/raid1/www/Hosts/bankrupt/CAR_Public/000530.MBX                  C L A S S   A C T I O N   R E P O R T E R

                  Tuesday, May 30, 2000, Vol. 2, No. 104


ACT MANUFACTURING: Ap Ct in Boston Upholds Dismissal of Securities Suit
AZTECA RESTAURANTS: Settles Racial Discrimination Lawsuit in Seattle
BEHR PROCESS: Jury Awards WA Homeowners Resoration Costs on Mildewing
BOEING NORTH: Plaintiffs Try to Revive Cancer Claims
BRISTOL-MYERS: Kaplan, Kilsheimer Files Securities Lawsuit

CAMPBELL SOUP: Lead Plaintiff Named for Securities Suit in NJ
CINAR CORP: HighReach Learning Partners Sue over Stock Purchase Deal
CYBER-CARE, INC: Hoffman & Edelson Files Securities Suit in Florida
CYBER-CARE, INC: Weinstein Kitchenoff Files Securities Suit in Florida
E.SPIRE COMMUNICATIONS: Finkelstein, Thompson Files Securities Lawsuit

FIRST SECURITY: Finkelstein & Krinsk Investigate on Securities Issues
GTE CORP: Shareholders Sue Over Dividends, Shalove Stone Announces
GUN MAKERS: Senate Considers Bill Curbing Lawsuits
INSO CORPORATION: Announces Settlement for Shareholder Litigation
KAISER ALUMINUM: Faces 35 Lawsuits Related to Gramercy Explosion

LEAD PAINT: CA County Seek Compensation and Medical Fund from Makers
LOEWEN GROUP: 1996 Suit over Trade Practices Stayed Pending Ch 11 Case
LOEWEN GROUP: Securities Suit in Suspense in PA Pending Ch 11 Case
LUCENT TECHNOLOGIES: Securities Suit Counsel to Be Chosen by Sealed Bid
MANHATTAN INVESTMENT: 18 Foreign Companies Sue Bankrupt Brokerages

MCI WORLDCOM: SkyTel Shareholder Suit Survives Dismissal in NY
MTBE LITIGATION: Utilities, Gas Stations Under Attack; Residents Sue
PATHMARK STORES: Lawsuit over Proposed Merger Settled; Buyer Quits
S1 CORP: Top Financial Firms Plow $244M; 3 Insurers Take Largest Stakes
SOTHEBY'S CHRISTIE'S: Attorneys Wrestle With Lead Counsel Auction

WATER CONTAMINATION: New Rules Announced for Ontario Water Testing
WATER CONTAMINATION: Ontario Police Probe Amidst Lies; Town Sued
WORLD ONLINE: Plaintiffs' Lawyer Suggests Settlement for 3-4 Bil NFL


ACT MANUFACTURING: Ap Ct in Boston Upholds Dismissal of Securities Suit
ACT Manufacturing, Inc. (Nasdaq: ACTM) announced on May 25 that the United
States Court of Appeals for the First Circuit has upheld the dismissal of a
securities class action litigation that had been filed against the Company
and certain of its officers.

The securities class action litigation was filed against ACT in February
1998 and alleged that ACT had made misstatements to the investing public
regarding the Company's financial performance.

In May 1999 the United States District Court in Boston granted ACT's motion
to dismiss the litigation in its entirety, and denied plaintiffs' request
to file a new complaint. Plaintiffs then appealed to the Court of Appeals.
On May 5, 2000 the Court of Appeals issued its decision denying the appeal,
ruling that "the lower court handled the matter appropriately in all

The Boston law firm of Testa, Hurwitz & Thibeault, LLP represented ACT in
the litigation.

AZTECA RESTAURANTS: Settles Racial Discrimination Lawsuit in Seattle
Three former employees of Azteca Restaurants Enterprises recently settled a
lawsuit against the restaurant chain for discrimination based on race and
national origin, claiming the company discriminated against non-Hispanic

"The exact amount of the settlement is confidential, but we are extremely
happy with the result," said attorney Tony Shapiro who represented the men.
Shapiro is a partner at the Seattle law firm of Hagens Berman.

Habib Sidani, Karam Slim, and Luaye Khatib, all former Azteca employees and
of Arab decent, filed the suit in April 1999 against the popular
Washington-based restaurant chain in the Federal District Court of Seattle.

According to attorney Shapiro, the suit alleged that Azteca discriminated
against their employee's and others based on race and national origin. The
lawsuit also included causes of action for conspiracy to violate the
plaintiffs' civil rights, unlawful retaliation, wrongful termination and

"The managers at these Azteca establishments made it very clear, by their
verbal abuse and physical actions, that they did not want anyone other than
those of Hispanic decent working in their restaurants," said the
plaintiff's attorney Tony Shapiro. The suit also claimed that each of the
three employees, as well as others not of Hispanic decent, were treated
unfairly by denying them overtime pay, leaves of absence, or scheduling
options offered to other Hispanic employees. The men, who are of
Palestinian or Lebanese descent, alleged that the managers at the Federal
Way, Mountlake Terrace, and Totem Lake restaurants routinely discriminated
against them, by making negative comments about their race and ethnicity.
According to Shapiro, the treatment was widespread and blatant. "One
example we cited in the complaint was that managers would address the
employees as a 'camello,' which is the Spanish word for camel."

Shapiro also noted that management referred to the plaintiffs as "Saddam
Hussein" and "the terrorists." According to the suit, the Azteca management
knowingly and intentionally implemented discriminatory employment practices
against any and all individuals of Middle-Eastern, Asian, and
African-American decent. According to the suit, efforts within the
organization to stem the tide of racial intolerance found little success.

Azteca, a Washington based corporation, has approximately 30 restaurants in
the Seattle and Portland area.

Contact: Firmani and Associates Hagens Berman, 206/623-7292 or Mark
Firmani, 206/443-9357 mark@firmani.com

BEHR PROCESS: Jury Awards WA Homeowners Resoration Costs on Mildewing
On Tuesday May 23, 2000, a Grays Harbor County jury verdict awarded nine
homeowners and the class they represent the full damages they had sought in
a case brought against the Behr Process Corporation of Santa Ana,
California. After deliberating only 4 1/2 hours, the jury awarded
restoration costs for all consumers in Western Washington who applied the
Behr products.

Behr manufactures two finish products that caused extensive mildewing of
the plaintiffs' homes and wood surfaces. (The products are Super Liquid
Rawhide Nos. 12 and 13 and Natural Seal Plus Nos. 80 and 92.) The jury
returned verdicts for the nine families of between $14,000 and $87,000 as
restoration costs to remove the Behr products from their wood. The verdict
entitles every person who applied the Behr products between 1992 and the
present to a full recovery of restoration costs according to the damage
matrix the jury approved.

The jury verdict followed a one-week damages trial. The Honorable David
Foscue, Grays Harbor County Superior Court, had granted a default judgment
against Behr after finding that Behr had willfully and deliberately
concealed two outdoor exposure tests. The tests had resulted in mildew
formation on test boards within 3 to 6 months of application of the Behr
products. The Court found Behr also concealed tests showing a chemical
instability in the formulation of their product. Judge Foscue ruled that
these discovery violations caused severe prejudice to plaintiffs in their
preparation and trial of the case, and found the only just sanction would
be to award default judgment against Behr. The Court has scheduled a
hearing on treble damages for June 12, 2000. (Mergers & Acquisitions
Litigation Reporter, May 2000)

BOEING NORTH: Plaintiffs Try to Revive Cancer Claims
Boeing North American will continue to defend its environmental record at
its Santa Susana, Calif., facility as the cases against the company head to
the appellate court.

On April 27, lawyers representing residents living near the Rocketdyne
engine testing facility filed a preliminary motion, which will lead to an
appeal that argues the U.S. District Court for the Central District of
California, Western Division, erred when it granted summary judgment to a
majority of the personal injury cases. At the same time, the plaintiffs
want to reinstate the cases on five parties with the district court.

In Lawrence O'Connor, et. al. vs. Boeing North American Inc., et. al., the
district court should have thrown out the statute of limitations defense
because the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA) pre-empts state law, according to a brief filed by
Cappello & McCann, which represents the plaintiffs. The brief asks the
appellate court to invoke CERCLA.

On March 27, the district court granted summary judgment because the
statute of limitations expired on personal injury claims (HWN, April 3, p.
107). The plaintiffs argued the Rocketdyne plant releases toxic waste to
soil and ground water and has caused high cancer rates in the area (HWN,
March 13, pp. 83-84).

In addition, the district court should review the ruling on five cases
because they were placed in the wrong category, Cappello & McCann said in a
second brief. The plaintiffs could not have read the local newspaper as the
court ruled and therefore should have their cases reheard.

Judge Audrey Collins will rule on the two motions June 5. In addition,
Boeing has the option to decertify the class in the class-action suit. The
company must file its motion before May 22. IAC-ACC-NO: 62267323 (Hazardous
Waste News, May 15, 2000)

BRISTOL-MYERS: Kaplan, Kilsheimer Files Securities Lawsuit
Kaplan, Kilsheimer & Fox LLP has filed Class Action lawsuits against the
Bristol-Myers Squibb Company (NYSE: BMY).The lawsuit charges Bristol-Myers
and its CEO, Charles A. Heimbold, Jr. with violations of the federal
securities laws and regulations promulgated thereunder. The complaint
alleges that, during the Class Period (November 8, 1999 - April 19, 2000),
Bristol-Myers issued a series of false and misleading statements heralding
VANLEV as the most effective drug for treating hypertension and conditioned
the market to believe that there were no serious side effects to the drug.
Moreover, the complaint alleges that Bristol-Myers knew, but failed to
disclose, that the results of the Company's clinical trials of VANLEV
showed that a rare and life-threatening side effect had afflicted some
patients in the trials. Defendants' false and misleading statements
regarding VANLEV resulted in artificially inflating the price of
Bristol-Myers stock during the Class Period.

Contact: Kaplan, Kilsheimer & Fox LLP Frederic S. Fox, Esq. Janine R.
Azriliant, Esq. Hae Sung Nam, Esq. Donald R. Hall, Esq. Tel. 800/290-1952
212/687-1980 Fax. 212/687-7714 Email: mail@kkf-law.com.

CAMPBELL SOUP: Lead Plaintiff Named for Securities Suit in NJ
S. District Judge Joseph J. Irenas of the District of New Jersey has
appointed two individual investors and the treasurer of the state of
Connecticut as co-lead plaintiffs in the securities class action against
Campbell Soup. Class counsel will be named after the lead plaintiffs have
agreed on their selection and submitted it to the court for approval.
Laborers Local 1298 Pension et al. v Campbell Soup Co. et al., No. 00-152,
order issued (D.N.J., Apr. 6, 2000).

"The court considers it desirable to have both an institutional investor,
like Connecticut, and individual investors, like Donald DeValle and Daryle
Green, included as lead plaintiffs since each may bring a unique
perspective to the litigation," said Judge Irenas.

Three motions were made for the appointment of lead plaintiff and the
approval of class counsel. Laborers Local 1298 Pension Fund, represented by
Schoengold & Sporn; DeValle and Green, represented by Berger & Montague;
and the treasurer of Connecticut, represented by Schatz & Nobel, all
applied for the position.

Initially, the court noted that the Private Securities Litigation Reform
Act (PSLRA) creates a presumption that the most adequate plaintiff is the
person or group that has the largest financial interest in the relief
sought. The act, however, does not define whether the concept should be
viewed in terms of absolute dollars or as a percentage of a plaintiff's net
worth, said Judge Irenas.

Laborers Local lost $100,494 while the state of Connecticut, through its
pension funds, asserts that its losses exceed $1,000,000. The individual
plaintiffs combined say they lost about $131,000.

The court acknowledged that Connecticut has by far the largest loss but
said it was a small portion of the total pension funds managed by the
state. In comparison, the court said the Campbell Soup shares represented a
substantial portion of the of retirement funds lost by the individual
plaintiffs, DeValle and Green, who are both former Campbell employees.

According to the complaint, Campbell Soup and two of its executives
portrayed the company as growing, when in reality the company was
falsifying its revenue from condensed soup sales in violation of federal
securities laws. Specifically, the company allegedly posted "sham
recordings of sales" for products that were never shipped to its
distributors in order to meet Wall Street expectations.

In January 1999, the company announced that "major cost saving initiatives
in supply chain operations," "discontinuation of rebates and discounts,"
and the "unseasonably warm weather in November and December" would result
in lower shipments for the quarter and an earnings shortfall. Thereafter,
the stock price dropped from a high of $53.94 on Jan. 8 to close at $45.375
on Jan. 11, a drop of almost 13 percent. The class period is from Nov. 18,
1997 to Jan. 8, 1999.

Regarding the number of co-lead plaintiffs to appoint, the court took a
different approach than that utilized by Judge Charles Brient in In re
Oxford Health Plans Inc., 182 F.R.D. (S.D. N.Y. , 1998). In that case, the
court selected three lead plaintiffs to avoid the possibility of a tie vote
or a deadlock on important issues.

Judge Irenas questioned whether litigation can proceed smoothly in the
event that one of the three strongly objects to a particular course of
action. Since the individual plaintiffs are considered a single group, this
approach requires unanimity.

During oral argument, the parties addressed whether the Schatz firm and the
Schoengold firm are large enough to handle this securities class action. In
response, all three firms said they intended to parcel out the work in an
undetermined fashion to the other firms.

However, Judge Irenas said that he has "serious reservations about this
approach." A private litigant would not expect his or her lawyer to dole
out work to the other firms that had competed for the case, continued the

"Not only would such action suggest the possibility of collusion among
counsel, but it would likely be inefficient and would undercut the client's
desire to select the best lawyers for the job," said the court.

Although the court did not totally reject the possibility of co-class
counsel, it is requiring detailed information on any proposed delegation in
the motion for approval. The court also listed other factors it would
consider in approving the plaintiffs' choice of lawyers. These include a
clear understanding of who will be responsible for expenses if the
litigation is unsuccessful, and a cap on fees, even though the court will
actually determine the fee to be awarded. Oral argument is scheduled for
May 19.

CINAR CORP: HighReach Learning Partners Sue over Stock Purchase Deal
On the heels of several class-action lawsuits filed on both sides of the
border earlier this year, the Montreal-based TV producer is now facing a
lawsuit filed by the four former owners of HighReach Learning, a publisher
of kids educational materials acquired by Cinar in 1998.

Michael Mayberry, Sharon Mayberry, Phillip Kelley and Kathy Kelley --- who
were partners in HighReach Learning --- are suing Cinar and majority
shareholders Ronald Weinberg and Micheline Charest in an attempt to recover
losses related to the stock-purchase agreement inked with Cinar when the
Canadian company took-over High Reach two years ago.

The suit was filed in the District Court in Charlotte, N. C., where
HighReach is based. The former HighReach principals are seeking to have
that stock-purchase agreement over-turned. In an unusual twist, the four
HighReach partners continue to hold senior management positions at Cinar.

                            Shares in Deal

Cinar acquired HighReach in 1998 for $ 18 million in cash and 422,000 Cinar
shares. At the time of the deal, Cinar's shares were trading at around $ 19
on the Nasdaq exchange.

In the suit, the former HighReach owners allege that Weinberg and Charest
"knowingly or recklessly engaged in act, transactions, practices and
courses of business that operated as a fraud and deceit upon the
plaintiffs." It further alleges that the defendants failed to state
material facts, or misstated material facts, that would have affected the
sale of HighReach. According to the suit, "Had plaintiffs known of the
materially adverse information misrepresented or not disclosed by
defendants, they would not have purchased Cinar stock at the artifically
inflated prices they did or sold HighReach stock in exchange for Cinar

Michael Mayberry, president of HighReach Learning, said, "These legal
proceedings pertain to circumstances surrounding the stock purchase
agreement negotiated between Cinar and the former owners of HighReach
Learning in 1998. This does not affect HighReach's day-to-day operations,
nor does it affect our numerous projects in support of Cinar's ongoing

                            Still Together

There was some more bad news from Cinar headquarters. The company's
auditors, Ernst & Young, have now said that the company's financial
statements might not be prepared in time for Cinar's self-imposed June 30

Due to lack of financial information, trading on Cinar's stock has been
halted since March on both the Toronto and Nasdaq exchanges, and the Quebec
stock authorities placed a trading halt on the company's stock in late
April, which means that the company's shares cannot begin trading again
until it receives the green light from the Quebec Securities Commission.
(Daily Variety, May 26, 2000)

CYBER-CARE, INC: Hoffman & Edelson Files Securities Suit in Florida
Hoffman & Edelson, LLC announces that a class action lawsuit has been
commenced in the United States District Court for the Southern District of
Florida on behalf of investors who purchased shares of the common stock of
Cyber-Care, Inc. (NASDAQ: CYBR) between October 12, 1999 and May 12, 2000
(the "Class Period").

Cyber-Care describes itself as a "technology-assisted disease management
company." The complaint charges Cyber-Care and the Company's Chairman and
CEO, Michael F. Morrell, with violations of the federal securities laws by,
among other things, making materially false and misleading statements.
Specifically, defendants issued press releases touting sales and customer
interest in the Company's Internet Electronic Housecall System, ("EHS"),
despite not having the required Food and Drug Administration approval to
market and sell EHS and despite the financial inability of many of the
purported customers to purchase the number of EHS units indicated. The text
of the specific press releases referenced in the complaint from February
26, 2000 to date can be obtained at http://biz.yahoo.com/n/c/cyber.html.
Specific dates of press releases referenced in the complaint include, but
are not limited to: October 12, 1999; December 10 & 20, 1999; January 13,
2000; February 4, 24 & 28, 2000; and March 21 & 22, 2000. After having
traded as high as $37.00 per share during the Class Period, Cyber-Care's
common stock fell as low as $5.60 per share after the true facts were

Contact: HOFFMAN & EDELSON, LLC Marc H. Edelson, Esq. or Jerold B. Hoffman,
Esq. 877/537-6532 (toll free), fax 215/230-8735 E-mail: Hofedlaw@aol.com

CYBER-CARE, INC: Weinstein Kitchenoff Files Securities Suit in Florida
Kitchenoff Scarlato & Goldman Ltd. announces that a class action lawsuit
has been commenced on behalf of investors who purchased shares of the
common stock of Cyber-Care, Inc. (Nasdaq: CYBR) between October 12, 1999
and May 12, 2000 (the "Class Period"). The action was filed in the United
States District Court for the Southern District of Florida.

Cyber-Care describes itself as a "technology-assisted disease management
company." The complaint charges Cyber-Care and the Company's Chairman and
CEO, Michael F. Morrell, with violations of the federal securities laws by,
among other things, making materially false and misleading statements.
Specifically, defendants issued press releases touting sales and customer
interest in the Company's Internet Electronic Housecall System, ("EHS"),
despite not having the required Food and Drug Administration approval to
market and sell EHS and despite the financial inability of many of the
purported customers to purchase the number of EHS units indicated.

The text of the specific press releases referenced in the complaint from
February 26, 2000 to date can be obtained at
http://biz.yahoo.com/n/c/cybr.html.Specific dates of press releases
referenced in the complaint include, but are not limited to: October 12,
1999; December 10 & 20, 1999; January 13, 2000; February 4, 24 & 28, 2000;
and March 21 & 22, After having traded as high as $37.00 per share during
the class period, Cyber-Care's common stock fell as low as $5.60 per share
after the true facts were disclosed.

Contact: Mark Goldman, Esquire or Andrew Henry, Esquire, of Weinstein
Kitchenoff Scarlato & Goldman Ltd., 888-545-7201, or msgoldman@wksg.com

E.SPIRE COMMUNICATIONS: Finkelstein, Thompson Files Securities Lawsuit
Finkelstein, Thompson & Loughran has filed a securities class action
lawsuit in the United States District Court for the District of Maryland on
behalf of investors who bought e.spire Communications, Inc. (Nasdaq: ESPI)
stock between August 12, 1999 and March 30, 2000 (the "Class Period").

The lawsuit charges Espire and certain officers of the Company, with
violations of the federal securities laws. The lawsuit alleges that
defendants issued a series of false and misleading statements during the
Class Period concerning the Company's assets, revenues, income and
earnings. The complaint specifically alleges that the Company's 1999
revenues and operating results were overstated through improper revenue
recognition and the overstatement of receivables, causing the Company to
have to restate its 1999 results. The complaint further alleges that
certain insiders took advantage of their inside knowledge to sell
significant amounts of their own Espire stock holdings for proceeds of over
$2.8 million.

On March 30, 2000, the market discovered for the first time defendants'
deceptive accounting practices. By the close of trading on March 31, 2000,
the Company's stock price had fallen almost 38%, to a close of $7.031

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

FIRST SECURITY: Finkelstein & Krinsk Investigate on Securities Issues
Finkelstein & Krinsk, is pursuing an aggressive investigation of the
activities of First Security Corporation (Nasdaq: FSCO) between at least
October 18, 1999, and March 2, 2000, concerning allegations of artificial
inflation of the Company's stock price and other violations of the federal
securities laws, including Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

First Security represents itself to be an independent and multi-state bank
holding company that provides financial services to individual and
corporate customers throughout Utah, Idaho, California, New Mexico, Nevada,
Oregon and Wyoming.

On January 19, 2000, the Company reported earnings of $0.37 per share
during its fourth quarter of fiscal 1999, constituting an increase over the
comparable quarter of 1998. Certain shareholders have alleged that while
the Company was reporting such increased earnings, such statements were
material misrepresentations, thereby artificially inflating the price of
First Security common stock. Such shareholders allege that, in fact, the
Company's fourth quarter earnings per share were adversely affected by an
undisclosed one-time nonrecurring gain of $0.04 per share, resulting in the
Company's true operating performance being $0.33 per share, which was a
decrease over the comparable 1998 period. When the Company revealed on
March 3, 2000, that its operating results for the fourth fiscal quarter
would fall short of estimates, the price of First Security common stock
dropped by 38 percent, falling from $22.50 per share to $ 13.968 per share.

Contact: Jeffrey R. Krinsk Esq. of Finkelstein & Krinsk, toll free -
877-493- 5366 or 619-238-1333

GTE CORP: Shareholders Sue Over Dividends, Shalove Stone Announces
Shalov Stone & Bonner announced on May 26 that a class action was commenced
on behalf of all shareholders of record of GTE Corp. (NYSE: GTE) as of
March 29, 1999. The lawsuit alleges that the defendants violated the
federal securities laws by, among other things, misrepresenting that GTE's
dividend would not be altered by the company's merger with Bell Atlantic.
According to the complaint, GTE altered its dividend practice, materially
reducing the amounts shareholders are to receive.

Contact: Ralph M. Stone of Shalov Stone & Bonner, 212-686-8004

GUN MAKERS: Senate Considers Bill Curbing Lawsuits
The Senate is considering a House bill that would prevent anyone, including
the state, from suing a gun maker or dealer unless a gun was defective or
was sold illegally. Rep. Jim Klauber, R-Greenwood, introduced the bill. He
said such lawsuits are frivolous attempts to change the law in an effort to
ban guns. Twenty states, including Georgia, have taken steps to prevent
lawsuits against gun makers and gun dealers, according to National Rifle
Association spokeswoman Patricia Hilton

New Orleans filed the first such lawsuit in 1998 to recover costs created
by shootings and force changes in the way guns are designed and
distributed. At least 28 other cities and counties, none in South Carolina,
have done the same. (The Associated Press State & Local Wire, May 24, 2000)

INSO CORPORATION: Announces Settlement for Shareholder Litigation
Inso Corporation (Nasdaq: INSO), announced on May 26 that it had entered
into an agreement to settle the consolidated securities class action
originally filed on February 1, 1999 on behalf of shareholders who acquired
Inso shares during the period April 23, 1998 through March 31, 1999. The
litigation was related to Inso's restatement of revenues during the first
three quarters of 1998. The settlement provides that all claims against
Inso and its former Chief Executive Officer, Chief Financial Officer and
Controller will be dismissed. In agreeing to the proposed settlement, the
Company and the individual defendants specifically deny any wrongdoing.

The settlement provides for a cash payment of approximately twelve million
($12,000,000) dollars by Inso's insurance carrier, pursuant to an insurance
agreement announced in the Company's September 30, 1999 press release. All
costs of the settlement will be covered by the insurance agreement and the
Company will not take a new charge as a result of the settlement.

The settlement is subject to certain customary conditions, including
preliminary and final approval by the United States District Court for the
District of Massachusetts and notice to the class. Once the Court gives
preliminary approval to the settlement, formal notices with the details of
the settlement will be sent to purported class members who purchased Inso
common stock during the class period.

KAISER ALUMINUM: Faces 35 Lawsuits Related to Gramercy Explosion
In July 1999, the Gramercy, Louisiana alumina refinery of Kaiser Aluminium
& Chemical Corp. was extensively damaged by an explosion in the digestion
area of the plant. Twenty-four employees were injured in the incident,
several of them severely. As a result of the incident, alumina production
at the facility was completely curtailed. Construction on the damaged part
of the facility began during the first quarter of 2000. Initial production
at the plant is currently expected to commence during the third quarter of
2000. Based on current estimates of the Company, full production is
expected to be achieved during the first quarter of 2001. The Company has
received the regulatory permit required to operate the plant once the
facility is ready to resume production.

The cause of the incident is under investigation by the Company and
governmental agencies. In January 2000, the U.S. Mine Safety and Health
Administration ("MSHA") issued 21 citations and in March 2000 proposed that
the Company be assessed a penalty of $.5 in connection with its
investigation of the incident. The citations allege, among other things,
that certain aspects of the plant's operations were unsafe and that such
mode of operation contributed to the explosion. The Company disagrees with
the substance of the citations and has challenged them and the associated
penalty. It is possible that other civil or criminal fines or penalties
could be levied against the Company.

The incident has also resulted in more than thirty-five class action
lawsuits being filed against the Company alleging, among other things,
property damage and personal injury. In addition, a claim for alleged
business interruption losses has been made by a neighboring business. The
aggregate amount of damages sought in the lawsuits and other claims cannot
be determined at this time; however, the Company does not currently believe
the damages will exceed the amount of coverage under its liability

                            Workers' Compensation

The Company says that claims relating to all of the injured employees are
expected to be covered under the Company's workers' compensation or
liability policies but the aggregate amount of workers' compensation claims
cannot be determined at this time and it is possible that such claims could
exceed the Company's coverage limitations.

LEAD PAINT: CA County Seek Compensation and Medical Fund from Makers
Alleging that the manufacturers of lead paint and pigments have acted to
conceal the health hazards posed by their products for almost a century,
Santa Clara County has lodged a seven-count California state court suit
seeking compensatory damages and establishment of a medical monitoring fund
to identify future victims of lead-paint poisoning. County of Santa Clara
v. Atlantic Richfield Co. et al., No. CV 788657 (Cal. Super. Ct., Santa
Clara County, Mar. 23, 2000).

According to the suit, the 10 named defendants, led by Atlantic Richfield
Co., either directly (or are the successors in interest of companies that)
produced lead pigments or the lead-based paint commonly used throughout the
United States until the substance was federally banned in 1978.

Also included in the suit is the Lead Industries Association (LIA), a trade
group which Santa Clara County says has "touted the benefit of lead paint;
denounced public reports that lead paint caused illness; made affirmative
misrepresentations that lead paint was no longer being used when it was;
and fought legislation and other regulatory efforts to ban lead paint."

In the complaint, which suggests the case be given class-action status, the
county seeks recovery of what it estimates to be the $1,300 to $5,000 in
public funds spent per child for added health care and education services
as the result of lead poisoning.

It contains causes of action under the California Business and Professions
Code Section 17200, and alleges strict product liability/failure to warn,
negligence, fraud and concealment, and unjust enrichment.

As an example of behavior that has been typical of lead paint
manufacturers, Santa Clara County notes that defendant Sherwin-Williams
Co., despite information published in a 1906 article in an internal
magazine describing the substance as "poisonous in a large degree, both for
the workmen and for the inhabitants of a house painted with lead colors,"
the company began producing white lead paint for domestic use in 1910.
Sherwin-Williams, in the same article, recommended the use of zinc-based
paints instead, the suit says.

Exhibits attached to the complaint include promotional literature from
before and up to the 1920s, touting the use of lead paint in children's
rooms and the fact that it had been employed in the construction of the
newest schools and public buildings of the era.

Although the lead pigment and paint industries had developed several
feasible alternatives to lead paint by 1930, the manufacture and promotion
of lead paint continued unabated through the 1950s. The county asserts that
when the use of lead-based paint began to decline in 1939, the LIA launched
an aggressive "White Lead Promotion Campaign" to increase sales and thwart
legislation to require lead paint warnings.

"The campaign continued to 1952 and the monies spent on the campaign were
more than offset by the increase in profits achieved by the paint
manufacturing defendants," according to the suit. "During this entire time,
the defendants, and each of them, knew of the serious dangers caused by
lead paint but intentionally failed to warn the public of those dangers."

Throughout the 20th century, the county claims, the defendants have:

  -- made affirmative misrepresentations about the safety of lead paint;

  -- failed to disclose the knowledge they had;

  -- made a concerted effort to hide the dangers of lead paint from the
      government and regulators; and

  -- taken "active steps" to successfully publicly discredit any
     information suggesting that lead paint was hazardous.

In addition to Atlantic Richfield, the LIA and Sherwin- Williams, those
named in the county's proposed class action include American Cyanamid Co.,
E.I. duPont de Nemours and Co., O'Brien Corp., Glidden Co., NL Industries
Inc. and SCM Chemicals.

Santa Clara County is represented by Bruce L. Simon, Joseph W. Cotchett and
Nancy L. Fineman of Cotchett, Pitre & Simon in Burlingame, Calif., and by
Santa Clara County Counsel Ann Miller Ravel of San Jose, Calif. (Consumer
Product Litigation Reporter, May 2000)

LOEWEN GROUP: 1996 Suit over Trade Practices Stayed Pending Ch 11 Case
This action (No. 96-CV-397, Court of Common Pleas, Erie County, Ohio) was
served on Loewen and other defendants on September 19, 1996. Plaintiffs
allegedly compete with defendants Restlawn Memorial Park Association,
Restlawn Memorial Gardens, Inc., and Sinfran, Inc., which were acquired by
the Company.

Plaintiffs allege thirteen counts, including counts alleging that defendant
Restlawn engaged in false and deceptive advertising, misused confidential
information, defamed plaintiffs, breached contractual obligations,
misappropriated trade secrets, and tortiously interfered with plaintiffs'
contractual relationships. Plaintiffs further allege that the Company knew
or should have known of Restlawn's conduct and adopted and continued
Restlawn's alleged unfair, false, and deceptive practices. Plaintiffs also
allege that the defendants conspired to destroy the plaintiffs' business
and created a "trust in order to prevent competition" in violation of
Ohio's antitrust laws.

Plaintiffs seek compensatory damages, which are unspecified but alleged to
exceed $350,000; punitive damages, which are unspecified but alleged to
exceed $300,000; and injunctive relief. Defendants' summary judgment motion
was denied as to all but one of plaintiffs' counts. A trial set for July
12, 1999 was stayed as a result of the bankruptcy proceedings, and no new
trial date has been set.

The Company has determined that it is not possible at this time to predict
the final outcome of these proceedings or to establish a reasonable
estimate of possible damages, if any, or reasonably to estimate the range
of possible damages that may be awarded to the plaintiffs. Accordingly, no
provision with respect to this lawsuit has been made in the Company's
Consolidated Financial Statements. F. Leo Groff, Inc. Et Al. V. Restlawn
Memorial Gardens, Inc. Et Al.

LOEWEN GROUP: Securities Suit in Suspense in PA Pending Ch 11 Case
Since December 1998, the Company has been served with various related
lawsuits filed in the United States District Courts for the Eastern
District of Pennsylvania and for the Eastern District of New York. Raymond
L. Loewen, the former Chairman and Chief Executive Officer, and certain
current and former officers and directors have been named as defendants in
some of the suits. All but one of these lawsuits were filed as purported
class actions on behalf of persons or entities that purchased Company
Common shares during five different time periods ranging from November 3,
1996 through January 14, 1999. LGII and Loewen Group Capital, L.P. ("LGC")
are named as defendants in two suits (with the Company, the "Loewen
Defendants"). The plaintiffs in these two lawsuits purport to sue on behalf
of a class of purchasers of Monthly Income Preferred Securities ("MIPS")
from March 5, 1997 through January 14, 1999. The MIPS were issued by LGC.

The complaints generally make allegations concerning, among other things,
the Company's internal controls, accounting practices, financial
disclosures and acquisition practices.

The Judicial Panel on Multidistrict Litigation (the "MDL Panel") granted
the Loewen Defendants' motion to consolidate all of the actions for
pre-trial coordination in the United States District Court for the Eastern
District of Pennsylvania.

On April 15, 1999, Judge Thomas O'Neill of the District Court for the
Eastern District of Pennsylvania entered an order consolidating in the
Eastern District of Pennsylvania, all of the cases then filed, as well as
any related cases thereafter transferred to that District (the "April 15
Order"). The April 15 Order appointed the City of Philadelphia Board of
Pensions and Retirement as lead plaintiff. Subsequent to the Company's
bankruptcy filings, Judge O'Neill entered an order staying all of the cases
and placing them on the suspense docket.

LUCENT TECHNOLOGIES: Securities Suit Counsel to Be Chosen by Sealed Bid
Following the lead of California district courts, the District of New
Jersey has ruled that the appointment of class counsel in the securities
fraud class action against Lucent Technologies will be decided through a
sealed-bid auction. Although Judge Alfred J. Lechner Jr. provisionally
appointed a pension fund as lead plaintiff, he also ordered that the notice
of the suit be republished to give more investors an opportunity to seek
the position. In re Lucent Technologies Inc. Securities Litigation, No.
00-621, letter-opinion and order issued (E.D.N.Y., Apr. 27, 2000).

Stating there has been "an absence of interest in the position of lead
plaintiff," the court said that it would carefully scrutinize the
composition of any proposal and that publication of a second notice may
result in a challenge to the currently-uncontested appointment.

The court's letter-opinion details what it considers an adequate notice of
pendency. In addition to providing information concerning the class action,
its claim and the class period, and any alleged misstatements, should be
delineated with the release dates of the disclosure. The court also said
that the notice should describe the possibility of intraclass conflict
among potential class members who purchased the company stock at various
intervals. After receiving court approval, the second notice of pendency is
to be published no later that June 2, 2000.

Lucent, a designer of network communication systems and software, allegedly
made false statements concerning its financial condition and the company's
reorganization plan to mask internal problems, including declining demand
and margins and escalating costs.

In early January, Lucent shocked the market by announcing that its results
for the first fiscal quarter of 2000 would fall materially short of
analysts' expectations. In after-hours trading, the stock price fell as
much as 27 percent to close at $50.19 per share.

The lead plaintiff proposed to date is the Employer-Teamsters Locals 175 &
505 S&P Pension Trust Fund, along with individual shareholders Huisuk
Clevenger and Marc Altman. The pension fund alleges losses of $129,923
while the individual shareholders allege losses of $81,346 and $44,933,

Judge Lechner denied the motion to the extent that it sought to include the
individual shareholders in the group stating, "It is not clear whether the
Pension Trust Fund, Clevenger and Altman even know that they have been
offered as a group."

Judge Lechner found that Altman and Clevenger do not have any unique skills
or experience to contribute to the position of lead plaintiff that the
pension fund does not already provide. The only commonality among the
proposed lead plaintiffs is their counsel, he added, which is an
insufficient basis for the grouping.

In any future proposals, the court is requiring a description of the
members, an explanation of how the group was formed, and information on
whether there was a pre-existing relationship among the members. In
addition, any motion should include details of how the group intends to
handle communication among its members and the proposed lead counsel.

Citing In re Network Associates, 76 F.Supp.2d 1017 (N.D. Cal., 1999), the
court noted "the lead plaintiff owes a fiduciary duty to obtain the highest
quality representation at the lowest price." In the instant case, the lead
plaintiff seeks approval of Milberg Weiss Bershad Hynes & Lerach of New
York City to serve as lead counsel. However, the court said they failed to
provide any evidence of the fee arrangement, its terms, or discussions
leading up to it.

"Significantly, there is no indication of whether other counsel were
interviewed or even considered," said Judge Lechner. "This is troubling."

Any law firm, including those presently unconnected to the litigation, may
seek to be appointed as class counsel. The bids are to be submitted by June
2 under seal. The court listed factors it considers important in any
proposal, including, but not limited to:

  -- a firm's experience in handling securities class actions;

  -- the qualification of the firm to perform the work, including whether
      it will post a completion bond; and

  -- a statement of the dollar amount to be charged and the percentage of
      any recovery through various stages of the proceedings. (Securities &

      Commodities Litigation Reporter, May 17, 2000)

MANHATTAN INVESTMENT: 18 Foreign Companies Sue Bankrupt Brokerages
Eighteen foreign companies have filed a $7 billion suit against bankrupt
Manhattan Investment Fund Ltd. and their services providers, alleging the
brokerages and accounting firms concealed or negligently failed to detect
millions of dollars in losses by the fund.

The Southern District of New York suit headed by French investment fund
Argos makes claims similar to a suit filed in March by another Manhattan
fund investor, Cromer Finance Ltd.

Defendants in the suit at bar include Bear Stearns & Co., the brokerage
that sold securities to the Manhattan fund; Ernst & Young, which owned Fund
Administration Services (FAS), the fund's administrator; and fund auditor
Deloitte & Touche.

The plaintiffs are:

   -- Argos, Altipro, Altipro II, W Finance Arbitrage, W Finance
       Croissance, all regulated French funds; and Stanel, a French

   -- Firmenich International S.A. and Mirabaud & Cie, both Swiss
      companies, and George Stucki, a citizen of Switzerland;

   -- Graceland Trust, HSF (Manhattan) Ltd., Olympia Stars Limited --
       Emerging Market Series, Polygon Capital Ltd., Winchester Holdings

   -- Olympia Star Global Hedge, all British Virgin Islands companies; and

   -- Parly North American Absolute Return Fund and Scorpio Multi-Strategy
       Fund Ltd., both Cayman Islands companies; Kenmar Global Hedge Fund,
       a Bahamian company; Multivalor Invest Inc., a Panamanian
       corporation; and Investment Strategies Fund PLC, an Irish company.

The plaintiffs allege that they lost $53.5 million when the Manhattan
Investment Fund, a hedge fund operated by Michael W. Berger, was shut down
by the Securities and Exchange Commission (SEC) for alleged fraud. The fund
has since filed for bankruptcy protection in New York bankruptcy court.

Named defendants in the complaint, in addition to those mentioned above,
are Berger and Financial Asset Management Inc., an Ohio brokerage.

In January, the SEC filed a civil fraud suit against Berger and the
Manhattan fund alleging the fund had undisclosed loses of $300 million. At
the time of the suit the fund had less than $50 million in assets. The
Manhattan fund filed for Chapter 11 protection in New York Bankruptcy Court
on March 7, 2000.

According to court documents, the Manhattan fund was designed to permit
foreign investors or tax exempt U.S. investors (such as pension funds and
trusts) to participate in the fund's capital appreciation strategy
involving the short-selling of Internet company securities.

In 1996, the fund's short sales began losing millions of dollars. The SEC
has alleged that Berger concealed those loses and sent out false statements
to investors showing the fund was making money.

The six-count suit at bar alleges that the Ernst & Young affiliate, FAS,
"knowingly or recklessly" passed Berger's false information over to
Deloitte, which failed to discover the fraud. Bear Stearns and the other
defendants are alleged to have known the Manhattan fund was in serious
trouble and either continued to sell it securities for the fees and
commissions the transactions generated, or helped to cover up the loses.

The foreign plaintiffs are asking the court for compensatory damages of
$53.5 million and punitive damages of $7 billion.

"This case involves egregious misconduct and recklessness," the plaintiffs
say, adding that the fraud would not have been possible without the alleged
connivance of all the defendants. (Chapter 11 Update, May 2000)

MCI WORLDCOM: SkyTel Shareholder Suit Survives Dismissal in NY
The Eastern District of New York has refused to dismiss the fraud action
against MCI WorldCom filed by shareholders of SkyTel Communications Inc.
after the communications giant acquired SkyTel. The investors of the target
company contend that MCI made false statements regarding the merger three
days before it was announced to artificially deflate the value of their
holdings. In re MCI Worldcom Inc. Securities Litigation, No. 99-CV-3136
(E.D.N.Y., Apr. 13, 2000).

MCI argued that it can only be held liable for statements relied on by its
shareholders. Judge I. Leo Glasser, however, said a false statement from an
officer of a corporate suitor can make that company liable to shareholders
in the target company even though they are not in privity.

The case is unique in that most shareholder class actions accuse officers
or directors of attempting to artificially inflate a stock for their own
purpose, rather than suppressing its value.

SkyTel, a leading provider of wireless communication services, was the
subject of takeover rumors for several months in early 1999. On May 25,
1999, an Internet news service reported that MCI had registered
"skytelworldcom.com" as an Internet domain name.

To protect companies from cybersquatters who register domain names that
they perceive as valuable, companies often register the names even before
they can use them.

When MCI's Senior Manager of Corporate Communications was asked about the
registration, she said the action was not indicative of any official
company intent. In addition, the company spokesperson said MCI employees,
acting on their own initiative, often register domain names to protect them
from squatters. When probed about the possibility of a merger, the company
only responded with an official "no comment."

That day, SkyTel stock opened at $18.875. When news of the domain name
registration hit the street, the stock value rose to $21.875, a gain of 16
percent over the previous day. The market later interpreted MCI's
statements as a denial of any interest in the company, and the stock price
declined to $18.675.

On May 28, MCI announced it would buy SkyTel for $1.3 billion in stock, or
about $21.50 per SkyTel share. The agreement also provided that SkyTel
shareholders would receive .25 shares of MCI stock for each SkyTel share
they owned.

Plaintiffs allege MCI's statements were materially misleading because the
company had in fact been negotiating a merger since February 1999.
According to the opinion, most of the terms of the agreement had been
established by May 25, including the exchange price ratio for the stock.
However, the shareholders argue that MCI denied the impending takeover to
ensure the acquisition price would not increase.

Relying on Basic v. Levinson, 485 U.S. 224 (1988), the court said any
statement other than a "no comment" can be the basis for allegations of
fraud. Judge Glasser found that the shareholders had pled their case with
sufficient particularity to meet the heightened pleading requirements of
the Private Securities Litigation Reform Act and Fed. R. Civ. P. 9(b).

Even though MCI insisted that the price of the SkyTel stock was irrelevant,
and that the SkyTel price dropped before the company made its statement
regarding the domain name registration, the court said the effect of the
stock price should be addressed by expert testimony and not decided at this
stage of the proceeding.

The SkyTel shareholders are represented by Stanley D. Bernstein of
Bernstein, Liebhard & Lifshitz in New York.

MCI Worldcom is represented by Paul C. Curnin of Simpson Thacher & Barlett
in New York. (Securities & Commodities Litigation Reporter, May 17, 2000)

MTBE LITIGATION: Utilities, Gas Stations Under Attack; Residents Sue
Utilities and petroleum companies soon may have to defend themselves like
the tobacco companies against large class-action lawsuits over personal
injury resulting from environmental contamination. The first such lawsuit
comes against Pacific Gas & Electric (PG&E) in November.

The law firm Masry & Vivitoe filed a personal injury case for about 1,500
people who lived near plants owned by PG&E. They contend the utility
company polluted aquifers with cancer-causing chromium 6. The firm also is
pursuing methyl tertiary butyl ether (MTBE)-related lawsuits in North
Carolina and California, said attorney Ed Masry.

The California case will go to trial this October in San Francisco Superior
Court. The firm has charged oil company Unocal Corp. of San Francisco with
fraud for allegedly placing reformulated gasoline containing MTBE in
leaking underground storage tanks.

In a separate case pending with the Hanover County Superior Court in North
Carolina, well owners charge petroleum firm Amerada Hess Corp. with
allowing MTBE to pollute ground water supplies. No hearing date has been

                          More Suits to Come

The lawsuits are part of a growing number of cases filed regarding MTBE

A Maine judge recently ruled that three manufacturers of the gasoline and
two national trade groups are not liable for the contamination of ground
water supplies. Maine Superior Court Justice Roland Cole on March 2 ruled
against five Maine residents who asked the court to force makers of MTBE to
test all water wells in the state and pay for cleanup.

Arco Chemical, Atlantic Richfield, Lyondell Chemical, the American
Petroleum Institute and the Oxygenated Fuels Association could have been
ordered to pay more than $ 15 million in damages, but Cole threw out the
class-action lawsuit, saying allegations that the makers of MTBE were
responsible for gasoline spills was a "novel and untested" theory. Contact:
Masry & Vivitoe, (818) 991-8900. IAC-ACC-NO: 62267326 (Hazardous Waste
News, May 15, 2000)

PATHMARK STORES: Lawsuit over Proposed Merger Settled; Buyer Quits
Pathmark Stores Inc., formerly known as Supremarkets General Corporation,
reports to the SEC that a purported stockholder class action lawsuit was
filed in the court of Chancery of the State of Delaware entitled Wolfson v.
Supermarkets General Holdings Corporation, et al., C.A. No. 17047, in which
the Plaintiff alleged, among other things, that the defendant directors of
Holdings and SMG-II breached their fiduciary duties to the holders of
Holdings' Preferred Stock. The Plaintiff, by his counsel, entered into a
Settlement Agreement, dated June 9, 1999, with the Defendants pursuant to
which the parties agreed to settle the Action.

The Settlement Agreement provides for, among other things, the
certification of the action as a class action under the rules of the Court,
which class would consist of all holders of the Preferred Stock from and
including March 9, 1999 through and including the consummation of the
SMG-II Merger or, if the SMG-II Merger fails to close, the stock purchase
pursuant to the Stock Purchase Agreement, dated March 9, 1999, by and among
Ahold, the Purchaser, SMG-II and PTK (the "Alternative Transaction"). In
addition, pursuant to the terms of the Settlement Agreement, the Defendants
agreed, subject to Final Court Approval, that the Purchaser increase its
tender offer price to $40.25 per share of Preferred Stock (from $38.25),
less the total amount awarded as fees and expenses to Plaintiff's counsel
by the Court divided by the total number of outstanding shares of Preferred
Stock (the "New Offer Price"). Plaintiff's counsel applied to the Court for
an award of fees and expenses in an aggregate amount of $1,956,268, or
$0.40 per share of Preferred Stock.

The Settlement Agreement also provides, among other things, that any of the
Defendants shall have the right to withdraw from the proposed settlement in
the event that (i) any claims related to the SMG-II Merger, the Alternative
Transaction, or the subject matter of the Action are commenced by any
member of the Class against any Defendants or certain others employed by,
affiliated with, or retained by the Defendants in any court prior to Final
Court Approval of the settlement, and the court in which such claims are
pending denies Defendants' application to dismiss or stay such action in
contemplation of dismissal, or (ii) any of the other conditions to the
consummation of the settlement described below shall not have been
satisfied. The consummation of the settlement is subject to (i) Final Court
Approval of the settlement; (ii) dismissal of the Action by the Court with
prejudice and without awarding fees or costs to any party; and (iii) the
Purchaser closing (A) its tender offer and the SMG-II Merger, or (B) the
Alternative Transaction.

After notice and a hearing, on July 22, 1999, the Court approved the
settlement and the fee application of the Plaintiff's attorneys. As of
August 23, 1999, all applicable appeal periods expired, thus constituting
Final Court Approval. As a result of the settlement, the New Offer Price
was $39.85 per share of Preferred Stock.

However, on December 16, 1999, Purchaser and Ahold terminated the SMG-II
Merger Agreement. On January 5, 2000, Plaintiff moved to enforce the
Settlement Agreement against Purchaser, which motion is pending.

As previous disclosed, on December 16, 1999, Ahold terminated the SMG-II
Merger Agreement claiming that despite its best efforts, it could not
obtain necessary antitrust clearance from government regulators. That same
day, Ahold filed a complaint in the Supreme Court, State of New York,
County of New York against SMG-II seeking a declaratory judgement that
Ahold had used its "best efforts" under the SMG-II Merger Agreement. On
January 18, 2000, SMG-II filed its Answer and Counterclaims, denying
Ahold's assertion that it used its best efforts to consummate the SMG-II
Merger Agreement. Additionally, SMG-II asserted counterclaims against Ahold
for (i) breach of contract by failure to use best efforts; (ii) breach of
the covenant of good faith and fair dealing; and (iii) unfair competition.
SMG-II has requested compensatory damages in an unspecified amount.

On February 7, 2000, Ahold answered SMG-II's counterclaims and denied the
allegations contained therein, and filed an Amended Compliant seeking
declarations that (i) the "best efforts" clause in the SMG-II Merger
Agreement is unenforceable; (ii) if the "best efforts" clause is
enforceable, Ahold did not breach that clause; and (iii) Ahold properly
terminated the SMG-II Merger Agreement. Additionally, Ahold alleged that
SMG-II breached the best efforts clause of the SMG-II Merger Agreement and
has requested compensatory damages in an unspecified amount. SMG-II filed
its amended answer and the amended complaint and amended counterclaims on
February 27, 2000. At this juncture, discovery is proceeding.

S1 CORP: Top Financial Firms Plow $244M; 3 Insurers Take Largest Stakes
The windfall investment of $244 million that the Internet banking vendor S1
Corp. raised is striking not only for its size, but also because of the
investors that chipped in.

The three largest of the five separate investments came from insurers --
Zurich Financial Services Group, Allianz AG, and State Farm Mutual
Automobile Insurance Co. The other two companies involved were banks: J.P.
Morgan, which invested through its LabMorgan Internet unit; and FleetBoston
Financial Corp., which is the only company in the lot that runs the type of
retail banking business befitting a traditional S1 customer.

The magnitude of the investment not only solidifies S1's position as the
leading provider of Internet banking software, but highlights the designs
that nonbank financial institutions have on becoming providers of a full
range of electronic financial services.

State Farm, which owns a federal savings bank that offers deposit and
consumer loan products, added about $100 million to an initial investment
of $10 million in S1, according to S1 officials. Zurich was the next
largest investor, then Allianz. With an investment of about $7 million,
J.P. Morgan was in distant last place after Fleet. Specific amounts will
not be disclosed until S1 files disclosures with the Securities and
Exchange Commission.

In a statement, the chairman and chief executive officer of
Switzerland-based Zurich Financial, Rolf Huppi, disclosed some of his
company's strategy, saying: "We intend to utilize the strengths of S1 to
aggressively take our 35 million households online and continue to add
value to our customers."

Each investor serves at least 20 million households, representing a healthy
potential customer base for S1, which already has about 800 financial
institution customers and 2.9 million end-users worldwide.

"It is more than just the money," said Luke Fouke, an analyst at Friedman
Billings Ramsey & Co. in Arlington, Va. "It is the significance of the
customers' putting more on the table."

The money far exceeds the $30 million to $60 million that Internet banking
software companies typically have raised in initial public offerings; in
terms of capitalization, it puts S1 firmly ahead of its main rival,
Corillian Corp. of Beaverton, Oregon.

The investment also surpasses amounts raised in several rounds of financing
that S1 conducted in 1999. In February, Royal Bank of Canada invested $50
million; in May, Intuit Inc. invested $50 million for just under a million
shares of S1 stock; Andersen Consulting put up $4 million, and
Hewlett-Packard $10 million. In December, Zurich invested $15 million.

Through acquisition, S1 has positioned itself as an Internet banking
software provider for all. It acquired Belgium-based FICS, a provider of
Internet software for corporate banking, a product that held appeal for
J.P. Morgan.

"We look forward to helping S1 continue to build out is corporate and
wholesale arsenal," said Chris Ahearn, co-head of corporate development at

Corporate banking was on FleetBoston's agenda as well. "We are already
deploying S1's corporate suite and clearly plan to extend our relationship
with S1," said Chad Gifford, FleetBoston's president and chief operating

Atlanta-based S1 was not hurting for funds, but the injection is helping to
turn around an increasingly sour attitude among shareholders, which had
helped to deflate S1's stock price in recent weeks. Robert Stockwell, the
chief financial officer, said the company has a healthy $80 million of cash
on its balance sheet and expects to break even in the fourth quarter --
excluding one-time, non-operating charges.

But investors have been fixated on S1's first-quarter loss of 35 cents per
share, which was higher than the consensus estimate of 23 cents. Revenue
was $50.4 million, up 320% from the comparable quarter a year earlier. The
net loss was $75.2 million, a figure that included a $35.1 million gain
from sales of investment securities.

Analysts said the earnings disappointments were the result of changes that
S1 made in the way two of its acquisitions -- Edify Corp. and FICS Group --
recognize revenue. S1 acquired both companies in the fourth quarter, and S1
essentially made changes that sacrificed short-term profits in favor of
longer-term, recurring revenues.

The lowered earnings and subsequent stock drop have prompted at least nine
class-action shareholder lawsuits, which company officials said have
created unwarranted distractions.

Michael Hodes, analyst at Goldman Sachs & Co., called the capital raising a
"strong endorsement" of S1 that "should go a long way toward quashing any
doubts as to S1's leadership in the e-finance infrastructure field." He
added, "The magnitude of the equity commitment in this case approaches the
market value of some of S1's major competitors." Corillian has emerged as
S1's main U.S. competitor, and the two are involved in a patent dispute.
"In our opinion, this series of strategic investments could mark a key
turning point," Mr. Hodes said. "Investor psychology over the last several
months has been extremely pessimistic."

Under the terms of the equity agreement, S1 will issue 7.1 million shares
of newly minted common stock, subject to adjustments, at an effective price
of $34.15 per share. (The American Banker, may 30, 2000)

SOTHEBY'S CHRISTIE'S: Attorneys Wrestle With Lead Counsel Auction
Southern District Judge Lewis A. Kaplan smiled as he looked out at a sea of
attorneys anxious to know where they stood in the bidding to become lead
counsel in the antitrust case against New York City's two major auction
houses. "Are the Knicks playing here this afternoon?" he asked the crowd of
66 lawyers assembled in his courtroom.

The attorneys wanted to know if there had been any change in the unique
bidding system set up by Judge Kaplan to assign the lucrative lead role in
the case against Sotheby's Inc. and Christie's International plc.

In April, Judge Kaplan certified a class of thousands of people who bought
and sold items through the two auction houses after 1993. The suit, filed
earlier this year, alleges that Christie's and Sotheby's conspired to fix a
common rate schedule for premiums charged to buyers - and that the price
fixing was extended to sellers' commissions in 1995. In addition, a federal
grand jury has been probing the auction houses for over three years.

Making lawyers bid for the position of lead counsel is not a new
development in class actions, but the three-tiered system devised by Judge
Kaplan is - and some attorneys attending the pretrial session urged the
judge to abandon the approach.

Bidding firms were told to offer proposals in the following formula: 100
percent of gross recovery up to and including X goes to the class; the
amount between X and Y goes to the law firms; and anything over Y is
divided, with 75 percent going to the class and 25 percent going to the law
firms. Firms also were required to submit their qualifications, evidence
that they have fully evaluated the risks and rewards of the litigation, and
a memorandum explaining the basis for their bid. Finally, the bidders must
certify that they have not communicated with other bidders about the
process, any defendant concerning settlement or any other firm with an eye
toward providing legal services should the bidder be selected as lead

In February, Judge Kaplan appointed six attorneys as interim lead counsel
until the winning bidder is chosen. And the hearing revealed some anxiety
among lawyers as to whether interim counsel, who had met with Sotheby's and
Christie's and seen some of the auction houses' internal documents, had an
edge in devising their bids.

After an hour of wrangling on that issue, Lawrence A. Sucharow of Goodkind
Labaton Rudoff & Sucharow got to the heart of the matter. "We are all
assuming that your honor is committed to the auction process?" Mr.
Sucharow, who represents plaintiffs, asked. "I personally don't think that
an auction is the right way to go."

Mr. Sucharow and others argued that submitting bids with fixed price ranges
made little sense because it was too speculative. One lawyer complained the
process was inherently unfair and beseeched the judge to "level the playing

                                 Experts Disagree

But the judge was well aware that the approach was controversial. In order
to encourage a vigorous debate he had already solicited briefs on the issue
from academics. "You are all in the process of being served with amicus
from several scholars," he said. "I can tell you already that they don't
agree with each other. What a surprise."

Two of those who weighed in on the issue - Professor Jonathan R. Macey of
Cornell Law School and Professor John Coffee Jr, of Columbia Law School -
had different views of the formula. "I think it's very sound," said
Professor Macey. "It's extremely practical, it's simple - and it deals with
some of the classic incentive incompatibility issues that arise in
determining how to serve the best interests of the class."

Professor Coffee, while supporting innovation in the field, took an
opposing view. "Other judges have assumed you would use a percentage and
they ask you to use a percentage by declining percentage formula,"
Professor Coffee said. "He [Judge Kaplan] understands that the declining
percentage formula may result in under-investment or underfunding in class
actions and hence a weaker settlement." The problem, Professor Coffee said,
is "the structure he is using may cause a conflict." Suppose, he said, that
the winning bid calls for the class to receive the first $ 20 million, the
lawyers to receive anything between $ 20 and $ 30 million and anything
above $ 30 million to be split on a percentage basis. "Think about what
happens when a defendant says 'we don't think it's a strong case' and they
make a settlement offer of $ 22 million," he said. "The plaintiffs'
attorney has no interest in accepting that offer because all of the
recovery goes to the plaintiff class - but that might be all that the case
is worth."

"Where is the conflict there?" countered Professor Macey. "You still have
the same incentives to do a good job, I would work pretty hard to get that
25 percent."


A show of hands in the courtroom revealed that a minimum of 15 firms will
be submitting bids. One lawyer said that, under the current system, his
firm would not be participating. Others remained undecided.

When one attorney asked the judge to reconsider, or at least that they be
given more time, Judge Kaplan said "you have to get in at the starting
gate." He reminded those assembling bids on the spot that "the night
depository is open for anything you want to submit."

Stephen D. Oestreich of Wolf Popper LLP was in the camp of those who said
the formula ignores the uncertainty that comes with cases of this size,
where thousands of plaintiffs claim that Sotheby's and Christie's conspired
to fix prices on the commissions received for auctioned items.

"How anyone can know whether it takes two months or five years is beyond
me," Mr. Oestreich told the judge. After the hearing, Mr. Oestreich laughed
as he stated his objection in plainer terms, calling the bid system
"totally nuts."

But some lawyers said they favored Judge Kaplan's approach. David Boies of
Boies & Schiller said he felt the competition would be good for the class
members and fair for the law firms. Mr. Boies told the judge "it would be
undesirable to put off bidding." Daniel A. Osborn of Beatie and Osborn said
the dispute over whether interim counsel had seen some documents should not
affect the bidding process. "All of us are going to have a difficult time
coming up with X bid and I think there has been far too much emphasis on
settling this case," Mr. Osborn said. "We ask the court to pay attention to
the quality of representation and not the bid."

                                   Walker's Way

Soliciting bids to determine lead counsel in class actions has become more
common since Judge Vaughn Walker of the Northern District of California
first tried the method over 10 years ago in a shareholders suit involving
Oracle Systems Corp.

In addition to ensuring that members of the class receive the best possible
representation, Judge Walker said an auction process is better for lawyers
who find themselves on the outside looking in when it comes to class

"Before, it was kind of a mystery, kind of a club," he said. "The existence
of the club was pretty clear, but how the client was lined up and found was
kind of an art form. When I was in private practice, on both sides, it was
very much inside baseball - and when you are dealing with a class action in
which you have parties who aren't there to protect their own interests,
there is a need for an open process."

Judge Walker has now used bids to determine lead counsel in at least four
cases. He said "those firms who have been in the driver's seat" do not like
bidding, while those on the outside love the open competition.

Somewhat surprisingly, his impression is that the major defense firms are
not that enthusiastic. "They knew the players that were likely to emerge
from the process - they were used to working with them and felt that
anything that disrupted that selection process made it harder to settle the
case," he said.

The hearing began with Assistant U.S. Attorney General John J. Greene
asking to intervene and have the judge keep under seal, until Labor Day, 12
documents that could play a major role in a pending grand jury
investigation of the auction houses.

None of the lawyers present favored sealing the documents and Judge Kaplan
seemed skeptical, although he agreed to review the documents in camera
before making a final decision.

                                   Interim Team

But the greatest concern for the attorneys was other information shared
with the interim committee by Sotheby's and Christie's. Preliminary talks
were held, but only on the most general basis. Actual settlement numbers
were not exchanged.

Michael L. Weiner of Skadden, Arps, Slate, Meagher & Flom, representing
Christie's International plc and Christie's Inc. said the information
included minutes of board of directors' meetings and internal financial
reports and analysis. Mr. Weiner said that, while his clients reluctantly
allowed inspection of the documents by the interim committee, he was
strongly opposed to showing that information to the multitude of firms who
were in the courtroom - "so that someone can come up with an X number or a
Y number" in their bid submission.

Mr. Weiner's statement was the equivalent of waving a red flag at lawyers
who were not on the interim committee and sensed that their competitors
were receiving a crucial edge in the bidding process.

And interim committee member Stanley M. Grossman of Pomerantz Haudek Block
Grossman & Gross said the discussions were meant to explore "potential
liability," but conceded that "the information we received was more than
what we might receive from public files." Mr. Grossman said that his firm's
experts have come up with an analysis of what the case was worth and "it
would be misleading to think that a degree of intelligence won't be helpful
in determining X and Y."

But interim committee member Frederick P. Furth of Furth, Fahrner & Mason
downplayed the idea that committee members would have the inside track and
said, in any event, it was too early to talk about a meaningful settlement.

For his part, Judge Kaplan said fashioning a reasonable bid is not rocket
science. He said he sat down with his law clerk and made an estimate and
"sure enough, the first bid that was opened up was right on target." Still,
Judge Kaplan said he is leaving his options open and might take the "best
bid on my desk, modify the structure or authorize resubmissions.' "I could
forget about the auction and do it the old-fashioned way," Judge Kaplan
said. "And I can't tell you how joyous a prospect it is to have to read
10,000 diaries."

In addition to Mr. Weiner, Christie's is also represented by Skadden
attorneys Christopher H. Aronson and John A. Donovan.

Sotheby's is represented by Steven Alan Reiss, Howard B. Comet and Edward
J. Burke of Weil Gotshal & Manges. (New York Law Journal, May 16, 2000)

WATER CONTAMINATION: New Rules Announced for Ontario Water Testing
Regulations to improve the testing of Ontario's water and guarantee
immediate reporting of any problems will be part of the response to one of
North America's worst E. coli contaminations, provincial Environment
Minister Dan Newman said.

The contamination of town wells in Walkerton, 150 kilometers (90 miles)
west of Toronto, has killed five people and sickened hundreds. Police and
health and environment officials are investigating how the problem occurred
and whether local officials broke laws by failing to promptly report water

Newman said the new regulations would require all municipalities to use
accredited water-testing labs and inform the government if a new private
testing firm was hired. Water plants would be reviewed and certified every
three years, and the ministry also would clarify procedures that require
laboratories to notify local health officials, city officials and the
environment ministry of irregularities in tested water.

One class-action lawsuit has already been filed, accusing local officials
of failing to notify Walkerton residents of E. coli contamination for days
after finding out.

While the number of people getting sick has decreased, health officials say
some of the two dozen hospitalized could still die, including an elderly
patient considered terminally ill.

In another development, a school in a town near Walkerton was closed after
its water source tested positive for E. coli contamination. Klaus Seeger, a
public health inspector in Huron County, said the type of E. coli detected
at a well supplying water to the school in Wingham, 40 kilometers (25
miles) from Walkerton, was unknown pending further tests. No sickness has
been reported.

The intestinal bacteria, often spread through animal or human feces, may
have entered Walkerton's wells in flooding that followed a May 12 storm.
City officials have acknowledged the chlorinating system on one of the
town's two main wells had been malfunctioning for weeks before people
started getting sick.

A provincial water agency took control of the local water utility after
Mayor Dave Thomson of Brockton municipality, which includes Walkerton,
disclosed the utility's general manager knew as early as May 18 of the E.
coli contamination.

According to Thomson and a local health official, the utility failed to
tell them about the problem, and a boil order for Walkerton water was
issued on May 21 after increasing reports of bloody diarrhea.

Garry Palmateer of GAP EnviroMicrobial Services said his company found
another bacteria in the town's water supply as far back as January.
Palmateer said the finding showed surface water was seeping into the town
wells, and that he notified local and Ontario officials about the problem.

In a statement late Sunday, the environment ministry said it received test
results of Walkerton water in January and April that showed coliform
bacteria but no E. coli.

In an April 10 phone call to Walkerton's water utility, the province was
assured ''corrective measures were being taken'' including extra
chlorination and additional tests, the statement said.

''On May 3, the Walkerton Public Utilities Commission submitted to the
ministry office a copy of a lab report, which indicated the follow-up
testing showed an absence of any coliform bacteria or E. coli,'' the
statement said. ''No further lab reports were received.'' (AP Worldstream,
May 29, 2000)

WATER CONTAMINATION: Ontario Police Probe Amidst Lies; Town Sued
With the death toll at five and counting, it was alleged that a water
manager told health officials the town's water was safe when he knew it was

Amid the stunning allegation of lies and the angry accusations of
negligence by townfolk, Ontario Provincial Police detectives began probing
for criminal wrongdoing.

In addition to the five deaths, the worst epidemic of E. coli Canada has
ever seen has 10 people in critical condition in a London hospital -- among
them five young children. Another six people are critically ill at
Walkerton hospital and in danger of being transferred to London. More cases
are expected show up in the next four days and more deaths are likely,
health officials warned.

A London law firm is launching a class-action suit against the Town of
Walkerton and its public utilities commission on behalf of a Huron County
woman hospitalized with the E. coli bacteria. A notice of action, the first
stage of a class-action suit, was filed in a London court on May 25 by the
firm Siskind, Cromarty, Ivey and Dowler.

As two children were airlifted by helicopter from Walkerton to London and
another to Owen Sound, dozens of people -- one-third of them children --
suffering the bloody-diarrhea symptoms flocked there for treatment,
overwhelming the hospital's capability. Three outside doctors have been
brought in to help the exhausted Walkerton staff and another three
pediatricians from Toronto's Sick Kids hospital have been sent to London
and Walkerton.

The allegation against town water officials was made by local health
official Dr. Murray Mc-Quigge. The doctor revealed that when health
officials tried to locate the source of the E. coli 0157 outbreak,
Walkerton public utilities commission (PUC) manager Stan Koebel gave three
separate assurances his system was "safe and secure."

"The PUC had taken a water sample on Monday, May 15, and had received a fax
from their testing lab saying that their water was contaminated," said
McQuigge. "They received that fax on the Thursday, May 18. They did not
tell us this on  Thursday, nor did they tell us this on Friday or Saturday
when we phoned asking if the water supply was safe and secure."

But McQuigge charged when he confronted Koebel with his unit's positive
tests, Koebel admitted a chlorinator at one of three wells had
malfunctioned and water tests had showed contamination.

Although the test did not specifically reveal E. coli contamination,
McQuigge said, it should have raised a red flag. (The Calgary Sun, May 26,

WORLD ONLINE: Plaintiffs' Lawyer Suggests Settlement for 3-4 Bil NFL
The Spong en Hammerstein law firm representing 4,000 claimants in the
controversial listing of internet portal World Online last March said it is
willing to settle the case for 3-4 bil nfl before it goes to court.

In an interview with the weekend edition of Haagsche Courant, the firm's
pricipals said they are demanding a 4 bil bfl payment from World Online,
its founder Nina Brink, and listing lead managers ABN Amro Bank NV and
Goldman Sachs Group Inc. They said they are willing to discuss a 3 bln nfl
settlement, while an offer of 2 bln would be "difficult" to accept,
according to the paper.

The law firm is alleging the use of misleading information, fraud, insider
trading, and share price manipulation, and has reported the case to the
Amsterdam prosecutor's office besides preparing a civil class action suit,
the paper said. The lawyers said their evidence in the case is
overwhelming, and the defendants are likely to accept a settlement.

The case handled by Spong en Hammerstein is separate from another being
filed by lawyer Bob van der Goen on behalf of the Dutch shareholders'
association VEB. (AFX European Focus, May 29, 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
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Washington, DC. Theresa Cheuk, Managing Editor.

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

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