/raid1/www/Hosts/bankrupt/CAR_Public/000601.MBX                  C L A S S   A C T I O N   R E P O R T E R

                  Thursday, June 1, 2000, Vol. 2, No. 106


BANK OF NY: Depositors Sue for Money Lost in Russian Inkombank Collapse
BANK OF NY: Sued over Fiduciary Duty Breach in Russian Wire Transfer
BREAST IMPLANT: Dow Corning’s Ch 11 Plan Confirmed; Issues Outstanding
CHRISTIAN MEMORIAL: Cemetery to Give Refunds for Plastic Caskets
COCA-COLA: Fed. Judge Makes Time for Talks over Employees' Racial Suit

COCA-COLA: Judge Again Orders for Hiring Data
CYBER-CARE INC: The Pomerantz Firm Announces Securities Suit in Florida
CYBER-CARE, INC: Wolf Haldenstein Files Securities Suit in Florida
FIRST SECURITY: Schiffrin & Barroway Files Securities Suit in Utah
HMO: Lawsuit Says Cigna Shortchanges Doctors

HMO: N.Y. Hospitals Sue Aetna Alleging Delay in Paying Claims
MAGNA ENTERTAINMENT: Austrian Subsidiary Sued for Forced Labor in WWII
PFIZER, INC: Milberg Weiss Announces Lawsuit by Cardura Users
RACING CHAMPIONS: Milberg Weiss Announces Securities Suit in Illinois
REPUBLIC NY: $123M Suit Re Promissory Notes Stayed Pending Jury Action

SEROLOGICALS CORPORATION: Berman DeValerio Files Securities Suit in GA
SEWER RATES: Westside Residents Fight Disparity from Indianapolis
SOTHEBY'S: Taubman Accused of Refusing to Let Go Insider Board Control
TOBACCO LITIGATION: Analysts Say Bonds Get a Boost from Litigation
TOBACCO LITIGATION: Expert Challenges Industry Anti-Smoking Effect

TOBACCO LITIGATION: Jury Can Hear about Industry's Borrowing Power


BANK OF NY: Depositors Sue for Money Lost in Russian Inkombank Collapse
Additionally, on October 7, 1999, six alleged depositors of Joint Stock
Bank Inkombank ("Inkombank"), a Russian Bank, filed a purported class
action in the United States District Court for the Southern District of New
York on behalf of all depositors of Inkombank who lost their deposits when
that bank collapsed in 1998. The complaint, as subsequently amended,
alleges that the Company and BNY and their senior officers knew about, and
aided and abetted the looting of Inkombank by its principals. The amended
complaint asserts causes of action for conversion and aiding and abetting
conversion under New York law. In addition, the amended complaint states a
claim under the Racketeer Influenced and Corrupt Organizations Act
("RICO"). It seeks an unspecified amount of damages believed to exceed $500
million, along with punitive damages of $500 million, interest, costs,
attorneys' fees, expert fees, and other expenses. The amended compliant
seeks a trebling of any RICO damages. The Company and BNY moved to dismiss
the amended complaint, and the Court granted that motion with leave to
replead. The Company and BNY believe that the allegations of the amended
complaint are without merit and intend to defend the actions vigorously.

BANK OF NY: Sued over Fiduciary Duty Breach in Russian Wire Transfer
The Company is cooperating with investigations being conducted by federal
and state law enforcement and bank regulatory authorities focusing on funds
transfer activities in certain accounts at BNY, principally involving wire
transfers from Russian and other sources in Eastern Europe, as well as
certain other matters involving BNY and its affiliates. The funds transfer
investigations center around accounts controlled by Peter Berlin, his wife,
Lucy Edwards (until discharged in September 1999, an officer of BNY), and
companies and persons associated with them. Berlin and Edwards have pleaded
guilty to various federal criminal charges.

On February 8, 2000, BNY entered into a written agreement with both the
Federal Reserve Bank of New York and the New York State Banking Department,
which imposed a number of reporting requirements and controls. Substantial
portions of these were in place on the date the agreement was signed.

Four purported shareholder derivative actions have been filed in connection
with these Russian related matters - - two in the United States District
Court for the Southern District of New York and two in the New York Supreme
Court, New York County - - against certain directors and officers of the
Company and BNY alleging that the defendants have breached their fiduciary
duties of due care and loyalty by aggressively pursuing business with
Russian banks and entities without implementing sufficient safeguards and
failing to supervise properly those responsible for that business. The
actions seek, on behalf of the Company and BNY, monetary damages from the
defendants, corrective action and attorneys' fees.

BREAST IMPLANT: Dow Corning’s Ch 11 Plan Confirmed; Issues Outstanding
The Company is separately named as a defendant in more than 14,000 breast
implant product liability cases, of which approximately 4,000 state cases
are the subject of summary judgments in favor of the Company. In these
situations, plaintiffs have alleged that the Company should be liable for
Dow Corning's alleged torts based on the Company's 50 percent stock
ownership in Dow Corning and that the Company should be liable by virtue of
alleged "direct participation" by the Company or its agents in Dow
Corning's breast implant business. These latter, direct participation
claims include counts sounding in strict liability, fraud, aiding and
abetting, conspiracy, concert of action and negligence.

Judge Pointer was appointed by the Federal Judicial Panel on Multidistrict
Litigation to oversee all of the product liability cases involving silicone
breast implants filed in the U.S. federal courts. Initially, in a ruling
issued on December 1, 1993, Judge Pointer granted the Company's motion for
summary judgment, finding that there was no basis on which a jury could
conclude that the Company was liable for any claimed defects in the breast
implants manufactured by Dow Corning. In an interlocutory  opinion issued
on April 25, 1995, Judge Pointer affirmed his earlier ruling as to
plaintiffs' corporate control claims but vacated that ruling as to
plaintiffs' direct participation claims.

On July 7, 1998, Dow Corning, the Company and Corning Incorporated
(Corning), on the one hand, and the Tort Claimants' Committee in Dow
Corning's bankruptcy on the other, agreed on a binding Term Sheet to
resolve all tort claims involving Dow Corning's silicone medical products,
including the claims against Corning and the Company (collectively, the
Shareholders). The agreement set forth in the Term Sheet was memorialized
in a Joint Plan of Reorganization (the Joint Plan) filed by Dow Corning and
the Tort Claimants' Committee (collectively, the Proponents) on November 9,
1998. On February 4, 1999, the Bankruptcy Court approved the disclosure
statement describing the Joint Plan. Before the Joint Plan could become
effective, however, it was subject to a vote by the claimants, a
confirmation hearing and all relevant provisions of the Bankruptcy Code.
Voting was completed on May 14, 1999 and the confirmation hearing concluded
on July 30, 1999.

On November 30, 1999, the Bankruptcy Court issued an Order confirming the
Joint Plan, but then issued an Opinion on December 21, 1999 that, in the
view of the Proponents and the Shareholders, improperly interpreted or
attempted to modify certain provisions of the Joint Plan affecting the
resolution of tort claims involving Dow Corning's silicone medical products
against various entities, including the Shareholders. Many of the parties
in interest, including the Shareholders, filed various motions and appeals
seeking, among other things, a clarification of the December 21, 1999
Opinion. The effectiveness of the Joint Plan remains subject to the
resolution of these motions and appeals, which were heard by U. S. District
Court Judge Denise Page Hood on April 12 and 13, 2000, but upon which she
has not yet ruled. Accordingly, there can be no assurance at this time that
the Joint Plan will become effective.

It is the opinion of the Company's management that the possibility is
remote that plaintiffs will prevail on the theory that the Company should
be liable in the breast implant litigation because of its shareholder
relationship with Dow Corning. The Company's management believes that there
is no merit to plaintiffs' claims that the Company is liable for alleged
defects in Dow Corning's silicone products because of the Company's alleged
direct participation in the development of those products, and the Company
intends to contest those claims vigorously. Management believes that the
possibility is remote that a resolution of plaintiffs' direct participation
claims, including the vigorous defense against those claims, would have a
material adverse impact on the Company's financial position or cash flows.
Nevertheless, in light of Judge Pointer's April 25, 1995 ruling, it is
possible that a resolution of plaintiffs' direct participation claims,
including the vigorous defense against those claims, could have a material
adverse impact on the Company's net income for a particular period,
although it is impossible at this time to estimate the range or amount of
any such impact.

CHRISTIAN MEMORIAL: Cemetery to Give Refunds for Plastic Caskets
When a representative from Christian Memorial Cultural Center knocked on
her door in 1994, Hazel and her husband agreed to pay $8,000 for plastic
caskets and services they wouldn't need for decades. As many as 16,000
other customers who received similar sales pitches for more than 15 years
can now get refunds on "Heritage Deluxe Caskets" purchased from the
110-acre cemetery in Rochester Hills. Customers have until July 19 to claim
refunds on the $1,800 caskets, according to terms of a class-action lawsuit
partially settled this month. The deal closes the chapter on one of three
suits claiming former cemetery owner Bernard LePage bilked trust funds for
graves, maintenance and burials.

New owner, Hillcrest Memorial Co., is seeking up to $12 million, claiming
LePage and others didn't fully disclose the cemetery's financial status
when it was sold in 1998. That lawsuit in U.S. District Court in Detroit
recently was joined with one by National Bank and Trust Association. The
suits contend LePage squandered trusts on bad real estate deals.

LePage's lawyer, John Alfs of Troy, said he knows nothing about the casket
settlement. "People didn't do their homework before they bought it and now
they're turning around and saying they paid too much for the cemetery and
trying to renegotiate the deal," Alfs said. (The Detroit News, May 31,

COCA-COLA: Fed. Judge Makes Time for Talks over Employees' Racial Suit
Now that a federal judge has extended the deadline for plaintiffs'
attorneys to formally seek class-action status in the racial discrimination
lawsuit against Coca-Cola, settlement talks take center stage. With the
help of a mediator, attorneys for both sides are attempting to resolve the
case before the legal warfare intensifies.

Settlement talks began in mid-April, but there still appears to be a
significant gap that will need to be closed if an agreement is to be

"I don't think they're close at all on the money," Larry Jones, a former
Coke manager who has called for a boycott of company products, said as his
group of about a dozen people protested outside Coca-Cola headquarters.
Jones was referring to a potential monetary settlement that would include
not just four plaintiffs in the case but also a prospective class of 2,000
black current and former employees across the United States.

Attorneys for both sides are prohibited from talking about the
negotiations. In addition to money, however, another key issue concerns new
diversity policies and practices that could be established to improve
conditions in the future.

Coke Chairman Doug Daft frequently has said he wants the company to be a
corporate leader in diversity. Daft also has said that he wants a speedy
and equitable resolution of the suit.

The plaintiffs faced a deadline Tuesday to file a brief seeking class-
action status for the case, but U.S. District Judge Richard Story postponed
the filing date two weeks. Both sides agreed to the extension. "Because the
mediation involves complex issues and is ongoing, the mediator has
requested that plaintiffs be granted an extension ... until June 14, 2000,
to file their motion," Story said in an order.

A class certification brief would be one of the most important documents in
the case. It would include a detailed argument of why the lawsuit should be
expanded to include about 2,000 current and former employees. "The filing
of the brief could be a watershed event," plaintiffs' attorney Cyrus Mehri

In such a brief, the plaintiffs would use information and computer data
obtained from the company and analyzed by a labor economist. The economist
would give an expert opinion on whether Coca-Cola has systematically
discriminated against African-Americans in pay, promotions and performance
evaluations. The brief also would include affidavits from scores of current
and former employees detailing their personal experiences at Coke.

"The brief is like a fine wine," Mehri said. "It's only going to get better
with a little bit more age."

The brief could be a powerful legal weapon offsetting some of the recent
efforts the company has made to improve its record on diversity. Among
those efforts are $ 1 billion, five-year program to increase business
opportunities for minorities and women, tying managment compensation to
diversity and hiring a new diversity director.

The company has strongly denied that it has systematically discriminated
against black employees. It would have 75 days to file a response to the
plaintiffs' class certification motion if one is filed.

Jones predicted the plaintiffs will file the brief in two weeks because
negotiators won't make enough progress to warrant another delay. The delay
granted Tuesday, Jones said, "gives Coke more time to hoodwink the American
people into thinking they want to settle the suit."

Coca-Cola spokesman Ben Deutsch said the company is not trying to hoodwink
anyone. "We continue to work towards an equitable and timely resolution of
the lawsuit," Deutsch said.

Settlement talks could continue even if the plaintiffs file a class
certification brief in two weeks. But, some legal experts said, the
negotiations could become considerably more difficult because one side or
the other may dig in its heels. "If the plaintiffs, for example, put some
damaging information in their certification brief, it could force the
defendant into an entrenched position, " said Stephen Forte, a managing
partner of Smith Gambrell & Russell who has extensive class-action

Part of the reason the defendant may want to settle the case, Forte said,
is to prevent some of the information in the brief from becoming public. On
the other hand, Forte added, Coca-Cola also could become more entrenched if
the brief turns out to be weaker than it thought it would be. "If the
certification motion is wanting, and the defendant doesn't think the
plaintiffs can get the class certified, then the defendant could decide it
should litigate," Forte said. (The Atlanta Journal and Constitution, May
31, 2000)

COCA-COLA: Judge Again Orders for Hiring Data
Coca-Cola Co. must turn over key employment and hiring data to plaintiffs
in a racial discrimination lawsuit, a federal judge has ordered for the
second time. The world's largest soft drink company has not complied with a
year-old court order to provide the data to plaintiffs, U.S. Magistrate
Judge Clay Scofield found.

The plaintiffs allege that Coca-Cola withheld pay raises and promotions of
minority employees. The company now has until June 9 to comply with the
order and may face penalties for the delay, Scofield ruled.

Coca-Cola, which has fought the discovery process throughout the lawsuit,
was ordered by Scofield on June 4, 1999, to furnish the plaintiffs with the
human resources data by July 1, 1999. A federal judge also rejected the
company's bid to halt discovery last year. In a separate ruling by another
federal judge, Coca-Cola will get two more weeks to prepare for a motion by
its adversaries asking the judge to expand the case to cover all former and
current black employees. U.S. District Judge Richard Story granted a
court-appointed mediator's request to extend until June 14 the deadline for
plaintiffs to file their motion for class certification, plaintiffs' lawyer
Jeff Bramlett said. Shares of Atlanta-based Coca-Cola fell 69 cents to
close at $ 53.88 on the New York Stock Exchange. (Los Angeles Times, May
31, 2000)

CYBER-CARE INC: The Pomerantz Firm Announces Securities Suit in Florida
Pomerantz Haudek Block Grossman & Gross LLP (http://www.pomerantzlaw.com)
is filing a class action suit against Cyber-Care Inc (Nasdaq: CYBR) and two
of the Company's senior executives. The case is being filed in the United
States District Court for the Southern District of Florida on behalf of all
those who purchased the common stock or other securities of Cyber-Care
during the period between October 12, 1999 and May 12, 2000, inclusive (the
"Class Period").

The Complaint charges that Cyber-Care and its executives violated Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 by allegedly issuing
a series of false and misleading statements during the Class Period
concerning contracts for its highly touted Internet-based product,
"Electronic HouseCall System" ("EHS"), without disclosing that EHS had not
received FDA approval, in violation of FDA rules. Cyber-Care allegedly
manipulated its stock price by misrepresenting the EHS contracts as
involving Internet technology, rather than disclosing that the contracts
involved non-Internet systems which may not have required FDA approval.
This was done to allegedly benefit from the market's strong reaction to all
Internet related businesses, and resulted in artificially inflating the
market price of the Company's common stock during the Class Period.

It is further alleged that Cyber-Care misled the market by not disclosing
that a purportedly independent analyst who issued two research reports with
"strong buy" recommendations for Cyber-Care actually owned shares of the
Company's stock and was employed by Cyber-Care's own marketing firm. As a
result of Cyber-Care's materially false and misleading statements, the
market price of the Company's common stock was artificially inflated during
the Class Period. When the market finally learned of the Company's
misrepresentations, the price of Cyber-Care's common stock fell

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

CYBER-CARE, INC: Wolf Haldenstein Files Securities Suit in Florida
Wolf Haldenstein Adler Freeman & Herz LLP announces that it filed a
securities class action lawsuit in the United States District Court for the
Southern District of Florida on behalf of investors who bought Cyber-Care,
Inc. (NASDAQ:CYBR) stock between December 10, 1999 and May 19, 2000 (the
"Class Period").

The lawsuit charges Cyber-Care and certain officers of the Company, with
violations of the securities laws and regulations of the United States. The
lawsuit alleges that defendants issued a series of false and misleading
statements during the Class Period concerning demand for the Company's
products and the level of sales of its products. The complaint alleges that
defendants' false and misleading statements artificially inflated the price
of the Company's stock during the Class Period.

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

FIRST SECURITY: Schiffrin & Barroway Files Securities Suit in Utah
The law firm of Schiffrin & Barroway, LLP gives notice that a class action
lawsuit was filed in the United States District Court for the District of
Utah, Central Division, on behalf of all purchasers of the common stock of
First Security Corporation (Nasdaq: FSCO) from October 18, 1999 through
March 2, 2000 inclusive (the "Class Period").

The complaint charges First Security and certain of its officers and
directors with issuing false and misleading statements concerning the
Company's financial condition. Among other things, the Complaint alleges
that the Company reported artificially inflated earnings for the fourth
quarter of fiscal 1999. When the Company's true fourth quarter earnings
were revealed, First Security common stock fell over 38%.

Contact: Schiffrin & Barroway, LLP Marc A. Topaz, Esq. Robert B. Weiser,
Esq. 888/299-7706 (toll free) or 610/667-7706 e-mail: info@sbclasslaw.com

HMO: Lawsuit Says Cigna Shortchanges Doctors
A class-action suit filed in Madison County by an Alton physician and one
from Texas accuses the CIGNA Corp. of using a computer program to
shortchange its doctors nationwide. The case was filed Friday in circuit
court in Edwardsville on behalf of all physicians who have contracts with
CIGNA under managed health care plans known as preferred provider
organizations, or PPO's. It was filed by Judy Cates, a lawyer based in
Swansea who specializes in class-action suits.

The lead plaintiffs are Dr. Timothy N. Kaiser, an ear, nose and throat
specialist in Alton, and Dr. Suzanne LeBel Corrigan of Texas. Defendants
are the CIGNA Corp., which operates nationwide, CIGNA HealthCare of St.
Louis Inc. and Cigna HealthCare of Texas Inc.

The suit says CIGNA illegally reduces payments it has agreed to make to its
physicians through computer "downcoding" and "bundling." It says the
computer "downcodes" medical services rendered by physicians, substituting
a cheaper service instead. It says the computer "bundles" other services,
paying for only one service when more were rendered.

Wendell Potter, a spokesman at CIGNA's corporate headquarters in
Philadelphia, said that the company prohibited any comment on matters in
litigation, especially on a suit its officials had not yet seen.

The suit says CIGNA uses the same physician agreement form in all 36 states
where it offers PPO arrangements. The suit asks that the court certify the
case as a class action on behalf of all physicians with PPO agreements with
CIGNA because separate suits would not be practical. It requests
unspecified money damages plus interest, costs of the suit and "reasonable
attorney fees." It also asks that CIGNA be prohibited from " downcoding"
and "bundling." No hearing date has been set. (St. Louis Post-Dispatch, May
31, 2000)

HMO: N.Y. Hospitals Sue Aetna Alleging Delay in Paying Claims
Two dozen New York hospitals have become the latest medical providers to
sue Aetna U.S. Healthcare, accusing the nation's largest health insurer of
dragging its feet on paying claims. The lawsuit, filed Tuesday in a New
York state court, alleges Aetna violated a law requiring payment within 45
days. It also accuses the company of breaking the state's deceptive
business practices laws. The suit from the New York area hospitals comes as
Aetna is dealing with similar claims in other states, including Georgia and
Texas. The suit seeks $45 million in compensatory damages and $50 million
in punitive damages. All of the hospitals are located in a 60 mile swath
between New York City and Poughkeepsie, N.Y.

Aetna said it had not yet received the lawsuit and could not comment on it
directly. But the company said it strongly denies allegations that it has
been slow to make payments and is trying to work more closely with doctors
and hospitals.

Aetna recently promised to mend fences with doctors, who have long
complained that the company is slow to pay but quick to reject claims. In
February, three doctors in Georgia and the state's medical association
filed a class-action lawsuit in state court against Aetna for failure to
pay physicians in a timely way. The American Medical Association later
joined the suit. Georgia requires insurers to pay uncontested claims within
15 days. Last year, the New York State Insurance Department fined Aetna
more than $60,000 for repeated violations of the state's prompt payment
law. (AP Online, May 31, 2000)

MAGNA ENTERTAINMENT: Austrian Subsidiary Sued for Forced Labor in WWII
One of the Austrian subsidiaries of Magna Entertainment Corp. has been
named as a defendant in a class action brought in a United States District
Court by Gutwillig et al. The plaintiffs in this class action claim
unspecified compensatory and punitive damages, for restitution and
disgorgement of profits, all in relation to slave or forced labor performed
by the plaintiffs for that subsidiary and some other Austrian and German
corporate defendants at their facilities in Europe during World War II. As
a result of the transactions described under the heading "Reorganization"
above, we acquired the stock of this subsidiary. Under Austrian law, this
subsidiary would be jointly and severally liable for the damages awarded in
respect of this class action claim. We cannot predict the final outcome of
this class action suit, or establish a reasonable estimate of possible
damages or a range of possible damages that could be awarded to the
plaintiffs if their claims are successful. However, an Austrian subsidiary
of Magna has agreed to indemnify that subsidiary for any damages or
expenses associated with this claim.

PFIZER, INC: Milberg Weiss Announces Lawsuit by Cardura Users
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on May 30, 2000, against Pfizer, Inc. (NYSE:
PFE news) on behalf of users of the drug Cardura for the treatment of
hypertension. A copy of the complaint filed in this action is available
from the Court, or can be viewed on Milberg Weiss' website at
http://www.milberg.com/carduraThe action, numbered 00 CIV. 4042, is
pending in the United States District Court, Southern District of New York.

The complaint seeks, among other things, emergency notice to all class
members to ensure notification to individuals taking Cardura of important
new findings resulting from a nationwide study sponsored by the National
Heart, Lung and Blood Institute (the "NHLBI") which showed that users of
Cardura are twice as likely to experience potentially fatal congestive
heart failure and have a higher chance of suffering from certain other
serious cardiac events, including strokes, as compared with patients taking
the more traditional and less costly diuretic drug, chlorthalidone, to
treat hypertension.

The complaint alleges that Pfizer has consistently marketed Cardura as a
highly effective, "first-line" drug to treat hypertension as compared with
more traditional and less costly diuretic drugs and that Pfizer has taken
no affirmative steps to communicate the NHLBI's critical findings to class
members. The complaint further alleges that given the NHLBI's findings,
Cardura should no longer be used as a primary or "first-line" drug to treat
hypertension and that notice to patients, as opposed to physicians, is
required in order to ensure that persons taking the drug will receive this
critical information and be able to make an informed choice regarding their
treatment options.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or
Salvatore J. Graziano 800/320-5081

RACING CHAMPIONS: Milberg Weiss Announces Securities Suit in Illinois
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on May 30, 2000, on behalf of purchasers of
the common stock of Racing Champions Corporation (NASDAQ: RACN) between
February 1, 1999, and June 23, 1999, inclusive. A copy of the complaint
filed in this action is available from the Court, or can be viewed on
Milberg Weiss' website at: http://www.milberg.com/racingchampions/

The action, numbered 00C3267, is pending in the United States District
Court for the Northern District of Illinois, Eastern Division, located at
the Dirksen Bldg., 219 S. Dearborn Street, Chicago, IL, 60604, against
defendants Racing Champions, Robert Dods (Chairman, Chief Executive
Officer, and President,) Curtis Stoelting (Chief Financial Officer,) and
Victor Shaffer (Director.) The Honorable Suzanne B. Conlon is the Judge
presiding over the case.

The complaint charges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by issuing a series of material misrepresentations to the market between
February1, 1999, and June 23, 1999, thereby artificially inflating the
price of Racing Champions common stock. For example, as alleged in the
complaint, on February 23, 1999, the Company reported seemingly record
earnings for its 1998 fiscal year, and represented that the Company would
continue to experience growth in 1999. These statements were materially
false and misleading when made because defendants did not disclose, and
knew or recklessly disregarded, that the Company's sales were then being
negatively impacted by the competition from Star Wars related merchandise
and as a result, sales of the Company's products were declining
significantly. When Racing Champions revealed, on June 23, 1999, that it
was expecting a per share loss of $0.30 to $0.35 for its second fiscal
quarter of 1999, Racing Champions common stock dropped by 60%. Defendants
attributed the loss to poor sales, and the taking of a $6.4 million
restructuring charge in connection with a corporate acquisition.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or
Samuel H. Rudman Phone number: (800) 320-5081 Email:
racingcase@milbergny.com Website: http://www.milberg.com

REPUBLIC NY: $123M Suit Re Promissory Notes Stayed Pending Jury Action
The parties in a $123 million Southern District of New York dispute over
promissory notes linked to risky currency derivatives trading have agreed
to stay proceedings pending the outcome of a related federal grand jury
investigation. Amada v. Republic N.Y. Sec. Corp. P. 3.

Japanese Company Files $15M Fraud, RICO Suit Against Republic N.Y. Nichimen
Europe PLC has filed a $15 million fraud and RICO suit charging Republic
New York Securities Corp. with concealing $500 million in derivatives
trading losses sustained by Martin A. Armstrong and his two New Jersey
companies, Princeton Economics International Ltd. and Princeton Global
Management Ltd. Nichimen Europe v. Republic N.Y. Sec. Corp. P. 4.

Korean Insurer Asks S.D.N.Y. to Deny Morgan Guaranty MotionSeoul-based
Korea Life Insurance Co. is asking the Southern District of New York to
deny Morgan Guaranty Trust Co.'s motion to dismiss a $250 million suit that
the insurer filed following a soured swaps transaction. Korea Life Ins. Co.
v. Morgan Guar. Trust Co. P. 5.

Chase Manhattan Files Affirmative Defenses in $1.5 Billion Swaps CaseChase
Manhattan bank lists 25 affirmative defenses in its answer to an amended
complaint filed by Sumitomo Corp., which seeks $1.5 billion for copper
swaps that allegedly concealed losses by Sumitomo rogue copper derivatives
trader, Yasuo Hamanaka. Sumitomo v. Chase Manhattan Bank. P. 5.

D. Md. Dismisses Consolidated D&O Suit Against CRIIMI MAEA Maryland federal
judge has dismissed a consolidated class action suit against the directors
and officers of CRIIMI MAE Inc., a company that securitized millions of
dollars' worth of commercial mortgage-backed securities. In re CRIIMI MAE.
P. 6.

CFTC Files 10 Actions Against Derivatives Web SitesThe CFTC has filed
administrative fraud actions against 10 companies and individuals for using
false performance claims to sell computerized derivatives trading programs
on the Internet. In re Oasis Publ'g Corp. P. 7.

Federal Reserve Establishes Group to Study DisclosureA private-sector
working group developed by the Federal Reserve Board will evaluate the use
of enhanced public disclosure to improve transparency in the banking and
securities markets, the Fed announced on April 27. P. 8.

CFTC's Rainer Stresses Regulatory Flexibility At Senate HearingNoting the
growth of foreign competition in the derivatives markets, Commodity Futures
Trading Commission Chairman William J. Rainer testified at a U.S. Senate
hearing that regulatory flexibility was need to allow for development of
American markets. Maintaining Leadership. P. 8.

Immunity for Mutual Fund Boards Declared UnconstitutionalThe Maryland Court
of Appeals has declared a law classifying mutual fund directors as
"independent" and protecting them from derivative shareholder suits as
unconstitutional. The court found that the provision was tacked onto
unrelated legislation in 1998 and violated the "one-subject" rule mandated
by the state. Migdal v. Maryland P. 9.

Chase Manhattan, Bank of America Sued For Alleged Wire Transfer
Mix-UpNacional Financiera S.N.C. (NF), a bank organized under the laws of
Mexico with a principal place of business in Mexico City, has filed suit in
the Southern District of New York against Chase Manhattan Bank and Bank of
America (BOA), asserting that it was damaged following an erroneous wire
transfer of funds. Nacional Financiera S.N.C. v. Chase Manhattan Bank N.A.
(Derivatives Litigation Reporter, May 15, 2000)

SEROLOGICALS CORPORATION: Berman DeValerio Files Securities Suit in GA
Berman, DeValerio & Pease LLP announced that a shareholder class action was
filed against Serologicals Corporation (NasdaqNM:SERO) in the United States
District Court for the District of Northern District of Georgia. The action
seeks damages for violations of the federal securities laws on behalf of
all investors who purchased Serologicals common stock between April 27,
1999 and April 10, 2000 (the Class Period").

The lawsuit charges Serologicals and certain of its directors and officers,
with violations of the federal securities laws by issuing a series of false
and misleading financial statements and press releases concerning the
Company's publicly reported revenues and earnings. On April 10, 2000,
Serological shocked the investment community by announcing that it was
restating its previously recorded revenues for the first three quarter of
1999, including a reversal of approximately$1.4 million in revenue. As a
result of these false and misleading statements, the Company's stock traded
at artificially inflated prices during the Class Period.

Contact: Berman, DeValerio & Pease LLP Patrick T. Egan (800) 516-9926

SEWER RATES: Westside Residents Fight Disparity from Indianapolis
For about 40 years, some Westside and Far-Westside residents, businesses,
schools and churches west of Speedway have paid 50 percent more for
sanitary sewer service than those inside the town's boundaries. But they
discovered the disparity only after the Speedway Town Council voted
recently to raise the sewer user fee by 38 percent for everyone. Then they

"We were shocked" to learn of the differing charges, said Tammy Rabe,
president of the Chapel Hill Association, which represents about 500 of
2,200 households in the lawsuit. Numerous businesses also are plaintiffs.

"I asked residents who had been around 30 years. They said they knew their
rates were higher than Indianapolis', but they didn't realize they were
paying a premium to be connected to Speedway. "After the shock came
frustration," Rabe said, because Speedway Town Council members have shown
no interest in changing the rate structure.

"The Town Council decided rates should be left the way they are. That's the
way they voted," Town Council President Edward Frazier said. He said he and
other town officials only know "by folklore" how the two-tier rate

According to that lore, the developer of the Farley subdivision sought to
connect to Indianapolis sewers in the 1950s. But this was a decade before
the Indianapolis sanitary district extended that far.

Bette Dodd, the attorney who filed the lawsuit on behalf of the homeowners
and businesses, said the higher rate applies in all or part of these
subdivisions: Chapel Hill, Chapelwood Creek, Farley, Mount Auburn, Parc
Estates, Parc Estates North, Twin Oaks, Westmount single-family areas,
Westmount Villa and Westridge.

Farley, with 750 households involved, has the most. Chapel Hill has 500. (A
later section of Chapel Hill did connect to Indianapolis sewers.) The
smallest number is 12 in Mount Auburn, Dodd said.

She said the base rate for the 3,181 residential sewer customers inside
Speedway is $6.65 per month, and for the 2,238 customers outside, it's

The 38 percent increase, put on hold during the litigation, would boost the
inside rate to $9.20, the outside rate to $13.80, Dodd said.

"They're relying on the fact it has been this way since 1966," when the
current rate ordinance was adopted, Dodd said.

Judge Patrick L. McCarty of Marion Superior Court, Room 3, has ordered
Dodd's clients to post a $75,000 bond before a June 8 hearing on the case.
Speedway sought $200,000, arguing that was the potential revenue loss to
the town during the litigation.

Steven Rupenthal, a section leader in the Farley subdivision, said the
lawsuit does not challenge the 38 percent rate hike, just the formula,
because it widens the disparity in the amount of the sewer fee.

"We understand they need an increase, but we want a fair and equitable rate
across the board," Rupenthal said. What galls him is that in some areas,
"you could literally walk across the street and pay 50 percent less to
flush your toilet." (The Indianapolis Star, May 30, 2000)

SOTHEBY'S: Taubman Accused of Refusing to Let Go Insider Board Control
According to the New York Post, Sotheby's biggest stockholder, investor Ron
Baron, made his public comments that when French tycoon Bernard Arnault
offered $3 billion for Sotheby's (three times its current value),
billionaire A. Alfred Taubman "rejected the proposal without presenting it
to Sotheby's board."

Taubman controls 63 percent of the voting stock and can elect 10 directors,
leaving the other four seats to Baron and other shareholders. Baron
controls 55.2 percent of the common stock, but doesn't have the voting
power of Taubman's class-B stock, the New York Post reports.

Taubman, 76, who was forced off the board five months ago when a federal
price-fixing probe erupted, has nominated his son - Robert Taubman, 49 - to
be his eyes and ears on the board, the report goes on.

Baron says he's incensed by the move, according to the Post. Baron said
Taubman should be separated completely from the company as it prepares a
defense against the federal probe and the horde of class action lawsuits by
investors and collectors. "Fortunately, Alfred Taubman is one of the
wealthiest Americans ... he may be personally liable to both Sotheby's
shareholders and the company for any resulting damages," Baron wrote in his
latest Baron Asset Fund investment letter, as reported by the New York
Post. We were clearly upset" to see the elder Taubman nominate his son for
his board seat, Baron said.

"If the father resigned to allow the investigation to proceed without
interference from the company's controlling shareholder [Taubman], how
could it be OK for his son to take his place?" He said others with
"exceptionally close ties" to Taubman remain on the board and that the
son's appointment to the board is "inappropriate." "We believe Robert
Taubman will soon recognize the enormous conflicts of interest he will

Baron had been working quietly with advisers from Wasserstein, Parella to
settle the issue but apparently hasn't made much headway behind the scenes,
says the New York Post.

According to the Post, Boies Schiller & Flexner - the law firm representing
the Justice Department in its antitrust suit against Microsoft Corp. - was
named lead counsel in the class action against Sotheby's and Christie's
International PLC over alleged price-fixing. (The New York Post, May 31,

TOBACCO LITIGATION: Analysts Say Bonds Get a Boost from Litigation
Events that caused positive shareholder response to recent litigation in
favor of tobacco companies may have had the same effects on bondholders,
analysts say. Stock prices have crawled upwards on most tobacco companies
this month, with monoliths such as Philip Morris Inc. picking up steam.
Municipal bond prices don't mean as much, since the market has been trading
too thinly overall to offer great comparisons, but here values have held, a
trader at a large firm said. To date, three issuers in New York State have
sold bonds totaling $1.1 billion backed by their portions of the national
tobacco settlement.

Salomon Smith Barney Inc. served as lead underwriter on all three
transactions. New York City's Tobacco Settlement Asset Securitization Corp.
sold $709 million of tobacco bonds in November, followed by Nassau County's
$294 million sale later that month through its Tobacco Settlement Corp.,
and Westchester County's $103 million sale through its Tobacco Asset
Securitization Corp. in December.

The Internal Revenue Service is also reviewing the tobacco deals as part of
its ongoing tax-exempt bond compliance program, which might affect bond
prices in the opposite direction, analysts said.

Nonetheless, a trader said that tobacco bonds have remained at more
consistent levels recently than those from many other sectors of the
high-yield market. Almost all that has been bought or sold on these bonds
has done so at either the original spread or better, the trader said.

Although the tobacco companies' current equity values still don't compare
to what they were a year ago, analysts said the upward trend this spring
probably results from two events that took place this May. The Florida
Legislature passed a law preventing cigarette makers from having to post
financially crippling bonds when appealing jury verdicts, and Maryland
decertified a class action suit in Richardson v. Brown & Williamson Tobacco
in which smokers claimed to have been injured by tobacco products. "These
events indicate a more favorable litigation environment for tobacco
companies, and that's favorable for both equity and bond investors," said
Cadmus Hicks, a vice president with Nuveen Investments.

As the courts deal with the obligations of tobacco companies toward injured
smokers, the holders of bonds backed by the national tobacco settlement are
watching the companies' fiscal health. If tobacco companies go bankrupt
they could avoid making payments on the bonds backed by the settlement
funds. "There's less likelihood that there'll be a catastrophic judgment in
the Florida Engle case," said James Dearborn, an analyst at Liberty Funds
Group. That could be positive not only for stockholders but also for
bondholders, he added.

The new attention that equity investors have been paying to old economy
companies with "real earnings and yield" after the Nasdaq started slumping
may also have had an effect on tobacco companies' stock prices, Dearborn

Hicks said that this trend wouldn't have been able to help cigarette makers
in the absence of this month's positive litigation events.

Dearborn added that even with the current change in prices, it is not as if
cigarette companies are "going gangbusters." The continued decrease in
consumer consumption of tobacco products is "a positive for public health
and a negative for tobacco bonds," Dearborn said.

Nonetheless, the trader said that he's always been able to find buyers for
sellers in the tobacco bond market. They remain less volatile than many
other areas of the municipal market. "Even with good news there's been no
significant tightening," the trader said. (The Bond Buyer, May 31, 2000)

TOBACCO LITIGATION: Expert Challenges Industry Anti-Smoking Effect
A healthy, pink lung and a blackened lung removed from a smoker with
emphysema; a woman taking a deep drag of a cigarette through the
tracheotomy hole in her neck. Those images from a government-sponsored
anti-smoking campaign were played on Tuesday to the jurors hearing the
landmark statewide class action case against the tobacco industry.

The commercials, many produced by the state of Massachusetts, exemplify an
effective campaign to prevent youth smoking, said Dr. Michael Siegel, an
epidemiologist from Boston University.

But commercials urging teens to "Think; don't smoke," produced as part of
tobacco giant Philip Morris' $ 74 million anti-youth smoking campaign are
less effective, if not actually a recruitment tool to get new smokers,
Siegel testified on Tuesday. "Sure, if you want to be thought of as a
thinker, or a nerd like me, don't smoke," Siegel said interpreting the
commercial for the jurors. What it really says to teens, said Siegel, is,
"if you want to avoid that kind of ridicule, man, take up a cigarette and
be cool." "I don't think the company is spending a penny in a true effort
to try to get youth to stop smoking. It's either ineffective or it's
actually going to programs or to advertising that's actually going to make
smoking more appealing to youth."

And that, said Stanley Rosenblatt, the lawyer representing 300,000 to
500,000 sick or dead Florida smokers in this case, is contrary to tobacco
lawyers' repeated claims that they are dedicated to preventing young people
from smoking.

In this third phase of the trial, the six jurors must determine how much
tobacco should pay as punishment for manufacturing a product that they have
already determined causes lung cancer, emphysema and more than 20 other

Although Rosenblatt has not told the jury he is looking for a specific
amount from the industry, the original lawsuit filed in 1994 asks for $ 100
billion. Tobacco lawyers have said they feared punitive verdicts as high as
$ 300 billion, which they said could cripple the industry.

Tobacco lawyers have argued that under legal settlements they have reached
with all 50 states, they will pay the states more than $ 254 billion over
the next 25 years. The companies also agreed to pull all cigarette
advertising off billboards and at sporting venues because they reach too
many young eyes.

But studies show the money spent on that type of cigarette advertising and
promotions was simply shifted to print ads and other promotional campaigns,
Siegel said. In 1997, the most recent year for which statistics are
available, the Federal Trade Commission estimates the tobacco industry
spent $ 6 billion on advertising and promotions, he said. The rise in
adolescent smoking rates coincides with the increase in money spent on
advertising cigarettes, he said.

In one of the commercials Siegel called effective, the brother of a former
model who portrayed the Marlboro man in advertisements talked about how he
used to love the commercials for those cigarettes. The horses and the
cowboy symbolized independence, he said. Then he looked into the camera and
recalled his brother's death from lung disease. "Lying there with all those
tubes in you, how independent can you be?"

The somber looks on the jurors faces lifted, at least briefly, when they
saw a more light-hearted commercial in which two teenage boys sat on steps
talking about the keen intelligence of dogs. One of the teens is smoking.
Between drags on the cigarette, a white trail of smoke rises up from the
butt and into the face of the dog sitting next to him. The jurors laughed
when the dog lifted its leg and urinated on the lit cigarette. Even
Miami-Dade Circuit Judge Robert Kaye joined in.

The commercials designed to appeal to people's emotions, according to one
tobacco attorney, also seemed to ignite emotions -- more specifically the
ire -- of the lawyers on both sides of this two-year court battle between
sick Florida smokers and the country's top cigarette companies.

While cross-examining Siegel on Tuesday, Brown & Williamson lawyer Gordon
Smith appeared to become frustrated when the doctor would not agree that
any measures undertaken by the cigarette maker were legitimate and
effective. Several times Smith interrupted Siegel as he was speaking,
prompting Rosenblatt to stand and object.

As the judge admonished both lawyers, Smith stood directly in front of
Rosenblatt's table, staring at him. When the jury was ordered out of the
courtroom and the judge, angered, took a break and stepped out of the
courtroom, Rosenblatt exploded. "He's a bully and he's an intimidator,"
Rosenblatt yelled, referring to Smith.

Lead tobacco attorney Dan Webb, who is representing Philip Morris, urged
Rosenblatt to calm down. "You can be calm because you're billing by the
hour," Rosenblatt said. Webb responded: "You should be calm, you got $ 49
million," referring to the fee and costs Rosenblatt collected after
successfully representing flight attendants who sued the industry for being
sickened by second-hand smoke. More than a dozen lawyers affiliated with
tobacco and sitting in the courtroom laughed at Webb's retort.
(Sun-Sentinel (Fort Lauderdale, FL), May 31, 2000)

TOBACCO LITIGATION: Jury Can Hear about Industry's Borrowing Power
In a setback for the tobacco industry, a judge ruled Wednesday that the
jury considering punitive damages for sick Florida smokers can hear
evidence about the industry's borrowing power. "Among the assets is its
ability to borrow money," Circuit Judge Robert Kaye said. "I don't know why
you can't talk about that."

The nation's five biggest cigarette makers didn't want the jury to consider
anything beyond their present value because of the potential for inflating
a multibillion-dollar damage award. The jury already has ruled against the
industry and awarded $12.7 million in compensatory damages to three smokers
representing the state's 300,000 to 500,000 smokers.

The two sides are far apart on the industry's ability to pay. The industry
is asking for no award at all, but plaintiffs contend cigarette makers can
raise money to pay an award by raising prices. With the jury out of the
courtroom, a Philip Morris attorney said industry assets are less than $20
billion, the first time a number has been offered by the industry.

David Adelman, a tobacco analyst with Morgan Stanley Dean Witter, said he
doesn't think the stock market is "going to be very excited or agitated"
about Kaye's decision or any others in the case because he is convinced the
case will be overturned on appeal. It is the nation's first class-action by
smokers to go to trial.

The defendants are Philip Morris, R.J. Reynolds Tobacco Co., Brown &
Williamson Tobacco Corp., Lorillard Tobacco Co., Liggett and the industry's
defunct Council for Tobacco Research and Tobacco Institute. On the Net:
Tobacco links: http://www.umich.edu/(tilde)umtrn/websites.html(The
Associated Press, May 31, 2000)


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

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

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

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