CAR_Public/000526.MBX                  C L A S S   A C T I O N   R E P O R T E R

                  Friday, May 26, 2000, Vol. 2, No. 103

                                 Headlines

ALTIVA FINANCIAL: Interlocutory Appeal against Borrowers' Suit Pending
ALTIVA FINANCIAL: Resolves Securities Suit in Georgia
BANK PLUS: Court Orders Further Proceedings on Complaint on Stock Fraud
BOEING CO.: McDonnell Douglas Investors Included in Securities Suit
CAPSTEAD MORTGAGE: To Respond to Securities Suits Filed 1998

FINOVA GROUP: Harvey Greenfield Files Securities Suit in Arizona
FLIR SYSTEMS: Fires CEO Amidst Accounting Errors, Suits, Falling Prices
FORD MOTOR: Ontario Ct OKs Dealers Suit over Lincoln Mercury Conversion
GTE CORPORATION: Harvey Greenfield Files Securities Suit in New York
GUN MAKERS: MI Passes Bill Requiring Sale to Go with Trigger Locks

HMO: California Medical Association Files Suit under Fed. RICO Statute
HOLOCAUST VICTIMS: Italian Insurer Assicurazioni Generali Sued in CA
KITTY HAWK: Wolf Haldenstein Files Securities Suit in Texas
MCI WORLDCOM: Denied Motion to Dismiss Lawsuit over SkyTel Acquisition
METRIS AND DIRECT: Cardholder Files Consumer Protection Lawsuit

MOHAWK INDUSTRIES: Purchasers Sue In GA and CA over Antitrust Issue
NORTHBRIDGE EARTHQUAKE: CA Senate Bill for Re-opening Insurance Claims
OSICOM TECHNOLOGIES: Vigorously Defending Securities Suit in CA
PACIFIC GATEWAY: The Pomerantz Firm Files Securities Lawsuit
PE CORPORATION: Barrack Rodos Files Securities Suit in Connecticut

PERFORMANCE TECHNOLOGIES: Abbey, Gardy Files Securities Lawsuit in NY
SEROLOGICALS CORP: Finkelstein, Thompson Files Securities Suit in GA
TOBACCO LITIGATION: About 300,000 FL Deaths in 1990s Said to Be Related
UNION OF NEEDLETRADES: Ct Rejects Workers' Appeal Re Misrepresentation

                                   *********

ALTIVA FINANCIAL: Interlocutory Appeal against Borrowers' Suit Pending
----------------------------------------------------------------------
On October 2, 1998, an action was filed in the United States District
Court for the Western Division of Tennessee by Traci Parris, as a
purported class action suit against Mortgage Lenders Association Inc.,
Altiva Financial Corp. and City Mortgage Services, Inc., one of the
Company's strategic partners.

The complaint alleges, among other things, that the defendants charged
interest rates, origination fees and loan brokerage commissions in
excess of those allowed by law. The named plaintiff seeks to represent a
class of borrowers and seeks damages in an unspecified amount, reform or
nullification of loan agreements, injunction, costs, attorney's fees and
such other relief as the court may deem just and proper.

On October 27, 1998, the Company filed a motion to dismiss the complaint
for lack of jurisdiction, which the court denied on May 18, 1999. On
July 6, 1999, the court denied the Company's subsequent motion for
reconsideration, and on the same date granted the Company's request for
interlocutory appeal to the United States Court of Appeals for the Sixth
Circuit on the question of jurisdiction. On July 15, 1999, the Company
filed an interlocutory appeal to the Court of Appeals. On September 28,
1999, the Court of Appeals agreed to accept the Company's interlocutory
appeal on the jurisdictional question, and docketed the appeal. That
interlocutory appeal is still pending. The Company believes it has
meritorious defenses to this lawsuit and that resolution of this matter
will not result in a material adverse effect on the business of
financial condition of the Company.


ALTIVA FINANCIAL: Resolves Securities Suit in Georgia
------------------------------------------------------
On February 23, 1998, an action was filed in the United States District
Court for the Northern District of Georgia by Robert J. Feeney, as a
purported class action against Altiva Financial Corp. and Jeffrey S.
Moore, the Company's former President and Chief Executive Officer.

The complaint alleges, among other things, that the defendants violated
the federal securities laws in connection with the preparation and
issuance of certain of the Company's financial statements. The named
plaintiff seeks to represent a class consisting of purchasers of the
Common Stock between April 11, 1997 and December 18, 1997, and seeks
damages in an unspecified amount, costs, attorney's fees and such other
relief as the court may deem proper.

On June 30, 1998, the plaintiff amended the complaint to add additional
plaintiffs, to add as a defendant Mego Financial, the Company's former
parent, and to extend the class period through and including May 20,
1998.

On September 18, 1998, the Company, Jeffrey S. Moore and Mego Financial
filed motions to dismiss the complaint. On April 8, 1999, the court
granted each of these motions. In the court's order dismissing the
complaint, the plaintiffs were permitted, upon proper motions, to serve
and file a second amended and redrafted complaint within 30 days. On May
10, 1999, the Plaintiffs moved for leave to file and serve the second
amended and redrafted complaint contemplated in the earlier order. The
court granted Plaintiffs' motion and accepted the second amended
complaint on June 8, 1999. On July 19, 1999, the Company, Jeffrey S.
Moore and Mego Financial filed motions to dismiss the second amended and
redrafted complaint. On March 9, 2000, the court granted the Company's,
Moore's and Mego Financial motions and dismissed the case with
prejudice. The plaintiffs have 30 days to appeal the ruling. The Company
believes that resolution of this matter will not result in a material
adverse effect on the business or financial condition of the Company.


BANK PLUS: Court Orders Further Proceedings on Complaint on Stock Fraud
-----------------------------------------------------------------------
On May 3, 2000, the Honorable Victoria Gerrard Chaney, California
Superior Court Judge for the County of Los Angeles, ordered further
proceedings relating to class certification in connection with the class
action lawsuit filed on behalf of those who purchased shares of Bank
Plus Corp. ("BPLS") common stock between March 30, 1998 and Sept. 22,
1998.

The Complaint alleges that defendants issued false and misleading
statements that materially misrepresented the financial condition and
future prospects of BPLS's affinity credit card program. As a result of
the false and misleading statements, the price of BPLS common stock was
artificially inflated throughout the Class Period. On the last day of
the Class Period, when defendants were finally forced to disclose the
truth about BPLS's affinity credit card program, the price of BPLS
common stock plummeted 25 percent on heavy trading.

Contact: Weiss & Yourman Mark S. Levine, 1-800-437-7918 www.wyca.com


BOEING CO.: McDonnell Douglas Investors Included in Securities Suit
-------------------------------------------------------------------
The Western District of Washington has granted class certification in
the securities fraud class action against Boeing Co. and included
purchasers of McDonnell Douglas Corp. (MD) stock due to the merger
finalized between the two aircraft manufacturers prior to Boeing's
announcement of large contract losses and penalties. In re Boeing
Securities Litigation, No. C97-1715Z (W.D. Wash., Mar. 1, 2000).

Although Boeing argued that it did not owe a fiduciary duty to MD
stockholders prior to the merger on June 20, 1997, the court agreed with
the shareholders that the stocks were moving in tandem at the time due
to news of the pending transaction.

According to the amended complaint, the company could not meet its
production deadlines and planned to merge with MD to expand its
engineering expertise and fuel its rapid expan sion. Under the terms of
the merger, MD shareholders received 1.3 shares of Boeing stock for each
of their shares.

The plaintiffs allege that Boeing had to keep the price of its stock up
in order to ensure approval of the merger. Toward that end, Boeing
officials had announced on April 7, 1997, that the company was
increasing aircraft production and expected to meet its delivery
schedules.

However, the truth about Boeing's production problems were revealed the
following October when the company announced it was taking a $1.6
billion charge against earning. The stock price dropped from $53.94 per
share to $49.56 on that day and continued to drop to below $30 per share
during 1998.

The shareholder investors requested certification of two subclasses:
purchasers of Boeing stock between July 21, 1997, and Oct. 22, 1997; and
purchasers of MD stock (the MD purchasers) between April 7, 1997, and
July 31, 1997, whose stock converted to Boeing stock on that date. (In
July, the company reported strong earnings and allegedly made the same
false statement regarding its efficiencies.)

Boeing disputed the propriety of class certification with respect to its
shareholders' state law claims, as well as all claims of the MD
purchasers.

The company argued the MD purchasers failed to meet the commonality
requirement for class certification because they are not entitled to the
presumption of reliance under a fraud-on-the-market theory with respect
to Boeing's statements. The company also argued that a presumption of
reliance is not permitted under Washington law.

The shareholders asserted that the share price of MD stock was closely
associated with the price of Boeing stock due to the merger, and
Boeing's statements therefore affected both companies' stockholders.

The court agreed with the investors concluding that, for purposes of
class certification, plaintiffs' assertions that the MD investors relied
on Boeing's announcements are sufficient to satisfy the commonality
requirement. The Washington State Securities Act is to be construed
consistently with federal law, the district court said, assuming a state
appellate court would follow its lead.

The court granted class certification including the two subgroups
specified and expanded the class period for purchasers of Boeing stock
to include any person who invested in the company on or after April 7,
1997.

Boeing also moved for partial summary judgment as to the claims of the
MD shareholders, asserting they could not meet the requirements for
securities fraud under Section 10b-5 of the Exchange Act. Again, the
company argued it did not owe a duty to the MD purchasers and they were
not entitled to the fraud-on-the-market presumption of reliance.

U.S. Magistrate Judge Ricardo S. Martinez disagreed, stating courts have
found a duty owed by one company to shareholders of a different company
in several situations. Citing Tse v. Ventana Medical Systems Inc., 1998
WL 743668 (D. Del., 1998), the court said liability was imposed for
non-disclosure of material facts by one company to shareholders of a
target company.

"It is not an unreasonable extension of existing law to find that Boeing
owed a duty not only to prospective purchasers of Boeing stock, but to
the MD purchasers, who anticipated that their MD stock would convert to
Boeing stock," explained Judge Martinez.

Moreover, the court said the plaintiffs were entitled to the presumption
of reliance afforded under Basic v. Levinson, 485 U.S. 224 (1988). The
court said there are sound policy reasons for finding that Boeing owed a
duty to the MD purchasers, who were entitled to rely on the market price
of MD stock since they were unaware that it had been allegedly inflated
by Boeing's misstatements. (Corporate Officers and Directors Liability
Litigation Reporter, May 1, 2000)


CAPSTEAD MORTGAGE: To Respond to Securities Suits Filed 1998
------------------------------------------------------------
During 1998 twenty-four purported class action lawsuits were filed
against the Company and certain of its officers alleging, among other
things, that the defendants violated federal securities laws by publicly
issuing false and misleading statements and omitting disclosure of
material adverse information regarding the Company's business during
various periods between January 28, 1997 and July 24, 1998. The
complaints claim that as a result of such alleged improper actions, the
market price of the Company's equity securities were artificially
inflated during that time period. The complaints seek monetary damages
in an undetermined amount. In March 1999 these actions were
consolidated. The date by which the Company is to respond has not yet
run.


FINOVA GROUP: Harvey Greenfield Files Securities Suit in Arizona
----------------------------------------------------------------
The Law Firm of Harvey Greenfield has filed a class action lawsuit in
the United States District Court for the District of Arizona on behalf
of purchasers of securities of Finova Group, Inc. (NYSE: FNV) between
July 15, 1999 and May 8, 2000 (the “Class Period”).

The Complaint alleges that Finova and a former executive officer issued
materially false and misleading financial statements in its filings with
the Securities and Exchange Commission ("SEC") and in press releases, in
violation of federal securities laws. The financial statements
overstated the Company's assets, income and earnings per share during
the Class Period by understating reserves for loan losses. Also, the
Company failed to disclose the credit risk of a major customer, in
violation of relevant accounting and SEC rules.

Contact: Harvey Greenfield, Esq. at the Law Firm of Harvey Greenfield,
60 East 42nd Street, Suite 2001, New York, NY 10165, telephone
212-949-5500, or toll free 877-949-5500, facsimile 212-949-0049, or by
e-mail at hgreenf@banet.net.



FLIR SYSTEMS: Fires CEO Amidst Accounting Errors, Suits, Falling Prices
-----------------------------------------------------------------------Flir
Systems has fired CEO J. Kenneth Stringer III to help restore confidence
in a company beset by accounting errors, shareholder lawsuits and
falling stock prices. The Portland maker of infrared sensing systems
used by the military, police and intelligence agencies said March 6 its
revenue and earnings would be even lower than previously announced,
thanks to several unidentified errors in accounting records. J. Mark
Samper, chief financial officer, resigned and law firms in Oregon,
California, New York, Florida and Arkansas filed class-action lawsuits
in U.S. District Court in Portland on behalf of Flir shareholders.

The lawsuits allege that Flir Systems, Stringer and Samper defrauded
shareholders by failing to disclose the company's true state of affairs.

On May 2, Flir's board of directors dismissed the company's independent
auditor, PricewaterhouseCoopers, which had issued clean bills of health
on Flir's consolidated financial statements for 1998 and 1999. Flir has
had to revise statements for those years.

The accounting firm, however, had cautioned Flir about "material
weaknesses in internal controls," according to a document filed with the
U.S. Securities and Exchange Commission.

Flir's board of directors has named John C. Hart, a director and former
Louisiana-Pacific executive, as acting president and CEO. Stringer has
been placed on paid administrative leave while Flir begins a search for
a permanent chief executive, said James A. Fitzhenry, Flir's senior vice
president and general counsel. (The Associated Press, May 25, 2000)


FORD MOTOR: Ontario Ct OKs Dealers Suit over Lincoln Mercury Conversion
-----------------------------------------------------------------------
Ford dealers have won the latest round in a fight over claims the auto
giant is hurting their businesses by turning all Lincoln Mercury outlets
into Ford stores.

A divisional court appeal panel has ordered certification of a
class-action lawsuit by dealers against Ford, the country's
third-biggest auto maker.

The decision in the Ontario Superior Court of Justice overturns a lower
court ruling that held it would be simpler and more efficient if one or
more dealers launched their own claims.

But Bobbie Gaunt, president of Ford Motor Co. of Canada Ltd., said in a
message to dealers that Ford is appealing the latest ruling to the
Ontario Court of Appeal.

She did not disclose reasons for the appeal. The company has not yet
filed submissions in court.

An official for the Canadian Ford Dealers Association said it is clear
the company is stalling and fears the consequences of a trial. ''The
fact that Ford is appealing the decision of an appeal court indicates
the lengths to which the company will go to prevent dealers from
becoming a class," said Sonja Falkenberg, the association's lawyer and
director. ''We're disappointed that Ford is in effect stalling the trial
from proceeding by further appealing this crystal-clear decision."

Ford's dealers argue the company broke its franchise agreements. The
dispute started last fall when the Oakville-based auto giant turned all
of its Lincoln Mercury dealers into Ford stores in efforts to promote
brand awareness. Many existing Ford dealers said it would reduce their
business. Four dealers initiated legal action by arguing Ford breached
their franchise agreements because the company allowed new Ford outlets
within 15 kilometres of existing stores without market research
justifying the move.

The dealers sought class-action status on behalf of all dealerships so
they could seek a declaration at trial that Ford could be liable for any
losses. A favourable decision for dealers would allow them to pursue
damages without needing to prove Ford's liability in each case.

In the latest ruling, the appeal panel said a test case involving a few
dealers would determine common issues if the parties would bind
themselves to a decision.

Ford indicated, however, it would not make a commitment to be bound by a
decision that would apply to other dealers later. ''Only a class
proceeding will bind the class and Ford and avoid multiplicity of
proceedings and the associated risk of inconsistent results," said the
decision, written by Mr. Justice Dennis O'Leary.

Meanwhile, the Canadian Automobile Dealers Association has not set a
date for a meeting of the country's 565 Ford dealers to discuss strategy
for battling the company on the name change and other complaints. (The
Toronto Star, May 25, 2000)


GTE CORPORATION: Harvey Greenfield Files Securities Suit in New York
--------------------------------------------------------------------
The Law Firm of Harvey Greenfield has filed a class action lawsuit in
the United States District Court for the Southern District of New York
on behalf of investors who were shareholders of record of GTE
Corporation (NYSE: GTE) (“GTE” or the “Company”) securities as of March
29, 1999, and their successors in interest.

The Complaint alleges that GTE and several of its officers issued false
and misleading statements, in violation of the federal securities laws
and regulations, regarding the impact a proposed merger with Bell
Atlantic would have on the amount of dividends received by investors.
The complaint alleges that GTE assured investors that they would receive
virtually the same dividends after the merger as they had before. In
fact, as a result of the merger the combined company will issue
dividends one month later than GTE's pre-merger schedule. Such schedule,
resulting from GTE's dividend schedule being converted to coincide with
Bell Atlantic's, will cause material loss of the time value of dividends
on nearly one billion outstanding GTE shares.

Contact: Harvey Greenfield, Esq. at the Law Firm of Harvey Greenfield,
60 East 42nd Street, Suite 2001, New York, NY 10165, telephone
212-949-5500, or toll free 877-949-5500, facsimile 212-949-0049, or by
e-mail at hgreenf@banet.net.


GUN MAKERS: MI Passes Bill Requiring Sale to Go with Trigger Locks
------------------------------------------------------------------
Lawsuits brought by Wayne County and the city of Detroit against gun
manufacturers for gun violence would be banned under a measure the House
passed. The bill also would require all guns sold in Michigan to be
accompanied by trigger locks.

It's the most controversial measure in a comprehensive package designed
to protect Michigan families. Lawmakers crafted the package after the
tragic death of 6-year-old Kayla Rolland, who was shot in February by a
classmate at Buell Elementary School in Mt. Morris Township.

The House debated other segments of the package. "This package is wholly
focused on saving lives, starting at birth and continuing through the
school-age years," said House Speaker Chuck Perricone, R-Kalamazoo
Township.

Wayne County Deputy Executive Mike Duggan and Detroit Mayor Dennis
Archer both asked lawmakers not to outlaw lawsuits against gun
manufacturers, claiming both jurisdictions were close to winning major
awards against gun makers for the damage their products have caused.
Wayne County's lawsuit seeks $400 million; Detroit has not estimated the
amount of damage done to its residents.

Perricone decided to link lawsuits and trigger locks so he could get
votes from both sides of the gun issue. Gun-control supporters were
likely to vote for trigger locks, while gun-rights supporters were
likely to vote for banning the lawsuits.

Democrats tried unsuccessfully to separate the two issues. "This bill is
not about child safety, it's not about gun safety, it is a back-handed
attempt to protect the gun manufacturers," said Rep. Samuel "Buzz"
Thomas, D-Detroit.

Rep. Bruce Patterson, R-Canton, said individual and class action suits
could still be filed under the proposed change. And he suggested Atty.
Gen. Jennifer Granholm could pick up the Wayne County and Detroit suits.

Chris DeWitt, a spokesman for Granholm, said the idea has been
considered. "Potentially, we could get involved," he said. "The key word
is, 'potentially.' We have not made any preparations." (The Detroit
News, May 5, 2000)


HMO: California Medical Association Files Suit under Fed. RICO Statute
----------------------------------------------------------------------
The California Medical Association on Thursday May 25 filed a federal
lawsuit against the three largest for-profit national health plans in
California for imposing unfair contract terms, unnecessarily denying and
delaying payments for procedures patients need, and reimbursing
physicians at rates that are insufficient to cover costs.

The suit, in U.S. District Court in San Francisco, was filed under the
civil RICO (Racketeer Influenced and Corrupt Organization Act) laws. The
suit (California Medical Association v. California Blue Cross et.al.)
claims that California physicians have had their business damaged and
their patients victimized because of racketeering activity executed by
these health plans -- California Blue Cross, HealthNet and PacifiCare.
CMA is seeking injunctive relief.

The health plans used coercive, unfair and fraudulent means to dominate
and control physician-patient relationships for their own financial
gain, but to the detriment of both patients and physicians, the suit
further states. CMA President Marie Kuffner, M.D., said the lawsuit is
one of the final steps in what has been an excruciating and lengthy
effort to get the health plans to give physicians the means to care for
their patients. "It is with sadness that we are forced to this last
resort," said Dr. Kuffner, a UCLA professor of anesthesiology. "We as
physicians have tried to work with the for-profit HMOs in the
marketplace and have attempted to curb the abuses through the
legislative process -- all to no avail. We cannot continue to allow our
patients' health to be jeopardized by corporate greed."

More than nine million Californians, or about two-thirds of those
covered by for-profit plans in the state, are insured by the defendant
plans. The plans had no intention of keeping their promise to provide
access to quality care at a reasonable cost. Instead, these companies
have conspired to generate profits for themselves while delaying
payments to doctors, denying necessary and timely care to patients, and
refusing to provide the data necessary for physicians to treat their
patients, hence committing fraud on both physicians and patients, the
suit states. "CMA's role as plaintiff shows how critical the health care
problem is in the nation, particularly in California, where 21 million
people belong to a managed care health plan of some kind," said Archie
Lamb a Birmingham, Alabama attorney who filed the suit on CMA's behalf.

Lamb already has filed a lawsuit against Aetna, Cigna, Humana and
Prudential in the Northern District Court of Alabama on behalf of
physicians seeking national class certification. "It is ironic that here
in the state where the HMO concept was born, the abuses of managed care
are most egregious," Lamb said. "We are here today to demand that the
HMO industry return to the principle on which managed care was founded.
The CMA, on behalf of their membership, physicians all over America, and
all their patients say, 'enough is enough.,'" according to Lamb. "The
for-profit insurance industry-owned HMOs have engaged in a scheme that
included lying to employers about the benefits for employees, lying to
physicians about commitment to payment for quality health care and
fraudulently induced patients that they would be there in the time of
greatest need. And so, we start here today in California and will take
this fight all the way to the East Coast, until patients can once again
trust that their doctor can provide them with the care they need, free
of interference by companies driven only by greed," Lamb said.


HOLOCAUST VICTIMS: Italian Insurer Assicurazioni Generali Sued in CA
--------------------------------------------------------------------
California relatives of Holocaust victims on Wednesday accused Italy's
largest insurer of refusing to recognize pre-World War II insurance
policies for reasons such as a concentration camp inmate's failure to
pay premiums. Their lawsuit, filed in San Francisco Superior Court,
seeks class-action status on behalf of as many as 20,000 Californians
whose relatives were killed or persecuted in the Holocaust and held
insurance policies that were never honored.

The company, Assicurazioni Generali, is one of five European insurers
working with the International Commission on Holocaust Era Insurance
Claims. The commission, established in 1998, reviews claims of unpaid
policies and refers them to the companies. The Los Angeles Times
reported May 9 that the companies had rejected more than three-fourths
of the claims submitted so far, even though the commission considered
many of the initial claims to be particularly strong.

''The international commission is bogus,'' Nancy Cohen, a lawyer for the
four plaintiffs in the San Francisco suit, said after a news conference
announcing the case. ''It's not working. Even when they pay, they don't
pay what is owed, including all the interest.''

The suit said the company has denied claims because policyholders could
not provide death certificates from concentration camps or because
premiums were not paid during imprisonment, and by asserting in some
cases that no money was owed because the proceeds of the policies were
paid to the Nazis. The suit seeks payment of benefits, interest and
punitive damages.

Generali, as the Italian company is known, issued a statement saying
such lawsuits are ''counterproductive and only serve to further delay
payments to Holocaust victims and their families.'' The international
commission is ''the most just and expeditious process for resolving this
matter,'' the company said. It said it had made 375 settlement offers so
far, totaling nearly $5 million, and paid $2 million. (AP Online, May
25, 2000)


KITTY HAWK: Wolf Haldenstein Files Securities Suit in Texas
-----------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP has filed a class action
lawsuit in the United States District Court for the Northern District of
Texas, Dallas Division, on behalf of investors who bought Kitty Hawk,
Inc. (NASDAQ: KTTY or KTTYE) ("Kitty Hawk" or the "Company") securities
between April 22, 1999, and April 11, 2000, inclusive (the "Class
Period").

The lawsuit charges several of Kitty Hawk's top officers and directors
with violations of the federal securities laws and regulations.
Specifically, the Complaint alleges that the Company's financial
statements which were released during the Class Period were materially
false and misleading because company insiders overstated the Company's
revenues, income, earnings and net worth. As a result of these false and
misleading statements, the Company's stock traded at artificially
inflated prices during the Class Period. When the truth about the
Company was revealed, the price of the stock dropped over 80% in one day
and 93% from a Class Period high of $13.50. The Company itself is not
named as a defendant.

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


MCI WORLDCOM: Denied Motion to Dismiss Lawsuit over SkyTel Acquisition
----------------------------------------------------------------------
A New York district court has denied MCI Worldcom's motion to dismiss a
class-action complaint brought by a group of plaintiffs who allege that
an MCI official made a false statement just prior to its acquisition of
SkyTel Communications in order to drive down the price of Skytel's
stock. In re MCI Worldcom Inc. Securities Litigation, No. 99-CV-3136
(ILG) (E.D.N.Y., Apr. 13, 2000).

In his corrected memorandum and order, U.S. District Judge I. Leo
Glasser decided that the plaintiffs' allegations were sufficient to
survive a motion to dismiss.

The plaintiffs are a group of people who sold shares of SkyTel stock
during a three-day period in 1999. Their complaint asserted securities
fraud claims against MCI pursuant to Section 10(b) of the Securities
Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5.
The plaintiffs contended MCI made misleading statements that
artificially deflated the value of SkyTel stock, which the defendant
then acquired at the lower price.

When SkyTel had been the subject of takeover speculation, the price of
its shares rose 12 percent. In order to quell market rumors and deflate
the price of SkyTel stock, MCI's official corporate spokesperson,
Barbara Gibson, replied "no comment" when questioned by reporters about
a possible merger.

The market interpreted Gibson's statements as a denial that MCI had any
interest in acquiring SkyTel, whose stock prices then fell to one-third
of their recent average daily volume. Soon afterward, MCI agreed to buy
SkyTel.

MCI moved to dismiss the plaintiffs' complaint, arguing that Gibson's
statements said nothing about the company's intent with respect to
SkyTel, and therefore could not be the basis for a claim for securities
fraud. However, Judge Glasser determined that the plaintiffs'
allegations showed sufficient particularity to satisfy the heightened
pleading requirements of the Private Securities Litigation Reform Act
(PSLRA), since the price of SkyTel shares fell sharply immediately
following Gibson's statements.

MCI contended that even if Gibson's statement amounted to a false denial
of the impending merger, it was not actionable because it was
immaterial. However, Judge Glasser found that the plaintiffs'
allegations were material because the price of SkyTel's common stock
dropped after her statement.

When Congress enacted the PSLRA, it provided that plaintiffs must "state
with particularity facts giving rise to a strong inference that the
defendant acted with the required state of mind." The required state of
mind in a securities fraud case is scienter -- an intent to deceive or
defraud. Plaintiffs attempting to allege scienter must show motive and
opportunity.

To show motive, the plaintiffs alleged that MCI willfully intended to
deflate SkyTel's stock prices in order to ensure the acquisition price
would not rise. MCI responded that Gibson's knowledge of the merger
negotiations could not be assumed. If the complaint did not allege that
she had any knowledge, the plaintiffs failed to demonstrate opportunity,
MCI argued. However, Judge Glasser determined that it was reasonable to
assume that Gibson, as the official company spokesperson, knew of the
impending merger, and that the plaintiffs had demonstrated opportunity
on MCI's part.

The ability to acquire a company for a significantly reduced price was a
sufficient economic benefit to satisfy the motive requirement for
scienter, the judge held. MCI countered that it had no incentive to
deflate SkyTel's stock value because the price of the acquisition had
already been set at the time of Gibson's statements.

Judge Glasser did not find this argument persuasive, determining that
since MCI was acquiring SkyTel for stock, the purchase price was
determined by the number of MCI shares to be exchanged for each SkyTel
share, which would be determined by the exchange ratio that varied from
day to day. The judge also determined that MCI's actions and Gibson's
statements demonstrated conscious misbehavior or recklessness on the
part of MCI sufficient to plead scienter.

The plaintiffs also claimed loss causation, alleging that there was a
causal connection between movement in SkyTel's stock prices and Gibson's
statement because the stock price fell soon after. MCI argued that
SkyTel's stock had dipped below its high for the day before, not after,
Gibson's statement was released. Judge Glasser denied MCI's motion to
dismiss that count, finding that the plaintiffs had made a sufficient
showing that there was a factual dispute over the time of the
announcement that should be resolved at trial.

Counsel for the plaintiffs was Spiro Serras of Wilens & Baker, P.C., in
New York. (Mergers & Acquisitions Litigation Reporter, May 2000)


METRIS AND DIRECT: Cardholder Files Consumer Protection Lawsuit
---------------------------------------------------------------
The law firms of Lieff, Cabraser, Heimann & Bernstein, L.L.P., and
Zimmerman Reed P.L.L.P, announce the filing of Fischl v. Metris
Companies and Direct Merchants Credit Card Bank, N.A., Case No. 00-7129,
a consumer protection lawsuit against Direct Merchants Credit Card Bank,
N.A., and its parent company Metris Companies Inc. (NYSE:MXT), for
allegedly engaging in widespread deceptive and unlawful business
practices.

Direct Merchants Bank, the nation's ninth largest MasterCard issuer, has
over 3.8 million credit cardholders, and is one of the fastest growing
credit card companies in the United States. Metris Companies has stated
as its goal "to maximize the profitability of each (Direct Merchants
Bank) customer relationship." Plaintiff Gerald Fischl, a Direct
Merchants Bank cardholder residing in California, alleges that Direct
Merchants Bank's growth has been, in part, attributable to a series of
overly-aggressive, sharp, and unlawful business practices that have
harmed cardholders nationwide. Among the misconduct Plaintiff alleges is
that Direct Merchants Bank:

   --  routinely assesses fees for the purchase of fee-based services,
such
       as its PurchaseShield program, that cardholders did not
authorize;

   --  repeatedly charges late payment fees and interest for cardholder
       payments that are not in fact late or delayed;

   --  makes solicitations in connection with checks issued to
cardholders
       that are misleading and do not disclose the true value of the
checks
       issued to cardholders; and

   -- regularly promises a lower interest rate in connection with
balance
       transfers, convenience checks and cash advances than the interest

       rate that the cardholder receives.

Plaintiff filed individually and on behalf of all Direct Merchants Bank
cardholders nationwide from January 1, 1998 to the present. The class
action complaint was filed in Minnesota state court, Hennepin County,
where Metris Companies is based, and alleges violations of Minnesota's
Consumer Fraud Act and Deceptive Trade Practices Act. Plaintiff seeks an
order certifying a nationwide class of Direct Merchants Bank
cardholders, an order awarding Plaintiff and the Class restitution
and/or disgorgement of ill-gotten profits, and an injunction against
Direct Merchants Bank for its alleged deceptive and unlawful business
practices.

Commenting on the lawsuit, Elizabeth Cabraser stated, "Direct Merchants
Bank claims that its products and services offers cardholders the
freedom and opportunity to achieve their financial goals. Unfortunately,
as alleged in the complaint, many are subjected to misleading
solicitations and unlawful business practices, such as charges for
services that offer illusory benefits and fail to improve their credit
records. Our goal is to persuade the company to correct its practices."

Contact: Lieff, Cabraser, Heimann & Bernstein, LLP Elizabeth J.
Cabraser, Esq., 415/956-1000 (Press) Stephen H. Cassidy, Esq.,
415/956-1000 (Consumer) www.lchb.com DMBsuit@lchb.com or Zimmerman Reed,
P.L.L.P. Jennifer K. Sustacek, Esq., 612/341-0400 (Press/Consumer)
Keelyn M. Friesen, Esq., 612/341-0400 (Press/Consumer) 800/755-0098
www.zimmreed.com jks@zimmreed.com


MOHAWK INDUSTRIES: Purchasers Sue In GA and CA over Antitrust Issue
------------------------------------------------------------------- The
Company is a party to two consolidated lawsuits captioned Gaehwiler v.
Sunrise Carpet Industries, Inc. et al. and Patco Enterprises, Inc. v.
Sunrise Carpet Industries, Inc. et al., both of which were filed in the
Superior Court of the State of California, City and County of San
Francisco, in 1996. Both complaints were brought on behalf of a
purported class of indirect purchasers of carpet in the State of
California and seek damages for alleged violations of California
antitrust and unfair competition laws.

The complaints filed do not specify any amount of damages but do request
for any unlawful conduct to be enjoined and treble damages plus
reimbursement for fees and costs.

In October 1998, two plaintiffs, on behalf of an alleged class of
purchasers of nylon carpet products, filed a complaint in the United
States District Court for the Northern District of Georgia against the
Company and two of its subsidiaries, as well as a competitor and one of
its subsidiaries. The complaint alleges that the Company acted in
concert with other carpet manufacturers to restrain competition in the
sale of certain nylon carpet products. The Company has filed an answer,
denied the allegations in the complaint and set forth its defenses.

In February 1999, a similar complaint was filed in the Superior Court of
the State of California, City and County of San Francisco, on behalf of
a purported class based on indirect purchases of nylon carpet in the
State of California and alleges violations of California antitrust and
unfair competition laws. The complaints described above do not specify
any specific amount of damages but do request injunctive relief and
treble damages plus reimbursement for fees and costs. The Company
believes it has meritorious defenses and intends to vigorously defend
against these actions.


NORTHBRIDGE EARTHQUAKE: CA Senate Bill for Re-opening Insurance Claims
----------------------------------------------------------------------
SB 1899, a bill authored by California Senate President pro tem John
Burton, is an unnecessary and flawed measure, according to Dan Dunmoyer,
president of the Personal Insurance Federation of California (PIFC). "Of
the 600,000 insurance claims filed as a result of the Northridge
earthquake, the insurance industry has settled 99.9% of those claims and
paid out more than $15.3 billion," Dunmoyer explained.

"SB 1899 is a product of plaintiff lawyers designing a bill that has the
potential of unnecessarily re-opening 600,000 Northridge claims files
that have already been satisfactorily settled. It will also allow every
citizen living in the Los Angeles basin to file a claim for the first
time, for damages from Northridge," Dunmoyer continued. "The bill is a
class action lawsuit dream for plaintiff's lawyers who stand to make
hundreds of millions of dollars and once the lawsuits are handled,
consumers will collect next to nothing," he said.

"SB 1899 sets up a litigious system for resolution of earthquake claims
from a disaster that struck over six years ago. Every claim filed under
this bill will have to be thoroughly reviewed which will only serve to
delay the final settlement of the remaining few open Northridge claims,"
Dunmoyer added.

"The full impact of the bill is not being told," Dunmoyer said. "At a
recent Northridge Senate Insurance Committee hearing, it was revealed by
a few of the remaining claimants that they are not upset at the
insurance industry as much as the judicial system -- juries of their
peers -- who did not agree with their lawsuit claims and awarded them
less than what their insurers originally offered," noted Dunmoyer."

PIFC reports that the Northridge earthquake has become the largest
insured loss disaster in history. Within hours of the quake, thousands
of insurance claims adjusters, insurance agents and industry personnel
from all over the country and throughout California were on the scene.
"They worked tirelessly around the clock, month after month, to help
insurance customers," Dunmoyer noted. "Many claims personnel were away
from their families for months, working under stressful conditions and
often times, putting themselves in harm's way to provide assistance to
their clients who were in need," Dunmoyer said.

The Northridge earthquake destroyed or damaged more than 200,000 homes,
injured 12,000 people, caused 60 deaths and damaged or left
uninhabitable 114,000 buildings -- all within 40 seconds. When you have
a disaster of this magnitude, some mistakes will be made, but companies
have reacted quickly to rectify those mistakes. There is no need for SB
1899; however, there is a need for the Legislature to work with the
insurance industry to resolve the few remaining Northridge claims,"
Dunmoyer concluded. PIFC reports that its companies have settled 99.9%
of the 206,468 Northride earthquake claims received.


OSICOM TECHNOLOGIES: Vigorously Defending Securities Suit in CA
--------------------------------------------------------------- On
August 20, 1999, a consolidated class action lawsuit entitled In re
Osicom Technologies, Inc. Securities Litigation, Master File No.
CV-99-4321-R, was filed in the United States District Court for the
Central District of California against us, our Chief Executive Officer,
our President and our former Chief Financial Officer. The consolidated
complaint generally alleges that, during the purported class action
period, the defendants made false and misleading public statements
related to a contract entered into by our Far East business unit with a
Japanese customer. The consolidated complaint asserts that the
defendants' conduct violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and SEC Rule 10b-6 promulgated thereunder, as well
as state common law. The consolidated complaint does not specify an
amount of damages. During January 2000 the court issued an order denying
our motion to dismiss the case. In February, 2000, answers were filed on
behalf of all defendants denying liability for all claims. We are
defending the class action vigorously. An unfavorable outcome in such
litigation could have a material adverse affect on our financial
condition and results of operations.


PACIFIC GATEWAY: The Pomerantz Firm Files Securities Lawsuit
------------------------------------------------------------
Pacific Gateway Exchange, Inc. (Nasdaq:PGEX) announced the Company's
First Quarter 2000 financial results with revenue of $126.5 million.
This was a 10% decrease from $140.5 million revenue the Company reported
over the same quarter last year. Pacific Gateway also reported a net
loss in the First Quarter 2000 of $30.7 million as compared with net
income of$3.6 million over the same period in 1999. In addition, the
Company reported fully diluted EPS for the First Quarter 2000 was a loss
of$1.57, as compared with its year earlier profit of $0.18.

Pacific Gateway's announcement of the Company's First Quarter 2000
results was quite different from the financial picture the Company had
presented to the public during the period between May 14, 1999 and March
31, 2000, inclusive (the "Class Period"), according to allegations in a
complaint filed by Pomerantz Haudek Block Grossman & Gross LLP
(www.pomerantzlaw.com) against Pacific Gateway and four of the Company's
senior executives. The complaint was filed on behalf of all persons or
entities who purchased the securities of Pacific Gateway during the
Class Period.

Contact: Pomerantz Haudek Block Grossman & Gross LLP Andrew G. Tolan,
Esq., 888/476-6529 or 888/4-POMLAW agtolan@pomlaw.com


PE CORPORATION: Barrack Rodos Files Securities Suit in Connecticut
------------------------------------------------------------------
Counsel for Class Plaintiff, Barrack, Rodos & Bacine, on May 24 issued
the following:

A class action has been commenced in the United States District Court
for the District of Connecticut on behalf of all persons who purchased
the stock of PE Corporation Celera Genomics Group (NYSE: CRA) ("Celera"
or the "Company") in a secondary offering (the "Secondary Offering") of
Celera common stock conducted by PE Corporation on February 29, 2000.

The complaint charges PE Corporation and certain of its officers and
directors with violation of Sections 11, 12(a)(2) and 15(a) of the
Securities Act of 1933. The complaint alleges that the registration
statement and prospectus issued in connection with the Secondary
Offering were materially false and misleading because, among other
things, they failed to disclose that Celera had engaged in discussions
with the Human Genome Project (an international research organization
supported by the U.S. and U.K. governments, among others) concerning
collaborating on completing the map of the human genome and that those
discussions had terminated in December 1999 because the Human Genome
Project was opposed to Celera's demands for five-year exclusive rights
to the data.

Contact: Counsel for Class Plaintiff, Barrack, Rodos & Bacine,
800-417-7305 or 215-963-0600, or fax, 888-417-7306, or 215-963-0838, or
msgoldman@barrack.com


PERFORMANCE TECHNOLOGIES: Abbey, Gardy Files Securities Lawsuit in NY
---------------------------------------------------------------------
A release by the law firm of Abbey, Gardy & Squitieri, LLP says that a
class action entitled Feldman v. Performance Technologies, Inc., Donald
L. Turrell, Charles E. Maginness, John M. Slusser, John E. Mooney, and
Bernard Kozel, has been commenced in the United States District Court
for the Northern District of New York, Rochester Division on behalf of
all persons who purchased shares of Performance Technologies, Inc.
("PTIX") (Nasdaq: PTIX) common stock between February 2, 2000 and May
19, 2000 (the "Class Period").

In brief, the Complaint charges that PTIX and certain of its officers
and directors, violated the federal securities laws. The Complaint
alleges that during the Class Period defendants made materially false
and misleading statements and omitted to make statements regarding,
among other things, the order levels from two of PTIX's major customers.
The Complaint alleges that defendants violated Sections 10(b), 20(a) and
20A of the Securities Exchange Act of 1937 and Rule 10b-5 promulgated
thereunder by the Securities and Exchange Commission. The Complaint
alleges, among other things, that during the Class Period defendants
knew or were reckless in not knowing that two of PTIX's major customers
were substantially decreasing their order levels and that PTIX's
forecasted revenues and earnings would be negatively impacted. The
Complaint alleges that as a result of defendants' false and misleading
statements, the price of Performance Technologies common stock traded at
artificially inflated prices during the Class Period. In addition, the
Complaint alleges that while in possession of this material undisclosed
information defendants sold huge amounts of their personal holdings of
PTIX common stock at artificially inflated prices.

Contact: Mark C. Gardy (mgardy@a-g-s.com), Nancy Kaboolian, Maria
Criscitiello (mcrisciti@a-g-s.com), ABBEY, GARDY & SQUITIERI, LLP,
800-889-3701 (toll free) or 212-889-3700


SEROLOGICALS CORP: Finkelstein, Thompson Files Securities Suit in GA
--------------------------------------------------------------------
Finkelstein, Thompson & Loughran has filed a securities class action
lawsuit on behalf of purchasers of the stock of Serologicals Corporation
(Nasdaq: SERO), between April 27, 1999 and April 7, 2000, inclusive,
(the "Class Period"), in the United States District Court for the
Northern District of Georgia.

The complaint charges Serologicals and certain of its directors and
executive officers with violations of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that
defendants issued false and misleading financial statements that
materially overstated the Company's revenues, earnings and income. As a
result, Serologicals' stock price was artificially inflated throughout
the Class Period.

Contact: Donald J. Enright of Finkelstein, Thompson & Loughran,
888-333-4409 or at 202-337-8000, DJE@FTLLAW.com


TOBACCO LITIGATION: About 300,000 FL Deaths in 1990s Said to Be Related
-----------------------------------------------------------------------
Nearly 300,000 deaths in the 1990s from smoking-related disease in
Florida would be a "huge underestimate" of the group covered by a
class-action suit against the tobacco industry, a doctor testified
Thursday.

Testimony by Dr. Ronald Davis is intended to help jurors calculate the
number of sick Florida smokers when setting punitive damages in a case
that the industry fears could produce a crippling multibillion-dollar
award.

The Florida statute of limitations imposes a time window of 1990 to 1994
on the lawsuit, but smokers' attorneys argue the jury's fraud and
concealment findings against the industry erase the time limits.

Davis, who coordinated publication of three reports by the surgeon
general from 1988 to 1990, testified his death estimate of 292,000 to
296,000 is only a fraction of the extent of smoking-related disease.
"The number is a huge underestimate of the class," said Davis of
Detroit's Henry Ford Health System. "It's very likely that the number of
people who are alive and have a disease caused by smoking is much
larger."

In opening statements, Smokers attorney Stanley Rosenblatt offered an
estimate of 300,000 to 500,000 for the number of smokers covered by the
lawsuit. Before Davis was cut off by an objection, he noted the
strategic plan adopted by the industry's Tobacco Institute "very
clearly" aimed to prevent states from leaving a blank for
smoking-related deaths on death certificates.

The industry agreed to shut down the institute, long criticized by
public health officials as a propaganda arm, under state lawsuit
settlements currently value at $254 billion.

The defendants are Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown
& Williamson, Lorillard Tobacco Co., Liggett Group Inc. and the
industry's Council for Tobacco Research and Tobacco Institute. (The
Associated Press, May 25, 2000)


UNION OF NEEDLETRADES: Ct Rejects Workers' Appeal Re Misrepresentation
----------------------------------------------------------------------
A federal appeals court in Manhattan has refused to reinstate a
class-action lawsuit filed in 1997 against a leading garment industry
union by union members who contended that they were not fairly
represented in a complex arbitration case against the clothing
manufacturer Liz Claiborne.

The workers, who had been employed at Mademoiselle Knitware, a sweater
factory in Brooklyn that is now defunct, had filed the lawsuit against
the Union of Needletrades, Industrial and Textile Employees, known as
Unite, and two of its locals.

The unusual dispute, pitting union members against their own leaders at
what had once been a showcase factory in the garment industry, boiled
down to the issue of who actually had the legal duty to protect the
interests of the Brooklyn workers.

In a ruling released Tuesday, the United States Court of Appeal for the
Second Circuit affirmed a trial judge's decision last summer that
neither the parent union nor the two locals owed the Brooklyn workers
any "duty of fair representation" under federal labor laws.

The dispute involved the parent union, Unite; Local 23-25, which
represented Claiborne workers; and Local 155, which represented workers
at Mademoiselle.

In 1992, Claiborne had promised a Unite official, who was also manager
of Local 23-25, that it would order a specific volume of sweaters from
Mademoiselle. When Claiborne reneged, Local 23-25 filed an arbitration
case against Claiborne on behalf of the Mademoiselle workers, who were
represented by Local 155.

The union won that arbitration case and, when Claiborne still did not
supply the promised orders, it filed a second case in 1996 to enforce
the earlier ruling.

But in May 1997, during collective bargaining talks with Claiborne,
Unite and Local 23-25 agreed to nullify the first arbitration award,
drop the second arbitration case and free Claiborne from its commitment
to order sweaters from Mademoiselle. In turn, Claiborne agreed to pay
$750,000 into a fund to be distributed to the Local 155 workers but to
be administered by Local 23-25.

A group of workers at Mademoiselle later accused Unite and Local 23-25
of selling them out in exchange for a separate pact, concluded around
the same time, which obligated Claiborne to pay $13 million in damages
to the parent union and the Claiborne local. They further accused their
own local of failing to protect them in the dispute.

But under federal labor law, the trial court found, the only union
legally obligated to protect the Mademoiselle workers was their own
collective bargaining unit, Local 155.

That local could not be held liable in the class-action case, however,
because it had no role in the disputed settlement, the trial court
concluded. And Unite and Local 23-25, which had negotiated the
settlement, could not be held liable because neither was the designated
collective bargaining unit for the Mademoiselle workers. Thus, neither
had a legally enforceable duty to act in the best interests of Local
155's members.

The appellate court affirmed that interpretation. "Generally, the duty
of fair representation arises only with respect to a union entity that
is certified as the exclusive bargaining representative of a group of
employees," the appeals court found.

Jo-Ann Mort, a spokeswoman for Unite, said the union was "delighted" by
the appeals court's refusal to reinstate the Mademoiselle case, which
Unite had long argued was without merit.

"We hope that this concludes this unfortunate chapter and allows us to
get back to doing what we have done all along, namely, providing our
members with the best representation possible," Ms. Mort said.

Howard Rhine, a lawyer representing the Mademoiselle workers, said he
was considering petitioning the United States Supreme Court to take up
the issue. "There has to be a remedy if there is a wrong," he said. "But
what this court is saying is that no one is responsible." (The New York
Times, May 25, 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  * * *