CAR_Public/000519.MBX                  C L A S S   A C T I O N   R E P O R T E R

                  Friday, May 19, 2000, Vol. 2, No. 98

                                 Headlines

AMERICAN FAMILY: Blumenthal Announces $216,000 Sweepstakes Settlement
ASSICURAZIONI GENERALI: NY Ct Claims No Jurisdiction Despite Parent Co.
AVIS RENT: Appeals Ct Overturns Class Status for Jewish Customers
BERGEN, TRW: Co-Worker Cases Test Limits of Higgins Holding
CALIFORNIA: ACLU Sues over Schools for Poor and Minority Students

FEN-PHEN: AHP Announces It Will Proceed with Proposed Settlement
FORD MOTOR: PA Judge Denies Remand Motion in Transmission Defect Case
HOLOCAUST VICTIMS: Austria Will Start Examining Ways to Compensate Jews
IOMEGA CORP: Complaint over Zip Drives Goes on in DE; May Begin in TX
IOMEGA CORP: Securities Suit Dismissed in Central District Court of CA

JAMES WELLS: Krislov & Associates Obtains $13.7 Mil for IL
NORTHBRIDGE EARTHQUAKE: Secrecy of Insurance Settlements Comes to Light
NY BOARD: Board of Trade Sued for Using Member Funds to Cover Losses
REZULIN: Judicial Panel to Consider Centralizing Cases in CA or Ohio
SCHEIN HENRY: Faces 65 Product Liability Lawsuits, 45 Re Latex Gloves

SCHEIN HENRY: Sued in TX over Dental Practice Management Software
TIME WARNER: Tired of waiting for answers, Largo customer files suit
TOBACCO LITIGATION: Ads Targetting Youths May Violate Settlement
TOBACCO LITIGATION: Judge Denies Women's Claim On Utah's Money
TOBACCO LITIGATION: Punishment Not Capped at $250 Bil Payment to States

UPS: Faces Fraud Charges Over Insurance Policy; Full Refunds Demanded

                                  *********

AMERICAN FAMILY: Blumenthal Announces $216,000 Sweepstakes Settlement
---------------------------------------------------------------------
State officials announced a settlement Thursday that will prohibit a
sweepstakes promoter from using deceptive language, or so-called "winner
statements," in its mailings to Connecticut consumers. The agreement
with American Family Publishers includes the first court order in the
nation to enforce specific restrictions and provides $216,000 for
refunds, Attorney General Richard Blumenthal said.

"No longer will AFP be able to tell unsuspecting consumers that they are
winners," said Blumenthal, who announced the settlement with Consumer
Protection Commissioner James T. Fleming.

Blumenthal said the company has filed for bankruptcy but mailings have
continued.

Many senior citizens lost thousands of dollars buying magazines and
other merchandise they didn't want in the belief the purchases were
needed to win the offered prize money, Blumenthal said.

Consumers also will be eligible for refunds from a $30 million national,
class action settlement reached earlier. The AG's office has more than
500 complaints on file and officials suspect more than 20,000
Connecticut residents are eligible for refunds.

Blumenthal said anyone who feels they may have been duped is urged to
call his office for information on obtaining a refund.

The settlement was reached after the state filed a lawsuit against the
sweepstakes promoter that named TV personalities Ed McMahon and Dick
Clark, who acted as spokesmen for the sweepstakes. The settlement bars
AFP from using spokespersons to make representations about the
sweepstakes that do not comply with the terms of the agreement,
officials said.

As part of the court order, AFP will stop using solicitations containing
large bold headlines implying the recipient has won a grand prize, only
to be followed by smaller print of conditions. In the future, "winner
statements" may be used only if they do not contradict and are in the
same font and typeface as statements that follow, officials said.

The settlement also requires AFP to stop using the word "finalist"
unless in fact the recipient is a finalist. The sweepstakes promoter
also must display the odds of winning, information about possible
refunds and other relevant information in prominent print, officials
said.

Blumenthal vowed to continue pursuing similar lawsuits against other
sweepstakes promoters. Iowa announced a similar agreement Thursday. (The
Associated Press State & Local Wire, May 18, 2000)


ASSICURAZIONI GENERALI: NY Ct Claims No Jurisdiction Despite Parent Co.
-----------------------------------------------------------------------
The plaintiffs in two lawsuits have failed to make a prima facie case
that an insurance company wrongfully refused to pay insurance claims
arising from the deaths of policyholders or damage to their property
during the Holocaust. The U.S. District Court for the Southern District
of New York ruled that it had no jurisdiction because the company did
not do business in the United States. Cornell et al. v. Assicurazioni
Generali S.p.A., Consolidated et al., No. 97 Civ. 2262 (MBM); Winter et
al. v. Assicurazioni Generali S.p.A., Consolidated et al., No. 98 Civ.
9186 (MBM) (S.D.N.Y., Mar. 16, 2000).

The two cases were brought as class actions against over 20 European
insurance companies that issued policies from 1920 to 1945, including
Assicurazioni Generali S.p.A. Plaintiffs Marta Drucker Cornell and
Walter Winters alleged that the companies refused to pay benefits to
beneficiaries or their survivors, arising from the death of
policyholders or damage to their property during the Holocaust. The
defendant, Union des Assurances de Paris-Vie (UAP-Vie), sued as
successor-in-interest to another entity called L'Union, and moved to
dismiss the actions for lack of personal jurisdiction. The plaintiffs
opposed the motions.

Drucker and Winters argued that the U.S. District Court for the Southern
District of New York had jurisdiction over UAP-Vie pursuant to New York
Civil Practice Law and Rules (CPLR) @ 301 and the state's long-arm
statute, CPLR @ 302. Pursuant to CPLR @ 301, a New York court may
exercise jurisdiction over an out-of-state corporation that is doing
business "with a fair measure of permanence and continuity" in New York.

The plaintiffs stated that UAP-Vie participated in a "multinational
insurance arrangement" in New York, anddid business there. They also
argued that UAP-Vie had business relationships with several U.S.
companies.

Drucker and Winters asserted that UAP-Vie was part of a conglomerate,
the AXA-UAP Group, that had been established as a result of a 1997
merger between the UAP Group and the AXA Group. The plaintiffs contended
that the conglomerate was doing business in New York, and that their
contacts with the state could be attributed to UAP-Vie for the purposes
of Section 301.

The district court ruled that just because a company was part of a
larger conglomerate as a result of a merger does not mean it was
affected when the larger group did business in a specific state. The
AXA-UAP Group was the parent company, and UAP-Vie was its subsidiary.
The plaintiffs contended that the group solicited investments in New
York, but did not claim that those solicitations were connected in any
way to UAP-Vie. Additionally, although the plaintiffs maintained that
UAP-Vie and the UAP Group had directors in common prior to the merger,
the plaintiffs could not explain why the AXA-UAP Group's New York
contacts should be attributed to UAP-Vie on the basis of the
relationship that existed between the UAP Group andUAP-Vie before the
larger conglomerate was formed.

The plaintiffs also alleged under Section 302 that the AXA-UAP Group's
actions could be attributed to UAP-Vie because the conglomerate is
UAP-Vie's agent. To prove this, the plaintiffs needed to allege that the
group took actions in New York for the benefit of UAP-Vie. The
plaintiffs did not allege this. In addition, the plaintiffs could not
prove that the group and UAP-Vie were co-conspirators under Section
302(a). The plaintiffs were unable to make a prima facie case showing
that UAP-Vie was doing business in New York. Accordingly, the district
court granted UAP-Vie's motions to dismiss for lack of personal
judgment, and denied the plaintiffs' requests for jurisdictional
discovery.

The defendant was represented by Jeffrey Barist, Fred W. Reinke and
Aline Matta of Milbank, Tweed, Hadley & McCloy in New York. (Mergers &
Acquisitions Litigation Reporter, April 2000)


AVIS RENT: Appeals Ct Overturns Class Status for Jewish Customers
-----------------------------------------------------------------
A federal appeals court overturned an earlier ruling that granted
class-action status to a lawsuit alleging a years-long policy of
discrimination against Jewish customers at Avis Rent A Car Inc.

The lawsuit, first filed in March 1997, claims that from 1990 to 1995
the Garden City, N.Y., company systematically denied corporate-rental
contracts to Jewish customers. In February, the U.S. District Court in
Miami granted class-action status to the lawsuit.

But the U.S. Court of Appeals for the 11th Circuit reversed that
decision. In a ruling, the court cited the profoundly individualistic
nature of each plaintiffs claim for damages as a reason for denying
class-action status.

But in a footnote in the ruling, the court used harsh language to
condemn the request for class-action. There is nothing to be gained by
certifying this case as a class action ... except the blackmail value of
a class certification that can aid the plaintiffs in coercing the
defendants into a settlement, the justices wrote.

Avis lawyers said the ruling sets a significant precedent. Its a very
important decision because the improper use of the class-action device
can be very coercive for defendants, said Jonathan Lerner, a partner at
Skadden Arps Slate Meagher & Flom in New York. The court was unusually
direct in its ruling.

But the plaintiffs lawyers said they would seek a review of the decision
by the entire panel of the federal appeals court, and, if that was
denied, that they would appeal the decision to the U.S. Supreme Court.
(Broward Daily Business Review, May 18, 2000)


BERGEN, TRW: Co-Worker Cases Test Limits of Higgins Holding
-----------------------------------------------------------
Scarcely a year after the Supreme Court ruled that peer-to-peer
whistleblowers in the workplace are entitled to protection against
retaliatory discharge, two cases argued early this month force the
justices to sharpen the pencil.

The central issue in both cases is the extent to which the Conscientious
Employee Protection Act, N.J.S.A. 34:19-1 et seq., covers a worker who
discloses wrongful action by fellow employees or cooperates in an
investigation of them, even though direct harm to the public interest
may not be present.

In one case, DeLisa v. County of Bergen, A-74-99, a former investigator
who claims the Bergen County prosecutor fired him for cooperating in a
probe of other members of the office asked the Court to reinstate his
CEPA wrongful discharge suit, which had been dismissed at the trial
level.

In the other case, Roach v. TRW Inc., A-74-99, a former defense
contractor employee is asking the justices to reinstate a $920,000
verdict that was overturned by the Appellate Division. The plaintiff
claimed he was fired after disclosing that other employees were buying
office equipment from companies in which they had a financial interest.

In each case, the justices seemed interested in whether CEPA was being
stretched beyond what the Legislature intended, especially as to the
type of co-employees' activity complained of. "When the Legislature
enacted CEPA, it was designed to be a comprehensive and effective cause
of action," said Kevin Kiernan, who represents Peter DeLisa. "It is
remedial and should be liberally construed.

But Bergen County's lawyer disagreed sharply. "CEPA is not a complete
shield from complaining employees," said J.S. Lee Cohen, noting that the
Court in Higgins v. Pascack Valley Hospital, 158 N.J. 404 (1999), the
seminal peer-to-peer whistle-blower case, recognizes employers' ability
to fire at- will employees without cause.

DeLisa claims he was unjustly fired in 1995 because he cooperated in a
probe of two other investigators allegedly using their positions to
lease cars at a rate that would not be available to the average person.
The probe began under the tenure of Bergen County Prosecutor John Fahy,
a Democrat, but DeLisa was fired shortly after Fahy left for private
practice and Charles Buckley, a Republican, was named acting prosecutor.

Kiernan said DeLisa's case should be reinstated based on Higgins.
"(DeLisa) was not endorsing their behavior, he was giving information
about a crime," said Kiernan, a partner at Montclair's McDonough,
Kiernan & Campbell. "DeLisa was required to make a statement about the
activity."

The county's lawyer, Cohen, a partner at Teaneck's DeCotiis,
Fitzpatrick, Gluck, Hayden & Cole, said DeLisa was not fired for
cooperating in the investigation but for unrelated inappropriate
behavior, including quarrels with police departments in the county and
for giving false testimony in another criminal case. Cohen argued that
prosecutors should have the right to fire "at-will" employees without
cause. "Assistant prosecutors and investigators serve at the pleasure of
the prosecutor," Cohen said. "Are we supposed to tenure every
investigator?"

In the other CEPA case, TRW Inc. claims it fired Frank Roach, a former
marketing executive with the company's defense contracting subsidiary at
Fort Monmouth, along with several thousand other employees because of
cuts in defense spending.

Roach prevailed in his jury trial but the Appellate Division reversed
the award last year, finding that in order for an employee to be
protected by CEPA, he must have an objectively reasonable belief that
another employee's activity's are illegal or harmful to the company.
Here, the Appellate Division said, Roach did not. "The object of CEPA is
not to make lawyers out of conscientious employees," the Appellate
Division said.

Roach's lawyer, Linda Kenney, said Roach was acting in what he believed
to be a proper manner when he informed his superiors about his
co-workers' activities. "He had an objective belief that something was
wrong," said Kenney, a partner at Red Bank's Kenney, Schaer & Martin.
"Under the company's code of ethics, he was required to report the
activity." The result, she said, was a "whitewash" with the evidence of
the wrongdoing "swept under the rug."

Justice Peter Verniero noted that an increasing number of employees are
using CEPA after being fired by their employers, and asked Kenney
whether she believed CEPA was a hot topic among the state's workers.
"They are aware of employee rights," Kenney said. "Maybe not CEPA
itself, but there is an increasing sense that employees are becoming
more aware of their rights."

TRW's lawyer, Kenneth Kelly, said the mere act of reporting an alleged
wrongdoing does not automatically shield an employee from being fired.
"That was not what the Legislature meant" when it enacted CEPA, said
Kelly, a partner at Newark's Epstein, Becker & Green. Specific
applications of CEPA are still evolving, noted Kelly, and employees
should not be able to believe with confidence that if they fear they are
going to be fired -- either because of poor performance or job cuts --
they can protect their jobs by complaining about fellow workers. "TRW
was not harmed by any of this" alleged wrongdoing, Kelly said. "CEPA is
not concerned with minutia." (New Jersey Law Journal, May 8, 2000)


CALIFORNIA: ACLU Sues over Schools for Poor and Minority Students
-----------------------------------------------------------------
The American Civil Liberties Union has filed a class-action lawsuit
against California, claiming it has failed to provide the ''bare
necessities'' to a disproportionate number of poor and minority
students. The lawsuit alleges that disadvantaged students are being
taught at schools without adequately trained teachers and where rats
roam, ceiling tiles fall and there are broken toilets. ''The conditions
are so bad that if these schools were prisons they would be shut down,''
ACLU attorney Peter Eliasberg said Wednesday.

The ACLU claims that dilapidated schools house a disproportionate number
of poor and minority students, preventing them from having the same
opportunity to get a good education as their middle-class and white
counterparts. They are also far more likely to have uncredentialed
teachers, according to the plaintiffs.

The ACLU is suing to have the state fix the schools and provide enough
credentialed teachers at all schools. Attorneys also want the state to
set up an agency to then monitor schools to make sure they remain safe
and clean.

John Mockler, executive director of the State Board of Education, said
there are laws to ensure that schools are kept clean and safe, but no
agency to monitor them. Disparities between school facilities,
particularly those in the same district, depend primarily on local
districts, he said. ''That's a function of the distribution of funds,''
he said. ''It's a function of local management and of patterns of
attendance.''

California's constitution requires the state to make sure that schools
provide an equal chance for an education for all students, said
Catherine Lhamon, an attorney with the ACLU.

Mockler countered that neither the Board of Education nor the Department
of Education have the power to require school districts to spend money
evenly between schools. Only the Legislature could require that, he
said.

Students, parents and teachers spoke at Wednesday's news conference,
describing a lack of textbooks, lead pipes in drinking fountains and
entire schools without student access to bathrooms. Eli Williams, a
seventh grader at Luther Burbank Middle School in San Francisco, said he
stays away from the school gym because he is afraid of falling ceiling
tiles. ''I feel like I'm someone bad to go to a bad school like this. It
makes me feel like I'm doing something wrong,'' he said. (AP Online, May
18, 2000)


FEN-PHEN: AHP Announces It Will Proceed with Proposed Settlement
----------------------------------------------------------------
American Home Products Corp. (AHP) announced on April 18 that it will
proceed with its proposed $4.75 billion settlement of the more than
9,000 lawsuits that have been filed against it and other drug
manufacturers and distributors around the country. The company had
reserved the right to withdraw the settlement proposal if too many
plaintiffs opted out at the end of the notice period. In re Diet Drugs
(Phentermine, Fenfluramine, Dexfenfluramine) Products Liability
Litigation , MDL No. 1203; Brown et al. v. American Home Products Corp.
et al., Ind. No. 99-20593, objections filed (E.D. Pa., Apr. 18, 2000).

The company reported that more than 200,000 plaintiffs had registered
for the settlement, while only 45,000 had opted out after the four-month
initial opt-out period, which ended March 31, 2000. That figure
represents less than 1 percent of the estimated 5.8 million users of the
recalled diet drugs fenfluramine and dexfenfluramine. AHP, the fifth
largest pharmaceutical company in the United States, is the lead
defendant in virtually all of the lawsuits because it manufactured
fenfluramine under the brand name Pondimin and because it co-marketed
dexfenfluramine in the United States under the brand name Redux.

"The number of opt-outs is well within the expected range for a
nationwide settlement of this magnitude and the company is confident
that it can continue to manage this level of opt-outs," said Louis L.
Hoynes Jr., a senior vice president and general counsel for AHP.

"The number of serious cases remains small and we believe that vascular
surgery cases are in the hundreds as opposed to the thousands. Further
we estimate that there are fewer than 100 unresolved primary pulmonary
hypertension (PPH) cases, which are not included in the settlement
number," he said.

Hoynes singled out vascular surgery cases because they represent the
most serious heart valve disease cases; those that are so severe that
they have or will require valve replacement. The proposed settlement
would pay up to $1.5 million to a 24-year-old victim with severe heart
valve disease requiring valve replacement. The settlement amounts
decrease as the plaintiffs' ages increase.

PPH cases involve injuries so severe that the victims are expected to
die unless they can obtain transplants. PPH plaintiffs were excluded
from the proposed settlement and the company has been dealing with them
on a case by case basis as they come up for trial. AHP reportedly set
aside $500 million to cover damages in those suits.

According to one estimate, AHP has more than $9 billion in stockholder
equity and nearly $8 billion in current assets. It enjoys an annual cash
flow of more than $3 billion. The company's resources are so vast that
it was able to set aside the entire $4.75 billion reserve for the
settlement in the third quarter of 1999.

AHP revealed in recent regulatory filings that some 9,456 lawsuits have
been filed against it. Many of those are class actions or name multiple
plaintiffs.

During the notice period, several plaintiffs' attorneys representing
large numbers of clients said they would advise those clients who are
alleging that they were injured by the drugs to opt out, but that they
would advise those who have manifested no injuries and are seeking
medical monitoring costs from the company to remain in the settlement.

AHP, however, said it believes a substantial number of those who opted
out do not meet the criteria for an FDA positive level of valvular
regurgitation and do not have clinically significant disease. The FDA
positive standard requires, at a minimum, that the patient have mild or
greater aortic valve regurgitation and/or moderate or greater mitral
valve regurgitation. Regurgitation refers to the backflow of blood
through the valves.

The company said it expects that even among those with FDA positive
regurgitation, most will have only mild aortic regurgitation that is not
clinically significant.

More than half of the opt-outs have not filed suit, according to AHP, an
indication that they have weaker claims and may be subject to statute of
limitations defenses since the drugs were withdrawn from the market more
than two and a half years ago.

However, since March 31 the number of new lawsuits against AHP and other
diet drug defendants being filed in the federal courts or removed to
federal court from the state courts, has been averaging five to 10 per
day, according to a survey of CaseStream, an on-line federal case
reporting service. (Mass Tort Litigation Reporter, May 2000)


FORD MOTOR: PA Judge Denies Remand Motion in Transmission Defect Case
---------------------------------------------------------------------
U.S. District Judge Ronald J. Buckwalter of the Eastern District of
Pennsylvania has denied the motion of plaintiffs in a transmission
defect class action against Ford Motor Co. to remand the case to state
court. Werwinski et al. v. Ford Motor Co., No. 00-943 (E.D. Pa., Apr.
11, 2000). The judge said the minimum jurisdictional amount of $75,000
was met -- despite an estimated $2,000 to $3,000 per vehicle repair cost
-- since the plaintiffs are seeking trebled compensatory damages,
punitive damages, injunctive relief and attorneys' fees.

The plaintiffs contend that certain 1990-1995 Ford vehicles have
defective automatic transmissions, which cause erratic performance and
require premature repairs. The complaint asserts claims for breach of
express warranty, breach of the implied warranty of merchantability,
fraudulent concealment, and violation of state consumer protection
statutes.

The vehicles are the 1990-1995 Ford Taurus, the 1993-1993 Taurus SHO,
the 1990-1995 Mercury Sable, the 1990-1994 Lincoln Continental and the
1995 Ford Windstar. Plaintiffs contend that the transmissions have a
faulty trans-axle that fails at an unacceptable rate before the expected
80,000 miles of service. They say Ford used aluminum instead of steel in
the construction of the forward clutch piston and inadequately
lubricated the rear planetary gears. The cracking of the trans-axle
causes the vehicles to move erratically or come to a halt, often
creating a dangerous situation, the plaintiffs maintain.

The suit was filed in Pennsylvania state court and removed to the
federal court by Ford. The plaintiffs moved for remand arguing that
jurisdictional was not proper, because the amount in controversy did not
exceed the $75,000 federal court minimum.

Judge Buckwalter noted that in diversity-based class actions, class
members may not aggregate their claims in order to reach the requisite
amount in controversy. However, claims brought by a single plaintiff
against a single defendant can generally be aggregated, regardless of
whether the claims are related. In order to decide whether the
jurisdictional minimum amount has been met, the judge said, the court
must determine how much each plaintiff sought in the original complaint.

The parties agreed that repair costs would run from $2,000 to $3,000,
and that compensatory damages could be trebled under the state consumer
protection laws. Further, Ford argued that other factors would push the
amount in controversy over the $75,000 mark: additional costs included
in calculating the value of compensatory damages, punitive damages and
injunctive relief.

Judge Buckwalter said that under the state consumer law, the amount in
controversy is the purchase price of the car, because a jury might
reasonably conclude that buyers could only be made whole by a full
refund. If fraud was found, those damages could be trebled; thus, a
$15,000 purchase price would result in a $45,000 claim. Collateral
charges, out-of-pocket costs and attorneys' fees could also be added.

This would still put the amount in controversy below $75,000 per
plaintiff, the judge noted. However, "the Plaintiff has alleged facts
that suggest punitive damages might be available, and both parties
believe that the awarding of such damages are a possibility," the
opinion states. "In this case, punitive damages would only have to be
about half of the possible compensatory damages in order to exceed the
$75,000 threshold."

Ford is represented by Dylan J. Walker and Robert Toland II of Cabaniss,
Conroy & McDonald in Wayne, Pa. The plaintiffs are represented by Joseph
C. Kohn, Martin J. D'Urso and David J. Cohen of Swift, Kohn & Graf in
Philadelphia; Donald F. Clarke of Devon, Pa., and Isaac H. Green of
Philadelphia.  (Mass Tort Litigation Reporter, May 2000)


HOLOCAUST VICTIMS: Austria Will Start Examining Ways to Compensate Jews
-----------------------------------------------------------------------
Chancellor Wolfgang Schuessel on Thursday said Austria will start
examining ways to compensate Jews stripped of property under the Nazis.
Schuessel made the pledge on state radio a day after U.S. Deputy
Treasury Secretary Stuart E. Eizenstat urged Austria to set up a fund to
deal with claims of Jews forced to hand over houses, businesses and
other property as part of what the Nazis called ''aryanization.''

The chancellor had previously said that most aryanization claims had
been covered under existing laws passed after the end of World War II.
But on Thursday, he announced the appointment of diplomat Ernst
Sucharipa as a ''negotiating partner'' on outstanding claims.

The Austria Press Agency cited Schuessel as saying that he was hoping
for ''very quick'' work on compensating those who still had valid
claims. But before formal negotiations on ways to meet such claims
begin, Schuessel said that a panel of historians examining the Nazis
aryanization campaign must put ''facts on the table'' to create a
framework for compensation.

Schuessel spoke a day after Austria announced the broad outlines of a
separate fund, meant to compensate those forced into labor under the
Nazis. Agreement was reached on payments ranging from between 20,000
schillings ($ 1,311) to 105,000 schillings ($ 6,884) to the estimated
150,000 surviving victims of forced labor.

So-called ''slave-laborers'' those forced to work in Nazi concentration
camps, many of them Jews would be eligible for the highest payment,
while others pressed into work on farms would receive the lowest. Others
forced to work in factories would be eligible for payments of 35,000
schillings ($ 2,295). In addition, women who gave birth while in Austria
for forced labor would receive 5,000 schillings ($ 328), while children
up to age 12 who accompanied parents can claim the same amount their
parents are eligible for.

The fund about 6 billion schillings ($ 393,400,000) would be paid for by
the Austrian government and companies that benefited from forced labor
under the Nazis, said participants.

Political leaders first began acknowledging in the 1980s that Austria
was not only a victim but also a perpetrator during the Nazi era. The
discussion about how Austrians deal with their country's past has
increased in recent months, in part because of the prominence of the
far-right Freedom Party in government

Participating in government since February, the party, under Joerg
Haider, gained a reputation for anti-foreigner sentiment and Haider
himself was condemned for several statements praising the Nazi era. The
14 other European Union nations have imposed sanctions on fellow E.U.
member Austria to show their opposition to the Freedom Party's
government role.

Schuessel on Thursday stressed that he had discussed the idea of a new
fund to compensate ''aryanization'' victims with his deputy, Susanne
Riess-Passer of the Freedom Party. Eizenstat, in Vienna to co-chair an
international conference with Austria on setting up the forced labor
fund, on Wednesday had urged quick Austrian action on creating a
separate fund to compensate others stripped of property under the Nazis.

U.S. lawyers have filed a class-action suit against Austria in a New
York City Court seeking restitution of property stolen from Jews and
other Holocaust victims. (AP Worldstream, May 18, 2000)


IOMEGA CORP: Complaint over Zip Drives Goes on in DE; May Begin in TX
---------------------------------------------------------------------
On September 10, 1998, a purported class action lawsuit, Rinaldi et al.
v. Iomega Corporation, was filed against the Company in the Superior
Court of Delaware, New Castle County. The suit alleges that a defect in
the Company's Zip drives causes an abnormal clicking noise that may
indicate damage to the Zip drive or disks. The plaintiffs sought relief
pursuant to claims of breach of warranty, violation of the Delaware
Consumer Fraud Act, and negligent design, manufacture and failure to
warn.

On September 3, 1999, the Court dismissed the claims of breach of
warranty and violation of the Consumer Fraud Act, granting the
plaintiffs the opportunity to amend the latter claim. On January 31,
2000, the plaintiffs filed an amended complaint, reasserting their claim
under the Delaware Consumer Fraud Act and on February 28, 2000, the
Company moved to dismiss this amended claim. With respect to this
motion, on April 10, 2000, the Attorney General of the State of Delaware
filed a brief in opposition. The Court has not yet decided the motion.

On April 25, 2000, the plaintiffs moved to further amend their complaint
to add an additional plaintiff who is a Delaware resident. The Company
has opposed that motion which has not yet been decided.

In connection with the same matter, on February 28, 2000, two of the
plaintiffs served on the Company a "Notice of Claim" under Section
17.46(b) of the Texas Deceptive Trade Practices Act asserting
allegations similar to those made in connection with the plaintiffs'
Delaware Consumer Fraud Act claim. The Texas Claim purports to be on
behalf of the two plaintiffs and a class of others similarly situated in
the State of Texas, and demands relief of $150 for each Zip drive
purchased by a class member, $100 for mental anguish damages to each
class member and attorneys' fees and costs. Formal litigation in
connection with the Texas Claim has not been commenced.


IOMEGA CORP: Securities Suit Dismissed in Central District Court of CA
----------------------------------------------------------------------
On May 27, 1998, Scott D. Ora filed a complaint against the Company and
other parties. The action, captioned Ora v. Iomega Corporation, et al.,
was filed in Superior Court of the State of California for the County of
Los Angeles and alleged that the Company and certain of its former
officers violated certain federal and state securities laws and alleged
that Kim B. Edwards, former Chief Executive Officer and director of the
Company, breached his duties as a director of the Company. The Company
successfully removed the action to the United State District Court for
the Central District of California.

On February 9, 1999, the Court dismissed five of the complaints original
seven causes of action. On August 18, 1999, the Court dismissed the
remaining two causes of action, but gave Ora the opportunity to file an
amended complaint with respect to those two counts. On November 1, 1999,
Ora filed an amended complaint repleading the two causes of action
dismissed on August 18, 1999 and bringing two new related conspiracy
causes of action. The amended complaint seeks an unspecified amount of
damages. On December 15, 1999, the Company and the individual defendants
filed a motion to dismiss the amended complaint. On April 12, 2000, the
Court dismissed the amended complaint in its entirety, entering
judgement in the Company's favor. The plaintiff has thirty days from the
entry of judgment in which to request an appeal of the Court's decision.
The Company intends to defend vigorously against this suit should there
be an appeal.


JAMES WELLS: Krislov & Associates Obtains $13.7 Mil for IL
----------------------------------------------------------
The following statement was issued May 18 by the law firm of Krislov &
Associates, Ltd.

In an opinion issued May 12, 2000, Chicago federal district judge John
A. Nordberg awarded judgment for the State of Illinois against James E.
Wells, the imprisoned former operator of the Cosmopolitan Bank in
Chicago, who engineered a scheme by which the bank loaned over $2
million to former State Treasurer Jerry Cosentino and Cosentino's
trucking company, and Cosentino deposited tens of millions of dollars in
State moneys in the bank, much of it in interest-free deposits, by which
the state lost an estimated $1.75 million in interest during the period
of the noninterest deposits, 1987 through 1991. Brought current, trebled
and increased by attorneys' fees under the federal Civil RICO statute,
the total judgment entered is $13,724,036.38.

Clint Krislov, the attorney who initiated the case in August 1990 as a
taxpayer action when state officials failed to act, and carried it
single-handedly for nearly ten years so far, stated: "We are pleased to
have won this judgment for the people of the State of Illinois. This
underscores the need for whistle-blower and other qui-tam type actions,
by which taxpayers can root out governmental fraud and mismanagement,
when public officials fail to take action. "Our efforts will now shift
to the search for Mr. Wells' assets to satisfy the judgment. We hope
that the State will join us in this pursuit, for the benefit of all the
people of Illinois."

Krislov, a public interest attorney, who focuses in class action and
whistleblower cases, previously a candidate for Illinois Attorney
General, obtained previous partial settlements in the case against other
alleged participants in the scheme, also advised that there is presently
pending before the federal court of appeals, awaiting decision under the
federal Civil RICO provisions, the same claim against another
participant, who allegedly served as a conduit for the loans to
Cosentino.

Contact: Clint Krislov of Krislov & Associates, Ltd., 312-606-0500, fax,
312-606-0207, or email, clint@Krislovlaw.com


NORTHBRIDGE EARTHQUAKE: Secrecy of Insurance Settlements Comes to Light
-----------------------------------------------------------------------
Quite aside from Chuck Quackenbush, the insurance-buying public
certainly had every right to expect that the private institutions
dealing with the Northridge earthquake's aftermath--the insurers and the
trial lawyers, particularly--would behave properly.

The secrecy of settlements that ran into billions of dollars, primarily
demanded by the insurers but accepted without a peep by the lawyers,
helped keep the truth from emerging for a long time.

At the state Senate hearing in Granada Hills some witnesses refused to
give their names for fear the insurers would come after them for
violating the confidentiality of their settlements. But now, in the
midst of scandal, the truth is coming out.

What has come to be known about the role of 20th Century (now renamed
21st Century) Insurance Co. is especially pertinent. This company had
the misfortune of having its earthquake insurance policies concentrated
in the very area where the quake occurred. Its payouts, now reported at
$ 1.1 billion, were so heavy that the company nearly went under. So it
was under pressure, but this does not excuse its poor adjusting of
claims, vastly understating damage at the outset, and its maneuvers to
keep its policyholders from asserting their claims when the full scope
of their losses became evident.

Trial attorney Glenn Kantor testified how, when homeowners found they
had more damage than 20th Century adjusters had said, they called for
new inspections. The company sent out new adjusters, who often vastly
increased damage estimates and reported back to the company, which then
sent letters out to about 1,000 of the policyholders saying, too bad,
you have all this damage, but it's too late to file a claim.

Kantor noted that about 200 of the policyholders didn't accept this, and
contacted lawyers. Virtually all of these insureds later received
sizable settlements from 20th Century, although the amounts have been
kept secret. The other 800, accepting the company's word that it was too
late, did nothing and got nothing more. On Monday, Kantor and his
partner, Daniel Gruber, asked Los Angeles Judge Marvin Lager for
permission to bring a class action suit reopening those cases.

Lager was dubious, but reserved a decision, pending possible state
Supreme Court or legislative action that could have bearing on whether
it's really too late. This is a powerful lesson to consumers: Don't
necessarily believe it when an insurance company tells you that you have
no remedy. Consult a lawyer to be sure you don't.

The cases brought against 20th Century were greatly aided when a former
high company executive, Paul Castellani, forced into retiring a year
after Northridge, gave numerous documents he had taken with him to
plaintiffs' lawyers. The company later sued Castellani and got a
restraining order instructing him not to give out any more of the
documents, but this had all the effect of locking the barn door, as one
lawyer said, when the horse was already several miles down the road.

In a move that has generated much talk among other lawyers, 20th Century
settled all the cases brought by David Prestholt, the attorney with the
most success representing earthquake victims against it, and then hired
Prestholt as a consultant, ending any threat he would bring new suits.
Ric Hill, a company spokesman, confirming that Prestholt "is a
consultant to us," said he obviously had to finish all his preexisting
cases or fall afoul of a conflict of interest. "Part of our interest . .
. is trying to understand the concerns of customers, and often the
opposing counsel or investigators can help us understand ways that we
can improve," Hill said.

Robert Fellmeth of the University of San Diego's Center for Public
Interest Law rejoined, "Give me a break. Pay the claims; that's how a
company can improve." Fellmeth also questioned the propriety of
Prestholt's change of sides. It is sometimes hard to know that a case is
definitely over, and given attorney-client privilege, he said,
Prestholt's former clients are "entitled to fidelity."

But Erwin Chemerinsky, a USC Law School expert on ethics, said he felt
that if Prestholt "had wound up all his cases and wanted to change
sides, there's no problem. . . . It's simply that he can't work for both
sides at once."

Meanwhile, Dan Dunmoyer, an industry lobbyist in Sacramento, recently
said that, since the beginning of 1996, two years after the quake
occurred, insurer payouts for Northridge have increased by $ 2.8
billion, from $ 12.5 to $ 15.3 billion. Much of this had to be
settlements of various kinds, although no one outside can say how much
resulted from actual litigation. (Los Angeles Times, May 18, 2000)


NY BOARD: Board of Trade Sued for Using Member Funds to Cover Losses
--------------------------------------------------------------------
The New York Mercantile Exchange said that it had filed suit against the
New York Board of Trade to prevent it from using member funds to cover
trading losses sustained by another member.

The class-action suit, filed in the Federal District Court in New York,
seeks to prevent the New York Board of Trade from using member funds on
deposit with Klein & Company Futures, the clearing member, to meet
margin requirements resulting from losses sustained in trading on the
New York Futures Exchange, a division of the board of trade. "As an
exchange and a clearing organization, we are particularly disturbed to
see other such organizations threaten to seize identifiable funds of
individual customers to satisfy the obligations of a separate customer,"
R. Patrick Thompson, president of the mercantile exchange, said in a
statement.

Nymex was joined in the suit by 15 of its members that are customers of
Klein & Company, which was suspended by the board of trade after it
failed to meet the minimum $2 million capital required for a clearing
member. The suspension resulted from customer losses in trading stock
index options on the futures exchange, the exchange said.

The New York Board of Trade used funds of other members on deposit with
Klein & Company to meet margin requirements resulting from the loss, a
Nymex spokeswoman, Nachamah Jacobovits, said.

Margins are payments traders must make to ensure their obligations are
met. When losses mount on a trading account, a trader may be required by
a clearing member to make additional payments in a "margin call."
Clearing members help ensure the settlement of trades. The money should
have been provided by the New York Clearing Corporation's "guarantee
fund, which is intended for such purposes," Mr. Thompson said. "These
actions not only impact traders who cleared through Klein & Company at
our exchange," he said, "but taint the image and integrity of the entire
futures industry." (The New York Times, May 18, 2000)


REZULIN: Judicial Panel to Consider Centralizing Cases in CA or Ohio
--------------------------------------------------------------------
The Judicial Panel on Multidistrict Litigation (JPML) will hold a
hearing on May 19 to consider two petitions seeking the transfer of
federal Rezulin actions to either the Central District of California or
to the Southern or Northern District of Ohio. In re Rezulin Products
Liability Litigation, MDL No. 1348, notice of hearing (J.P.M.L., Apr.
12, 2000).

Numerous class-action and individual lawsuits have been filed in several
federal courts alleging liver damage and death resulting from ingestion
of Rezulin, Warner-Lambert's Type II diabetes drug.

Attorneys for Amparo Magdalena filed their petition for centralization
on March 29, 2000. Magdalena sued Warner-Lambert Co. and its Parke-Davis
division in the U.S. District Court for the Central District of
California the day before.

Janet G. Abaray, David L. Suggs, Ramon R. Lopez and John M. Restaino
Jr., of Lopez, Hodes, Restraino, Milman, Skikos & Polos in West Chester,
Ohio, argue in their petition that transfer of the federal actions to
one forum will promote convenience, justice and efficiency.
Centralization will prevent an undue imposition upon witnesses by
avoiding duplicative discovery requests, the attorneys state.

The complaints allege common issues of fact involving the defendants'
purported negligence and strict liability in marketing and manufacturing
Rezulin, they point out. All plaintiffs further contend that the
defendants acted intentionally in misrepresenting the drug's safety,
according to the petition.

Magdalena's attorneys seek transfer of the cases to the U.S. District
Court for the Central District of California or to the Southern District
of Ohio where another Rezulin products liability case is pending. The
attorneys advise the JPML that the federal judges of the Central
District of California are experienced in managing complex litigation.
They also recommend U.S. District Judge Sandra S. Beckwith of the
Southern District of Ohio. Magdalena's counsel further attempt to
dissuade the JPML from centralizing the litigation in the U.S. District
Court for the District of New Jersey, where the defendants are
headquartered. The attorneys argue that transfer to a forum where the
plaintiff resides "recognizes the keen interest that the plaintiffs have
in directing their own litigation and will permit the named plaintiffs
to remain active in the prosecution of their claim."

A second petition for centralization was filed by attorneys for the
plaintiffs in two class actions, Jones v. Warner- Lambert Co., No.
00cv798 (N.D. Ala.), and Huston et al. v. Warner-Lambert Co. et al. ,
No. 00cv856 (N.D. Ohio). The Huston and Jones attorneys urge the JPML to
transfer the cases to the Northern District of Ohio because the actions
are brought on behalf of a nationwide class of consumers. A central
location that is not a congested metropolitan area is most convenient
for the majority of counsel, they claim.

The attorneys specifically recommend centralization before U.S. District
Judge Patricia A. Gaughan of the Northern District of Ohio.
Alternatively, they suggest the litigation be transferred to the
Northern District of Alabama. (Mass Tort Litigation Reporter, May 2000)


SCHEIN HENRY: Faces 65 Product Liability Lawsuits, 45 Re Latex Gloves
---------------------------------------------------------------------
Schein Henry tells investors it is named as a defendant in products
liability cases as a result of its distribution of pharmaceutical and
other healthcare products. As of the end of the Company's first fiscal
quarter of 2000 the Company was named a defendant in approximately
sixty-five such cases. Of these product liability claims, forty-five
involve claims made by healthcare workers who claim allergic reaction
relating to exposure to latex gloves. In these cases, the Company acted
as a distributor of both brand name and/or "Henry Schein" private brand
latex gloves, which were manufactured by third parties.

To date, discovery in these cases has generally been limited to product
identification issues. The manufacturers in these cases have withheld
indemnification of the Company pending product identification; however,
the Company is taking steps to implead those manufacturers into each
case in which the Company is a defendant. The Company is also a named
defendant in nine lawsuits involving the sale of phentermine and
fenfluramin. Plaintiffs in the case allege injuries from the combined
use of the drugs known as "Phen/fen". The Company expects to obtain
indemnification from the manufacturers of these products, although this
is dependent upon the financial viability of the manufacturer and
insurer.


SCHEIN HENRY: Sued in TX over Dental Practice Management Software
-----------------------------------------------------------------
In Texas District Court, Travis County, the Company, and one of its
subsidiaries, are defendants in a matter entitled Shelly E. Stromboe &
Jeanne N. Taylor, on Behalf of Themselves and All Other Similarly
Situated vs. Henry Schein, Inc., Easy Dental Systems, Inc. and
Dentisoft, Inc. Case No. 98-00886. This complaint alleges among other
things, negligence, breach of contract, fraud, and violations of certain
Texas Commercial Statutes involving the sale of certain practice
management software products sold prior to 1998 under the Easy Dental
name. In October 1999, the Court, on motion, certified both a Windows
Sub-Class and a DOS Sub-Class to proceed as a class action pursuant to
Tex. R.Civ. P.42. It is estimated that 5,000 Windows customers and
15,000 DOS customers could be covered by the judge's ruling. The Company
has filed an appeal of the Court's determination, during which time a
trial on the merits is stayed. The Company intends to vigorously defend
itself against this claim, as well as all other claims, suits and
complaints.

The Company assures investors it has various insurance policies,
including product liability insurance covering risks and in amounts it
considers adequate. In many cases the Company is provided by
indemnification by the manufacturer of the product. There can be no
assurance that the coverage maintained by the Company is sufficient to
cover all future claims or will be available in adequate amounts or at a
reasonable cost, or that indemnification agreements will provide
adequate protection for the Company. The Company intends to vigorously
defend all such claims, suits and complaints.


TIME WARNER: Tired of waiting for answers, Largo customer files suit
--------------------------------------------------------------------
A Largo man says Time Warner is charging him for services he didn't want
and items he doesn't need. When Joseph DeSanto got fed up with the cable
company, he didn't just yank out the cable and hook up an old rabbit-ear
antenna. He sued. "I am very angry with Time Warner," said DeSanto, who
thinks the Tampa Bay area's largest cable provider hits its customers
with unnecessary charges. So the 30-year-old retail project manager from
Largo filed a suit seeking class-action status against the media giant
in Pinellas County Circuit Court.

Jeff McQuinn, who heads Time Warner Cable's division office in Tampa,
said, "We cannot understand why anyone would have anything against our
pricing structure. The company offers as many channels as any other
place in the nation and at some of the lowest rates."

DeSanto became a customer of Time Warner Cable in 1996. Ever since, he
has been puzzled by a one-dollar "Time Guard" service on his monthly
cable bill, which he said he had never ordered. "Every time I called,"
DeSanto said, "they gave me a different answer." Time Warner said
customers purchase Time Guard to receive cable repairs whenever needed
for free.

Late last year, when DeSanto dropped premium channels such as HBO, he
discovered the cable boxes that sat on top of the TV sets were no longer
necessary. But he said he was still being charged $ 3 a month for each
box. DeSanto also complains that Time Warner ads for special rates on
the premium channels don't reveal that they require the cable boxes,
with their extra fees.

At the suggestion of a friend, DeSanto approached lawyers at the firm of
Staack, Simms and Hernandez. DeSanto insists it's not overkill to make a
court case out of a cable bill. "It's not a lot of money, but it's like
a death of a thousand cuts," De Santo said of the cable charges. "Ten
dollars here, $ 10 there, over the months, years, and think about how
many customers they have. It's a lot of money."

James Staack, the lawyer at the firm handling the case, said he did not
know how many Time Warner customers nationwide might be eligible to join
in if a judge certifies DeSanto's complaint as worthy of class action.
"At this stage, it's only guesswork," said Staack, whose firm could
stand to win a share of a successful case."But I would think it's
thousands and thousands and thousands of people. A very large number."

James Wood, who investigates consumer complaints for Pinellas County,
said in the past five years, 17 complaints were filed against Time
Warner with two-thirds of the complaints taken care of by the company
promptly. The company has more than 300,000 cable customers in Pinellas.
"That's a pretty good record considering the hundreds and thousands of
customers they have," Wood said.

Frank Turano, the cable franchise administrator in Hillsborough County,
where Time Warner has about 240,000 cable customers, said the real
problem may be customer service. "Their customer service representatives
are often incapable of explaining things adequately, which often
aggravates the problem and leaves people with the impression that Time
Warner does not care," he said. "I think it's a communication problem, a
training problem. Their turnover rate is too high. If your job is to
handle people's complaints, no one wants to stay at the job for too
long." (St. Petersburg Times, May 18, 2000)


TOBACCO LITIGATION: Ads Targetting Youths May Violate Settlement
----------------------------------------------------------------
Cigarette makers have increased advertising in magazines with large teen
readerships since 1998, when they agreed in a court settlement not to
target youths in their ads, according to two studies released Wednesday.
State officials who took part in the $ 206 billion settlement two years
ago said the findings show tobacco companies may be violating the
settlement terms.

Attorneys general from around the country are in the "discovery" phase
of an investigation into cigarette advertising placements, according to
Washington Attorney General Christine Gregoire.

Cigarette makers said the studies were misleading. One of the studies
was by the Massachusetts Department of Public Health and the other was
by the American Legacy Foundation, a nonprofit group funded by the
settlement. One section of the 1998 agreement forbids tobacco companies
from "targeting" people under 18. (St. Louis Post-Dispatch, May 18,
2000)


TOBACCO LITIGATION: Judge Denies Women's Claim On Utah's Money
--------------------------------------------------------------
A federal judge has refused to allow two women injured by smoking to get
a piece of the state's $1 billion tobacco settlement.

Linda Villagrana and Renee Masich say the state originally filed its
lawsuit against the tobacco companies to recover Medicaid funds spent to
treat people like them. They wanted to stop the state from spending its
money until their case was resolved. Yet U.S. District Judge Dee Benson
decided Wednesday to prevent Villagrana and Masich from interfering with
the state settlement. "The state will view it as a victory," said Salt
Lake City lawyer Brent Hatch, who represented the two women. "And in a
sense it is ... but it is a very preliminary round."

Attorney General Jan Graham, who negotiated the settlement on behalf of
the state, said Benson agreed with the state's argument that the claim
came too late and targeted the wrong party. "This was an attempt to
share in a victory in which these attorneys had no part in earning," she
said, adding that she would support Villagrana and Masich if they sue
the tobacco companies directly.

Roughly $9 million of Utah's settlement being held in escrow because of
this lawsuit and another filed by attorneys seeking more money for
helping the state with its case. The money will be held until that case
is settled.

The actual Medicaid expenses amount to about $900 million. The women say
they deserve a portion of the remainder of the $1 billion settlement
because the case had been won on their behalf.

The state has argued that its lawsuit, filed in 1996, did not only
pertain to the harm suffered by tobacco users served by Medicaid, but
also included other claims, such as consumer fraud and civil conspiracy.

Hatch, the son of U.S. Sen. Orrin Hatch, said he will probably make some
changes to the lawsuit and refile it, possibly in state court. He also
wants to bring a class-action lawsuit covering many smokers, and has
said that more than 50 Utah residents have asked to be included. (The
Associated Press State & Local Wire, May 18, 2000)


TOBACCO LITIGATION: Punishment Not Capped at $250 Bil Payment to States
-----------------------------------------------------------------------
According to news from Miami, Florida by The News and Oberser, cigarette
makers cannot tell a jury considering punitive damages for sick Florida
smokers that the $ 250 billion they agreed to pay to states was
sufficient punishment, a judge ruled Wednesday.

"You didn't get punished by any other case. You capitulated, and that's
another matter," said Judge Robert Kaye. "You were not forced by court
action in the law to pay against your will."

The jury already has ruled the industry conspired to produce a deadly
product and awarded $ 12.7 million in damages to three smokers serving
as representatives of an estimated 500,000 smokers covered by the
class-action suit. Now, the jury must decide whether to award punitive
damages to punish the companies for their conduct. (The News and
Observer (Raleigh, NC), May 18, 2000)


UPS: Faces Fraud Charges Over Insurance Policy; Full Refunds Demanded
---------------------------------------------------------------------
Customers who paid billions of dollars to insure United Parcel Service
packages deserve a full refund, say class-action suits filed in Michigan
and seven other states. In cases that largely could boil down to
semantics, attorneys are accusing the shipping titan of bilking
customers $1 or $2 at a time for 15 years with questionable insurance
policies on packages.

In a class-action suit filed on behalf of his wife, Mary Ellen O'Bryan,
and thousands of other Michigan customers, Birmingham attorney Dennis
O'Bryan charged UPS with fraud, violating the Michigan Consumer
Protection Act and false representation. "For years, UPS represented to
customers that they were purchasing insurance, but none was ever
purchased," said Philip Bohrer, a Baton Rogue, La., lawyer and an
associate of O'Bryan. "UPS would work with customers if they ever filed
a claim. They paid some, but didn't pay others. In fact, the company
never had a license or legally sold anyone insurance."

UPS, however, stands by its insurance practices -- and the service and
security it provides to customers. "The argument is ridiculous on its
face," said Norman Black, a UPS spokesman. "The fact is there is no one
anywhere who offers a better bargain on insurance to our customers. And
the claims were always paid."

The stampede of suits follows a U.S. Tax Court ruling last year that
concluded UPS set up a "sham transaction" involving offshore insurance
company as a tax shield. The ruling may cost the Atlanta-base company as
much as $2.4 billion in back taxes and penalties. No one can say for
sure how much is at stake, but the litigation could take years and
result in small payouts to customers and windfalls for attorneys.

The Oakland County Circuit Court suit follows cases filed in Ohio,
Colorado, California, Louisiana, Arizona, Pennsylvania and New York.

The Tax Court ruling cited UPS for establishing a Bermuda subsidiary in
1984 to provide reinsurance -- as a way of spreading risk -- on packages
worth more than $100.

The company, Overseas Partners Ltd., was wholly owned by UPS
shareholders and declared a tax shelter.

UPS is appealing the ruling, but O'Bryan and the others interpret it to
mean UPS never had any legal right to sell insurance and thus defrauded
anyone who bought it -- even if claims were paid and customers never
knew the difference. Black said UPS "followed the letter and spirit of
the law" when it spun off Overseas Partners to avoid the tangled mess of
state-by-state insurance regulation.

The Bermuda company was independent, even though customers bought the
insurance at UPS offices, Black said. He said its rate of 25 cents for
every $100 in value is the lowest in the industry. The corporate shift
didn't affect customers in the least, Black said.

But UPS has set aside $1.8 billion in escrow at the Internal Revenue
Service pending the appeal -- and now is offering its own insurance.
(The Detroit News, May 18, 2000)


                              *********


S U B S C R I P T I O N  I N F O R M A T I O N

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc.,
Washington, DC. Theresa Cheuk, Managing Editor.

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

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