jury refused to award damages against RJR
Tobacco and Brown & Williamson. The same jury found that the tobacco
company defendants in the other two cases were not liable. On June 2,
1999, in an environmental tobacco smoke case, Butler v. Philip Morris
Co., Inc., the jury returned a defense verdict. On July 9, 1999, a
Louisiana state court jury found in favor of RJR Tobacco and Brown &
Williamson, in an individual smoker case, Gilboy v. American Tobacco Co.



TOBACCO LITIGATION: RJ Reynolds Says Class Cert. Mostly Sought in State
-----------------------------------------------------------------------
In May 1996, in an early class-action case, Castano v. American Tobacco
Co., the Fifth Circuit Court of Appeals overturned the certification of
a nationwide class of persons whose claims related to alleged addiction
to tobacco. Since this ruling by the Fifth Circuit, most class-action
suits have sought certification of statewide, rather than nationwide,
classes, RJ Reynolds points out in its report to the SEC.

Class-action suits based on claims similar to those asserted in Castano
have been brought against RJR Tobacco, and in some cases RJR, in state
and, in a few instances, federal courts in Alabama, Arkansas,
California, the District of Columbia, Florida, Hawaii, Illinois,
Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota,
Missouri, New Mexico, Nevada, New Jersey, New York, North Carolina,
Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah,
Virginia and West Virginia, the report says.

In addition, a class action filed in Tennessee seeks reimbursement of
Blue Cross and Blue Shield premiums paid by subscribers throughout the
United States, and class-action suits against RJR Tobacco in New Jersey,
Pennsylvania and Ohio claim that the marketing of "lights" and
"ultralight" cigarettes is deceptive. Plaintiffs have made similar
claims in other lawsuits elsewhere. Other types of class-action suits
also have been filed in additional jurisdictions. Most of these suits
assert claims on behalf of classes of individuals who claim to be
addicted, injured, or put at greater risk of injury by the use of
tobacco or exposure to environmental tobacco smoke, or are the legal
survivors of those persons.


TOBACCO LITIGATION: RJ Reynolds Says Few Complaints Have Been Certified
-----------------------------------------------------------------------
Few class-action complaints have been certified, or if certified, have
survived on appeal, RJ Reynolds asserts. On May 17, 1999, the U.S.
Supreme Court declined to review a circuit court decision upholding the
denial of class certification in a Pennsylvania medical monitoring case,
Barnes v. American Tobacco Co. On April 12, 1999, in Chamberlain v.
American Tobacco Co., a federal district court in Ohio refused to
certify a class of "nicotine-dependent" Ohio residents. On April 13,
1999, in Avallone v. American Tobacco Co., a state court judge in New
Jersey refused to certify a class of casino workers exposed to
environmental tobacco smoke. On June 21, 1999, in Geiger v. American
Tobacco Co., a New York state court refused to certify a class of New
York state residents who were alleged to have contracted lung and throat
cancer as a result of cigarette smoking. On June 29, 1999, in Clay v.
American Tobacco Co., a federal district court in Illinois refused to
certify a class of persons in 46 states who, "as children, purchased and
smoked cigarettes designed, manufactured, promoted or sold by the
defendants." On July 21, 1999, in Hansen v. American Tobacco Co., a
federal district court in Arkansas refused to certify an Arkansas
state-wide class consisting of smokers claiming to have tobacco-related
disease. On July 23, 1999, in Reed v. Philip Morris, Inc., a District of
Columbia superior court judge entered an opinion and order refusing to
certify as a class residents of the District of Columbia claiming to
have tobacco-related disease. On September 21, 1999, a federal district
court judge in Pennsylvania dismissed the Brown v. Philip Morris, Inc.
complaint. This suit alleged, among other things, violations of
plaintiffs' civil rights in the marketing and sale of menthol
cigarettes. On October 26, 1999, the New York Court of Appeals affirmed
a ruling by a lower court decertifying five smoker class actions,
including Hoskins v. R. J. Reynolds Tobacco Co., and dismissing each
case. On November 22, 1999, in Thompson v. American Tobacco Co., a
federal district court refused to certify a class seeking smoking
cessation and medical monitoring programs for smokers and former smokers
in Minnesota. Finally, on January 10, 2000, in Taylor v. American
Tobacco Co., a state court judge in Michigan denied certification of
another smoker class action.

A Maryland state court in Richardson v. Philip Morris, Inc. granted
class certification in 1998. The Maryland Court of Appeals is reviewing
that decision. In addition, on November 5, 1998, a Louisiana state
appeals court affirmed the certification of a medical monitoring and/or
smoking cessation class of Louisiana residents who were smokers on or
before May 24, 1996 (Scott v. American Tobacco Co.). On February 26,
1999, the Louisiana Supreme Court denied the defendants' petition for
writ of certiorari and/or review. Finally, defendants, including RJR
Tobacco, settled the class-action suit, Broin v. Philip Morris, Inc., in
October 1997. The Florida Court of Appeal denied challenges to this
settlement on March 24, 1999, and subsequently denied motions to
reconsider. On September 7, 1999, the Florida Supreme Court dismissed
all proceedings, and the settlement and judgment became final.


TOBACCO LITIGATION: RJ Reynolds under Investigation Re Leaf Purchase
--------------------------------------------------------------------
RJR Tobacco is aware of a grand jury investigation being conducted in
North Carolina that relates to the cigarette business of RJR Tobacco and
some of its former affiliates that were sold to Japan Tobacco Inc., as
well as a now-closed grand jury investigation in Pennsylvania. In
connection with the former, RJR Tobacco responded to a document subpoena
dated July 7, 1999. In connection with the latter, RJR Tobacco received
a document subpoena, dated September 17, 1998, from a federal grand jury
convened in the Eastern District of Pennsylvania by the Antitrust
Division of the Department of Justice. RJR Tobacco understands that the
grand jury was investigating possible violations of the antitrust laws
related to tobacco leaf buying practices. RJR Tobacco responded to that
subpoena. On February 4, 2000, RJR Tobacco received formal notification
from the Department of Justice that this investigation has been closed.

By letter dated September 30, 1999, the U.S. Department of Justice
informed RJR Tobacco that its criminal investigation of RJR Tobacco, and
a grand jury investigation in the District of Columbia that involved
allegations of perjury and misrepresentation before Congress and other
federal agencies and other activities of the tobacco industry, have been
completed.

On December 22, 1998, Northern Brands International, Inc., a now
inactive tobacco subsidiary that was part of the business of R.J.
Reynolds International B.V., a former Netherlands subsidiary of RJR
Tobacco which was managed by a former affiliate, RJR-MacDonald, Inc.,
and which was sold to Japan Tobacco Inc. on May 12, 1999, entered into a
plea agreement with the United States Attorney for the Northern District
of New York. Northern Brands was charged with aiding and abetting
certain customers who brought merchandise into the United States "by
means of false and fraudulent practices . . . ." RJR-MacDonald, Inc.,
now Japan Tobacco's international operating company in Canada, is
cooperating with an investigation now being conducted by the Royal
Canadian Mounted Police relating to the same events that gave rise to
the Northern Brands investigation. On December 21, 1999, the government
of Canada filed a lawsuit in the United States District Court for
Northern District of New York against RJR Tobacco, RJR, several
currently and formerly related companies, and the Canadian Tobacco
Manufacturers Council. The lawsuit alleges that, beginning in 1991, the
defendants conspired with known distributors and smugglers to illegally
import into Canada tobacco products originally earmarked for export from
Canada, in a fashion that avoided the imposition of certain excise and
retail taxes and duty payments. Although the international tobacco
business was sold, RJR Tobacco retained certain liabilities relating to
the events disclosed above.


TOBACCO LITIGATON: Native American Tribes Appeal Case Vs. RJ Reynolds
---------------------------------------------------------------------
Native American tribes have filed similar cases, six in tribal courts
and one class action in San Diego Superior Court. On November 12, 1999,
in Table Bluff Reservation v. Philip Morris, Inc., a federal district
court dismissed plaintiffs' lawsuit. Plaintiffs have appealed this
ruling to the United States Court of Appeals for the Ninth Circuit.


VITAMIN PRICE-FIXING: More Than 200 Companies Opt out of Settlement
-------------------------------------------------------------------
More than 200 companies in the USA have decided to pull out of a $ 1.18
billion settlement reached last November with seven manufacturers over
price-fixing of vitamins, according to Reuters. A lawyer for the class
plaintiffs has reportedly told a federal judge in Washington at the end
of February that a total of 223 companies had opted out. Under the
settlement announced last year, thousands of affected companies were to
recover between 18% and 20% of what they had spent on vitamins.
(Nutraceuticals International, March 1, 2000)


                              *********


S U B S C R I P T I O N  I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by Bankruptcy
Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc.,
Washington, DC. Theresa Cheuk, Managing Editor.

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

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