/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000515.MBX C L A S S A C T I O N R E P O R T E R Monday, May 15, 2000, Vol. 2, No. 94 Headlines AUTO INSURANCE: Ct OKs Suit Alleging Farmers Insurance Reduces Payment BAXTER HEALTHCARE: Emerges from LA Lawsuit over Tainted Clotting Factor DAIRY QUEEN: $50 Mil Settlement Agreed with One-Third of US Franchises ELCOR CORP: Plans Vigorous Defense against Homeowners Suit over Asphalt FEN-PHEN: Lawyers Say Settlement Would Shortchange Victims GOODYS FAMILY: Too Early to Gauge Effect of Employees Racial Bias Suit IKON OFFICE: Judge Awards More Than $32M Legal Fees in Securities Case INMATES LITIGATION: Parole Board Chief Investigated for Early Release LEAD PAINT: One Mother's Efforts Secure HA Settlement for Families LOS ANGELES SHERIFF: Black Inmates Sue Deputies for Hispanic Attack MAINE/NH BORDER: Maine Petitions Supreme Court to Settle Dispute OFFICEMAX INC: Shareholders File Suit in Ohio over Franchise Rights PASMINCO: Fed Court Strikes out Action over Lead Emissions SOTHEBY'S, CHRISTIES'S: Auctioneers Turn in Incriminating Evidence SUNGLASS HUT: Continues to Defend Securities Suit Filed 1997 in FL SUNGLASS HUT: Missouri Suit Alleges Violations of Wage and OT Laws TECHNICAL CHEMICALS: Awaits Ct Ruling on Shareholder Suits in FL TOBACCO LITIGATION: 17 Law Firms to Split $575 Mil in Handling LA Share WACO SCHOOL: Tx Ct dismisses case against school district WORLD ONLINE: Dutch Lawyer Alleges IPO Violates Dutch Regulation ********* AUTO INSURANCE: Ct OKs Suit Alleging Farmers Insurance Reduces Payment ---------------------------------------------------------------------- A $5 million class action lawsuit that will affect approximately 7,500 Oregonians has received court certification. The lawsuit, filed by attorney Richard Yugler, a partner in the law firm of Landye Bennett Blumstein, alleges that Farmers Insurance Company of Oregon systematically reduced medical expense reimbursement to automobile policyholders. Multnomah County Circuit Court Judge Harl H. Haas granted plaintiff's motion for class action certification on May 10, 2000. Certification allows Oregonians insured with Farmers, and their assignees such as doctors, hospitals, chiropractors, therapists and other caregivers, to seek reimbursement of medical expenses that were reduced on the basis of certain codes between January 26, 1998 to July 31, 1999. The lawsuit, "Mark Strawn v. Farmers Insurance Company of Oregon," alleges that Farmers systematically refused to pay the usual and customary expenses charged by medical providers by arbitrarily reducing medical reimbursement rates. The lawsuit alleges that Farmers refused to pay medical providers for the portion of any medical bill that exceeded an 80th percentile when compared to other providers' charges. After pre-litigation notice of the class action lawsuit was provided, Farmers increased the reimbursement rate to the 90th percentile and then later to the 99th percentile citing "customer complaints." Oregon Department of Insurance and Consumer Affairs records indicate that Farmers Insurance Group has the second highest number of consumer complaints compared to all other auto insurers in Oregon.(1) Farmers Insurance Company is part of Farmers Insurance Group. Yugler has now filed papers requesting that the lawsuit be amended to include Farmers' subsidiaries Mid-Century Insurance Company and Truck Insurance Exchange. Richard Yugler, the lawyer for class members, said, "When an insurance company wrongfully 'nickels and dimes' its customers, it can amount to millions of dollars in an insurers' pockets -- and that's just what Farmers did. The average policyholder has been short changed by about $175 in medical expense reimbursement. For some people that can be the difference in whether their children can participate in after school education. For doctors it amounts to thousands of dollars in unpaid bills." Yugler stated, "Numerous other similar lawsuits were filed across the country after this case, but I believe this is the first one to be certified. Oregon consumers may well set the trend nationwide." Last August the class action lawsuit was filed before changes to the Insurance Code made filing of consumer disputes against insurers more difficult. Insurance lobbyists persuaded the Oregon legislature to provide insurers with the ability to prevent individual policyholders from obtaining attorney fees in disputes with insurers that offer binding arbitration. Yugler commented, "Insurance companies have millions to spend on attorneys. Without the ability to pursue claims as a class action, consumers don't stand a chance. The insurance lobby also supported Oregon Ballot Measure Number 81 which, if passed by voters in May 2000, would provide lobbyists for irresponsible companies and politicians with unlimited power to eliminate consumer rights." A trial date has not been set by the court. Contact: Richard S. Yugler, ESQ, Landye Bennett Blumstein, 503-224-4100, or A. Doreen Olsen, 503-350-5872 BAXTER HEALTHCARE: Emerges from LA Lawsuit over Tainted Clotting Factor ----------------------------------------------------------------------- A federal court judge in New Orleans has granted summary judgment to Baxter Healthcare Corp. in a failure-to-warn and defective-product suit filed by a couple whose 18-year-old son died of AIDS, acquired through the clotting factor products he took to control his hemophilia. In re Factor VIII or IX Concentrate Blood Products Litigation; Cross et al. v. Alpha Therapeutic Corp. et al. , No. 94-0382 (E.D. La., Mar. 14, 2000). The judge said the suit was untimely, even if Louisiana's limitations period governing the wrongful-death claims of Gary and Karen Cross over the death of their son, Darren Bradley Cross (Brad), was suspended during pendency of a failed national class action on behalf of hemophiliacs infected with the AIDS virus via blood clotting products. Co-defendant Alpha Therapeutic Corp. still remains in the case. Brad was born in 1975 with hemophilia and treated his blood clotting deficiency with "factor concentrates." He was given factorate products made by Baxter Healthcare Corp., Armour Pharmaceutical Co., the Cutter Biological Division of Miles Inc. (now Bayer International) and Alpha. Infusion records kept by his parents beginning in October 1979 indicate Brad last used Baxter's non-heat-treated factorate in April 1981, but began to use the company's heat-treated factor concentrate in February 1984. In June 1995, the Crosses learned that samples of their son's blood sera drawn in December 1982 and June 1984 tested positive for HIV antibodies. Brad developed AIDS in 1989 at age 13, and died of it on April 16, 1993. Deciding Baxter's summary judgment motion, Judge Helen G. Berrigan said the plaintiffs' survival claims were considered "peremptive" under Louisiana law (La. Civ. Code Art. 2315.1), ran for one year following Brad's 1993 death and were not subject to "interruption or suspension." The couple's wrongful-death claims, however, are considered "prescriptive" by the state (La. Civ. Code Art. 2315.2), meaning that they were subject to such "interruption or suspension." The Crosses maintained that their wrongful-death claims, filed in U.S. District Court for the Eastern District of Louisiana on Feb. 2, 1994, were still considered timely because the Northern District of Illinois class action, Wadleigh v. Rhone-Poulenc Rorer Inc., 157 F.R.D. 410 (N.D. Ill., 1994), was filed on Sept. 30, 1993, interrupting Louisiana's prescription period. Although Wadleigh was granted class-action status in August 1994, the class was ordered decertified by the U.S. Court of Appeals for the Seventh Circuit in March 1995. While their 1994 suit initially named only Alpha as a defendant, the Crosses added Baxter as a defendant on March 22, 1996. This, they said, was safely within one year of the U.S. Supreme Court's October 1995 denial of a writ challenging the Wadleigh class decertification and entry of the actual decertification order in the Northern District of Illinois in January 1996. Baxter's 'Opt Out' Claim Rejected Baxter argued that the Wadleigh class action had not interrupted prescription with regard to the Crosses' individual claim against the company. An earlier, unsuccessful Louisiana state court suit by the couple against Armour and Cutter constituted an "opting out" of Wadleigh, Baxter said. The one-year prescription period continued to run and expired on April 16, 1994, the first anniversary of Brad's death. "The plaintiffs contend they did not 'opt out' of the Wadleigh class action and this court agrees," wrote Judge Berrigan. "At first point, while class certification was granted by the trial judge in Wadleigh, that decision was ultimately ordered rescinded by the appellate court, so no notices were ever sent to putative class members, such as the plaintiffs. Consequently, no one, included the plaintiffs, ever had the opportunity to 'opt out' of that litigation. "Since they did not ever 'opt out,' they remained 'in' the class action litigation until the class was finally decertified by the trial court, after which they added Baxter to their separate litigation within a year." The Crosses' filing of their Louisiana state court suit in 1991, she added, could not possibly have placed them in the position of having "intentionally 'opted out' of a class action law suit that didn't even exist when they filed their own litigation." Despite finding the instant suit against Baxter timely, Judge Berrigan said the facts of the case lean heavily against the plaintiffs and warrant the grant of summary judgment for Baxter. "It was not reasonable for plaintiffs to wait until March 22, 1996, 11 years after all of the plaintiffs knew of Brad's HIV infection, seven years after they knew he had tested positive for AIDS, almost five years after their first suit against two other factor concentrate manufacturers, and almost three years after his death, to file this claim," ruled the judge. "Plaintiffs reasonably believed that the HIV infection, contraction of AIDS, and subsequent death were caused by factor concentrate. They further knew that Brad had used four different manufacturers, including Baxter." Noting evidence that showed that, at the time of their son's death, the Crosses believed three out of the four possible tortfeasors were responsible, the court said "the plaintiffs were unreasonable in not pursuing a possible cause of action against Baxter, the last possible defendant, at that time." "They believed that factor concentrate caused Brad' injuries and knew that he had infused Baxter's factor concentrate, but decided to sue only three out of four manufacturers," concluded Judge Berrigan. Fraud Claim Also Rejected The court also rejected the couple's claim that during the 1980s, the defendants conspired to "mislead and manipulate" the U.S. Food and Drug Administration and that their activity created a regulatory environment conductive to the defendants' "goal s of sabotaging safety for profit." Such a claim, said the judge, failed for lack of evidence. "If the underlying act they allege here is based on fraud, plaintiffs have not alleged the elements of fraud and the claim must fail. Furthermore, plaintiffs have offered no evidence that defendants intended to harm or injure plaintiffs. What their evidence could possibly show is the factor concentrate manufacturers acted in concert in the early 1980s to mitigate the significance of the AIDS crisis in their dealings with government authorities," wrote the judge. "This in and of itself is not enough to show a conspiracy to commit an unlawful act." Baxter is represented by E. Paige Sensenbrenner of Adams and Reese in New Orleans and by Kathryn Connelley, Robert Limbacher and Joseph O'Connor of Dechert, Price and Rhoads in Philadelphia. The plaintiffs are represented by Robert Arceneaux and Thomas Maull of Maull & Maull in New Orleans. Deborah D. Kuchler of Abbott, Simses, Knister & Kuchler, also in New Orleans, represents Alpha. (Pharmaceutical Litigation Reporter, May 2000) DAIRY QUEEN: $50 Mil Settlement Agreed with One-Third of US Franchises ---------------------------------------------------------------------- After six years of litigation, a proposed $50 million class action settlement has been reached between International Dairy Queen (IDC) and one-third of the Dairy Queen (DQ) franchises nationwide. Minneapolis-based IDC must pay $30 million in advertising, $250,000 to each of the suits five original plaintiffs and $11.3 million in legal fees. DQ franchisees complained it was difficult to obtain supplies not sold by IDC. IDC claims it was ensuring consistency and quality throughout the chain. IDC, which is owned by Berkshire Hathaway Inc., Omaha, Neb., and billionaireWarren Buffett, will also pay $6 million to Dairy Queen Owners Cooperative, an association of franchise owners united to buy supplies for DQ stores. (Dairy Field, April 2000) ELCOR CORP: Plans Vigorous Defense against Homeowners Suit over Asphalt ----------------------------------------------------------------------- On February 25, 2000, Wedgewood Knolls Condominium Association filed a purported class action against Elcor Corp. and Elk Corporation in the United States District Court in Newark, New Jersey. The purported nationwide class would include purchasers or current owners of buildings with certain Elk asphalt shingles installed between January 1, 1980 and present. The suit alleges, among other things, that the shingles were uniformly defective. It seeks reformation of the limited warranty applicable to the shingles, and unspecified damages for breach of implied and written warranties and alleged unfair or deceptive trade practices on behalf of the plaintiff and the purported class. Elcor Corp and Elk intend to vigorously defend the suit, and believe the claims and the purported class are totally without merit. FEN-PHEN: Lawyers Say Settlement Would Shortchange Victims ---------------------------------------------------------- American Home Products Corp.'s proposed $ 3.7 billion class-action diet-drug settlement would shortchange seriously ill people, lawyers claimed in a U.S. District Court hearing. In final arguments of an eight-day fairness hearing before Judge Louis C. Bechtle, lawyers who said they represented 4,000 people who took the drugs said the settlement would undercut people with serious medical problems. "The problems, they're there," said Tom Pirtle, a Houston lawyer. "It's up to us to fix them." Under the settlement, people who took the drugs can receive medical tests and seek up to $ 1.485 million apiece in damages. Bechtle gave the settlement preliminary approval in the fall and is expected to make a final ruling this summer. Ed Blizzard, another Houston lawyer representing patients objecting to the deal, argued that a broad class-action settlement was inappropriate because people who took the drugs suffered from a range of medical problems and at varying levels of severity. Blizzard also argued that the lawyers who negotiated the settlement on behalf of people who took the drugs did not have strong cases and had little incentive to take their cases to court. He also said that the lawyers representing those people did not have a strong incentive -- in the form of fees -- to fight hard enough for a bigger settlement. He also said that once the class was formed, the individual plaintiffs named in the suit were not involved in the settlement negotiations. And he criticized the settlement because it left out some types of heart problems and neurological complaints such as memory loss that he said some patients experienced. Pirtle argued that the settlement did not take into account the possibility that more patients may develop symptoms later. Michael Fishbein, a lawyer who represented patients in the class-action settlement, defended the agreement. He argued that it would be "silly" to include the named plaintiffs in the complex medical and legal negotiations. Fishbein also said that in 20 studies there was no indication that people who took the drugs will develop additional medical problems. Fishbein also pointed out that the classes were certified by state courts and Bechtle. Michael Scott, a lawyer for American Home, said the company was confident that Bechtle would approve the settlement. (The Philadelphia Inquirer, May 12, 2000) GOODYS FAMILY: Too Early to Gauge Effect of Employees Racial Bias Suit ---------------------------------------------------------------------- In February 1999, a lawsuit was filed in the United States District Court for the Middle District of Georgia and was served on Goodys Family Clothing Inc. and Robert M. Goodfriend, its Chairman and Chief Executive Officer, by 20 named plaintiffs, generally alleging that the Company discriminated against a class of African-American employees at its retail stores through the use of discriminatory selection and compensation procedures and by maintaining unequal terms and conditions of employment. The plaintiffs further allege that the Company maintained a racially hostile working environment. The plaintiffs' claims are being brought under Title VII of the Civil Rights Act of 1964, as amended, and under the Civil Rights Act of 1866. The plaintiffs are seeking to have this action certified as a class action. By way of damages, the plaintiffs are seeking, among other things, injunctive relief (including restructuring of the Company's selection and compensation procedures) as well as back pay, an award of attorneys' fees and costs, and other monetary relief. The Company disputes these claims and intends to defend this matter vigorously. It is too early to estimate the effect, if any, the above lawsuit may have on the Company's financial position or results of operations. IKON OFFICE: Judge Awards More Than $32M Legal Fees in Securities Case ---------------------------------------------------------------------- A federal judge has awarded more than $ 32.4 million in fees to the team of plaintiffs' lawyers who secured a $ 111 million settlement in the class-action securities fraud suit against IKON Office Solutions Inc. In a 73-page opinion, Senior U.S. District Judge Marvin Katz announced final approval of the settlement the largest securities settlement ever in the Eastern District of Pennsylvania as well as approval of a related $ 5 million settlement of a derivative suit. Katz found the settlement was "fair and reasonable" because while investors potentially could have won more than $ 1 billion if the case went to trial, they also risked getting nothing at all. And a much larger award could have sent IKON, a Malvern, Pa.-based provider of office equipment and services, into bankruptcy. But the big news was Katz's decision not to trim the huge attorney fees award if only for its sheer size. "The court is well aware that most decisions addressing similar settlement amounts have adopted some variant of a sliding fee scale, by which counsel is awarded ever diminishing percentages of ever increasing common funds," Katz wrote. In In re Unisys Corp., Katz said, the court awarded just 6.25 percent of a $ 111 million fund. And in In re Chambers Dev., the court again applied a sliding scale to award 21.6 percent of a $ 95 million fund. "This court respectfully concludes that such an approach tends to penalize attorneys who recover large settlements. More importantly, it casts doubt on the whole process by which courts award fees by creating a separate, largely unarticulated set of rules for cases in which the recovery is particularly sizable," Katz wrote." It is difficult to discern any consistent principle in reducing large awards other than an inchoate feeling that it is simply inappropriate to award attorneys' fees above some unspecified dollar amount, even if all of the other factors ordinarily considered relevant in determining the percentage would support a higher percentage," he wrote. Such an approach, Katz said, also "fails to appreciate the immense risks undertaken by attorneys in prosecuting complex cases in which there is a great risk of no recovery." Reducing the percentage awarded for larger settlements also fails to give sufficient weight to the fact that "large attorneys' fees serve to motivate capable counsel to undertake these actions," Katz wrote. In the final analysis, Katz found that the plaintiffs' team on the IKON case deserved the full fee they had requested."Class counsel did a remarkable job of representing the class interests. In so doing, they expended huge amounts of time and money, and faced considerable risks of non-recovery," Katz wrote. "They also settled expeditiously with very few objectors. An award of 30 percent of the net settlement fund, which comes to approximately 28.4 percent of the gross settlement fund after deducting costs and considering that the derivative counsel fees and costs will come out of this award, is eminently reasonable and fair," he wrote. Sharing in the award are four firms that served as co-lead counsel Berger & Montague; Keller Rohrback; Milberg Weiss Bershad Hynes & Lerach; and Stull, Stull & Brody as well as liaison counsel Savett Frutkin Podell & Ryan. Stock Prices According to the suit, IKON's former officers set out to inflate the company's stock price so that they could go on an aggressive campaign of acquiring smaller companies, building an office-service empire that spread from the United States to Canada and Europe. Between 1995 and 1998, IKON purchased close to 200 independent companies, which it then attempted to integrate into its own network. But the company experienced a variety of problems in its growth, the suit alleged, especially with respect to its internal auditing procedures. And it kept the problems a secret so that it could keep its stock price high, the suit said, since most of its acquisitions involved using IKON stock as currency. After a "special review procedure" in the summer of 1998, IKON announced on Aug. 14, 1998, that it would be taking a $ 110 million charge to earnings $ 94 million in the third fiscal quarter and $ 16 million against previously reported second fiscal quarter earnings.Stock prices dropped sharply on the news, and lawyers later said shareholders lost at least $ 1 billion when the stock reached its proper selling price. At first, the shareholders sued IKON and its former officers, all of whom were at the helm during the period that all of the alleged misleading statements were made.But just a few months after the suit was filed, the plaintiffs returned to court and asked permission to add Ernst & Young as defendants for violating Section 10(b) and Section 11 of the Securities Act. The amended suit alleged that the accountants, as both external and internal auditors, acted recklessly by issuing unqualified audit reports in October 1997 that vouched for the financial statements issued by IKON. The auditors said IKON's statements conformed with generally accepted accounting principles and that E&Y's audit itself complied with generally accepted auditing standards. The shareholders allege that E&Y auditors were aware that their audit was flawed because it made no mention of allegations they had heard that one of IKON's officers was "cooking the books" and that the company lacked internal controls, had doubtful accounts and overstated its subsidiary income. The suit says E&Y was aware of the problems from a very early date but nonetheless continued to issue unqualified statements regarding IKON's finances. In the audit opinions, dated Oct. 15 and 27, 1997, E&Y stated: "We have audited the accompanying consolidated balance sheets of IKON Office Solutions, Inc. ... and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the three years in the period ended Sept. 30, 1997."... We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion." Move to Dismiss E&Y's lawyers, Edward M. Posner of Drinker Biddle & Reath and Marc Gary of Mayer Brown & Platt in Washington, moved to dismiss the claims, arguing that the shareholders failed to meet the requirements for pleading fraud with "particularity." But in a 31-page opinion handed down in September 1999, Judge Katz refused to dismiss E&Y as a defendant, saying the plaintiffs had met the legal test for pleading "scienter," or knowledge on the part of the auditors. E&Y argued that the plaintiffs could not show scienter merely by arguing that E&Y knew that IKON's chief financial officer, Kurt Dinkelacker, had been accused of doctoring accounts. Katz disagreed, saying the suit alleges that E&Y was informed at an auditing committee meeting that Dinkelacker was altering accounts and instructing others to do so. The suit also said E&Y was informed of Dinkelacker's wrongful activities by at least April 1997 and that handwritten notes showed that auditors were told that "Kurt instructed everyone to cook the books." Those claims, Katz said, if proven, would be sufficient to hold the auditors liable. In the settlement, IKON pledged to cooperate with the plaintiffs' lawyers in their continuing litigation against E&Y. Berger & Montague attorneys Merrill G. Davidoff and Todd S. Collins will be lead trial counsel for the plaintiffs if the case goes to trial. In approving the settlement with IKON, Katz found that many of the factors courts consider weighed "heavily in favor" of approval. If the case didn't settle, he said, the case would likely stretch on "for months or even years longer with significant financial expenditures by both defendants and plaintiffs." The discovery in the case, he said, "proved to be particularly complex because of IKON's decentralized structure." Many of the businesses purchased by IKON had not been fully integrated, administratively or otherwise, into its system. And the extremely large sums of money at issue, he said, "almost guarantee that any outcome, whether by summary judgment or trial, would be appealed." Very few objections were filed opposing the settlement, and some appeared only to seek a clarification. "No large institutional investor has objected to the proposed settlement, and there have been few opt-outs given the size of the class," Katz wrote. IKON eventually produced more than 2 million pages of documents in discovery, Katz said, and the plaintiffs' lawyers managed to organize the information while minimizing duplication by establishing a computerized document retrieval system and a system of reviewing documents by teams of attorneys. Plaintiffs' counsel conducted more than 35 depositions of IKON personnel, Katz said, and did so "in an extremely short time." As a result of such extensive discovery, Katz found, the plaintiffs' team was highly prepared for the settlement negotiations. "This is not a situation in which plaintiffs' counsel have conducted only cursory investigation or have otherwise failed to consider the ramifications of settlement," Katz wrote."The fact that counsel claim over 45,000 hours of time on this matter, which has been before this court for more than a year and a half, strongly suggests that they are well-informed on the merits of settlement versus continued litigation." (The Legal Intelligencer, May 12, 2000) INMATES LITIGATION: Parole Board Chief Investigated for Early Release --------------------------------------------------------------------- The chairman of the state Parole Board is under investigation regarding the early release of state prisoners, including a reputed mobster, according to a newspaper report. The chairman, Andrew Consovoy, told The Record of Hackensack he had done nothing improper or illegal and was not involved in the decision to parole Samuel Corsaro, whom authorities consider a member of the Gambino crime family. Consovoy said he was unaware of any investigation. Board executive director Robert Egles said he learned of the probe from the newspaper. Egles confirmed that Consovoy did not participate in the parole of Corsaro, who was freed Feb. 14, after serving the minimum time before becoming eligible. Corsaro's case was heard in January, Egles said, several weeks after becoming eligible for parole. Two of the board's 10 members, as is typical, decided his parole, Egles said. The members ruling were Rachel T. Chowaniec and Dominic Porrovecchio, Egles said. The swiftness of the hearing is unusual, according to a class-action lawsuit filed against the parole board May 2. It charged the board's backlog has caused more than 1,000 inmates to wait over a year for hearings, in violation of state law and federal due-process protections. Corsaro, of Clifton, had served seven years for plotting to burglarize the offices of the organized crime unit of the state attorney general in Fairfield. Corsaro was on parole for a murder conviction at the time. Under state law, parole is presumptive unless the board finds a "substantial likelihood" that the inmate will commit another crime, Egles said. The investigation into the parole board is being headed by the Corruption and Government Integrity unit in the attorney general's office, according to an unnamed law enforcement source cited by The Record. A person contacted by investigators said he was questioned about Jason J. Guerrera, the son of a Superior Court judge in Atlantic County, the newspaper said. Guerrera was released in 1996 after serving 20 months of a seven-year term for manslaughter, despite a violent history and an arrest for forgery and theft while a prisoner. A former Parole Board hearing officer, William Schirmann, said last month that he recommended against Guerrera's release and had been told to pass the case to Consovoy. Hearing officers usually pass cases to board members randomly, the newspaper said. Schirmann was fired recently; he says it was because he was a whistle-blower. Consovoy told The Record Schirmann was a disgruntled employee. The president of a union of board employees, Joyce Couch, told The Record that she gave the state attorney general's office documents showing that Consovoy made parole decisions by himself at his home on weekends. Such decisions are to be made by two board members. Consovoy told the newspaper that criminal and administrative codes allowed him to review some parole cases alone, as long as the cases were reviewed later by a second board member. (The Associated Press, May 11, 2000) LEAD PAINT: One Mother's Efforts Secure HA Settlement for Families ------------------------------------------------------------------ Former Norristown resident Latanya Collier could have stopped pursuing her lawsuit over lead paint after securing financial help for her mentally disabled son. She didn't. Now, because of Collier's persistence, children of low-income families receiving federal rental assistance through the Montgomery County Housing Authority may never have to deal with the devastating effects of lead-based paint poisoning. Collier's son, Jarrett Dykes, was poisoned by the lead-based paint in rental housing, which Collier had secured with a Section 8 certificate. Jarrett's condition autism and pediatric development disorder was exacerbated by the lead poisoning, said Peter R. Kohn, of Monheit Monheit Silverman & Fodera in Philadelphia. Collier sued the housing authority as well as the property owner, and a financial settlement was reached, he said. However, Collier also pursued a federal class-action lawsuit against the housing authority in behalf of all Montgomery County Section 8 families with children under the age of 6. "In most cases when people are victims of a catastrophic event, once there is a financial settlement, they go their merry little way," said Kohn. "In Latanya's case, she insisted that it not end there but that we move forward so that all Section 8 families in Montgomery County benefit and that none will ever have to suffer the same pain that she did in knowing that her young son will be mentally disabled for the rest of his life," said Kohn. In the lawsuit, Collier alleged that the county housing authority failed to inspect for lead-based paint, banned since 1978, in Section 8 rental properties, and failed to enforce any lead-based paint abatement program for these properties. In addition, the lawsuit maintained, the authority failed to notify Section 8 families with minor children that the properties might contain lead-based paint and failed to educate these families on the symptoms of lead poisoning and the precautions that should be taken. Federal Court Judge Eduardo C. Robreno has now given his preliminary approval for a proposed settlement that details the authority's responsibilities concerning lead-based paint in Section 8 rental units. Under the proposed settlement, the Montgomery County Housing Authority is required to: * Provide notice to the tenants of the potential risk for lead-based paint exposure, the hazards of such exposure, the symptoms of lead poisoning and precautions that should be taken. * Provide written notice to prospective tenants regarding the importance of having tenants inform health-care providers of the risk of lead-based paint exposure. * Seek approval from the federal Department of Housing and Urban Development to amend leases for Section 8 properties to include a lead-based paint warning and to insert space for the landlord's disclosure of known lead-based paint. * Provide notice of the lead requirements to landlords and penalize any landlord who refuses to make proper repairs while reissuing Section 8 vouchers to tenants to secure new housing. * Arrange for a qualified inspector to test the property after learning that a child has elevated levels of lead in his or her system, forward the report to both the tenant and landlord and make sure the landlord follows through with any remediation work recommended in the report. The federal court will retain jurisdiction over the matter for the next two years to make sure all conditions of the settlement are met. A final hearing on the proposed settlement is slated for next month. "I think we have achieved a significant adjustment in the Montgomery County Housing Authority's Section 8 program," said Kohn. "This settlement will better protect the children of lower-income families, who are a very vulnerable population," he said. Kohn emphasized that the authority personnel were dedicated people who are truly interested in their clients. "This is just a serious program inadequacy," he said.Of his client, Latanya Collier, Kohn said: "She is just a very, very remarkable person." (The Legal Intelligencer, May 10, 2000) LOS ANGELES SHERIFF: Black Inmates Sue Deputies for Hispanic Attack ------------------------------------------------------------------- Sheriff's deputies intentionally allowed Hispanic inmates to attack black prisoners during a recent series of racial brawls in a county jail, a civil rights lawsuit alleges. The lawsuit, filed in U.S. District Court on behalf of 273 black inmates, alleges that deputies took away black prisoners' shoes so they couldn't stomp other inmates. Attorney Leon Jenkins says deputies also did not retrieve razor blades from Hispanic inmates that later were used as weapons. The lawsuit, filed last Tuesday by Jenkins, seeks class-action status, unspecified monetary damages for those injured and an injunction to force the department to take steps to prevent future riots. Sheriff's officials would not respond to specific allegations in the lawsuit, but issued a statement that said, ''acts of violence have never and will never be condoned.'' Rioting that began April 24 and lasted three days, left one black prisoner in a coma after his head was bashed into the concrete floor. More than 80 others were injured. Six Hispanic inmates pleaded innocent to attempted murder and mayhem charges in the attack on Ahmad Burwell, 21. In their lawsuit, the black inmates contend the Sheriff's Department placed them in life-threatening situations by isolating them in dormitories dominated by rival Hispanic groups. Jenkins said deputies knew the brawl was being planned and did not prevent it. Sheriff's officials say they learned of plans for the fighting only minutes before it erupted. A forced segregation of inmates at Pitchess has been lifted, said Sheriff's Chief John Anderson. Eighty percent of the black and Hispanic inmate population has been voluntarily re-integrated. The county has a total inmate population of 19,000. ''Looking at this in totality, I think we do a very, very good job at protecting our inmate population,'' he said. (AP Online, May 12, 2000) MAINE/NH BORDER: Maine Petitions Supreme Court to Settle Dispute ---------------------------------------------------------------- Maine petitioned the U.S. Supreme Court last Friday to settle its long-simmering border dispute with New Hampshire. Both states claim the nation's oldest Navy shipyard lies within their territory. The two states agree the Portsmouth Naval Shipyard lies on Seavey Island in the Piscataqua River separating Maine and New Hampshire. The disagreement revolves around where the border lies -- in the middle of the river or along the north bank. In a 500-page response to New Hampshire's claim, Maine Attorney General Andrew Ketterer argues the border between the states lies in the middle of the river, putting the shipyard in Kittery, Maine, The Portland Press Herald reported last Friday. New Hampshire officials claim the border lies along the Maine bank of the river, placing the shipyard in Portsmouth, N.H. Along with state pride, the controversy involves some $5 million in annual income taxes. Unlike New Hampshire, Maine has a personal income tax that some 1,300 out-of-state workers, including New Hampshire residents, must pay. Maine also has a spousal tax based on a spouse's income earned outside Maine. New Hampshire workers resent the tax since it increases their tax burden. Attempts at exempting New Hampshire residents from paying Maine taxes have failed. New Hampshire's two Republican senators unsuccessfully lobbied Congress in 1997 to relieve the shipyard workers from paying Maine income taxes. And the Maine Supreme Court has refused an appeal of a class-action suit brought by New Hampshire workers against Maine's tax policy. Maine traces its claim to colonial times when in 1740 George II decreed the boundary between Massachusetts and New Hampshire lay in the middle of the river. At that time Maine was part of Massachusetts. Ketterer also cited the U.S. Supreme Court's 1976 ruling that forced New Hampshire to cede some prime fishing grounds to Maine. Further bolstering Maine's claim, the attorney general said deeds to properties at Seavey Island are recorded in Alfred, Maine, and permits for wastewater discharges and air emissions licenses are filed in Maine. He said the only road leading to the shipyard runs from Kittery. But New Hampshire has insisted an 18th Century map places Seavey Island in the Granite State; hence the Portsmouth Naval Station is in Portsmouth, N.H., not Kittery, Maine. To prevent motorists from getting the idea that New Hampshire has agreed to a mid-river boundary, four years ago New Hampshire removed the "Welcome to Maine" signs that hung over its three bridges leading north. (United Press International, May 12, 2000) OFFICEMAX INC: Shareholders File Suit in Ohio over Franchise Rights ------------------------------------------------------------------- On March 24, 2000, Charles Miller and Great Neck Capital Appreciation, L.P. initiated two separate, but virtually identical, purported class actions against the Company and its directors. The cases, both filed in the Court of Common Pleas for Cuyahoga County, Ohio, allege claims for interference with shareholders' franchise rights against the Company and its directors and breach of fiduciary duty against the directors relating to the adoption of a shareholder rights plan on March 17, 2000. The cases are at their earliest stages and discovery has not yet commenced. The Company believes that the cases are without merit and intends to vigorously defend against the allegations set forth in both complaints. On April 7, 2000, Crandon Capital Partners initiated a purported class action against the Company and its directors. The case, filed in the Court of Common Pleas for Cuyahoga County, Ohio, also alleges claims for interference with shareholders' franchise rights against the Company and its directors and breach of fiduciary duty against the directors relating to the adoption of the shareholder rights plan. The case is at its earliest stages and discovery has not yet commenced. The Company believes that the case is without merit and intends to vigorously defend against the allegations set forth in the complaint. PASMINCO: Fed Court Strikes out Action over Lead Emissions ---------------------------------------------------------- The Federal Court in Sydney on May 12 struck out an application for a class action relating to alleged damage caused by the long term effects of lead emissions from Pasminco's lead and zinc smelters at Cockle Creek and Port Pirie. Managing Director and Chief Executive of Pasminco, Mr David Stewart, said that since its formation in 1988, the company had accepted full responsibility for its environmental performance. He added that Pasminco had also accepted an obligation to address the legacies of the past - even though much of the lead contamination had occurred before Pasminco's inception. SOTHEBY'S, CHRISTIES'S: Auctioneers Turn in Incriminating Evidence ------------------------------------------------------------------ At the federal courthouse, U.S. District Judge Lewis A. Kaplan has requested sealed bids by May 12 from dozens of lawyers to represent the 1,000-plus plaintiffs expected to be part of a class-action lawsuit accusing the two dominant auction houses of price-fixing and other unfair practices going back to 1993. At a meeting Feb. 8, the initial antitrust lawyers filing cases against auction houses selected five firms to spearhead the effort. Other lawyers complained that the winners "bargained for their positions by promising specific committee chairmanships to firms that would support them." Soon after, Kaplan appointed an interim executive committee of six lawyers and requested bids for getting the permanent lead counsel, presumably to maximize the take to clients and not eat up all of a settlement with legal fees. But groups of lawyers have submitted memos from law professors (one paid $ 400 an hour for her time) arguing that the "sealed bid auction" is a bad idea. "The cheapest counsel is rarely the best counsel," one wrote. "Patients facing brain surgery do not conduct auctions for their surgeon." The case is a consolidation of dozens of suits already brought by clients of the firms in the wake of the stunning disclosure by Christie's this year that its top officials had begun cooperating with an investigation of auction practices by the U.S. Justice Department's Antitrust Division, which has the power to bring criminal charges. To the art world's amazement, the 234-year-old auction house has rolled over, as they say in less genteel realms--turning over incriminating evidence in hopes of gaining more lenient treatment, according to court papers. Christie's and Sotheby's control more than 90% of the world's $ 4-billion-plus auction trade. These days they peddle Grand Cru wines, cat-themed jewelry and Hollywood memorabilia in addition to Impressionist landscapes. At issue is whether officials of the two firms met secretly in an attempt to increase their take at both ends of the auction process after the fine art market slumped in the '90s: first increasing in 1993 the "premium" that buyers pay on top of winning bids, then in 1995 changing the way they took cuts from sellers. They also allegedly agreed that neither would negotiate any discounts with people seeking to auction off their art--except for a select list of elite customers, who sometimes were charged nothing. The investigation has claimed three of the biggest names in auctioneering since last fall's season. Christie's CEO Christopher M. Davidge resigned the day before Christmas. But it was not until the end of January and into February that the art world learned why--Christie's was cooperating with the Justice Department in return for "conditional amnesty," a status granted suspects who report "illegal activity . . . with candor." With their counterpart apparently having surrendered notes and phone records to help make the government's case, the top two officers of Sotheby's submitted their resignations Feb. 20. Chairman A. Alfred Taubman and President Diana D. Brooks said they were acting in "the best interests of the company." Court records indicate that a grand jury has been convened to hear evidence, but a Justice Department spokeswoman says only that an investigation is ongoing into "the possibility of anti-competitive practices in the fine art auction business." On top of the government scrutiny and the civil suits--which seek triple damages--the two auction houses face an additional challenge: a would-be rival. Phillips Auctioneers, another British firm but a distant third in grosses, is trying to step up in class, and dollars, to compete with the Big Two. Phillips is backed by a new deep-pocket owner, Bernard Arnault, the French entrepreneur whose parent firm, LVMH, owns such upper-crust brands as Dom Perignon, Louis Vuitton and Parfums Christian Dior. Phillips has rented for three weeks a major part of the American Craft Museum--half a block from Fifth Avenue--and reportedly promised top-dollar guarantees to art sellers to lure their "lots" away from Christie's and Sotheby's. It also promised to contribute to charity 3% of the winning bid price for each object at its marquee sale. No less than Sharon Stone agreed to accept the donation on behalf of AmfAR, the AIDS research organization. Phillips' 'Repositioning' Began Last Fall Phillips' CEO, Chris Thomson, said the auctioneer began plotting its "repositioning" last fall, prior to the unexpected turmoil at Christie's and Sotheby's. But he is not averse to exploiting any resentment among art patrons who may believe the dominant houses took more than a fair cut from past sales. "Those other houses have given us an opportunity," Thomson said. "People are ready, without question, for a strong third house." All this comes during an expansionist time for Christie's and Sotheby's: Both have renovated their headquarters here to fit more bidders in their main auction rooms ringed by private suites. Both are poised to gain the right to operate in Paris, after centuries fighting protectionist French policies. And both are making increasing use of the Internet--Sotheby's actually selling through a dot-com unit and Christie's offering "live Web casts" of its auctions here. But as visible as the action seems, this luxury-goods business has long thrived on secret bidding signals, secret reserves, secret guarantees and other clandestine financial agreements. A case in point was Sotheby's loaning money to Australian mogul Alan Bond so he could pay a then-record $ 53.9 million in 1987 for Van Gogh's "Irises," using the painting as collateral. The arrangement was disclosed three years later when Bond defaulted on the payments, setting the stage for Los Angeles' Getty museum to get the painting. It's certainly no secret that Christie's and Sotheby's long have cooperated on some matters, such as auction scheduling. That seemed logical, though, as it enabled buyers to make the rounds of sales. Nor was there anything automatically suspicious about the fact that the two firms imposed the same fees on buyers. Until 1993, winning bidders paid a flat 10% surcharge to the auction houses above the "hammer price." Then, within less than two months of each other, Sotheby's and Christie's adopted a new sliding scale--15% on the first $ 50,000, and 10% for amounts above that. Two years later, both changed fees charged to sellers, abandoning a flat 10% commission. This seemed little different than airlines matching one another's price changes. Indeed, the auction houses had reputations as fierce competitors, particularly when it came to wooing the society families and great art patrons with treasured collections. The two firms tried to distinguish themselves with charm, expertise, exhibitions, parties and publications, putting out art book-like catalogs for exhibitions. But the complaints filed in US federal court Allege that the surface of fine manners masked a crude collusion. Officials of the two firms allegedly met in London and New York to work out price schemes and pacts not to give discounts, except to that select few. "In fact . . . both established a system of referring any attempts to negotiate or reduce rates . . . to the highest levels of the respective companies," says the latest amended complaint, filed April 5. Those top officials, Brooks and Davidge, would then hold tough, refusing to undercut each other, the plaintiffs allege. The result was that buyers and sellers paid more "than would have been paid in a free and competitive market . . . and to inflate the revenues of Christie's and Sotheby's," the complaint says. "Nobody had any understanding that there was anything illegal going on," says Washington, D.C., attorney Michael Hausfeld, who represents both buyers and sellers in the case. He said his clients reacted with "surprise and anger" to conduct of "two institutions which publicly had the image of trust." The resigned auction house officials have refused to comment. But in a memorandum filed last month, Sotheby's argues that while there may have been "conscious parallelism" in pricing, that "does not prove a violation of the antitrust laws." Some Fear Harm to Art Market Amid the federal investigation, both Christie's and Sotheby's changed their rate schedules in February. They are no longer identical. Some arts professionals fear the scandal could damage the whole art market, making potential buyers and sellers ever more suspicious. Some art dealers, meanwhile, are quietly gloating--in the hope that collectors will abandon the auction houses and take their trade to galleries. But as sales began, others sensed the fascination with great art--or simply expensive art--would overshadow any taint. (Los Angeles Times, May 12, 2000) SUNGLASS HUT: Continues to Defend Securities Suit Filed 1997 in FL ------------------------------------------------------------------ In January 1997, a class action securities lawsuit was filed against Sunglass Hut International Inc. and certain of its current and former executive officers in the U.S. District Court of the Southern District of Florida. The lawsuit alleges, among other things, that the Company and certain of its officers made materially false and misleading statements regarding the Company's business performance and prospects. The Company believes that the lawsuit has no basis, and intends to vigorously defend the action. SUNGLASS HUT: Missouri Suit Alleges Violations of Wage and OT Laws ------------------------------------------------------------------ In September 1999, a class action lawsuit was filed against Sunglass Hut International Inc. in the United States District Court in the Eastern District of Missouri. The lawsuit alleges, among other things, that the Company violated state and Federal wage and overtime laws. The Company is in the process of investigating and responding to the charges. TECHNICAL CHEMICALS: Awaits Ct Ruling on Shareholder Suits in FL ---------------------------------------------------------------- During November 1998 through January 1999, several lawsuits were filed in the United States District Court for the Southern District of Florida - Case No. 98-7334-CIV-DAVIS - against Technical Chemicals & Products Inc. and its Chairman on behalf of various shareholders of TCPI alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder. In general, plaintiffs allege that defendants made untrue and misleading statements in the Company's public disclosure documents and in certain press releases, articles and reports. The disclosures relate primarily to the development, clinical testing and viability of the Company's TD Glucose Monitoring System. The plaintiffs are seeking certification as a class on an unspecified amount of damages, interest, costs and attorneys' fees. The Company believes the allegations lack merit and plans to contest the allegations vigorously. On April 19, 1999, an Amended Consolidated Class Action Complaint was served upon the Company. In response, on June 18, 1999, the Company filed a motion to dismiss the Amended Consolidated Class Action Complaint. Plaintiff's response to this motion, as well as defendant's reply, have been served, but the court has not yet ruled. Discovery has been stayed pending resolution of the motion to dismiss. TOBACCO LITIGATION: 17 Law Firms to Split $575 Mil in Handling LA Share ----------------------------------------------------------------------- The Associated Press reports that a law firm with close ties to the state attorney general will get $120 million of the $575 million in legal fees to be split over the next 20 years from handling Louisiana's share of the national settlement with the tobacco industry. In January, it was announced that 17 firms would split the fees, amounting to about $6,700 per hour, for their services. However, the state said how much each firm would get would remain confidential. The Times-Picayune obtained the splits after a public records request, the Associated Press tells. The report also says that of the Louisiana lawyers, Badon & Ranier, a Lake Charles law firm with close ties to Attorney General Richard Ieyoub, will get more than $120 million over the for its lead role in the case, and a top New Orleans firm headed by Russ Herman will get about $48 million. Twelve other firms, including one based in San Francisco and another in Mississippi, each will get 3.75 percent of the award, which translates into about $1 million a year for 20 years, according to the Associated press. But about 25 percent of the fees will land in law firms run by Pascagoula, Miss., attorney Richard Scruggs and asbestos litigation giant Ronald Motley of South Carolina. Each of those firms has reaped more than a billion dollars from tobacco settlements in other states, and their combined share of the Louisiana fees will be about $138 million. The fee splits already are the subject of one lawsuit that claims the arrangement with Ieyoub is illegal and demands that the private lawyers turn over their payments to state coffers, the reports says. State Rep. Chuck McMains, R-Baton Rouge, also has turned his attention to the award, which will be the topic of a special hearing at the House civil law committee, the Associated Press report continues, "It is absolutely outrageous," McMains said. "I have not talked to a single lawyer in Louisiana, either plaintiff or defense, who isn't embarrassed by it." According to the report, Ieyoub said that focusing on the fee misses the point. "The litigation against the tobacco companies and the result which occurred is unprecedented. It is historic," he said. "How can anybody complain about the fact that Louisiana obtained $4.6 billion, in addition to forcing tobacco companies to cease manipulative advertising, especially ads aimed at youngsters?" "It should bring nothing but praise," Ieyoub said. Those who complain about the fees overlook the fact that tobacco companies spent $600 million a year on 2,700 lawyers on retainer to defend against "anyone who dared take them on in the courtroom," he said. The legal fees are separate from $4.6 billion the cigarette industry must pay Louisiana as part of the $246 billion national settlement reached in 1998, says the Associated Press. It is the fifth largest-award by a special arbitration panel that decided how much the attorneys would get. The Press says that Ieyoub played no role in dividing the money. He has defended his choice of firms, saying he wanted geographic and racial diversity among the lawyers representing Louisiana. While several of the lawyers, including longtime ally Drew Ranier of Lake Charles, were campaign contributors, others were not, he said. "Should an attorney general be forced to hire his political enemies who he doesn't trust?" Ieyoub said at a recent Tulane University Law School conference on class-action lawsuits. Ieyoub said the fee award does not come out of taxpayer money or reduce the state's share of the $246 billion settlement. Taking on the tobacco industry was a risky venture, he said. The tobacco industry disagrees with the fees, the report says. Tobacco companies say that if attorneys for the state charged a top rate of $275 per hour, a generous fee award would be about $46.5 million. The industry said Louisiana attorneys benefited from work already done in other states, did not have to take depositions or prepare for trial. (The Associated Press, May 12, 2000) WACO SCHOOL: Tx Ct dismisses case against school district --------------------------------------------------------- The Texas Supreme Court last Thursday dismissed a lawsuit against the Waco school district and its promotion policy, ruling the suit was filed before any students were affected by the policy. The court majority, in a 6-3 decision, said the four plaintiffs in the case showed no evidence of damage from the promotion policy, which requires students pass a state-mandated test. The plaintiffs, including McLennan County Commissioner Lester Gibson and his wife, former school board president Coque Gibson, claim in the lawsuit that use of the test for promotion purposes is illegal and breaches students' confidentiality. Waco Independent School District's policy, implemented in the 1997-98 school year, requires students pass the Texas Assessment of Academic Skills test before advancing to the next grade. Test scores from that year were not available until May 1998. If students fail the test, the policy requires they participate in a remediation plan and take the test again. In its ruling, the court said there were no test results available when the lawsuit was filed in April 1998 to show that the plaintiffs had been damaged by the promotion policy. ". . . The Court's decision still turns on the fact that when the plaintiffs sued, no test results were available, and no evidence of the probability of the remediation's success or failure existed," Justice Craig Enoch wrote in the majority opinion. In a dissenting opinion, Justice Nathan Hecht wrote that the court majority was wrong in concluding that the plaintiffs could not prove damage because their claim does not consider the success of remediation. Hecht, joined by Chief Justice Thomas Phillips and Justice Priscilla Owen, said the majority "ignores the fact that any child allowed to attempt remediation . . . will be openly stigmatized as having failed the test . . .," which would violate confidentiality of test scores. Gibson met with attorney Michael Roberts last Thursday to discuss the court's decision and review options for future action. Gibson said he is considering filing a request for another hearing before the Supreme Court. Plaintiffs also will pursue a lawsuit pending in a Travis County district court, which they filed after the state education commissioner denied an administrative complaint, Gibson said. Should those avenues fail, Gibson said plaintiffs will consider filing a new lawsuit in state district court. The legality of the promotion policy itself has yet to be addressed in court through this lawsuit. "Sooner or later, WISD is going to have to address" whether the policy is legal, Gibson said. But Phil McCleery, WISD's attorney, said actions by courts and the Texas Legislature since the suit was filed serve as "strong evidence of the legality of the policy." A federal court in San Antonio last year ruled in another lawsuit that the state can require students to pass the TAAS before earning a high school diploma. The legislature last year adopted a more lenient promotion policy similar to WISD's that holds students accountable for TAAS scores at only three grade levels. McCleery also said the "success of the policy" should discourage anyone from filing a lawsuit against the district. In 1998, the first year the promotion policy was implemented, nearly 10.5 percent of first- through third-graders were retained. In 1999, scores rose significantly and retentions dropped to about 7 percent. WISD officials received scores from this year's TAAS test last week, but administrators said they will not know until later this month how many students will be retained. Technically, a portion of the original lawsuit remains pending in 74th District Judge Alan Mayfield's court in Waco. That portion of the test, which alleges WISD violated the Open Meetings Act by developing the promotion policy in illegal closed committee meetings of the WISD board, has not been addressed in court. Mayfield in May 1998 dismissed the portion of the lawsuit relative to last Thursday's Supreme Court hearing, saying he didn't have jurisdiction because administrative remedies had not been pursued, but left intact the portion of the suit involving the Open Meetings Act. Waco's 10th Court of Appeals later sent the case back to Mayfield's court for a temporary injunction hearing. Mayfield denied an injunction, then recused himself from further involvement in the case. WISD Superintendent Rosanne Stripling said last Thursday's court ruling ended the battle. "I'm very pleased that this issue has been resolved," Stripling said. "We felt that Judge Alan Mayfield's ruling was right, and this affirms it. We're glad this is over." (Cox News Service, May 11, 2000) WORLD ONLINE: Dutch Lawyer Alleges IPO Violates Dutch Regulation ---------------------------------------------------------------- Dutch lawyer Bob van der Goen, representing more than 1,000 shareholders of World Online International NV, has called a court hearing for Monday alleging World Online and its bank ABN Amro Holding NV violated Dutch securities regulation. According to a summons filed with the Amsterdam District Court, Van der Goen is leading a class-action suit alleging that World Online's IPO prospectus contained "incorrect or inadequate" which gave shareholders a "misleading impression" of the company. The suit alleges that the revelation after the listing of further details, such as that founder and chairwoman Nina Brink sold two-thirds of her stake in the company three months before the IPO at a price of 6.04 eur per share, contributed to a sharp drop in the World Online share price. In addition to more information on Brink's sale of shares, Van der Goen also hopes to hear more on her track record as an entrepreneur, with the summons noting that she worked in the management of five companies in Belgium, all of which eventually went bankrupt. The case also seeks information on ABN Amro's preparations for the IPO, Brink's relationship to World Online shareholders BayStar Capital LP, Reggeborgh Beheer BV, and Mallow Dale Corp; the lock-up restrictions for the IPO; the position of World Online supervisory board member Avram Miller; BayStar's sale of shares and Brink's financial past. Van der Goen is calling for World Online to publish the above information on its website, with a court-set penalty of 100,000 nfl for every day the company withholds the information. The information will serve as the basis for further legal action against ABN Amro and World Online. The claimants look for damages covering their losses on World Online shares and a court ruling deeming the IPO illegitimate and no longer valid. The Dutch shareholders association, the VEB, said that shareholders holding more than 3.25 mln World Online shares have filed complaints with the group. (AFX European Focus, May 12, 2000) ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *