/raid1/www/Hosts/bankrupt/CAR_Public/000420.MBX                  C L A S S   A C T I O N   R E P O R T E R

                  Thursday, April 20, 2000, Vol. 2, No. 78


CELERA GENOMICS: Milberg Weiss Files Suit in CT over Secondary Offering
COCA-COLA: Reports a Loss Of $58 Million in Quarter
CONSECO INC: Wolf Haldenstein Files Securities Suit in Indiana
ENTERTAINMENT COMPANIES: Hearing Impaired Individuals File Suit
HOLOCAUST VICTIMS: Austria Defends Ambassador over US Lawsuit Comments

HOLOCAUST VICTIMS: French Panel Finds Collaboration in Theft Revolting
INDIAN TRUST: Data Center Moves from Albuquerque to Virginia
INSPIRE INSURANCE: Buena Venture Files Suit, Plans Proxy Fight
MICROSTRATEGY, INC: Weiss & Yourman Files Securities Lawsuit in VA
NORTH FACE: Moves to Dismiss Securities Lawsuit in CO

NORTH FACE: Shareholders Sue in DE over Terminated Transaction of Stock
PACIFIC GATEWAY: Cauley & Geller Files Securities Suit in CA
POWERCERV CORP: No Resolution over IPO Issue in Ct Ordered Mediation
PROLONG INTERNATIONAL: Shareholders' Counsel for CA Case Disqualifed
RAILROAD HORNS: Lawsuit for Deerfield Beach Residents Suggested

SAGINAW VALLEY: Former Student Seeks Equality for Female Athletes
SBC COMMUNICATIONS: Employees File Fed. Suit in CA over 401(k) Account
TENNESSEE STATE: Agrees to Pay for Psychiatric Care for Girl in Custody
TERAYON COMMUNICATIONS: Says Letters with CableLabs Set Record Straight
TOBACCO LITIGATION: Panel Proposes Capping Bond Companies Would Pay

TOBACCO LITIGATON: Judge Weinstein Urges for National Deal

* Did amending Rule 23 revolutionize process or preserve status quo?
* Punitive Damages Class Actions Still Prove Elusive in Fed. Practice


CELERA GENOMICS: Milberg Weiss Files Suit in CT over Secondary Offering
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP notifies that a
class action lawsuit was filed on April 19, 2000 in the United States
District Court for the District of Connecticut on behalf of all persons
who purchased the stock of PE Corporation Celera Genomics Group (NYSE:
CRA) in a secondary offering of Celera common stock conducted by PE
Corporation on February 29, 2000.

The complaint charges PE Corporation and certain of its officers and
directors with violation of Sections 11, 12(a)(2) and 15(a) of the
Securities Act of 1933. The complaint alleges that the registration
statement and prospectus issued in connection with the Secondary
Offering were materially false and misleading because, among other
things, they failed to disclose that Celera had engaged in discussions
with the Human Genome Project

Contact: Milberg Weiss Bershad Hynes & Lerach LLP Shareholder Relations
Dept. endfraud@mwbhlny.com 800/320-5081 or Steven G. Schulman or Samuel
H. Rudman at One Pennsylvania Plaza, 49th Floor, New York, New York
10119-0165, by telephone 1-800-320-5081 or via e-mail:
endfraud@mwbhlny.com or visit website at http://www.milberg.com

COCA-COLA: Reports a Loss Of $58 Million in Quarter
One day before Coca-Cola's annual meeting with shareholders, which is
expected to include protests by black Coca-Cola employees, on April 18
the company said that it lost $58 million in the first quarter, much of
that because of one-time charges for reorganization.

That translated into a loss of 2 cents a diluted share, compared with
net income of $747 million, or 30 cents a share, in the period a year
earlier. Revenue fell to $4.39 billion from $4.40 billion.

Excluding all the charges, the company said, it would have earned 32
cents a share. But the company took an 8-cent charge for the costs of
laying off thousands of employees worldwide and a 10-cent charge for
reducing concentrate inventories at several bottlers. Both charges were
announced as part of a reorganization in January.

Coca-Cola also said it would reduce earnings by 16 cents a share to
cover the costs of writing down its bottling plants in India. That
write-down, which sent earnings into negative territory, was announced
at a meeting with analysts and money managers in New York earlier this

Volume rose just 2 percent in the quarter worldwide excluding Schweppes
brands acquired last year, the company said, which matched analysts'
expectations. Including those brands, volume rose 3.5 percent over all.
Volume in the United States, the biggest soft-drink market, was slightly
weaker than expected, showing no growth except when the company's Minute
Maid division, which makes juice and juice drinks, was added in.

"For the first time, Coke is putting Minute Maid into its volume numbers
for North America, adding a point of growth," said Jennifer Solomon, a
beverage analyst for Salomon Smith Barney. Coke's chairman and chief
executive, Douglas N. Daft, has said that increasing noncarbonated
beverages is a central part of the company's growth strategy.

The lackluster volume in the first quarter increases the need for Coke
to show strong growth for the rest of the year, several analysts said.
"There is a fingers-crossed mentality that their marketing plan will be
able to deliver stronger levels of volume growth around the world," said
Andrew Conway, a beverage analyst at Morgan Stanley Dean Witter. "They
are going to have to step up their marketing for the second and third

Some of the marketing programs in place might not generate high volume
because prices are also rising in some areas, he added. "You may have to
spend more to convince the consumer in supermarkets and other
future-consumption channels to buy the same amount of cola, given the
higher pricing," he said, noting that cola sales for both Coke and its
main rival, Pepsico, have been trailing off in recent years.

In its earnings report, Coke offered more detail about where it was
selling less concentrate, the result of stockpiled inventory around the
world. In Asia, concentrate sales fell 16 percent, "primarily in Japan,"
the company said.

One analyst noted that Japan was the highest-priced market for Coke
concentrate, and any reduction in sales to Japanese bottlers has a
significant effect on the company. "As Japan goes, so goes Coca-Cola,"
said Emanuel Goldman, a beverage analyst for ING Barings in San

The quarter was the eighth consecutive one in which Coke's earnings
declined. The company is under pressure from Wall Street to improve its
performance, and the stock has fallen 19 percent since Mr. Daft was
named to the top job in December. Shares of Coca-Cola fell 81.25 cents
yesterday, to $47.6875.

        In Talks to Resolve Racial Discrimination Lawsuit

At the same time, Coke is also in talks to resolve a
racial-discrimination lawsuit filed last year by four of its black
employees. The number of plaintiffs has since grown to eight, and
lawyers are seeking class-action status for the case, which could affect
as many as 2,000 current and former workers at Coke. The plaintiffs say
they were denied promotions, raises and other benefits because of their

A group of current and former black employees plans to attend the
shareholder meeting in Wilmington, Del., today to draw investors'
attention to their situation.

Coca-Cola Enterprises, Coke's largest bottler, also reported earnings
yesterday that reflected weaker volume. Its loss narrowed to $34
million, or 8 cents a share, from $61 million, or 15 cents a share, in
the period a year earlier. But the bottler reported higher revenue,
$3.29 billion compared with $3.27 billion in the quarter a year earlier.
(The New York Times, April 19, 2000)

CONSECO INC: Wolf Haldenstein Files Securities Suit in Indiana
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 Indiana, Indianapolis Division on behalf of
investors who bought Conseco Inc. (NYSE:CNC) stock between April 28,
1999 and March 31, 2000 (the "Class Period").

The lawsuit charges Conseco 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
Conseco Finance Division, formerly known as Green Tree Financial
Corporation ("Green Tree") and the value of Green Tree's portfolio of
interest-only securities. The complaint alleges that defendants' false
and misleading statements artificially inflated the price of the
Company's stock during the Class Period.

Contact: Wolf Haldenstein Adler Freeman & Herz LLP, New York Michael
Miske, George Peters, Gregory Nespole, Esq., Fred Taylor Isquith, Esq.
or Shane T. Rowley, Esq. 800/575-0735 Website at http://www.whafh.com

ENTERTAINMENT COMPANIES: Hearing Impaired Individuals File Suit
Three hearing-impaired individuals are filing a class action lawsuit on
behalf of millions of hearing-impaired persons against AMC
Entertainment, Inc., and Loews Cineplex Entertainment Corp. The case
will be filed on Thursday, April 20, at noon in the United States
District Court for the District of Columbia. The lawsuit will focus on
the movie theaters' failure to comply with federal law by refusing to
provide captioning for hearing impaired individuals at movies.

Unfortunately, in our society, there are a substantial number of
communication barriers that hearing-impaired individuals face on a daily
basis. In an attempt to remove these barriers the Americans with
Disabilities Act (ADA) was signed into law in 1990. The ADA requires
that places of public accommodations, like movie houses, take steps to
ensure that disabled individuals are not excluded from, or denied,
services due to their disability.

However, despite the fact that the ADA has been in existence now for
almost 10 years, AMC and Loews have failed to provide adequate and
reasonable accommodations for the hearing-impaired. By failing to
provide reasonable accommodations, the movie houses are denying the
hearing-impaired the right to have "full and equal enjoyment of the
goods, services, facilities, privileges, advantages or accommodations"
that hearing individuals enjoy. This violates the fundamental purpose
and spirit of the ADA. Movies are a significant part of our nation's
culture and infiltrate all aspects of society. Hearing-impaired persons
who are unable to attend first-run movies are foreclosed from enjoying
not only the movies themselves, but from sharing experiences and
creating bonds with their family, friends and fellow citizens.

The case is being handled by Wayne R. Cohen, Thomas J. Simeone and Alex
Menendez of the law firm of Cohen & Cohen, P.C. These lawyers, who
previously have taken on such giants as the tobacco industry, have vowed
to prosecute the case to the fullest extent permissible by law. A press
conference will be held on Thursday, April 20, at 1 p.m. in the Murrow
Room at the National Press Club located at 529 14th St., N.W.,
Washington, D.C. Questions should be directed to Wayne R. Cohen at
202-955-4529. All class representatives and counsel will be available
for comment. Wayne R. Cohen, 202-955-4529

HOLOCAUST VICTIMS: Austria Defends Ambassador over US Lawsuit Comments
Austria defended its ambassador to the United States after he was
reportedly accused of trivializing Holocaust compensation claims by a
key US lawyer.

Ambassador Peter Moser was attacked after implicity criticizing the way
people in the United States can make large amounts of money by suing for
damages over relatively trivial matters. "If you drink bad coffee and
find yourself a good lawyer", you can be an "instant millionaire", he
had told the magazine Profil, referring to a suit against fast-food
chain McDonald's over a scalding cup of coffee. He was quoted in an
article on an 18 billion-dollar (19-billion-euro) class-action legal
suit launched by New York lawyer Ed Fagan against Austria on behalf of
Nazi victims.

Fagan responded by charging Moser with equating consumer claims with
those of Nazi victims, and thereby trivializing the Holocaust, the news
agency APA reported.

The Austrian foreign ministry said Wednesday April 12 that Moser's
comment had been taken out of context, and that Moser had clearly stated
to the interviewer that the two types of claims were not comparable. A
ministry statement added that the Profil journalist had confirmed that
to be true and had not had the intention of attributing such attitudes
to Moser.

Fagan's suit has been condemned in Austria as "absurd" by the country's
chancellor Wolfgang Schuessel and the government-appointed official in
charge of compensation, Maria Schaumayer. (Agence France Presse, April
19, 2000)

HOLOCAUST VICTIMS: French Panel Finds Collaboration in Theft Revolting
A French panel of experts reported on April 18 that their country's
collaboration with the Nazis in stealing property from Jews during World
War II was worse than they had imagined, so much that it "profoundly
revolts us."

The report, which a blue-ribbon commission took three years to compile,
said the occupying Nazis or their French allies in the Vichy government
froze 86,000 Jewish-owned bank accounts and safe deposit boxes, stole
100,000 Jewish-owned works of art, pillaged 38,000 Jewish-owned
apartments and seized more than 50,000 Jewish-owned companies or

In addition, some $ 30 million in personal property was stolen from Jews
who were held in French internment camps before they were sent to
concentration camps. All in all, the report said, some $ 8.5 billion
worth of goods and assets were confiscated, not including items such as
works of art whose value is not easily ascertained.

The report marked another phase of France's comprehensive, if tardy,
reexamination of the cooperation its government and people provided to
the Nazis during the war, both in the German-occupied north and in
southern areas controlled by a collaborationist government headquartered
in Vichy. The scrutiny has reversed policies of previous presidents,
from Charles de Gaulle to Francois Mitterrand, who felt no need to
uncover wartime outrages, particularly those committed by the French

The World Jewish Congress, which has played an influential role in
pushing banks and countries to acknowledge past wrongs and make
restitution, said the amount stolen was larger than expected.

"We welcome this report as a further step in the French effort to come
to terms with its wartime past, while expressing shock at the degree of
French collaboration with the Nazis in the plundering of Jewish assets,"
said Executive Director Elan Steinberg.

Of the 100,000 stolen works of art, the report said, 45,000 were
returned to their owners and 2,000, mostly unclaimed, still reside in
French national museums. The museums have begun efforts to locate the
owners. Many of these confiscations were undertaken on French
initiative, not just Nazi orders, which is what commission president
Jean Matteoli said "profoundly revolts us."

"The extent of the despoilment and the innumerable ramifications were
the first factors to surprise us," Matteoli, a wartime French Resistance
fighter, wrote in a preface to the report. "The Nazi authorities and the
Vichy government bound Jews in an inextricable lattice of attacks on
human rights."

While the report is a litany of confiscation, theft and ruination, it
also found that a large proportion of Jewish-owned property was restored
to the former owners or their heirs after the war, either by Germany or
by France. In all, perhaps 5 to 10 percent of property was not returned.

To compensate those who lost goods and property, the French government
has established a commission to adjudicate individual claims. In
addition, a foundation will be set up with a mission of "history,
education and solidarity" concerning the country's wartime conduct. The
French government will contribute $ 150 million to the foundation, thus
accepting responsibility for the actions of the Vichy government. Banks,
insurance companies and other sources are expected to put in nearly as

Unlike Switzerland, which began examining its wartime past in 1996 only
after revelations that its banks had never returned the assets in
Jewish-owned accounts, France began to look back voluntarily. President
Jacques Chirac publicly apologized for France's wartime behavior shortly
after taking office in 1995. Then Maurice Papon, 86 years old at the
time he entered a courtroom in Bordeaux, was convicted of complicity in
crimes against humanity in 1998 and sentenced to 10 years in prison for
his role in the deportation of Jews during the war.

The commission did not specify how survivors and heirs should be
compensated because, commission members said, the body felt history was
more important than money.

Jewish groups elsewhere, especially in the United States, have used
lawsuits to recover financial assistance for Holocaust victims. Swiss
banks, for instance, settled a U.S.-based class-action suit against them
for $ 1.25 billion. A similar lawsuit is pending against French banks.

Matteoli told reporters French and Nazi treatment of Jews in France was
intended to dehumanize them completely. Their identity documents were
taken, their businesses shut down, their assets pillaged. Some 76,000 of
the 330,000 Jews living in France during the war were sent to
concentration camps; 2,500 came back. (The Washington Post, April 18,

INDIAN TRUST: Data Center Moves from Albuquerque to Virginia
The Department of Interior Data Center which manages and processes
checks for trust fund accounts is on the move from Albuquerque to
Virginia and employees claim it wasn't necessary and they are upset.

The Office of Information Resources Management is being dismantled and
relocated. This operation maintains systems that contain information on
tribes and individual American Indians to pay per capita, grazing,
timber, oil and gas royalties and social services benefits.

Many BIA employees claim the move was in retaliation for their comments
about the new, off-the-shelf computer system that was to resolve
mismanagement problems of the trust funds that occurred over the past

"The trust reform system was difficult in getting deployed. Many people
knew that and they were targeted," said Mona Infield, a supervisor in
charge of programming at the Albuquerque center. She said many people
said the new Trust Asset and Accounting Management System would not
work. There were many people who tried to tell the BIA the system would
not work, she said. Instead, the entire center is on the move and many
of the employees were separated, Infield said.

"Why move an office that serves Indian people from where Indian people
live. I don't know the truth," Infield said. She sits in her house
without an assignment though she remains on the payroll, she said.

"It's skirting Indian preference law," she said, adding there are fewer
American Indians in Virginia than in New Mexico.

Kevin Gover, assistant secretary for Indian Affairs, said reports from
the National Academy of Public Administration recommended that an office
of Deputy Assistant Secretary for Policy, Management and Budget be
established. It would deal with financial, human resources, information
resources and records and procurement management.

"As part of this effort, we determined that the geographic distance
between BIA's Washington headquarters and its Albuquerque accounting and
management and information resources management operations greatly
contributed to BIA's severe accounting and management problems and
increased a sense of isolation from ongoing priority management
initiatives," Gover said.

BIA spokesman Rex Hackler said the employees were given a choice. They
could move to new location in Virginia or choose separation or
retirement. Most, Infield said, did not want to move. "Employees were
offered full relocation benefits with their acceptance to transfer with
their current position," Gover said.

"We were given the option of a buyout for $ 25,000 or less if we quit
the service," said Charlene Lattier, branch chief for operations and
data management. "One person took a 14 percent cut in retirement."

In court documents, the BIA claims the move to the computer center in
Virginia was in response to a report issued by the National Academy of
Public Administration. The lawsuit in question is Cobell vs. Babbitt, a
class action suit in U.S. District Court here on behalf of 300,000
Individual Indian Moneys account holders.

The plaintiffs claim the NAPA report did not mention a resource
management center move. They argue that workers not as qualified
replaced people who had worked on the system for many years and that
independent contractors replaced BIA personnel. This action violated the
privacy act, which applies to the gas, oil and other leases paid to
tribes and individuals and services would be in jeopardy of disruption,
the plaintiffs claimed.

To stop the move and prevent contract employees from taking over the
system, the plaintiffs from Cobell v. Babbitt asked for and received a
temporary restraining order.

"Claiming concern for the preservation of important trust data,
plaintiffs have contributed to the jeopardy of the very same information
they purport to care about," the government stated in court documents.

"Plaintiffs' counsel have enmeshed themselves in a fight over the
relocation of an office, and in so doing, they have made a difficult
situation worse." The government stated that if the restraining order
was not lifted, substantial harm could come to Indian country.

Judge Royce Lamberth lifted the order April 4. That allowed contract
workers to operate the systems and the move to continue. He also denied
the plaintiff's request for a preliminary injunction. But the judge, who
has developed a reputation by holding Gover and Babbitt in contempt and
siding frequently with the plaintiffs, added a lecture to the government
in his ruling.

"It's clear that the defendants were, in fact, acting in violation of
the law on March 7, when this court granted the temporary restraining

"This entire fiasco is vivid proof to this court that Secretary Babbitt
and Assistant Secretary Gover have still failed to make the kind of
efforts that are going to be required to ever make trust reform a
reality," Judge Lamberth said.

Court documents submitted by the government said Gover ordered the
relocation of the resource management offices to "remedy longstanding,
material weaknesses in the functioning of the office." It went on to say
there were problems with the legacy trust systems managed by the
Albuquerque team.

Infield and Lattier disagree. Infield said it wasn't a perfect system,
but recently the checks were being processed on time and records
management was effective.

"Applications people on the floor were saying the (TAAMS) system was not
working. Most of my help desk people said the same," Lattier said.

Lattier said when the contract personnel first came to the center, she
denied them access to the system because they had no security
clearances. On Feb. 14 they came back and said they were taking over the
operations, she said. "I said 'No. Where's the contract?'"

She said an e-mail message came from Deborah Maddox, acting director of
Management and Administration that security clearances were in order.
"The contract didn't reflect work they did."

The move was to take place in step by step fashion. First, the contract
people would work along side the Albuquerque staff to learn the system.
Those who chose to move would relocate in Virginia while the contract
people worked the Albuquerque system. When a parallel system was up and
running, the Albuquerque system would be shut down.

Just recently, however, the BIA admitted that the TAAMS system would
take more time to get up and running. All testing was done with test
data, not actual records as would be inputted when the system is on

The government argued it needed to allow contractors access to the
entire system to get acquainted with the operation, regardless of
whether secure data was accessed. Attorneys for the government said
Infield would not provide information to the contractors. On March 7 and
March 15, Judge Lamberth denied access to confidential individual
information until the contractors could show they were in full
compliance with the requirements of the privacy act. The judge later
lifted his order.

"Without the action that the plaintiffs took, this move was slated to
take place without a security plan, and in violation of at least the
Privacy Act, and probably other statues as well.

"I will say again what I've said before. The 300,000 Indian plaintiffs
deserve better than they're getting from the Department of Interior and
the Bureau of Indian Affairs in this case. "Even though the plaintiffs
are not going to receive the preliminary injunction they seek today,
they have again achieved another important victory in their effort to
establish the defendants are either unable or unwilling to take the
steps necessary to make trust reform a reality," Judge Lamberth said.
(Indian Country Today, April 19, 2000)

INSPIRE INSURANCE: Buena Venture Files Suit, Plans Proxy Fight
The following statement was issued today by Buena Venture Associates,

Buena Venture Associates, L.P., a private venture capital partnership
located in Fort Worth, Texas, and managed by persons and entities
associated with Sid Bass, said April 18 it has filed a lawsuit against
INSpire Insurance Solutions, Inc. (NASDAQ: NSPR) to overturn an "illegal
and unenforceable" bylaw that restricts shareholders' input at the
company's 2000 annual meeting.

In a letter to the company, Buena Venture also said that, absent a
satisfactory response from the company, it would take preparatory steps
necessary to conduct a proxy contest for the two director seats up for
election this year, including the seat held by George Dunham, the
company's CEO.

Buena Venture says it is taking the action because it has received no
response from the company to its "retroactive" bylaw change, passed on
March 23,2000, that requires any shareholder desiring to make
nominations or introduce any other business at the annual meeting to
notify the Company 90 days before the anniversary of the previous annual
meeting. This means shareholders must have notified the Company before
February 11, 2000.

The following persons and entities may be deemed to be participants in
any potential solicitation of proxies relating hereto. These persons and
entities beneficially own the number of shares of common stock of
INSpire Insurance Solutions, Inc. set forth immediately following each
participant's name. Buena Venture Associates, L.P. (2,135,000), Buena
Holdings Associates, L.P. (2,135,000, in its capacity as the sole
general partner of Buena Venture Associates, L.P.), Buena Holdings
Genpar, Inc. (2,135,000, in its capacity as the general partner of Buena
Holdings Associates, L.P.), The Sid R. Bass Management Trust (2,135,000,
in its capacity as the sole shareholder of Buena Holdings Genpar, Inc.),
Sid R. Bass (2,315,000, in his capacity as a Trustee of The Sid R. Bass
Management Trust) John Pergande, an associate of Mr. Bass (none) and
Greg B. Kent (none).


A copy of the letter follows.

Buena Venture Associates, L.P. 201 Main Street, Suite 3200 Fort Worth,
TX 76102

April 18, 2000

Mr. George Dunham Chief Executive Officer INSpire Insurance Solutions,
Inc. 300 Burnett Street Fort Worth, TX 76102

Dear Mr. Dunham:

Last month you and the rest of INSpire's Board of Directors adopted an
illegal and unenforceable bylaw in an attempt to muzzle shareholders at
this year's upcoming annual meeting. We have already expressed to you,
both privately and publicly, our shock and dismay.

Frankly, we had hoped to hear from you by now with some positive news.
But we have heard nothing. We have consequently filed earlier today a
lawsuit requesting that the Texas courts formally declare that your
bylaw is illegal and void as applied to this year's meeting.

We have also regretfully commenced taking the preparatory steps
necessary to conduct a proxy contest with respect to the two director
seats open for election this year - one of which is yours. We have
engaged D.F. King to assist us, and we have asked our attorneys to start
preparing draft preliminary proxy materials for filing with the
Securities and Exchange Commission.

We do not believe, however, that a proxy contest and yet more litigation
are necessarily in the best interests of the Company and its
shareholders right now. Neither, presumably, do you.

This time we expect an answer.

Very truly yours,


By: Buena Holdings Associates, L.P., general partner
By: Buena Holdings Genpar, Inc. general partner
cc: Board of Directors By: John Pergande, Vice President

Contact: Owen Blicksilver 212/419-4283

MICROSTRATEGY, INC: Weiss & Yourman Files Securities Lawsuit in VA
A class action lawsuit against MicroStrategy, Inc. (NASDAQ:MSTR) and its
senior executives was commenced in the United States District Court for
the Eastern District of Virginia  seeking to recover damages on behalf
of defrauded investors who purchased MicroStrategy securities. If you
purchased MicroStrategy shares between June 11, 1998 and March 20, 2000,
please read this notice.

The complaint charges MicroStrategy and its top executives with
violations of the antifraud provisions of the Securities Exchange Act of
1934. The complaint alleges that defendants issued false and misleading
statements concerning the Company's financial statements, revenues and
earnings per share.

Contact: James E. Tullman, David C. Katz or Mark D. Smilow (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.

NORTH FACE: Moves to Dismiss Securities Lawsuit in CO
Beginning in March 1999, purported class action lawsuits were filed in
federal district court against North Face Inc. and certain of its former
and current officers and directors alleging violations of the federal
securities laws. These complaints have been consolidated in federal
district court in Colorado. The consolidated action generally alleges
that the Company made false and misleading statements about its
financial results from January 22, 1998 through April 16, 1999. The
Company has filed a motion to dismiss these claims.

On April 6, 1999, a shareholder derivative action purportedly on behalf
of the Company, captioned Eng v. Cason, et. al., Civil Action No.
810726-0, was filed in California Superior Court, Alameda County. The
complaint alleged that the Company's directors and various current and
former officers violated California law and breached fiduciary duties to
the Company by engaging in alleged wrongful conduct from April 25, 1997
through March 12, 1999, including the conduct complained of in the
Securities Litigation. The Company was named solely as a nominal
defendant, against whom the plaintiff sought no recovery. The Alameda
Superior Court granted the Company's motion to dismiss the derivative
complaint with leave to amend.

NORTH FACE: Shareholders Sue in DE over Terminated Transaction of Stock
On February 27, 1999, North Face Inc. entered into a Transaction
Agreement with TNF Acquisition LLC, an affiliate of Leonard Green &
Partners, L.P. The Transaction Agreement provided for a tender offer for
all the Company's outstanding stock (other than shares held by James G.
Fifield, former President and Chief Executive Officer) at $17.00 cash
per share and the acquisition of control of the Company by LGP and Mr.
Fifield. On March 5, 1999, the Company withdrew its tender offer. The
Transaction Agreement remained in full force and effect, although LGP
had informed the Company that it was reevaluating the transactions
contemplated by the Transaction Agreement. On September 1, 1999, the
Transaction Agreement was terminated and the Company agreed to pay LGP
$2.2 million to reimburse LGP for expenses associated with the
terminated Transaction Agreement.

In March 1999, various complaints were filed against the Company and its
Board of Directors in the Delaware court of Chancery and in the
California Superior Court, Alameda County in connection with the
Transactions. The complaints, filed on behalf of a purported class of
the Company's shareholders, generally alleged that the Transactions were
unfair and inadequate to the Company's shareholders and charged the
defendants with self-dealing and breach of fiduciary duties. The
complaints generally requested injunctive relief to prevent the
consummation of the Transactions, and sought other remedies in the event
the Transactions were completed. The Company has filed a motion to
dismiss these claims.

PACIFIC GATEWAY: Cauley & Geller Files Securities Suit in CA
The Law Firm of Cauley & Geller, LLP announced today that it has filed a
class action in the United States District Court for the Northern
District of California on behalf of all individuals and institutional
investors that purchased the securities of Pacific Gateway Exchange,
Inc. (Nasdaq:PGEX) between May 13, 1999 and March 31, 2000, inclusive
(the "Class Period").

The complaint charges that the Company and certain of its officers and
directors violated the federal securities laws by providing materially
false and misleading information about the Company's financial
condition. As a result of these false and misleading statements the
Company's stock traded at artificially inflated prices during the class

Specifically, the Complaint alleges that while the defendants were
publicly reporting profits of more than $10.1 million for Pacific's
first, second and third quarters of 1999, defendants used Pacific common
stock to acquire the assets of Robo Tel, Inc. and attempted to use its
stock to fund its most important acquisition ever, the acquisition of
NOS Communications, Inc., just weeks before revelations of accounting
fraud had surfaced. After the market had closed, on March 31, 2000,
Pacific shocked investors, revealing that it would restate its first,
second and third quarter earnings for 1999. This revelation caused
Pacific stock to plummet to$10-1/4 per share, a decline of 75% from its
Class Period high the following trading day. Pacific's shares continued
their descent to$7-1/2 in the days that followed.

Contact: Cauley & Geller, LLP, Boca Raton Sue Null or Sharon Jackson
Toll Free: 888/551-9944 Email: Cauleypa@aol.com

POWERCERV CORP: No Resolution over IPO Issue in Ct Ordered Mediation
A complaint was filed on July 24, 1997, in the United States District
Court for the Middle District of Florida, captioned J. Conrad Lifsey vs.
Harold R. Ross, Gerald R. Wicker, Marc J. Fratello, Roy E. Crippen, III,
Donald B. Hebb, Jr., Thomas S. Roberts, PowerCerv Corporation, Alex
Brown & Sons, Inc., Robertson, Stephens & Company, ABS Capital Partners,
L.P., Summit Investors II, L.P., and Summit Ventures III, L.P.

The complaint purports to be a class action on behalf of those persons
who purchased shares of the Company's common stock from March 1, 1996
(the date of the Company's initial public offering of its common stock)
through July 24, 1996. The complaint alleges, among other things, that
the defendants violated the Securities Act of 1933 and the Securities
Exchange Act of 1934 in connection with the Company's IPO and in its
subsequent securities filings, press releases and other public
statements. The plaintiff seeks damages of an unspecified amount,
rescission of certain securities sales and certain other remedies.

On March 19, 1998, the defendants filed their motions to dismiss this
complaint. An effect of this motion filing is to postpone any discovery
on this case until after the motions are ruled on by the Court. On April
5, 1998, the Court ordered the parties to attend a mediation conference
by July 30, 1998. The parties did not resolve this lawsuit in the
mediation conference. The Court ordered a second mediation conference
for March 22, 2000, in which the parties were again unable to resolve
this lawsuit. To date, the Court has not issued a ruling on the
Company's motion to dismiss. The defendants continue to deny any
wrongdoing and intend to contest the suit vigorously.

PROLONG INTERNATIONAL: Shareholders' Counsel for CA Case Disqualifed
Prolong International Corporation is a Nevada corporation that was
incorporated on August 24, 1981 as Giguere Industries, Incorporated. On
September 14, 1981, Giguere consummated a merger with Medical
International, Inc., a Utah corporation, pursuant to which Giguere was
the surviving entity.

Subsequent to the merger, Giguere conducted operations for several years
until it liquidated its assets in order to satisfy its creditors and
discontinued operations in 1987. Giguere was inactive and held no
significant assets from 1987 to June 21, 1995. On June 21, 1995, Giguere
acquired all of the outstanding common stock of Prolong Super
Lubricants, Inc., a Nevada corporation, in a share exchange with PSL's
then existing shareholders and changed its name from Giguere to Prolong
International Corporation.

Since the Reorganization, PIC has changed its focus from being a company
without operations, a business or significant assets, to that of a
holding company for its wholly-owned operating subsidiary, PSL. On
December 4, 1998, PIC formed Prolong International Holdings Ltd., a
Cayman Islands company, as a wholly-owned subsidiary. On the same day,
PIHL formed Prolong International Ltd., a Cayman Islands company, as its
wholly-owned operating subsidiary.

PIC, through PSL, PIHL and PIL, is engaged in the manufacture, sale and
worldwide distribution of a line of high performance lubrication and
automotive appearance products, several of which are based on a patented
extreme pressure lubricant additive for use in metal lubrication,
commonly referred to as anti-friction metal treatment ("AFMT").

On February 5, 1998, PIC entered into a definitive agreement with EPL
Pro-Long, Inc., a California Corporation ("EPL"), under which PIC
purchased the business assets of EPL.

                     Shareholders' Complaint

On or about November 17, 1998, Michael Walczak et al, on behalf of
himself and other similarly situated shareholders of EPL filed a
purported class action in the U.S. District Court in San Diego,
California against PIC, PSL, EPL and their respective former and current
officers and directors. The named plaintiffs allege breach of contract,
certain fraud claims, civil RICO, breach of fiduciary duty and
conversion, and seek monetary damages. The named plaintiffs in the
action are allegedly current EPL shareholders who hold less than two
percent (2%) of the outstanding shares of EPL's common stock, in the
aggregate. The plaintiffs applied for a preliminary injunction to halt
the sale of the assets of EPL to PIC and to prevent the dissolution of

On November 25, 1998, the Court granted a temporary restraining order
without a hearing and before opposition could be submitted. On December
30, 1998, the Court held a hearing on whether a preliminary injunction
should be issued in connection with such action. The Court entered a
preliminary injunction based on the plaintiffs' (a) alleged claim for
fraudulent conveyance in connection with PSL's license agreement with
EPL and (b) alleged claim for breach of fiduciary duty. The preliminary
injunction enjoins the further consummation of the asset purchase
transaction and prevents EPL from completing its liquidation and
dissolution until further notice from the Court. The preliminary
injunction will last until the case is tried on its merits or until the
preliminary injunction is otherwise dismissed. The Court ordered the
plaintiffs to post a bond in the amount of $100,000, which bond has been
posted. PIC appealed the Court's preliminary injunction ruling, which
appeal was subsequently denied. The defendants have each filed and
served motions to dismiss the complaint pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure.

The defendants successfully moved to change venue and, effective March
15, 1999, the case was transferred to the federal court in Orange
County, California, where PIC's principal office is located. In December
1999, plaintiffs' counsel was disqualified from the matter on the
grounds of unwaivable conflict of interest. Plaintiffs have not yet
selected new counsel. The Ninth Circuit Court of Appeal did not,
however, set aside the preliminary injunction. At this time, due to
plaintiffs lack of legal counsel, there are no mediation conferences
scheduled. Therefore, final resolution of the matter cannot presently be
determined. PIC and PSL and their respective current officers and
directors continue to believe that there is no merit to the plaintiffs'
claims and plan to vigorously defend against the claims.

RAILROAD HORNS: Lawsuit for Deerfield Beach Residents Suggested
The railroad's statement that it tries to "balance quality of life with
safety" means residents who live some short yards from the tracks, don't
sleep. Night and day, new and improved horns are blaring. In Deerfield
Beach, a bonus of an added track and extra horn blowing is not a musical

Perhaps Staff Writer Andreas Tzortzis can follow up his horn story,
maybe an inquiry with a video crew to record the day and night sounds of
horn. This would lead to a class-action dance in court.

(Anthony Mikalauskas, Deerfield Beach, published in Sun-Sentinel (Fort
Lauderdale, FL), April 19, 2000)

SAGINAW VALLEY: Former Student Seeks Equality for Female Athletes
Former basketball player at Saginaw Valley State University is the lead
plaintiff in a lawsuit against her alma mater seeking enforcement of
Title IX requirements for equal opportunity for women athletes.

The lawsuit was filed April 19 in U.S. District Court for the Eastern
District of Michigan by Detroit law firm Charfoos & Christensen, PC, on
behalf of Teiryne Fischer, a former Saginaw Valley basketball player who
now coaches basketball at Eastern Michigan University. Charfoos &
Christensen is seeking class action status for the lawsuit since the
attorneys believe they can prove hundreds of other women athletes have
been adversely affected by discriminatory policies at Saginaw Valley.

Fischer is seeking an injunction from a federal court judge to force the
university to immediately fund women's athletic programs in a non
discriminatory manner. Title IX of the Education Amendments of 1972
outlawed gender discrimination in any educational program that receives
federal funds.

"We're not asking the university to spend the same amount on women's
sports as it spends on men's sports if there are more men
participating," said Jared Buckley. "We're asking the court to tell the
university to spend enough money to provide equal opportunity to women

The most recent information filed by the university for the 1998-99
academic year showed that while women make up 58 percent of the student
body, only 28 percent of the participants in the athletic program were
women. The report filed with federal officials showed that only 4.3
percent of female undergraduates participated in the athletic program,
compared to 15.2 percent for men. The report showed that 73 percent of
athletic scholarships went to men. Overall, the university spent almost
two and a half times as much on men's programs as on women's programs.

The federal Department of Education has ruled that in cases where
members of one sex are underrepresented in the athletic program, the
university must show, "a continuing practice of program expansion
responsive to the developing interests and abilities of that sex" or
else demonstrate that the program, "accommodates the interests and
abilities of the underrepresented sex."

Buckley believes that a major change is needed in the official attitude
toward women's athletics in order to bring Saginaw Valley into
compliance with Title IX. "There is a good ol' boys network, and they
are stonewalling because they are afraid women's athletics will take
money away from the men's football or basketball programs," Buckley
said. "But if your university accepts federal funding, you have to
provide equal opportunity to women."

The lack of funding for women athletics results in a much different
experience for women athletes. Michelle Aiello, who is co-counsel with
Buckley on the lawsuit, recalls that when she was a soccer player at
Oakland University, she had to get up at 5 a.m. to pick up bagels to
sell to raise money for the team. It is a commonplace sight to see women
athletes selling hotdogs and programs at men's sporting events.

"There remains a significant problem with underfunding of women's
athletics at the collegiate level. My guess is that Michigan's other
universities and colleges are also guilty of underfunding women's
athletics," Aiello said.

"Almost all women athletes are frustrated," Buckley said. "Yet women
athletes stand for what college athletics are supposed to be about. They
compete for the love of the sport and the opportunity for personal
growth. They aren't in it for the money."

Buckley contends more women will participate in athletics if more
programs are available. The female participation rate at Michigan high
school athletics was 40 percent in the 1996-97 school year, dramatically
up from 7 percent when Title IX was enacted in 1972. "Given the
increased interest in women's sports in our society, a 4.3 percent
participation rate for women at Saginaw Valley just isn't good enough,"
Buckley said.

For further information or to obtain a copy of the Complaint, please
contact Attorney Jared P. Buckley or Michelle T. Aiello of Charfoos &
Christensen, P.C. at 313-875-8080.

SBC COMMUNICATIONS: Employees File Fed. Suit in CA over 401(k) Account
Sprenger & Lang, PLLC announces that Eighteen (18) current and former
SBC Communications Inc. employees filed a $1.15 billion class action
lawsuit in federal district court today in Los Angeles, accusing SBC,
one of the nation's largest telecommunications companies, of improperly
manipulating their 401(k) accounts for corporate gain.

The breach of trust suit alleges that SBC sold off over $600 million of
employee holdings in AirTouch (now Vodafone AirTouch), an SBC
competitor, and reinvested the proceeds in SBC stock. This alleged
self-dealing, which the suit estimates cost employees $1.15 billion in
lost profits, is said to have violated a number of federal laws
requiring SBC to put the interests of its 401(k) plan participants ahead
of corporate interests when acting as the plan fiduciary. SBC, a former
"Baby Bell," is headquartered in San Antonio, Texas.

The suit is the largest of its kind ever brought. It was filed on behalf
of a class of an estimated 40,000 401(k) plan participants who had been
invested in AirTouch stock since early 1994, soon after the company's
stock was first made public. The suit contends that these participants
were suddenly stripped of their investments by SBC soon after SBC bought
PTG, another former "Baby Bell," which had made the stock available to
employees as one of their investment options. According to the suit, SBC
not only sold off participants' AirTouch stock without their consent but
also automatically reinvested the proceeds into SBC stock, where they
have been invested ever since.

The action is filed by a trio of class action law firms: Sprenger &
Lang, PLLC, a Washington, D.C and Minneapolis, Minnesota firm; Sigman,
Lewis & Feinberg, PC, an Oakland, California firm; and Lieff, Cabraser,
Heimann & Bernstein, LLP, a San Francisco and New York firm.

According to the suit, SBC liquidated employees' AirTouch holdings
because AirTouch was one of SBC's direct competitors in the wireless
telecommunications markets. According to Eli Gottesdiener, a partner
with the Washington, D.C. office of Sprenger & Lang, "While that may
make good business sense this was not a business setting. These were
employee benefit plans containing employees' retirement savings. SBC
should have been thinking only of its employees and what was best for
them as investors trying to save for retirement -- not about what might
be best for the company's financial or corporate interests."

Gottesdiener added: "We've already heard from two clients that a key SBC
401(k) official admitted to them that SBC sold their AirTouch stock
simply so they would not be invested in the stock of an SBC competitor."

The suit argues that SBC had no good reason to sell off employees'
AirTouch stock. The suit claims that AirTouch stock had doubled in value
before SBC took control of the PTG Plans and analysts agreed it was
poised to appreciate even further. In fact, the stock has tripled in
value since SBC sold it off. Meanwhile, according to the suit, SBC stock
into which employees' AirTouch stock sale proceeds were reinvested has
remained essentially flat. The result, the suit alleges, is that SBC's
actions have cost participants about $1.15 billion or, on average,
$28,750 each in lost investment return.

The suit also alleges that to ensure the success of the
liquidation-and-mapping scheme, SBC violated the law by intentionally
failing to give clear, timely and informative notice to the PTG Plans'
participants of their rights either to avoid the sale of their AirTouch
stock or of being moved into SBC stock.

Plaintiff Larry Gottlieb said, "I saw the notices and thought I had no
choice." Janet Brown of Sigman, Lewis & Feinberg, explained that
"Providing participants with faulty notice maximized the dollars that
would flow into SBC common stock, in turn propping up its share price."
The suit alleges that, contrary to the implications conveyed by the
carefully crafted notices, participants actually had several options for
avoiding the liquidation and reinvestment scheme.

Michael Lieder of Sprenger & Lang said that he believes that the suit
will help further define employers' responsibilities to their employees
in administering their 401(k) savings: "We hope that the suit will serve
as a wake-up call to employers and employees alike. Today, as employers
shift onto employees the responsibility for funding their own
retirements, employees have to monitor how their employers may be
manipulating these huge asset pools to further corporate interests." For
their part, Lieder said, "Responsible employers should erect safeguards
to ensure that corporate business interests don't creep into fiduciary
investment decision-making."

Gottesdiener added that the suit may reinforce a principle established
in a similar suit Sprenger & Lang is prosecuting against First Union
Corporation in federal district court in Richmond, Virginia: a company
about to impose changes on an employee 401(k) plan must give
participants clear, timely and informative notice of those changes,
especially when the employees have the right to take actions to protect
the autonomy of their investment choices.

Copies of the Complaint and links to the three class action firms'
websites are available on a website dedicated especially to the suit:

Contact: Sprenger & Lang, PLLC Eli Gottesdiener, Esq., 202/265-8010
202/425-9510 (cell) or Sigman, Lewis & Feinberg, PC Janet E. Brown,
Esq., 510/839-6824 or Lieff, Cabraser, Heimann & Bernstein, LLP James M.
Finberg, Esq., 415/956-1000

TENNESSEE STATE: Agrees to Pay for Psychiatric Care for Girl in Custody
A Clinton teenager badly abused while in state custody will be provided
needed psychiatric care under an agreement reached between her attorney
and the state of Tennessee. Identified only as "Sarah C." in court
papers, the girl was admitted to Vanderbilt Child and Adolescent
Psychiatrist Hospital in Nashville.

"Legally, when the gun was at their head, they (the state) gave her what
she needed," said attorney Michele Johnson, who works with the Tennessee
Justice Center, the organization that sued on the girl's behalf.

Under TennCare, Tennessee Behavioral Health had denied Sarah certain
psychiatric care, Johnson said. Court documents say the teen-ager was
placed in state custody when she was about 3 years old and was
"shuffled" among seven foster homes over three years. During that time,
she was exposed to occult sadism, beatings, repeated rapes, was hung
from walls and locked for extended periods in closets, all before the
age of 7, according to court documents. Sarah will be 18 years old in
four months. At that time, she can walk away from treatment if she

Her case is part of a class action lawsuit filed by the TJC against the
state for failing to properly administer the appeals procedure for
TennCare enrollees. TennCare is the state health care program for the
poor and uninsured.

The lawsuit was settled last fall, but a lack of care for Sarah led to a
contempt motion in U.S. District Court. The motion was withdrawn on
April 17 after it became clear the state will pay for her care.

A psychological evaluation ordered by U.S. District Judge John T. Nixon
concluded Sara should have received help three years ago, Johnson said.
The evaluation shows she has been "warehoused" and wasn't receiving
proper treatment at the Haslam Center, a secure residential treatment
center in Knoxville.

TERAYON COMMUNICATIONS: Says Letters with CableLabs Set Record Straight
Terayon Communications Systems officials continued to deny any
wrongdoing following class-action suits brought against the company,
headquartered in Santa Clara, California.

The suits, filed by the Seeger Weiss and Milberg Weiss Bershad Hynes &
Lerach law firms, accuse the company of misleading investors when it
referred to its S-CDMA (synchronous code division multiple access)
cable-modem technology - which facilitates Internet access through
cable-TV lines - as an industry standard, when, in fact, it is only
being considered for such designation, as most companies use a different
technology. The plaintiffs said that the misleading information led to $
439 million worth of Terayon stock being purchased at "artificially
inflated prices" between February 2 and April 11.

Company insiders, several of whom are named as defendants, sold over
71,000 shares of their privately held Terayon common stock during that

Company CEO Zaki Rakib responded to the claims, saying, "We are
confident that a vigorous defense of these allegations will prove them
to be groundless and completely without merit."

Cable Television Laboratories Inc., the cable-TV industry group known as
CableLabs which set the standard for transmitting data over cable lines,
has invited Terayon to submit its products for a possible future version
of the standard.

On April 18 Terayon posted on its Web site correspondence between the
company and CableLabs. "We believe that these letters set the record
straight," said Rakib.

Terayon, which had $ 97 million in sales last year, supplies broadband
networking solutions for advanced broadband voice, data, and video
services. In the last year it has purchased five Israeli companies:
Ultracom, Internet Telecom, Telegate, Radwiz, and ComBox. (The Jerusalem
Post, April 19, 2000)

TOBACCO LITIGATION: Panel Proposes Capping Bond Companies Would Pay
Florida should not limit punitive damage awards but instead cap the
amount tobacco companies and other class action defendants must post for
bond while appealing big awards, a special panel recommended Wednesday.

The recommendation to the Florida Senate came from a special committee
of its members asked to figure out how to protect billions of dollars
owed the state by cigarette companies from a 1997 settlement. Florida
brought the lawsuit to recoup the cost of treating sick smokers.

Earlier this month, North Carolina legislators held a one-day special
session at which they capped punitive damage bonds at $25 million.

Tobacco companies are now bracing for a Miami jury to return a punitive
award in May in a class action suit brought by sick Florida smokers.
Their lawyers have warned that award could be so large it would bankrupt
the companies.

State lawmakers count on having hundreds of millions dollars a year from
the settlement, much of which pays for programs for children and the

If the companies file for bankruptcy, the settlement is voided. If the
companies' sales fall, the income would drop off correspondingly.

The Senate panel recommended the Legislature do several things to
protect the settlement. But the most controversial idea, capping how
much the companies should pay in punitive damages, was rejected.
Instead, lawmakers will consider a $100 million cap the companies have
to put up in a bond while they appeal whatever punitive award the jury
comes back with. A number of other states have already done the same

Anti-smoking groups had reacted angrily when suggestions of a punitive
damages cap were made, accusing the state of seeking to bail out the
tobacco industry. "If they have to do something, this is something that
seems to us to be the most narrow approach," said Ralph DeVitto, a
spokesman for the American Cancer Society.

The bill will also clarify in statute what Florida case law already
holds, that punitive awards can't be large enough to bankrupt a company.
The full Senate and the House would still have to approve the ideas,
which would then have to be signed by Gov. Jeb Bush. The Legislature is
in session until May 5.

The details, such as the amount of the bond limit, may change as the
bills go through the committee process and then get to the floors of the

The panel made other suggestions for protecting the settlement money.
One of those is simply to spend less of the income each year. The
committee proposed a constitutional amendment requiring the Legislature
cap how much of the money it spends each year. That would allow the
principal to increase for future emergencies.

Another of the committee's recommendations would protect the state if
the companies covered by the settlement declare bankruptcy or stop
selling cigarettes and are replaced by companies not covered by the
settlement. That recommendation is to set up a wholesale cigarette tax
that would discourage the sale of cigarettes by any other companies in
Florida. Under that measure, if cigarettes made by non-settlement
companies are sold in Florida, they would be hit with an assessment that
would go into the settlement fund.

That's to prevent companies like Philip Morris, responsible for half of
the state's settlement money, from declaring bankruptcy, reorganizing,
and coming back as a new company to sell cigarettes, said Sen. Jim
Horne. "They're not going to be able to dance," said Horne, R-Orange
Park. "We want those who are selling it to pay." (The Associated Press,
April 19, 2000)

TOBACCO LITIGATON: Judge Weinstein Urges for National Deal
A judge is prodding lawyers to seek a global settlement to all tobacco
cases nationwide, saying ''the time for bringing a close to tobacco
litigation is nigh.'' In a three-page order issued Tuesday, April 18,
U.S. District Judge Jack B. Weinstein urged lawyers in five major
tobacco cases in various stages nationwide to begin talks. Weinstein, a
jurist in federal court in Brooklyn since 1967, said the cases were
complex and the court has a ''duty to take affirmative action'' to
encourage lawyers to seek creative ways to resolve the disputes.

The settlement would include a pending class action suit currently
before Weinstein that encompasses all U.S. smokers with lung cancer.

The judge said plaintiffs and defendants in the cases must each choose
an individual or individuals to represent them in preliminary
discussions meant to create a framework for settlement negotiations.
Then, they should try to jointly select a mediator or special master to
assist the discussions, he said. If necessary, he will appoint one, he

A liberal judge known for fostering innovative mass-tort litigation, the
78-year-old Weinstein has played a major role at resolving other complex
and high-profile civil cases, including some involving Agent Orange and
asbestos. The need for global solutions to complex cases was illustrated
in 1991 when the U.S. Judicial Conference, a 27-judge board, discovered
that two of every three dollars spent in connection with asbestos cases
went to trial costs, not the victims. In 1992, Weinstein ordered the
consolidation of 44 lawsuits against major computer-equipment makers by
people complaining of painful work-related wrist and arm injuries. A
decade ago, Weinstein led a group of 10 judges who created a plan to
combine cases and reduce a backlog of nearly 100,000 asbestos lawsuits
which were clogging state and federal courts at the time. Weinstein also
devised a national settlement in 1984 for Vietnam War-related injuries
from the defoliant Agent Orange. (AP Online, April 19, 2000)

* Did amending Rule 23 revolutionize process or preserve status quo?
Federal Rule of Civil Procedure 23, the class action rule, was amended
in 1998 to allow discretionary interlocutory appeals of class
certification decisions. See Fed. R. Civ. P. 23(f). This article will
discuss the progression of interlocutory appeals of class action
decisions and related issues, including: the early attempts at appellate
review of certification decisions; the resultant controversy; the intent
of the drafters of Rule 23(f); and the first applications of the new
rule in reported cases.

This background should provide counsel contemplating an appeal under the
new rule a basis for decision-making.

               Early Attempts at Interlocutory Appeals

The idea of allowing interlocutory appellate review of class
certification decisions is not new. Throughout the late 1960s and early
1970s, several federal circuits held orders denying class certification
to be appealable pursuant to 28 U.S.C. Sec. 1291 as a final order under
what came to be known as the "death knell" doctrine. See Ott v.
Speedwriting Publishing Co., 518 F.2d 1143 (6th Cir. 1975); Graci v.
United States, 472 F.2d 124 (5th Cir. 1973); Hartmann v. Scott, 488 F.2d
1215 (8th Cir. 1973).

In Eisen v. Carlisle & Jacquelin, the Second U.S. Circuit Court of
Appeals held that: Dismissal of the class action in the present case,
however, will irreparably harm (the plaintiff) and all others similarly
situated, for as we have already noted, it will for all practical
purposes terminate this litigation. Where the effect of a district
court's order, if not reviewed, is the death knell of the action, review
should be allowed. 370 F.2d 119, 120-21 (2d Cir. 1966), cert. denied 386
U.S. 1035 (1967).

This doctrine, however, was never accepted by all circuits. See, e.g.,
Hackett v. General Host Corp., 455 F.2d 618, 622 (3d Cir. 1972),
criticizing the "death knell" doctrine, because: "(I)t operates only in
favor of the plaintiff who has unsuccessfully sought to be designated as
a class representative. It neither requires nor permits general
supervision by the court of appeals over class action designations."

Defendants also attempted to pursue interlocutory appeals of class
determinations. See 15B Charles Alan Wright et al., Federal Practice and
Procedure, Sec. 1802, at 478-79 (2d ed. 1986).

A common approach was to attempt to use 28 U.S.C. Sec. 1292(b), the
Discretionary Interlocutory Appeals Act of 1958, which provides: When a
district judge, in making in a civil action an order not otherwise
appealable under this section, shall be of the opinion that such an
order involves a controlling question of law as to which there is
substantial ground for difference of opinion and that immediate appeal
may materially advance the ultimate termination of the litigation, he
shall so state in writing in such order.

In general, the response to the various attempts at interlocutory appeal
under Sec. 1292(b) was unfavorable. See 15B Wright et al., Sec. 1802, at
478-79. Typical was the Third Circuit's opinion in Link v. Mercedes-Benz
of North America Inc., which announced a general policy against
interlocutory appeal of class certification decisions: Sec. 1292(b) was
not designed to substitute wholesale appellate certainty for trial court
uncertainty under circumstances where, as here, the Rule gives broad
discretion to the District Court to revise the class certification
determination at any time prior to the decision on the merits. 550 F.2d
860, 862-63 (3d Cir. 1977).

In 1978, the U.S. Supreme Court accelerated this trend, making clear
that class certification decisions did not fit within the narrow
category of issues that were eligible for interlocutory review. See
Coopers & Lybrand v. Livesay, 437 U.S. 463, 468-69 (1978). In Coopers,
the high court said: To come within the "small class" of decisions
exempted from the final judgment rule by Cohen, the order must
conclusively determine the disputed question, resolve an important issue
completely separate from the merits of the action, and be effectively
unreviewable on appeal from a final judgment. ... An order passing on a
request for class certification does not fall in that category.

Within 10 years, there was near unanimity on this issue, and circuits
began to speak in terms of a "clearly articulated policy against freely
accepting Sec. 1292(b) appeals from class certification orders." See In
re School Asbestos Litigation, 789 F.2d 996, 1002 (3d Cir. 1986).

                    Circuits Split Over Mandamus

Still the perceived need for review of certain class action
determinations continued. Another common attempt for defendants seeking
interlocutory review of class determinations was to petition for a writ
of mandamus under the All Writs Act, 28 U.S.C. Sec. 1651. See DeMasi v.
Weiss, 669 F.2d 114 (3d Cir. 1982). Mandamus is not technically an
appeal. Rather, mandamus is a request for the court to take jurisdiction
so as to prevent "usurpation of power" by a lower court, under
"exceptional circumstances." Historically mandamus was an extraordinary
procedure used only in unusual and near-emergent situations. See Will v.
United States, 389 U.S. 90, 95 (1967).

Yet, the chances of obtaining interlocutory review of class
determinations through mandamus varied widely depending upon the circuit
in which one appeared. The Third, Fourth and Eighth Circuits stuck to
the notion that class determinations were not appropriate for
interlocutory review, whether by mandamus or otherwise. See DeMasi v.
Weiss, 669 F.2d at 119, denying a petition for mandamus to review a
class certification, stating: We therefore adhere to the clear and
settled precepts of this court: a class action determination,
affirmative or negative, is not a final order appealable under 28 U.S.C.
Sec. 1291. ... We will not employ mandamus in this case to circumvent
these precepts and therefore the petition will be denied.

In In re Allegheny Corp., the Eighth Circuit said: The issue is not
whether the District Court correctly determined the issue of law
concerning the proper application of (Rule 23). For if we applied this
as the governing criterion, then every interlocutory order which is
wrong might be reviewed under the All Writs Act. 634 F.2d 1148, 1150
(8th Cir. 1980).

Similarly, the Fourth Circuit in In re Catawba Indian Tribe, 973 F.2d
1133, 1137 (4th Cir. 1992), held that the Supreme Court's decision in
Coopers & Lybrand, supra, required circuit courts to refrain from
allowing interlocutory review of class determinations under Sec. 1291,
Sec. 1292(b) or mandamus "decisions regarding class certifications,
however important their outcome might be to the underlying suit, are
entitled to no special dispensation from fundamental procedural
requirements." Catawba, 973 F.2d at 1137.

Other circuits, however, showed a much greater willingness to use
mandamus to allow interlocutory review of class determinations. In
particular, the Sixth, Seventh, and 11th circuits gained a reputation
for permitting mandamus to provide almost routine interlocutory review
of class determinations. See In re American Med. Sys. Inc., 75 F.3d 1069
(6th Cir. 1996); In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293 (7th Cir.
1995); Jackson v. Motel 6 Multipurpose Inc., 130 F.3d 999 (11th Cir.
1997). See also Kruse, "Appealability of Class Certification Orders: the
*Mandamus Appeal' and a Proposal to Amend Rule 23," 91 Nw. U. L. Rev.
704, 731 (1997).

The rationale underlying this policy was adopted over a vigorous dissent
in the decision of Rhone-Poulenc Rorer Inc., a case stemming from a
tragic AIDS-tainted blood transfusion program.

The majority in this case set the stage for "mandamus appeals" of mass
tort certification decisions as a means of protecting defendants from an
unfair risk of industrywide bankruptcy:

     The protection of the right conferred by the Seventh Amendment to
trial by jury in federal civil cases is a traditional office of the writ
of mandamus. Beacon Theatres v. Westover, 359 U.S. 500, 510-11, 79 S.Ct.
948, 956-57, 3 L.Ed.2d 988 (1959). When the writ is used for that
purpose, strict compliance with the stringent conditions on the
availability of the writ (including the requirement of proving
irreparable harm) is excused.

     But the looming infringement of Seventh Amendment rights is only
one of our grounds for believing this to be a case in which the issuance
of a writ of mandamus is warranted. The others as we have said are the
undue and unnecessary risk of a monumental industry-busting error in
entrusting the determination of potential multi-billion dollar
liabilities to a single jury when the results of the previous cases
indicate that the defendants' liability is doubtful at best and the
questionable constitutionality of trying a diversity case under a legal
standard in force in no state. We need not consider whether any of these
grounds standing by itself would warrant mandamus in this case. Together
they make a compelling case. Rhone, 51 F.3d at 1303-04.

Still other circuits took a position somewhere short of Rhone,
criticizing the decision for distorting mandamus principles, but
nevertheless frequently allowing interlocutory appeal of class
determinations under Sec. 1292(b), where the District Court had given
permission for such an appeal. See Valentino v. Carter-Wallace Inc., 97
F.3d 1227 (9th Cir. 1996), decertifying a class action, but refusing to
adopt the mandamus analysis of Rhone, stating: "We therefore do not
accept Carter- Wallace's invitation in this case to adopt the principles
of Rhone-Poulenc as the law of this circuit." See also Mullen v.
Treasure Chest Casino Inc., 186 F.3d 620 (5th Cir. 1999)(granting
interlocutory appeal of class certification decision under Sec.

          Using Rule 23(f) to Preserve Procedural Integrity

By the mid-1990s, there was growing concern that the Sixth, Seventh and
11th circuits were "stretching" mandamus principles to, or beyond, the
breaking point. See Gould, "Federal Rule of Civil Procedure 23(f):
Interlocutory Appeals of Class Action Certification Decisions," 1 J.
App. Prac. & Process 309, 318 (2000).

In particular, critics from within and outside the Seventh Circuit
denounced Rhone, as an attempt at judicial amendment of both the All
Writs Act and the federal rules. See Kruse, 91 Nw. U. L. Rev. at 731,
noting that "Rhone-Poulenc Rorer effects the judicial amendment of Rule
23 in the Seventh Circuit," citing the dissent in Rhone, 51 F.3d at
1308. See also Scott, "Non- Traditional Resolutions to Mass Tort
Disputes Take a Hit as AIDS- Infected Hemophiliacs Bear the Cost of
Judge Posner's Economic Justice," 12 Ohio St. J. on Disp. Resol. 159,
166 (1996): "According to the Rhone court's logic, the irreparable harm
requirement for granting mandamus will be satisfied by almost every
class certification order."

Thus, it may well be that the Advisory Committee on Civil Rules, facing
a near revolt from some circuits on the issue of appealability of class
determinations, decided that an alternative was necessary to preserve
the overall integrity of the civil rules and to return mandamus to its
original purpose.

To bring an appearance of uniformity back to this area of civil
procedure an amendment was made to Federal Rule of Civil Procedure 23.
On Dec. 1, 1998, a new section was added to expressly authorize
"discretionary" interlocutory appeals of class certification decisions.

The text of new Rule 23(f) states: A court of appeals may in its
discretion permit an appeal from an order of a district court granting
or denying class action certification under this rule if application is
made to it within ten days after entry of the order. An appeal does not
stay proceedings in the district court unless the district judge or the
court of appeals so orders.

An analysis of the history and text of the rule is enlightening. The
rule speaks to the circuit courts, not the District Courts. One would
ordinarily expect to find a grant of appellate jurisdiction in either a
statute or the Federal Rules of Appellate Procedure, not the Federal
Rules of Civil Procedure.

Indeed, according to the Journal of Appellate Practice and Procedure,
Fed. R. Civ. P. 23(f) represents the first time a grant of appellate
jurisdiction has been implemented by court rule, rather than by statute.

    Creation of a federal court appeal procedure by rule, rather than
statute, is unique. ... (S)ubsection (e) of Sec. 1292 gives the Supreme
Court authority to "prescribe rules, in accordance with the Rules
Enabling Act to provide for an appeal of an interlocutory decision to
the courts of appeals that is not otherwise provided for." The
interlocutory appeal procedure of rule 23(f) was promulgated by the
authority granted the Supreme Court by that subsection. Rule 23(f) is
the only federal rule of civil procedure created through the Sec.
1292(e) process. Gould, "Federal Rule of Civil Procedure 23(f):
Interlocutory Appeals of Class Action Certification Decisions," 1 J.
App. Prac. & Process at 310.

             'Discretion' as the Better Part of Valor

Another fact evident from the text of Rule 23(f) is the lack of any
guidance as to when interlocutory review of a class decision is
appropriate. The history surrounding the drafting of Rule 23(f) confirms
this, noting that "permission to appeal may be granted or denied on the
basis of any consideration that the court of appeals finds persuasive."
See April 18 and 19, 1996 Minutes of the Civil Rules Advisory Committee,
reprinted at 5 Newberg on Class Actions (3d ed. 1992), July 1999
Cumulative Supplement, Appendix A. See also Advisory Committee Note to
Fed. R. Civ. P. 23(f): "The court of appeals is given the unfettered
discretion whether to permit the appeal, akin to the discretion
exercised by the Supreme Court in acting on a petition for certiorari."

The decision to vest such vast discretion in the circuit courts was not
without its opponents. Some members of the Advisory Committee sought to
create an interlocutory appeal of certain class determinations "as of
right." See Judicial Conference of the United States, Advisory Committee
on Civil Rules, Minutes of Nov. 9-10, 1995, 1995 WL 870908, at *4-5.

The primary concern voiced by opponents of the "discretionary" appeal
procedure seemed to be that the new procedure would simply encourage
circuit courts to continue their prior practice.

    The discretionary opportunity provided by the draft was thought to
be illusory. It was observed that at least in some circuits,
certification for appeal under Sec. 1292(b) frequently fails because the
court of appeals denies permission to appeal; eliminating the need for
district-court certification does not ensure that the court of appeals
will grant permission. Id. at *4.

The majority of the Advisory Committee, however, apparently feared that
appeal "as of right" would cause an unwanted rush to the circuit court
clerk's office. "The response to the fear that a discretionary system of
interlocutory appeal would prove illusory was the fear that a right to
appeal would lead to abuse." Id.

                   A True Break With the Past?

Does new Rule 23(f) represent a true break with past practice? Or does
it simply codify the right of circuits to take the varying approaches to
class certification appeals they were already taking?

As correctly observed by the advocates of interlocutory appeal "as of
right," nothing in Fed. R. Civ. P. 23(f) prevents a circuit from
continuing its previous policies regarding allowing -- or not allowing
-- interlocutory appeals of class certifications. Indeed, Rule 23(f)'s
grant of "unfettered discretion" to the circuits legitimizes these
varying practices. See Knibb, Federal Court of Appeals Manual, 4th ed.
(2000) Sec. 5.7, noting that under new Rule 23(f):

    (a)s courts of appeals gain experience with class certification
appeals, they are likely to develop standards about the types of issues
they will exercise their discretion in favor of reviewing, but for now
the only standards are those you may find in cases granting or denying

Rule 23(f) clearly does make at least some changes to the prior practice
surrounding interlocutory appeals in class actions. The most obvious is
that a party no longer needs the permission of the District Court as was
necessary under Sec. 1292(b). The party seeking to appeal need only
obtain the permission of the circuit court itself.

A review of the minutes of the Advisory Committee leaves little doubt
that this was considered to be an important step by the drafters.
Removing the requirement of District Court permission was not without
its critics on the Advisory Committee. The arguments for requiring
District Court approval of interlocutory appeals were summarized in the
minutes of the committee meeting as follows:

    An argument was advanced for restoring the requirement of district
court permission to appeal, drawing from the observation that a class
certification decision may be provisional. ... These arguments were
later renewed, with the added suggestion that district-court discretion
is particularly important in cases that have generated lengthy records
on the certification question. The district court's familiarity with the
record will support a better evaluation of the value of appeal. 1995 WL
870908, at *5.

The majority of the Advisory Committee, however, found the arguments for
retaining the District Court as "gate keeper" of interlocutory appeals
to be unpersuasive. Indeed, the minutes of the Advisory Committee
meetings voice a fear that District Court judges were refusing to allow
interlocutory appeal for reasons wholly unrelated to the certification
issue. Id.

The District Court, however, was not dropped from the interlocutory
appeals equation entirely. The drafters of new Rule 23(f) recognized the
need for at least some informal District Court involvement. See Fed. R.
Civ. P. 23(f) Committee Note.

Obviously, there is no requirement in the rule itself that the District
Court submit any such "statement of reasons." This has led some
commentators to question the value of this statement in the Committee
Note. See Gould, "Federal Rule of Civil Procedure 23(f): Interlocutory
Appeals of Class Action Certification Decisions," 1 J. App. Prac. &
Process at 325.

Another change brought by Rule 23(f) is that the objective standards
imposed by Sec. 1292(b) are no longer present. For example, there is no
longer any requirement that a party show that the class decision
involved a "controlling issue" of law or that there exists a
"substantial ground for difference of opinion." See Knibb, Federal Court
of Appeals Manual, Sec. 5.7, noting that under Rule 23(f):

    (A)ppeals of class certification orders are not restricted to the
potentially limiting requirements of appeals under section 1292(b). In
other words, they do not need to meet the test of a controlling question
of law with substantial grounds for differing opinions, and the prospect
of ending the litigation sooner with an immediate appeal.

                  Will Rule 23(f) Increase Appeals?

It seems unlikely the circuit courts will use their "unfettered
discretion" to greatly increase the number of interlocutory class
certification appeals accepted.

The Advisory Committee minutes echo this view: Permission to appeal
should be granted with restraint. The Federal Judicial Center study
supports the view that many suits with class action allegations present
familiar and almost routine issues that are no more worthy of immediate
appeal than many other interlocutory rulings. See April 18 and 19, 1996
Minutes of the Civil Rules Advisory Committee, reprinted at 5 Newberg on
Class Actions (3d ed. 1992), July 1999 Cumulative Supplement, Appendix

Was Rule 23(f) expected to increase the number of interlocutory appeals?
While there is no doubt that Rule 23(f) was intended to increase the
opportunity for interlocutory appeal of class decisions; the drafters
opined that the number of appeals actually heard will not greatly
increase. "It is anticipated and the Advisory Committee Note would make
clear that permission to appeal, although discretionary in the court of
appeals, will rarely be given." Advisory Committee on Civil Rules,
Minutes of Nov. 9-10, 1995, 1995 WL 870908, at *5

That does not mean that parties who lose the certification decision
below will not attempt to transform new Rule 23(f) into a device for
automatic interlocutory review of almost every class certification
decision. Indeed, the minutes of the Advisory Committee predict just
such attempts will initially occur; though they express the hope that
these attempts will be short-lived. Id. at *4-5; see also Report of the
Judicial Conference Committee on Rules of Practice and Procedure,
contained in the Communication from the Chief Justice, at 4, where it
was "recognized that there might be strong temptations to seek
permission to appeal, particularly during the early days of Rule 23(f)"
but expressing hope "that lawyers would soon recognize that appeal would
be granted only in cases that present truly important and difficult

                        The Rule in Practice

Very few reported appellate opinions have thus far considered petitions
for appeal under Rule 23(f). Currently, only two such cases have been
located; both from the Seventh Circuit.

In Blair v. Equifax Check Services Inc., 181 F.3d 832 (7th Cir. June 22,
1999), the court took the opportunity to attempt to define some of the
parameters of the "unfettered discretion" granted by Rule 23(f). In
particular, Blair outlined three circumstances when the Seventh Circuit
would allow interlocutory appeal of a class determination. 181 F.3d at

The first of these circumstances was a promise by that circuit to revive
the old "death knell" theory struck down by the U.S. Supreme Court in
Coopers, supra. In describing this circumstance, the Blair court noted:
Rule 23(f) gives appellate courts discretion to entertain appeals in
"death knell" cases ... when denial of class status seems likely to be
fatal, and when plaintiff has a solid argument in opposition to the
district court's decision, then a favorable exercise of appellate
discretion is indicated. 181 F.3d at 834.

The second "circumstance" outlined in Blair are those cases where class
certification puts "excessive pressure" on a defendant to settle, "even
when the plaintiff's probability on the merits is slight." 181 F.3d at
834. This circumstance appears to call for at least some consideration
of the "merits" of a plaintiff's claims. How else can such a
"probability" be calculated?

The third "circumstance" discussed in Blair is loosely described as any
case with issues that may "facilitate the development of the law." 181
F.3d at 835. In such cases, Blair indicates the Seventh Circuit will
probably accept the appeal, even if it cannot be shown "that the
district judge's decision is shaky." Id.

Another Seventh Circuit opinion, Gary v. Sheahan, 188 F.3d 891 (7th Cir.
1999), also touches upon the subject of Rule 23(f). Unlike Blair, Gary
does not dwell upon the circumstances governing when a circuit should
accept an interlocutory appeal. Rather, it emphasizes one of the limits
placed on the opportunity to seek interlocutory appeal: the 10-day time
limit set forth in Fed. R. Civ. P. 23(f).

Gary makes clear that this time limit will be strictly enforced and
denies the petition for appeal on that basis. 188 F.3d at 893. See also
Advisory Committee on Civil Rules, Minutes of Nov. 9-10, 1995, 1995 WL
870908, at *4: "The limits built into the draft were noted repeatedly
throughout the discussion. Application for permission to appeal must be
made within 10 days of the order granting or denying certification."

It is impossible to draw firm conclusions about how Rule 23(f) will
operate from only two reported opinions, especially since both are from
the same circuit. The nature of the new rule itself, which grants
"unfettered discretion" to each circuit, provides no guarantee that
anything said in Blair or Gary will be followed in any other circuit.

Moreover, a very strong argument can be made that in Blair, the Seventh
Circuit was simply continuing its pre-Rule 23(f) policy of allowing
increased interlocutory review of class decisions, a policy previously
established in mandamus cases such as In re Rhone-Poulenc Rorer Inc.,


It is unclear whether Rule 23(f) will actually change prior practice
regarding interlocutory review of class determinations. Some
practitioners might argue that the new rule simply recognizes the state
of affairs that already existed: some circuits strongly oppose
interlocutory review and others seem to favor it.

By granting "unfettered discretion" to each circuit court, Rule 23(f) is
essentially a license for each circuit to continue following its prior
policy regarding such appeals. The argument would assert that Rule 23(f)
was adopted merely to preserve the integrity of mandamus and the All
Writs Act.

If this interpretation is correct, then one might opine that some
circuits, including the Third, Fourth and Eighth, will continue their
firm policy against allowing interlocutory review of class
determinations. Other circuits, which previously "stretched" mandamus
principles to allow frequent interlocutory review of class
determinations -- such as the Sixth, Seventh and 11th -- can be expected
to continue that prior practice; but this time under the more
intellectually acceptable rubric of Rule 23(f)'s "unfettered

The future actions of other circuits, however, will be harder to
predict. Courts such as the Fifth and Ninth circuits have shown a
willingness to allow Sec. 1292(b) appeals of class determinations. These
same circuits, however, have expressed reluctance to follow the
Seventh's Circuit's approach in Rhone because of their belief that it
distorted mandamus principles. That objection having been rendered moot
by new Rule 23(f), these circuits may very well use their discretion to
accept more interlocutory appeals.

Accordingly, while it would be trite to say that "only time will tell"
whether Rule 23(f) completely revamps class action appellate procedure,
it would be true. A more interesting question may be whether the rule
will affect a change in policy in the Third Circuit, where most of us
have the majority of our cases.

(Byline: Philip Stephen Fuoco And Joseph A. Osefchen. Fuoco heads a
Haddonfield firm that concentrates its practice in class actions and
complex litigation. Osefchen is an associate at the firm.) (New Jersey
Law Journal, April 17, 2000)

* Punitive Damages Class Actions Still Prove Elusive in Fed. Practice
The author is the Reuschlein Distinguished Visiting Chair at Villanova
University School of Law in Villanova, Pa. She is the author of Mass
Tort Litigation (1996).

The concept of a punitive damages class is simple, logical and
compelling. If certified, a punitive damages class could provide a means
to pay all class claimants a share of a single punitive damages fund.
Theoretically, the punitive damages class eliminates the problem of
successive punitive damages awards against a defendant. However,
punitive damages classes have proved elusive in federal practice.

Federal courts have split over whether it is appropriate to certify a
punitive damages class, either for a determination of liability for
punitive damages or for an actual class-wide determination of damages.
Federal courts generally have rejected punitive damages classes in
several seminal mass tort cases. However, some federal courts have been
willing to entertain requests for punitive damages classes.

                       Seeking Certification

Punitive damages classes raise interesting procedural problems. Thus,
defendants may join plaintiffs in seeking certification, and defendants
independently may seek such a class certification, or accomplish this
through settlement.

Parties may seek certification of a punitive damages class under the
Federal Rule 23(b) categories, but also as a "limited issue" class under
Federal Rule of Civil Procedure 23(c)(4)(A). (Limited-issue classes as a
sound trial management technique. Federal Judicial Center, Manual for
Complex Litigation, West Pub. 3d ed. 1995, at Sec. 30.17.)

The Fifth U.S. Circuit Court of Appeals, for example, has validated the
use of class certification of limited issues, as have other federal
courts. See, e.g., Jenkins v. Raymark Industries, 782 F.2d 468 (5th Cir.
1986); cf. Castano v. American Tobacco Co., 160 F.R.D. 544 (E.D. La.
1995), rev'd, 84 F.3d 734 (5th Cir. 1996).

In addition, proponents of a punitive damages class would have to
convince the court that such a class would not violate the Seventh
Amendment jury trial right by impermissibly severing the punitive
damages determination from the underlying substantive claims or
determination of compensatory damages. See, e.g., In re Fibreboard
Corp., 893 F.2d 706 (5th Cir. 1990).

In complex litigation, courts and commentators have questioned the
appropriateness of multiple, repetitive punitive damages awards against
a defendant based on claims arising from the same defective product or
course of conduct.

These authorities suggest that multiple punitive damages awards might
violate federal constitutional protections against excessive fines, as
well as substantive due process. In re School Asbestos Litigation, 789
F.2d 1004 (3d Cir. 1986), citing Judge Henry Friendly's opinion in
Roginsky v. Richardson-Merrell Inc., 378 F.2d 832 (2d Cir., 1967).

Judge Gerald Heaney, dissenting in the Federal Skywalk cases, noted:
"Unlimited multiple punishment for the same act determined in a
succession of individual lawsuits and bearing no relation to the
defendants' culpability or the actual injuries suffered by the victims,
would violate the sense of 'fundamental fairness' that is essential to
due process." In re Federal Skywalk Cases, 680 F.2d 1175, 1188 (8th Cir.
1982) (Heaney, J., dissenting).

Similarly, Judge Jack Weinstein, in certifying a Rule 23(b)(1)(B)
punitive damages class in Agent Orange litigation, concluded, "There
must, therefore, be some limit, either as a matter of policy or as a
matter of due process, to the amount of times defendants may be punished
for a single transaction." See In re Agent Orange Products Liability
Litigation, 100 F.R.D. 718, 728 (E.D.N.Y. 1983).

               The Failure of Punitive Damages Classes

Judge Weinstein endorsed a (b)(1)(B) punitive damages class as a means
of resolving punitive damages liability related to the rationales of
punishment and deterrence. Agent Orange, 100 F.R.D. at 728

Thus, a (b)(1)(B) certification would permit a jury to consider
aggregate punitive damages for a single course of conduct. If the
punitive damages class were certified under the (b)(3) provision,
opt-out members might conceivably receive all available punitive damages
in individual lawsuits or, if the cases were not completed first, might
receive none at all. Id.

Nonetheless, most attempts to certify (b)(1)(B) punitive damages classes
have failed, a situation likely to be unchanged after the Supreme
Court's decision in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999).

The most prevalent grounds for rejecting proposed (b)(1)(B) punitive
damages classes are the failure to prove the existence of a limited
fund, underinclusiveness of the class definition and violation of the
federal Anti-Injunction Act. 28 U.S.C. Sec. 2283. Courts also have
rejected punitive damages classes because of lack of commonality, lack
of notice to the class members and state law prohibitions.

In some instances, proponents of a (b)(1)(B) punitive damages class have
failed to prove the limited fund. In re Northern District of California,
Dalkon Shield IUD Products Liability Litigation, 693 F.2d 847, 849 (9th
Cir. 1982). Not only do federal courts require fact-finding and proof of
the existence of a limited fund, but they also differ over the
appropriate standard for a (b)(1)(B) punitive damages class.

Thus, the Ninth Circuit in Dalkon Shield indicated that the appropriate
standard required proponents to demonstrate that the disposition of
earlier claims would "necessarily affect" later claims. Dalkon Shield,
693 F.2d at 851. Because the class proponents failed to satisfy this
high standard, the court reversed the certification of a (b)(1)(B)

Judge Weinstein, however, rejected this standard in certifying a
(b)(1)(B) punitive damages class in the Agent Orange litigation,
concluding that Rule 23 requires only that there be a "risk of
impairment rather than a conclusive determination of impairment." Agent
Orange, 100 F.R.D. at 726.

In addition, federal courts have refused to approve (b)(1)(B) punitive
damages classes because of the failure to prove a limited fund in DES
litigation, Payton v. Abbot Laboratories, 83 F.R.D. 382, 389 (D. Mass.
1979); the School Asbestos property damages litigation, In re School
Asbestos Litigation, 789 F.2d at 1005; and the Bendectin litigation. In
re Bendectin Products Liability Litigation, 749 F.2d 300, 306 (6th Cir.

Moreover, Rule 23(b)(1)(B) cannot be satisfied by speculation about the
effect of uncertain future punitive damages awards. See Newberg and
Conte, Newberg on Class Actions, Vol. 3, at Sec. 17.36 (1992 and Supp.).
No court has approved a (b)(1)(B) punitive damages class on the ground
that multiple, individual punitive damages awards would deplete
defendants' funds.

Also, the possibility that juries might award later-suing plaintiffs or
class members less or no punitive damages because the defendant already
had been punished in prior litigation is called the "limited generosity
theory." Federal courts have rejected the limited generosity theory when
it has been urged in support of (b)(1)(B) punitive damages class
certification. See In re School Asbestos Litigation, 789 F.2d at
1005-06; see also In re Rail Collision Near Chase, Md., on Jan. 4, 1987
Litigation, 9 Fed. R. Serv. 3d (Callaghan) 1045 (D. Md. Dec. 8, 1987).

A proposed punitive damages class also may fail because the class
description is "underinclusive." In re School Asbestos Litigation, 789
F.2d at 1005-06. In the School Asbestos litigation, the class complaint
named all school districts that did not opt out as claimants. The
proposed punitive damages class was underinclusive because it did not
apply to other property owners where asbestos abatement had occurred and
did not include personal injury claimants.

           Avoiding a Violation of the Anti-Injunction Act

A Rule 23(b)(1)(B) punitive damages class may be prohibited if the class
certification operates as an injunction restraining class claimants from
settling their damage claims and bars state plaintiffs from pursuing
pending state actions. In re Federal Skywalk Cases, supra.

One federal court has held that a (b)(1)(B) punitive damages class
violates the federal Anti-Injunction Act, which provides that "(a) court
of the United States may not grant an injunction to stay proceedings in
a state court except as expressly authorized by Act of Congress, or
where necessary in aid of its jurisdiction, or to protect or effectuate
its judgment."

Whether the Anti-Injunction Act will serve as a bar to certification of
a (b)(1)(B) punitive damages class depends on the wording of the
certification order and the intent of the court. For example, in the
Exxon Valdez litigation, the Ninth Circuit noted that the District Court
had considered the Anti-Injunction Act a problem and avoided it by not
entering any injunctions in the action, in contrast to the district
court's order in the Skywalk litigation. In re the Exxon Valdez, 26 F.3d
130, 1994 WL 266519 (9th Cir.) (unpublished disposition).

Federal courts have repudiated attempts to certify nationwide punitive
damages classes under the Rule 23(a) commonality requirement. Dalkon
Shield, 693 F.2d at 850. Similarly, the predominance requirement for
23(b)(3) classes has frustrated proposed nationwide punitive damages
classes that involved multiple state punitive damages laws. Id.

Also, a punitive damages class under Rule 23(b)(3) must provide adequate
notice of the class-wide trial. The failure to inform class members that
the defendants' punitive conduct will be tried on a class-wide basis is
sufficient to overturn certification. In re Copley Pharmaceutical Inc.,
"Albuterol" Products Liability Litigation, MDL. 1013, 161 F.R.D. 456,
467 (D. Wyo. 1995).

                Banning Class-wide Determination of Punitives

Attempted punitive damages classes may fail because federal or state
substantive law prohibits class-wide determination of punitive damages.
See, e.g., In re Copley Pharmaceutical Inc.; Walsh v. Ford Motor Co.,
627 F. Supp. 1519 (D.D.C. 1986).

Thus, in a Rule 23(b)(3) products liability action brought against the
manufacturer of Albuterol, the District Court held that certification of
a punitive damages class was inappropriate because "punitive damages are
measured, in part, by how outrageous such punitive conduct is relative
to a particular plaintiff. ... Therefore, it is necessary for the jury
which is to determine the amount of punitive damages, if any, to
consider how outrageous a particular defendant's conduct may be." In re
Copley Pharmaceutical Inc., 161 F.R.D. at 467-68, citing TXO Production
Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993). The court
concluded that the law compelled that punitive damages and punitive
conduct be determined on an individual basis.

Courts have been marginally more receptive to proposed (b)(3) opt-out
punitive damages classes because they preserve individuals' rights to
exclude themselves and pursue independent compensatory and punitive

Thus, despite the general trend against certification of punitive
damages classes, some courts have been willing to certify them. See,
e.g., In re the Exxon Valdez, supra; see also, In re the Exxon Valdez,
Order No. 267, 1995 WL 527988 (D. Alaska); Agent Orange, supra. Cf.
Sterling v. Velsicol Chemical Corp., 855 F.2d 1188 (6th Cir. 1988)
(affirming class-wide treatment of compensatory and punitive damage
claims in landfill contamination action; compensatory damage claims
tried first, followed by class-wide punitive damages).

Other courts have been willing at least to authorize class- wide means
for assessing class-wide liability for punitive damages, with award
determinations conducted in subsequent trial phases. See, e.g., Cimino
v. Raymark Industries, 751 F. Supp. 649, 657-58 (E.D. Texas 1990). A
federal district court in Louisiana subsequently adapted a Cimino-style
trial plan in a mass accident case arising from an explosion and fire at
a Shell Oil refinery, endorsing the concept and use of a "punitive
damages multiplier." In re Shell Oil Refinery, 136 F.R.D. 588 (E.D. La.
1991). The 5th Circuit upheld the Shell Oil trial plan on appeal. See
Watson v. Shell Oil Co., 979 F.2d 1014 (5th Circ. 1992), reh. en banc
granted, 990 F.2d 805 (5th Cir. 1993). But there is some debate over the
precedential value of Shell Oil because while a rehearing en banc was
pending, the parties settled. (New Jersey Law Journal, April 17, 2000)


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