CAR_Public/000508.MBX                  C L A S S   A C T I O N   R E P O R T E R

                  Monday, May 8, 2000, Vol. 2, No. 89

                                 Headlines

ADOBE SYSTEMS: Continues to Defend Securities Suit Filed 96 in CA
----CENTOCOR INC: Counsel Fees Awarded for Settlement Improvement
CHRYSLER CORP: Fd Judge in PA Denies Certification for Paint Defect
CITY OF DETROIT: Property Tax Practices Targeted, Mantese Miller Says
COMPUSERVE: Online Service Accused of Failing (Timely) to Pay Rebates

DANKA BUSINESS: Announces Dismissal of Securities Suits in FL and NY
HOLOCAUST VICTIMS: Poland expects tough talks on details of Payments
LEGIONNAIRES OUTBREAK: Victims in Australia to Sue Aquarium
MEDICAL ASSISTANCE: Suit Seeks to Raise Dental Reimbursement Rates
MICROSOFT CORP: Former Distric Judge Appointed Discovery Referee

NETWORK ASSOCIATES: 9th Cir. to Address Lead Role Selection Under PSLRA
NORTHBRIDGE EARTHQUAKE: CA Suit Alleges Conspiracy over Insurance
NUTRAMAX PRODUCTS: Milberg Weiss Files Securities Complaint in MA
SONY MUSIC: Retailers Stike Dissonant Note on Audio CD Hyperlinks
TOBACCO LITIGATION: Suits Worldwide Build on US Legal Triumph

WATER HEATERS: Lawyers to Get $5.7 Million in Fees

* Study Shows Awards up on Product Liability and Medical Malpracticce

                            *********

ADOBE SYSTEMS: Continues to Defend Securities Suit Filed 96 in CA
------------------------------------------------------------------
On February 6, 1996, a securities class action complaint was filed
against Adobe Systems Inc., certain of its officers and directors,
certain former officers of Adobe and Frame Technology Corporation,
Hambrecht & Quist, LLP ("H&Q"), investment banker for Frame, and certain
H&Q employees, in connection with the drop in the price of Adobe stock
following its announcement of financial results for the quarter ended
December 1, 1995. The complaint was filed in the Superior Court of the
State of California, County of Santa Clara.

The complaint alleges that the defendants misrepresented material
adverse information regarding Adobe and Frame and engaged in a scheme to
defraud investors. The complaint seeks unspecified damages for alleged
violations of California law. The court granted plaintiffs' motion for
class certification on September 22, 1999. We believe that the
allegations against us and our officers and directors are without merit
and intend to vigorously defend the lawsuit. The case is currently in
the discovery phase.


CENTOCOR INC: Counsel Fees Awarded for Settlement Improvement
-------------------------------------------------------------
This was the chancery court's opinion awarding counsel fees to objectors
who had improved a class action settlement. No. 14405-NC, Delaware
Chancery Court memo opinion, submitted 12 October 1999, decided 31
January 2000. (Vice Chancellor Steele.)

Defendant Centocor Inc. was a Pennsylvania corporation in the business
of developing and selling new drugs. Centocor's wholly-owned subsidiary
was general partner of a limited partnership (whose units cost $100,000
each) in which objectors: Pharmaceutical Partners II L.P. (PharmPart)
was the largest single investor in Class A; and John E. Abdo also owned
Class A limited partnership units.

In 1992 and 1993 Centocor's sub signed an agreement with Eli Lilly & Co.
over the marketing rights to a new drug called CentoRx. One of the
provisions of that contract was that if the Food and Drug Administration
(FDA) did not approve another drug, whose rights were owned by another
limited partnership, then Lilly could exercise its option to acquire all
rights to CentoRx without paying any more for them. The FDA did not
approve the other drug, and Lilly did exercise its option to acquire the
rights to CentoRx.

In 1995 PaineWebber R&D Partners II L.P., another investor in the
limited partnership Centocor's sub managed, filed this class action
seeking: damages for breach of: (a) contract; and (b) fiduciary duties;
and declaratory relief giving the plaintiff class of unitholders part of
the future profits from CentoRx.

Abdo filed a separate action, because he thought PaineWebber had a
conflict of interest and so, in this case, did not: address his concerns
adequately; name certain defendants; and pursue certain claims.

The parties to this suit reached a proposed settlement, and Abdo and
then PharmPart objected to it. Abdo mainly wanted to take some discovery
as to the adequacy of the settlement, and PharmPart backed him up on
that; and PharmPart mainly objected to the way the settlement had been
calculated, and Abdo seconded what PharmPart said about that.

At the settlement hearing in March 1999, the court: overruled Abdo's
objections to PaineWebber's adequacy as class representative, but did
not find them to have been frivolous; and corrected miscalculations that
added $690,431.25 and $502,707.00 to how much the class would get (and
PharmPart said the difference in future profits had a present value of
at least $10,615,808 to the plaintiff class).

                           This Fee Application

Abdo was represented by two law firms, one in Bala Cynwyd, Pa., and one
in Bear, Del., and they were working on contingency. Ann Caldwell, of
the Pennsylvania firm, made most of the appearances for Abdo. PharmPart
was represented by a firm in Wilmington, Del., and it was not working on
contingency but on straight hourly rates.

Now all three firms representing the objectors had made a joint
application for fees and expenses of $900,000 plus interest, and no one
opposed it. The vice chancellor asked for a breakdown of the total, and
a large chunk of it was for 188.5 hours worked by Richard D. Greenfield
of Abdo's Pennsylvania firm, at $495 per, which was twice the rate any
of the other lawyers were seeking (plaintiffs' counsel had a separate
fee application pending). And Greenfield's pro hac vice application had
admitted he had been suspended from practicing law in Pennsylvania for a
time for misconduct related to a conflict of interests in a similar
case.

                               Applicable law

V.C. Steele said: the same standards apply to an application for counsel
fees for an objector as for a plaintiff-class representative, and to get
any fee at all a petitioner must show:

(a) its claim had legal merit when it was filed;
(b) the action produced a benefit to the corporation or class; and
(c) the benefit was caused by the filing of the claim; Klar, Attorney's
     Fees in Securities Class Actions, 417 P.L.I.Lit. 153 (Oct.-Nov.
     1991); Wolfe et al., Corporate & Commercial Practice in the
     Delaware Court of Chancery @ 9-5(b) (1998); Rosen v. Smith, No.
     7863-NC, V.C. Hartnett (Del. Ch., 23 Sept. 1985); In re Resorts
     Int'l, No. 9470-NC, V.C. Hartnett (Del. Ch., Oct. 1990); United
     Vanguard Fund Inc. v. TakeCare Inc., 693 A.2d 1076 (Del. 1997)

There is no standard method of determining attorneys' fees, but the
factors the court considers are:
(a) the time and effort counsel spent;
(b) the difficulty and complexity of the case;
(c) counsel's standing and ability;
(d) any contingency in the fee agreement;
(e) how far the litigation went before it ended;
(f) how much of the resulting benefit was due to petitioner's efforts;
(g) how much the litigation caused the benefit; and
(h) the size of the resulting benefit, and this is by far the most
    important factor;
    Goodrich v. E. F. Hutton Group Inc., 681 A.2d 1039
    (Del., 1996); Stroud v. Milliken Enters. Inc., No. 8969-NC, V.C.
    Hartnett (Del. Ch., Aug. 1990); Weinberger v. UOP, Inc., No. 5642-
    NC, V.C. Berger (Del. Ch., 10 Mar. 1987), aff'd, 497 A.2d 792 (Del.,

    1985); J. L. Schiffman & Co. v. Standard Indus. Inc., No. 1126-NC,
    C. Allen (Del. Ch., 15 July 1993); In re Caremark Int'l Inc., 698
    A.2d 959 (Del., Ch. 1996); In re MAXXAM Group Inc., No. 8636-NC, C.
    Allen (Del. Ch., 16 Apr. 1987); In re Anderson, Clayton & Co., No.
    8387-NC, C. Allen (Del. Ch., 19 Sept. 1988); In re Golden State
    Bancorp Inc., No. 16175-NC, C. Chandler (Del. Ch., 7 Jan. 2000); In
    re Shell Oil Co., No. 8080-NC, V.C. Hartnett (Del. Ch., 30 Oct.
    1992); In re Dr. Pepper/Seven Up Co., No. 13109-NC, V.C. Chandler
    (Del. Ch., 9 and 27 Feb. 1996), aff'd,683 A.2d 58 (Del., 1996) and
    When a Delaware court cannot base the fee award on the benefit
    achieved, because the benefit is not quantifiable, it uses a quantum

    meruit analysis, which somewhat resembles the Lindy Brothers
    "lodestar" approach federal courts use, which starts with the
    attorneys' hours multiplied by their hourly rates and then adjusts
    the result by multiples to reflect the other factors. Sonet v. Plum
    Creek Timber Co., No. 16639-NC, V.C. Jacobs (Del. Ch., 10 Aug.
    1999); Sugarland Indus. Inc. v. Dann, 420 A.2d 142 (Del., 1980)

                                  The Fee

The vice chancellor said it was hard for him to address the pertinent
factors, because the fee application still did not break the numbers
down by who had done what, but he decided:

    -- Abdo's objection not only had not achieved any additional benefit

    to the plaintiff class but had actually held up their getting what
    they  did get, but PharmPart's objection had gained the class about
    $11.8 million more, but they admitted only $7.7 million was
    attributable solely to the objectors;

    -- Abdo's lawyers had a contingent fee agreement, and PharmPart's
    did not;

    -- He suspected petitioners did not break down their fee application

    because they thought he would not balk at giving them about 10
    percent of the $11 million benefit, but his duty was to figure out
    how much was fair, so he would use a quantum meruit approach;

    -- Greenfield's 188.5 hours were worth $200 apiece, and none of
    Abdo's lawyers had done anything that justified enhancing their
    "lodestar";

    -- Applying the other factors, he decided $650,000 was a fair total
    for the award; and

    -- That amount would be paid:
    (a) first to reimburse PharmPart for what it had paid its lawyers
         against their hourly fee;
    (b) then to pay the rest of the hourly fees PharmPart's law firm had

         run up but not yet been paid; and
    (c) whatever remained of the $650,000 to Abdo's lawyers, against
        their hours at their hourly rates, with priority given to
        Caldwell.

For the Objectors: Ann M. Caldwell, Esquire: Caldwell & Associates, Bala
Cynwyd, Pa.; Douglas R. MacGray, Esquire: The Bear Law Firm, Bear, Del.;
Vernon R. Proctor, Esquire, Kurt M. Heyman, Esquire, and John H.
Newcomer Jr., Esquire: The Bayard Firm, Wilmington, Del. (Delaware
Corporation Law Update, April 2000)


CHRYSLER CORP: Fd Judge in PA Denies Certification for Paint Defect
--------------------------------------------------------------------
A federal court judge in Pennsylvania has denied a motion for class
certification in a case involving paint defects in post-1990 Chrysler
vehicles. In re Chrysler Corp. n/k/a DaimlerChrysler Corp. Paint
Litigation, MDL No. 1239 (E.D. Pa., Mar. 2, 2000).

The proposed class action seeks damages against DaimlerChrysler Corp.,
based upon the claim that Chrysler fraudulently concealed a paint defect
in many vehicles manufactured since 1990. The named plaintiff contended
that the "Ecoat" paint process, consisting of an epoxy electrocoat
primer and an overlying topcoat, failed to prevent topcoat delamination.

The complaint alleges that Chrysler knew of this problem and the causes
of Ecoat delamination due to ultraviolet ray exposure by 1990, but
concealed that knowledge until 1997. The plaintiff maintains that the
automaker and its dealerships refused to pay repair costs or repaint the
damaged vehicles, and falsely represented to owners that the paint
problems were caused by factors other than the Ecoat process.

The plaintiff, an Illinois resident, sought class certification for
"citizens and entities of Illinois" in a common law fraud class, an
Illinois Consumer Fraud class and a breach of express warranty class.
U.S. District Judge F.S. Van Antwerpen examined whether the action met
the numerosity, commonality, typicality and adequacy of representation
requirements of Federal Rule of Civil Procedure 23(a). The numerosity
and commonality requirements were met, the judge said, given the large
number of potential class members and the "low threshold" for
commonality. "Plaintiff shares at least one question of law or fact with
the prospective classes and sub-class," the opinion states.

                              Typicality

Judge Van Antwerpen said the plaintiff met this burden as well. The
basic and primary allegation -- that Chrysler failed to disclose the
Ecoat paint defect that manifested itself in ultraviolet-ray induced
topcoat delamination, after expiration of express warranties -- extended
to each potential member of the proposed class.

                     Adequacy of Representation

Chrysler claimed the plaintiff was an inadequate representative of all
proposed classes because she was not an "original owner" of an allegedly
defective vehicle. As the owner of a used vehicle, the judge noted, the
plaintiff would not be an adequate representative of any owners of new
vehicles, and is only qualified to represent the Illinois Consumer Fraud
class, which requires previous or current, but not original, vehicle
ownership. "We agree with Defendant that this Plaintiff would unlikely
be a satisfactory representative of the various classes in any event,"
Judge Van Antwerpen held.

                              Rule 23(b)

In addition to satisfying Rule 23(a) requirements, a putative class must
also comply with at least one sub-part of Rule 23(b). The rule requires
that questions of law or fact common to members of the class predominate
over any questions affecting only individual members, and that a class
action is superior to the other available methods of fair and efficient
adjudication.

In the instant case, Judge Van Antwerpen noted, the proposed classes
comprise at least eight model years, 13 different manufacturing plants,
and hundreds of makes and models, with hundreds of different kinds and
colors of paint supplied by two different companies. "There is no one
product, let alone one act, to evaluate; indeed, during the years at
issue Defendant sold hundreds of thousands of vehicles; we cannot
conceive of how to manage the flood of people who will believe they
might be in the class," the opinion states.

A Rule 23(b) class action would be "absolutely unmanageable," the judge
held. A trial would require resolution of numerous factual and legal
issues, while damages computation would be "an endless task."

Judge Van Antwerpen concluded, "The administrative burdens that would
present themselves throughout foreclose the possibility of a successful
class action as proposed by the Plaintiff." (Mass Tort Litigation
Reporter, April 2000)


CITY OF DETROIT: Property Tax Practices Targeted, Mantese Miller Says
---------------------------------------------------------------------
A class action lawsuit was filed by Mantese Miller and Mantese and
Wasinger, Kickham and Kohls on behalf of property owners in the City of
Detroit, alleging that the City of Detroit has a pattern and practice of
failing and refusing to return tax overpayments to taxpayers. The
lawsuit alleges that the city has wrongfully retained over $20 million
in property tax over payments that the City of Detroit owes to thousands
of its property taxpayers. E. Powell Miller of Mantese Miller and
Mantese, P.L.L.C. emphasized: "The City has no right to keep money that
does not belong to it. We are determined to get this money returned to
the people to whom it belongs."

The case was filed on behalf of William Roe, Jr., on behalf of himself
and all others similarly situated against the City of Detroit. The
lawsuit was filed on May 4, and was assigned to the Honorable Michael J.
Callahan.

Contact: E. Powell Miller of Mantese Miller and Mantese, P.L.L.C.,
248-267-1200, fax, 248-267-9551, cell, 248-872-3661; or Steve Wasinger
of Wasinger, Kickham and Kohls, 248-414-9900


COMPUSERVE: Online Service Accused of Failing (Timely) to Pay Rebates
---------------------------------------------------------------------
About 500 consumers have reported similar difficulties in obtaining
CompuServe rebates to Florida lawyer Byron S. Petersen, who recently
filed a class-action suit against CompuServe.

The complaint, filed in a Florida circuit court, accuses the online
service of breaching its contracts with consumers by failing to pay
rebates or failing to send them in a timely manner. The suit, filed on
behalf of one Florida couple who had to wait 25 weeks before receiving a
rebate, asks CompuServe to pay rebates plus interest to all consumers
who were not paid in a timely manner.

Lory Lacsamana was prompted to buy a computer by a $400 rebate offer.
"It seemed like too good a deal to pass up," said Lacsamana, a retired
National Park Service employee who lives in San Francisco. So last
August he bought an $ 800 computer, and to get the $ 400 rebate he
signed up for three years of Internet access through CompuServe. That
was when his troubles began. As Lacsamana recently recalled, CompuServe
first told him he had not sent in the proper papers to get the rebate.
Then a company official sent him e-mail telling him he didn't qualify
for the rebate--because he didn't have a computer. Lacsamana read that
message on the very computer he had purchased in August. "I wrote back
and asked them how I could be talking to them on my computer without a
computer," Lacsamana said. Finally, in January, after dozens of phone
calls, CompuServe told him a check was in the mail. But it never came. A
few weeks ago, after more desperate phone calls to the company,
Lacsamana canceled his CompuServe service. "I just ate the $ 400, I was
so upset with the rebate runaround."

Tricia Primrose, a spokeswoman for America Online, which owns
CompuServe, said the company has sent out more than 700,000 rebates
since the offer began last August. "We say we're going to get the check
back within eight to 10 weeks, and we've had some instances where we
haven't met that particular time period. The reasons vary--sometimes
consumers send incomplete information. . . . But the vast majority of
checks have gone out without incident and in a timely way."

A judge has yet to certify whether the lawsuit is a valid class action.
But its filing and subsequent publicity once again highlight many of the
problems that occur after consumers buy products because of rebate
offers. These deals have become a standard marketing tool for almost all
computer equipment: Pick up an ad and all sorts of rebate "savings" are
touted, making the cost of PCs very low--some sell for the
"after-rebate" price of $ 129.99.

But many industry and consumer officials say the rebates have also
become a constant source of aggravation for consumers. "It is an
evergreen area of complaint activity," said Edward J. Johnson, president
of the Washington area's Better Business Bureau.

Michael Erbschloe, vice president of research for Computer Economics, a
Carlsbad, Calif.-based technology consulting company that runs an
Internet shopping complaint hot line to monitor consumer trends for its
clients, said his company has noted that "customer service of rebates
seems to get perpetually worse." "When consumers try to apply for a
rebate," he said, "they get trapped in what we call a 'rebate jungle.' "
Erbschloe said many have a hard time just getting the necessary
paperwork to apply. "They have to dig through 9,000 rebate coupons in
the store to get the right one. Then they may fill out the paperwork,
only to be told that their rebate coupon doesn't exactly match the
product they bought. Or they don't read the fine print--which looks like
a disarmament treaty--and fail to meet some of the rebate requirements.
Sometimes they may do everything right but they still never get the
rebates," Erbschloe said. He has no kind words for rebates: "They are
just a marketing ploy; there's no reason why a company can't just
discount prices, but they don't want to because they know far less than
half the people who buy the product will actually get a rebate."

Precise redemption numbers are unclear. Some industry studies indicate
that they run as high as 80 percent for any rebate over $ 50--but for
rebates as small as $ 2, redemption rates usually are no more than 2
percent.

As consumer complaints grow, so, too, does the attention of government
regulators. The Florida Attorney General's Office launched its probe of
the CompuServe rebates after receiving about five dozen complaints since
last summer. "That's a lot of complaints in a short period of time,"
said Stephen A. LeClair, an assistant attorney general in the Florida
office.

Officials at the Federal Trade Commission declined to comment on the
CompuServe rebate but indicated they were also looking at companies that
fail to process rebates on time. "We've brought a number of cases in the
past and expect to be bringing more cases in this area in the future,"
said Joel Winston, the FTC's assistant director for advertising
practices.

Winston said the commission was particularly concerned about these
Internet-provider rebates. "There's nothing illegal about them--as long
as consumers understand the restrictions and conditions." But Winston
noted that the ads always come with "big teaser prices," while "the
restrictions are buried in microscopic print, sometimes pages away from
where the product is being sold."

As a result, he said, many of the ads are "not adequately disclosing"
the full price. For instance, the $ 400 rebates offered to buyers who
sign up with an online service usually require a three-year
contract--which at a cost of $ 20 or more a month adds up to more than $
700 in Internet access charges. Canceling the service may subject
customers to penalties, as well as forfeiture of the rebate, Winston
added. In other cases, the ad may fail to note that it may require a
long-distance call to connect to the Internet service.

Either way, these added costs may not make the rebate as valuable as
consumers think. Internet service can be obtained for much less than $
20 a month, and some companies offer access for free.

At the same time, some consumers have complained to Florida Attorney
General Peterson that to qualify for the rebate, they are paying $ 21.95
a month--$ 2 more a month than what CompuServe would charge for the same
service if they didn't want the rebate.

AOL's Primrose said there were differences between the two services, but
she didn't elaborate. But when a customer service employee at
CompuServe's toll-free telephone number was asked what the difference
was between the $ 21.95 and $ 19.95 service, she said it was "the same
service." The only difference, she added, was that the cheaper option
didn't come with a rebate; it was also a month-to-month plan that the
consumer could cancel any time, unlike the costlier plan, with which an
early cancellation could incur a penalty.

The FTC's Winston said the commission wants to make sure that "any
important restrictions on rebate offers are not buried in fine print,
but made clearly and conspicuously, up front, where consumers will
notice them."

Even with more disclosure, industry officials are certain rebates will
continue to be offered--because they work. Just look at how many new
customers CompuServe has drawn in with its rebates; when AOL bought the
Internet service provider in February 1998, CompuServe had only 2
million members, a number that was dropping. Now, thanks in part to the
rebate program, the service has more than 2.7 million subscribers,
Primose said.

Similarly, Microsoft's Internet service, MSN, has reported 500,000 net
additions between December 1999 and March 2000, "the best growth in
recent memory." And the key factor, company officials say, was the
rebate program. "Our research shows that an ad featuring a 'price after
rebate' clearly sways the customer into looking at what products to
buy," said David Goldstein, president of Channel Marketing Corp., a
Dallas marketing and research firm specializing in technology products.
But Goldstein said the nature of the rebates may change over the next
few months as companies offer different versions of them. He pointed to
MSN's current "six months free" promotion as an example. In that
program, a consumer is billed only for the last half of a one-year
subscription. "We'll see a lot of testing of other offers," Goldstein
said. "In the end, the consumer will tell us which they prefer; they
will determine wither rebates stay or not."

The numbers from MSN indicate rebates are here to stay--97 percent of
its customers are opting for a three-year contract over the offer of one
year with six months free. But Lacsamana has a different opinion after
his experience with CompuServe. "I would never buy with a rebate again,"
he said. "Never ever." (The Washington Post, May 5, 2000)


DANKA BUSINESS: Announces Dismissal of Securities Suits in FL and NY
--------------------------------------------------------------------
Danka Business Systems Plc, in its reports for Fourth Quarter And Fiscal
Year End Results, says that on March 22, 2000, the U.S. District Court
for the Middle District of Florida, Tampa Division entered an order
dismissing the securities class action lawsuit brought against the
Company and certain former Directors and executives in June 1998.

In addition, on March 15, 2000, in an unrelated lawsuit, the U.S.
District Court, Southern District of New York entered an order
dismissing a case filed in February 1999 seeking significant damages for
the Company's alleged refusal and delay in registering the transfer of
certain restricted shares.

Although both cases have been appealed, the Company believes that the
orders of dismissal will be upheld.


HOLOCAUST VICTIMS: Poland expects tough talks on details of Payments
--------------------------------------------------------------------
A senior Polish official said he expects ''tough negotiations'' with
Germany over a proposal to divide payments to Nazi-era slave and forced
labor victims into two installments. Jerzy Widzyk, chief of staff for
Prime Minister Jerzy Buzek, made the remark after meeting with
representatives from Russia, Ukraine, Belarus and the Czech Republic on
plans to disburse a 10 billion mark (dlrs 4.6 billion) compensation
fund. He said the officials were satisfied with the pace of work by
Germany's parliament on the planned fund, but complained that Germany is
proposing to divide payments to individuals into two installments.
He did not say why Germany was proposing to divide payments into
installments. There have been reports that German companies so far have
come up with about half of the 5 billion marks (dlrs 2.8 billion) they
are to contribute. The German government is expected to contribute the
other half.

The companies proposed the fund under pressure of class-action lawsuits
in the United States, and will receive guarantees backed by the U.S.
government that judges will be asked to divert future lawsuits to the
foundation. Widzyk said he was concerned that aging victims might not
live long enough to receive both installments, and that the 5,000 marks
(dlrs 2,500) most victims would receive is too small to split up. ''We
are all against division of payments into two installments and expect
tough negotiations on the subject,'' Widzyk said. (AP Worldstream, May
5, 2000)


LEGIONNAIRES OUTBREAK: Victims in Australia to Sue Aquarium
-----------------------------------------------------------
Victims of Australia's worst outbreak of Legionnaires' disease will sue
the aquarium identified as the source of the illness, lawyers said.

Health officials last Thursday April 27 identified the southern city of
Melbourne's new aquarium as the source of the outbreak, which has left
two people dead, eight people in critical condition and 66 others ill.
The disease was traced to the air conditioning cooling system in the
aquarium. The system has been disinfected since the outbreak, which
occurred in April.

Eugene Arocca said his law firm, Maurice Blackburn Cashman, had filed a
suit at the Victoria state Supreme Court on behalf of at least half of
the people who have fallen ill. ''We're seeking compensatory damages on
behalf of a class of people who have suffered as a result of the
outbreak,'' Arocca told reporters. ''That includes the victims and it
will include matters dealing with pain and suffering and loss of
enjoyment of life.'' He did not say how much money the victims would
seek, but that the claim would include medical costs, which were already
substantial. Arocca said the aquarium should have done more to ensure
the safety of its customers.

The lead plaintiff in the class action is 69-year-old Phyllis Patterson,
who spent six days in intensive care after contracting the disease, he
said.

Health authorities urged everyone who visited the aquarium in April,
including Prime Minister John Howard, to contact their doctor if they
suffered from symptoms including muscle aches, fever, chills, headache
or shortness of breath. About 1,800 people gave urine samples for
testing. Howard said he felt fine and did not contribute a sample.

Health officials issued an international alert last Thursday asking
anybody who visited the aquarium between April 11 and April 25 and is
displaying symptoms of Legionnaires' disease to visit a doctor. Two
travelers from New Zealand, one from Britain and one from the United
States have reported symptoms.

Legionnaires' disease is a form of pneumonia that killed 34 people at a
1976 American Legion convention in Pennsylvania. An outbreak in the
Netherlands last year, the worst since 1976, killed 28 visitors to a
flower show near Amsterdam. The bacteria that are believed to cause the
illness grow in air conditioning ducts, storage tanks and rivers. (AP
Worldstream, May 5, 2000)


MEDICAL ASSISTANCE: Suit Seeks to Raise Dental Reimbursement Rates
------------------------------------------------------------------
A public interest law firm has filed a class-action suit on behalf of
low-income families who increasingly are unable to find a dentist who
will treat them and their children under the state's Medicaid program,
causing some people to go years between dental visits.

The suit's main thrust is to force the Division of Medical Assistance to
raise the rate of reimbursement for dental services, which hasn't
changed in more than a decade. The low reimbursement rate is a major
reason dentists have dropped out in droves from the Medicaid program,
known in this state as MassHealth. Out of about 6,000 dentists in
Massachusetts, only about 600 or 700 now accept MassHealth patients, and
they are unequally distributed across the state, said Dr. James Bramson,
executive director of the Massachusetts Dental Society.

The suit was filed by Health Law Advocates Inc., a firm affiliated with
the advocacy group Health Care For All. The complaint alleges that the
Division of Medical Assistance has violated basic requirements for
providing Medicaid-covered services equitably and promptly.

"Health Care For All has been working on this dental issue for well over
a year," said Laurie Martinelli of Health Law Advocates, and yet the
problem has worsened. In some areas, such as Cape Cod, central, and
western Massachusetts, it's almost impossible to find a dentist who
accepts MassHealth patients, she said.

For the second year, the Massachusetts Legislature is considering a bill
that would expand the MassHealth budget by about $30 million to raise
the dental reimbursement rate. It has passed the House and is now in the
Senate.

But money is not the only issue, say dentists, who complain that the
claims process is slow and unwieldy, and warrants streamlining. One of
the plaintiffs in the suit, a single mother of two in Springfield, said
her dentist recently told her that after November he would no longer
treat her or her 6-year-old daughter, and he refused to accept her
3-year-old son as a new patient. "I was really disappointed and
discouraged," said Sirdeaner Walker, who works at an organization that
helps abused children. "As of November, I don't know what we're going to
do." Nonetheless, Walker said the dentist, Dr. James Maslowski of
Springfield, was a "wonderful guy" who had been treating her for about
two years.

Maslowski said in an interview that dentists are paid only about 50
percent of their usual fee by the MassHealth program, and that the rate
hasn't risen for about 11 years. He said dentists were assured more than
two years ago that the Legislature would raise the reimbursement, "but
it never did, and it never did, and it never did."

As a result, he said, the flood of dentists leaving the program surged
in the past year, and "the remaining providers were inundated" with
MassHealth patients. And with the law forbidding dentists to limit the
number of MassHealth patients in his or her practice, the system has
basically collapsed, said Maslowski. "We're bound by the rules that
prevent us from limiting our practice," he said.

Massachusetts is not the first state to be sued over access to dental
care, said Martinelli. In California, a lawsuit succeeded in forcing an
increase in reimbursement and improved access, she said. Similar suits
in New York and Tennessee are pending.

Mark Reynolds, the acting commissioner of the Division of Medical
Assistance, said he supported the thrust of the suit. "It is clear that
we have some common interest [with the plaintiffs] in making sure the
Legislature makes the appropriation necessary to expand the number of
dentists" in the program, Reynolds said.

Bramson, the director of the state dental society, said that, 12 years
ago, the state was spending 10 percent of its Medicaid budget on dental
health, but that figure has dropped to 1 percent. Nationally, he said,
the dental care proportion is 3 1/2 to 4 percent.

The class-action suit, filed April 28, also asks that the court retain
jurisdiction over the matter until the system is fixed, said Martinelli.
"We want the court to stay involved and make sure" that patients secure
appropriate access to care. (The Boston Globe, May 5, 2000)


MICROSOFT CORP: Former Distric Judge Appointed Discovery Referee
----------------------------------------------------------------
Former U.S. District Judge Charles Renfrew has been appointed the
discovery referee in an antitrust class action filed against Microsoft
Corp. in San Francisco Superior Court.

Renfrew said that he has already met with opposing counsel in the case,
Lingo v. Microsoft, 301357, and is prepared to get to work. "These are
interesting cases, when you have a corporation like Microsoft involved,"
he said.

At least 23 separate complaints accusing Microsoft of antitrust
violations and unfair business practices have been consolidated into the
class action before Superior Court Judge Stuart Pollak.

Eugene Crew, who has been designated the plaintiffs' lead counsel, said
attorneys from both sides have begun discussions with Renfrew on how
discovery materials will be produced.

Crew, a partner at Townsend and Townsend and Crew, also said that the
parties intend to meet with Renfrew and Pollak to begin developing a
trial schedule.

Renfrew served on the federal bench from 1972-80, when he was appointed
to the No. 2 post in the U.S. Department of Justice by President Jimmy
Carter.

After Carter's defeat by Ronald Reagan, Renfrew returned to private
practice. In 1993, he began working as a mediator/arbitrator and special
master in complex litigation. (The Recorder, May 4, 2000)


NETWORK ASSOCIATES: 9th Cir. to Address Lead Role Selection Under PSLRA
-----------------------------------------------------------------------
A federal appeals court in San Francisco stayed a controversial ruling
on the selection of class representative and lead counsel in the
securities class action against Network Associates Inc. while it decides
two issues of first impression under the PSLRA. Moore et al. v. Network
Associates Inc. et al. , No. 00-70006; KBC Equity Fund v. Network
Associates Inc. et al., No. 00-70061 (9th Cir. , Feb. 14, 2000); see
Pension Fund LR, March 13, 2000, P. 9.

A Belgian pension fund and another class representative candidate told
the U.S. Court of Appeals for the Ninth Circuit that when Judge William
Alsup chose a novice local investor and a tiny, inexperienced law firm
to champion the cause of the disgruntled Network shareholders, he
ignored Reform Act guidelines that favor institutional investors and the
law firms they select. This is the first time an appellate level court
will address these issues, the petitioners said.

The panel's order prevents newly appointed class representative Robert
Vatuone from employing the law firm he selected to fashion an amended
complaint. Judge Alsup's ruling threatened a change for large plaintiff
attorney firms who seek the pivotal role of lead counsel in securities
class actions. The judge ruled that a small investor who puts the lead
counsel job out for bids will be better able to manage the securities
fraud action against officers and directors of Network Associates than
an unrelated shareholder group recruited by a big plaintiff firm.

In a break with common practice in large class actions, Judge Alsup
appointed a lone stockholder as class representative when the
institutional investor he initially chose -- the City of Philadelphia
Pension Fund -- balked at auctioning off the lead counsel job.

Previously, that role usually went to a member of a select group of
large specialty plaintiff firms, but the judge ruled that in the
post-securities reform world, it is the responsibility of the class
representative to set attorney fee parameters at the beginning of the
case rather than expect the court to review a mammoth bill line-by-line
at the end.

Dozens of investors filed parallel securities fraud actions in the U.S.
District Court for the Northern District of California following reports
of fiscal chicanery at the computer software company and a resulting
steep stock price drop.

Two of the most prominent securities class action plaintiff firms --
Milberg Weiss Bershad Hynes & Lerach in San Diego and Weiss & Yourman in
Los Angeles -- separately aggregated investors into groups and subgroups
in their motions to appoint lead counsel.

In a November opinion highly critical of aggregating groups of unrelated
investors to serve as lead plaintiff, Judge Alsup flatly rejected the
bids by the subgroups. Instead, he selected as lead plaintiff a
Philadelphia retirement fund, the institutional investor with the
largest losses, holding that "an amalgam of unrelated class members"
cannot qualify as lead plaintiff under the Private Securities Litigation
Reform Act (PLSRA).

In order to determine which investor would be "the presumptively most
adequate plaintiff" under the PSLRA, Judge Alsup had the investors with
the largest financial interest in the case appear before the court for
questioning. Although he picked the retirement fund as lead plaintiff,
he declined to agree on its selection of Philadelphia's Barrack, Rodos &
Bacine as lead counsel.

When the retirement fund balked at putting the job up for bids, Judge
Alsup accepted its withdrawal from the class representative role. KBC
Equity Fund also sought the lead role but was rejected when it too
declined to bid out the lead counsel job.

Of the remaining applicants, the court found that Vatuone, a retired
attorney, would be best able to manage the litigation. Although
Vatuone's loss was much smaller than the institutional investors, it was
more than offset by his experience in litigation and his willingness to
use the bidding process to select counsel, Judge Alsup said.

KBC's petition claims that the counsel auction issue was only one of the
"manufactured" problems used by the court to block large investors, and
the traditional class action firms they might choose, from taking the
lead role in this action. In addition, according to the petition, the
court said KBC was unsuitable because:

  -- It had acquired its NA shares through an acquisition of another
     company;

  -- It was a foreign institution; and

  -- It had a corporate relative that was "under a cloud" of financial
     scandal.

Responding to those points in order, KBC said:

  -- The PSLRA makes no distinction as to how a class member's shares
      were acquired;

  -- The statute does not distinguish foreign corporations; and

  -- There is no investigation of KBC or its corporate parents or
     siblings.

"In a gross abuse of discretion, the court would rewrite the PSLRA, its
legislative history, the federal securities laws, class certification
jurisprudence and ignore or rewrite the record evidence, in order to
impose a personal, arbitrary and illegal template on this case and
inadequate representation upon he thousands of class members with its
concomitant adverse affect upon finality," petitioner KBC wrote.

Vatuone is a divorce lawyer who, contrary to the court's finding, never
selected or managed outside counsel except for his own divorce. The
counsel he chose for this job are admittedly inexperienced and lack the
necessary resources, KBC adds.

Shareholders represented by Milberg, Weiss, Bershad, Hynes and Lerach
said in support of their motion for a stay that it was senseless to
allow Vatuone's lawyers to go to the time and expense of preparing a new
amended complaint (and indeed the court had decreed that they should do
that on an expedited basis) if the appeals court later decides that he
should not have been appointed class representative or that his
selection of counsel was inappropriate.

"Can a district court ignore the PSLRA, which requires the court to
'appoint the most adequate plaintiff' and further requires that the
court 'shall' adopt a presumption that the most adequate plaintiff' is
the person or group of persons that in the determination of the court,
has the largest financial interest in the relief sought by the class"
asked Raymond Moore and two allied investors. "Not only does this
directly violate the statute, but it creates and fosters a public
perception of favoritism and unbridled exercise of power."

The Moore plaintiffs are represented by William Lerach and Leonard Simon
of Milberg, Weiss Bershad, Hynes & Lerach in San Diego; Michael Pucillo
of Bert & Pucillo in West Palm Beach, Fla.; and Patrick Coughlin, Reed
Kathrein and John Grant of San Francisco.

KBC is represented by Roger Kirby and Randal Berger of Kirby, McInerney
& Squire in New York and Jill Manning in the firm's San Francisco
office. (Pension Fund Litigation Reporter, April 24, 2000)


NORTHBRIDGE EARTHQUAKE: CA Suit Alleges Conspiracy over Insurance
-----------------------------------------------------------------
Saying he has corrupted the state insurance department, a group of irate
Northridge earthquake victims, consumer advocates and lawyers  called
for the immediate resignation of California Insurance Commissioner Chuck
Quackenbush. The call for Quackenbush's resignation was made outside the
Devonshire Village condominium complex where quake-damaged roofs are
still covered with blue tarpaulins six years after the 1994 earthquake.
The buildings have not been repaired, along with thousands of other
structures, because victims have been unable to settle claims against
insurance companies.

Rick Bennett, president of the homeowners association at the complex,
accused Quackenbush of violating promises to advocate for consumers. "I
voted for you," Bennett said, saying that he was directing his words at
Quackenbush, who was not present. "I believed in your words and I
believed in your promises, but you violated both. . . . I ask that you
resign immediately so that we can get help from other sources in
government."

Responding at an afternoon news conference in downtown Los Angeles,
Quackenbush asserted that his detractors have "continually lied" about
his department's record and said he is proud of his work.

Bennett said Farmers Insurance Group has offered to pay $ 931,000 for
repairs that private appraisers estimate will cost more than $ 5.5
million. A Farmers attorney declined comment, citing pending litigation.
Others at the news conference said that if Quackenbush does not resign,
they will call on the Legislature to impeach him. An impeachment
movement for misconduct in office can be initiated by a resolution of
the Assembly and imposed by a two-thirds vote of the Senate. No elected
state official has ever been impeached in California, said Bion Gregory,
state legislative counsel. The Legislature, Atty. Gen. Bill Lockyer and
the Fair Political Practices Commission all are probing Quackenbush's
activities.

Bennett and others blamed Quackenbush for siding with insurance
companies instead of homeowners. The Department of Insurance allowed
insurance companies to avoid fines for mishandling claims by making
donations to foundations set up by Quackenbush. The foundations,
sometimes operating out of Quackenbush's office, gave money to
charitable groups, many of which were connected to the commissioner's
political associates, documents obtained by The Times have shown. "When
greed takes the place of public safety and personal self-dealing
overcomes public protection, then serious changes need to be made," said
George Kehrer, executive director of a consumer group that helps
disaster victims nationwide. Kehrer flew in for the news conference from
North Carolina, where his organization, Community Assisting Recovery
(CARe), is working with hurricane victims.

The conference was called by the Santa Monica-based Foundation for
Taxpayer and Consumer Rights, led by Harvey Rosenfield, who wrote the
1988 ballot initiative that changed the state insurance commissioner's
job from an appointed to an elected one.

Rosenfield accused Quackenbush, who was elected in 1994, of allowing
insurance companies to escape massive fines that had been recommended by
state investigators in return for donations to the foundations.

Quackenbush, reading a prepared statement,  contended that the morning's
news conference was orchestrated by "professional critics and trial
lawyers" and that only one alleged earthquake victim was in attendance.
A reporter at the event counted about two dozen homeowners present. The
commissioner said his department has sparked a "firestorm of market
competition," overseen $ 1.5 billion in rate decreases in the past five
years and helped mediate agreements between more than 700 earthquake
victims and their insurance companies. He also said he has enforced $ 56
million in sanctions against insurance firms since taking office.
Included in that amount is the $ 12.8 million collected from insurers
for the foundations, according to Department of Insurance records.

Quackenbush said the charitable foundations were more "consumer
beneficial than the traditional route of assessing fines and penalties."
He acknowledged mistakes in the way that the foundation program was
implemented. "We would have liked to have a little more control of that
money," he said, but added that he expected recommendations for
improvements from a blue-ribbon commission now being formed. Quackenbush
also criticized Rosenfield, accusing him of "lining his pockets" with a
$ 100,000 a year salary from his own foundation.

Rosenfield, who says he earns about $ 200,000 a year from two nonprofit
groups, said Quackenbush "is trying to save himself by attacking me."
Quackenbush's state salary is $ 132,000 a year. "We are going to do
everything we can to make our voices heard in Sacramento," Rosenfield
said, calling for enforcement of laws and adoption of additional laws to
punish companies that mistreat policyholders. Rosenfield and others also
are calling for laws to prohibit public officials from accepting
campaign donations from industries they regulate.

Although he first announced that he would not accept political
contributions from insurance companies, Quackenbush quickly reversed
himself. State records show that he has accepted more than $ 6.4 million
from companies he regulates.

Rosenfield called on consumers to join a grass-roots movement for
insurance reforms that he said otherwise will become "nothing other than
a lot of chest beating" among legislators who are heavily supported by
the powerful insurance industry.

Three San Fernando Valley attorneys said they have filed a class-action
suit against Quackenbush, the insurance department and Farmers Insurance
Group, alleging fraud and breach of contract in their handling of
Northridge quake claims. It is believed to be one of the first legal
claims filed against Quackenbush in the wake of revelations about his
dealings with the companies that insured victims of the 1994 temblor.

The suit, filed  in Los Angeles County Superior Court, alleges that
Quackenbush wrongfully allowed Farmers to send its customers a form --
ostensibly a survey -- that the company could use to deny claims on
grounds that they were not filed in a timely manner. "The allegations
are conspiracy," said Sherman Oaks attorney Alan Schimmel, who has 19
cases pending against Farmers and its affiliates. The suit alleges that
Quackenbush "entered into this unfair business practice . . . aiding
Farmers in wiping out claimants." "Quackenbush was giving people a
feeling that he was trying to help them," said Schimmel, adding that the
class may include "thousands" of earthquake victims who received a
survey. "Instead he was falling into Farmers' trap, helping them not
deal with claims."

As part of an agreement reached between the company and the insurance
department, Farmers was required to survey policyholders who had filed
Northridge claims.

The suit alleges that Farmers policyholders unwittingly "waived their
rights to seek further relief in a court of law by participating in a
survey conducted by Farmers, with the approval of the Department of
Insurance and Quackenbush." "DOI and Quackenbush wrongfully approved use
of the survey in lieu of fines because Farmers agreed to pay $ 1 million
to an educational foundation run by political allies of Quackenbush,"
according to the lawsuit.

Jeff Beyer, vice president of corporate communications for Farmers,
declined to comment in detail about the suit while it is pending. But he
said the company "did not treat customer participation in the survey as
a waiver of policyholder rights." (Los Angeles Times, May 5, 2000)


NUTRAMAX PRODUCTS: Milberg Weiss Files Securities Complaint in MA
-----------------------------------------------------------------
A class action lawsuit was filed on May 4, 2000, in the United States
District Court for the District of Massachusetts, Civil Action No. 10861
(RGS), on behalf of all persons who purchased the stock of Nutramax
Products, Inc. (OTC Bulletin Board: NMPC, NMPCE) between January 20,
1998 and November 24, 1999 (the "Class Period").

The complaint charges the Company's former Chief Executive Officer and
former Chief Financial Officer with violation of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. Nutramax has not been named as a defendant as it recently
filed for bankruptcy. The complaint alleges that from January 20, 1998
through November 24, 1999, defendants issued materially false and
misleading financial statements and press releases concerning NutraMax's
revenues, income and earnings per share. The financial statements of the
Company made during the Class Period, all of which implicitly and/or
expressly were prepared in conformity with generally accepted accounting
principles (GAAP), were materially false and misleading because the
Company materially overstated its revenues, income and earnings.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP, Shareholder Relations
Dept., 800-320-5081, E-Mail: endfraud@mwbhlny.com


SONY MUSIC: Retailers Stike Dissonant Note on Audio CD Hyperlinks
-----------------------------------------------------------------
Sony The Internet's growing role in music sales is striking a dissonant
note with music retailers. The National Association of Recording
Merchandisers (NARM) has sued Sony Music Entertainment Inc. over the
record company's recent practice of including in its audio compact disks
hyperlinks to Sony-owned Web sites where users can purchase Sony
recordings.

According to the complaint, retailers are unfairly forced to promote
their competition, since retailers have no choice but to sell the
popular CDs that contain the links (a Ricky Martin album, for example,
when played on a computer can take the user to a Sony Web site). The
complaint, which was filed January 31 in federal district court in
Washington, D.C., also alleges that Sony's licensing arrangements with
Internet retailer CDnow and record club Columbia House (of which Sony is
a half-owner) are mechanisms to circumvent the price discrimination
provisions of antitrust law. The complaint seeks injunctions against
both practices.

For the National Association of Recording Merchandisers (Marlton, New
Jersey) Jenkens & Gilchrist (Dallas): Alan Malasky, John Mitchell,
Salvatore Romano, and associates Damon Burrows II and Christopher
Ondeck. (All are in the firm's Washington, D.C., office.) Malasky has
long been general counsel to NARM. Malasky and his partners brought the
client with them when they joined Jenkens from Washington, D.C.'s Arent
Fox Kintner Plotkin & Kahn three years ago.

For Sony Music Entertainment Inc. (New York) In-house: Vice president
and litigation counsel Gail Edwin. Cahill Gordon & Reindel (New York):
Thomas Kavaler, William Lifland, Dean Ringel, and associates Nicholas
Goldin and Martha Senkbeil. Cahill has previously represented Sony in
litigation. (The American Lawyer, April 2000)


TOBACCO LITIGATION: Suits Worldwide Build on US Legal Triumph
-------------------------------------------------------------
A report in the WorldPaper, says that tobacco litigation has transformed
the prospects for controlling tobacco use worldwide. Litigation is
forcing tobacco companies to the bargaining table with tobacco-control
advocates, and in the United States it has produced settlements that
have committed the industry to pay about $10 billion each year to
reimburse states for health-care costs related to smoking. The lawsuits
have put the industry on the political defensive, the report says.

Governments other than the US government have filed third-party
reimbursement suits in the United States, according to the WorldPaper.
Guatemala, Venezuela, Bolivia and Nicaragua all have cases pending in
the federal district court in Washington, DC, seeking recovery of
national healthcare expenses related to tobacco. In December 1999,
however, the court dismissed the Guatemala case on the ground that the
nation's financial injury was too remote from the tobacco industry's
alleged misconduct, and the other cases pending before that court are
likely to be disposed of in the same manner.

Similar cases have also been filed in some other countries' own courts.
A court in the Marshall Islands has permitted its government to proceed
there against the international tobacco companies that supply the local
market. The Canadian province of British Columbia has filed such a suit,
which suffered a temporary setback when the enabling statute was held by
the province's Supreme Court to have improperly sought to extend
jurisdiction over the corporate parents of the Canadian tobacco
companies. The Court did, however, uphold provisions of the statute
permitting the government to file a single action for all its losses,
and to use statistical methods to estimate its damages. Other pending
cases include one by the government health-insurance body in the
department of St Nizaire, France, and two by private health insurers in
Israel, covering the majority of Israeli citizens.

Building on the American experience, lawyers in several countries have
brought individual suits against the tobacco industry. Argentina,
Ireland, and Israel each have several such cases pending, and cases have
also been filed in Finland, France, Germany, Italy, the Netherlands,
Japan, Norway, Sri Lanka, Thailand and Turkey. A class action is pending
in Canada, and one is about to be filed in Spain.

In Australia especially, tobacco litigation already has a long history.
In 1991, the Federal Court ruled that advertisements run in 1986 by the
Tobacco Institute of Australia denying adverse health effects from
environmental tobacco smoke violated the Trade Practices Act (1974),
which prohibits misleading or deceptive conduct in trade or commerce. In
1999, two representative proceedings (class actions) against the major
Australian tobacco companies were begun in the Federal Court of
Australia.

The litigation situation in Britain, however, has had serious setbacks.
A group action by 54 people with lung cancer was killed off in March
1999 by a hostile judge who refused to exercise his discretion to allow
an extension of the three-year statute of limitations for 28 of the
claimants. The judge commented that the prospects of success for the
remaining 16 claimants were "by no means self-evident."

In Britain, the blame-the-smoker argument still holds great sway. It is
widely assumed that the warnings and the high level of awareness of the
dangers somehow absolve the tobacco companies of their responsibilities.
A legislative and policy approach, however, is achieving results. Taxes
raised on tobacco in the United Kingdom exceed the value per smoker of
the US master settlement agreement between the industry and the states
by a factor of eight, with no payments to lawyers or risk of failure in
court. Tobacco advertising is to be comprehensively banned, and existing
health and safety legislation will be deployed to reduce passive smoking
in the workplace. A white paper, Smoking Kills, sets out a comprehensive
package of measures to tackle smoking.

In the United States, the WorldPaper says, such a national strategy
would, without question, be blocked by Congress. Perhaps the success of
litigation in the United States is a response to the failure of the
legislative and executive branches of the US government to curb the
excesses of the tobacco industry. (WorldPaper , May 1, 2000, adapted
from an original article appearing in The British Medical Journal,
coauthored by Richard A. Daynard, professor of law at Boston's
Northeastern University, Clive Bates, director of Action on Smoking and
Health in London and Neil Francey, a Sydney-based attorney.)


WATER HEATERS: Lawyers to Get $5.7 Million in Fees
--------------------------------------------------
Lawyers sought excessive fees for their work in representing consumers
with defective water heaters, but they should nevertheless be paid the
$5.7 million they requested, a federal judge has ruled. The requested
fee award is "in my view, excessive, but it will be approved," he wrote.

The fees, which will go to about two dozen law firms, will give lawyers
as much as $520 per hour, or twice their normal hourly rates. The suits
were settled before any "significant in-court proceedings," said Judge
Howard F. Sachs in U.S. District Court in Kansas City.

Ralph Phalen, co-lead counsel in the settlement, said the fees being
sought were not out of line with similar class-action suits. Moreover,
none of the lawyer fees will come out of benefits due consumers, but
will be paid separately by the water heater manufacturers, he said. "I
think the judge did the right thing (in approving the fees)," Phalen
said.

The settlement, which was approved by the judge in April, allows the
replacement of defective dip tubes in as many as 14 million water
heaters.

Sachs, in approving the $5.7 million in fees, acknowledged that hourly
rates might be somewhat unrealistic for lawyers who often take cases for
contingent fees that are percentages of any awards. The judge said he
had also been assured by the manufacturers that the fees were not out of
line for what they paid their attorneys. "It would be inappropriately
intrusive, in my judgment, for the court to impose its idea of socially
desirable fees on the parties under the circumstances," he said. (The
Kansas City Star, May 5, 2000)


* Study Shows Awards up on Product Liability and Medical Malpractice
--------------------------------------------------------------------
Sharp increases in jury awards in product liability and medical
malpractice cases are fueling increases in the size of all personal
injury awards, according to a new study.

The median amount of compensatory damages awarded by juries in personal
injury cases rose 7% in 1998 to $50,000 from $46,695 in 1997, according
to the 1999 edition of "Current Award Trends in Personal Injury,"
published earlier this month by Jury Verdict Research of Horsham, Pa.
The study analyzes only awards and not the amounts paid to plaintiffs at
settlement, which often can be considerably lower. Contributing to the
increase were a 137% jump in the median compensatory award in product
liability cases and a 46% rise in the median in medical malpractice
cases.

JVR compiled the report from its database of 168,000 personal injury
cases in state and federal courts. While the database does not include
all personal injury cases, JVR maintains that the number is sufficient
to provide accurate award statistics. Because it takes time to compile
information on the awards, 1998 is the most recent year for which full
statistics are available for analysis. Statistics for past years
sometimes change, however, as JVR updates its database after surveys
have already been completed.

According to last year's report, sexual harassment and discrimination
awards in 1997 were sharply higher, and the median amount of
compensatory damages in all personal injury cases was up 15% from the
previous year (BI, March 6, 1999). Employment practices liability cases
are not included in the figures and will be detailed in a separate study
being prepared by JVR.

Tort reform proponents say increases in jury awards were expected.

The trend in recent years has been for awards to rise as big-dollar
verdicts grab the headlines, said Sherman Joyce, president of the
American Tort Reform Assn. in Washington.

Big awards in "megalawsuits" help "set the market for verdicts," Mr.
Joyce said.

And, he added, the trend did not stop in 1998, as last year was "an
extraordinary year" for large verdicts.

A spokesman for the Assn. of Trial Lawyers of America in Washington said
he doesn't think juries are influenced by headlines. Each jury "decides
on the merits before it," he noted. "We have great experience with
juries that take their roles very seriously and want to do the right
thing. If they think a wrong is proved, they want to right it."

The spokesman pointed out that the median compensatory award has not
varied much since JVR began tracking it in 1992. "Things have remained
very constant, and that belies the myths and propaganda of those who
want to limit people's legal rights."

The JVR survey shows that the most striking increase in 1998 awards was
seen in product liability cases.

In such cases, the report shows, the median compensatory award rose to
$1.3 million in 1998, up 137% from $556,690 the year before. The huge
jump comes after the median award fell from $750,000 in 1996.

The median punitive award in product liability cases fell in 1998 to
$200,000 from $388,000 in 1997, the second consecutive decline. The 1997
figure was far lower than the $2.3 million median in 1996.

The survey shows that punitive damages were awarded in 10% of the
product liability cases in 1998.

The median compensatory award in 1998 medical malpractice awards rose to
$755,530, an increase of 46% over 1997. There were no punitive awards in
1998 medical malpractice cases in the JVR study. In 1997, the median
punitive award was at $290,000.

Jumps in the median compensatory awards for product liability and
medical malpractice cases likely occurred because "large verdicts in
cases of willful misconduct are going to skew the results," the ATLA
spokesman suggested.

He said juries "are going to send a message to business and industry"
when they find that injuries occurred because of a problem that was
known by the company responsible.

Median compensatory awards rose sharply for other cases as well.

The median award in premises liability cases reached $120,000 in 1998, a
23% rise from the year before. The median in business negligence cases
was up 21% to $237,557.

Data on punitive damages awards was not available for premises liability
and business negligence cases.

Over the seven years since 1992 -- the period tracked in this year's
survey New York has recorded the highest median compensatory award of
$273,185. Only 2% of awards in New York personal injury cases included
punitive damages.

Minnesota had the second-highest compensatory median award -- $128,759
-- over the seven-year period. Two percent of the awards included
punitive damages.

Alabama jurors awarded punitive damages in 26% of the personal injury
cases from 1992 through 1998, the highest percentage of any state.
Alaska, which was the second highest, awarded punitive damages in 16% of
cases during that same period.

New York plaintiffs collected the most million-dollar verdicts, with 24%
of the awards totaling at least $1 million in compensatory and punitive
damages over the seven-year period. New York also led states with 23% of
its awards reaching at least $1 million in compensatory damages over the
period.

Mr. Joyce of the ATRA said that Alabama has become a "case study"
illustrating the unreasonableness of punitive damage awards in recent
years, with jurors handing out hundreds of millions of dollars to
plaintiffs. Modifications to state law last year placed limits on
punitive damages that can be awarded in the state (BI, June 21, 1999).

He said that in many states, awards are rising as tort reforms are
reversed. "One of the things that clearly is happening is that state
supreme courts are nullifying tort reform" and are "substituting their
judgment for the judgment of the legislatures." (Business Insurance, May
1, 2000)


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Class Action Reporter is a daily newsletter, co-published by Bankruptcy
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