/raid1/www/Hosts/bankrupt/CAR_Public/000612.MBX                C L A S S   A C T I O N   R E P O R T E R

                 Monday, June 12, 2000, Vol. 2, No. 113


ABC: 'Millionaire' Said to Be Deaf to Hearing-Impaired
ACCELR8 TECHNOLOGY: Berman, DeValerio Files Securities Suit in Colorado
ALTIVA FINANCIAL: Appeal against Securities Complaint in TN Pending
ALTIVA FINANCIAL: Securities Suit in Georgia Dismissed with Prejudice
Anika Therapeutics: Berman DeValerio Files Securities Lawsuit in MA

BRANCH DAVIDIAN SIEGE: Trial Set for June 19; Waco Awaits Replay in Ct
BRUNSWICK CORP: 8th Cir Reverses $133 Mil Judgment in Boat Engine Case
CAPSTEAD MORTGAGE: 24 Securities Suits Consolidated; Company to Respond
CONNECTICUT: Parents Sue State over Dental Care
CYBERSHOP.COM INC: Securities Suits Consolidated, Abbey, Gardy Notifies

FEN-PHEN: Judge Bechtle Blocks Texas Opt-outs En Masse
GASOLINE SPILL: Charmingdale Residents Forced from Homes Sue
INTERNET PRIVACY: Clicking 'Yes' for Merger Raises Dicey Web Issues
LINCOLN LIFE: Faces Lawsuits over Fraud in Interest-Sensitive Policies
LINCOLN LIFE: Sued for Marketing Variable Annuities in Retirement Plan

LOS ANGELES: One Year Limit for Rampart Police Scandal Runs out
MBTA: Beacon Hill Residents Urge to Slow Trains for Noise Level
PAINEWEBBER, INC: Klayman & Lazarus Files Customers' Suit on Trading
PRUDENTIAL SECURITIES: Wolf Haldenstein Files Suit Re Annuity Contract
TOBACCO LITIGATION: Lawmakers Try to Cut Off Funds for Fed Suit

TOBACCO LITIGATION: Worth of Companies Debated at Trial in Florida
WASHINGTON MUTUAL: Class Members Not Liable for Other Side's Atty. Fees
WATER CONTAMINATION: Ontario Announces Compensation for E.Coli Victims


ABC: 'Millionaire' Said to Be Deaf to Hearing-Impaired
A hearing-impaired schoolteacher is suing TV's "Who Wants to Be a
Millionaire," claiming the hit quiz show has turned a deaf ear on his
plea to compete. Peter F. Liberti Jr., 30, filed a lawsuit in Buffalo
federal court, alleging that "Millionaire" producers are in violation of
the Americans with Disabilities Act because they won't provide an
alternative to the telephone so he can participate in qualifying rounds
of the ABC show. "As a person with a disability, he's being denied the
opportunity to have equal access to try to get on the program," said
Liberti's lawyer, Bruce A. Goldstein.

To qualify for the show, potential contestants dial a toll-free number
to answer three questions as fast as they can. A second round is also
conducted over the phone, featuring five questions. Liberti, who speaks
and reads lips, can't use the telephone without a special communication
device on both ends of the line.

"He considers himself a pretty knowledgeable person," said Goldstein.
"He likes watching the show. He has done quite well answering questions
at home. He feels he would have as good a chance as anyone, given the

Since last August, Liberti has sent two letters and one e-mail to ABC
and Valleycrest Productions, asking: "As an intelligent but
hard-of-hearing person who is unable to use the telephone, how can I
participate in the show?" "We read your letter with interest and we are
unable to offer you what you are looking for," said a Nov. 23 response
from ABC's audience-information department.

Liberti's lawyer said his client would have no problem reading host
Regis Philbin's lips or answering the show's progressively tricky

Liberti is not the first disabled person to sue the game show. A Miami
class-action suit, which has not yet gone to trial, charges that the
show's screening system bars people with hearing, sight and movement
disabilities from the show's Hot Seat. "Everyone dreams the American
dream," said Michael F. Lanham, the lawyer in the case. "One of those
dreams is being a millionaire. People with disabilities are being
excluded from the dream that the show sells." "Millionaire" also has
been criticized for its lack of black, Latino and female contestants.
(The New York Post, June 9, 2000)

ACCELR8 TECHNOLOGY: Berman, DeValerio Files Securities Suit in Colorado
Berman, DeValerio & Pease LLP, announces that Accelr8 Technology
Corporation (Nasdaq: ACLY) was charged with violating Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 in a shareholder class
action lawsuit filed by Berman, DeValerio & Pease, LLP,
www.bermanesq.com, in the United States District Court for the District
of Colorado on June 8, 2000. The case was filed on behalf of all persons
and entities who purchased the common stock of Accelr8 during the period
of September 15, 1997 through and including November 16, 1999 (the
"Class Period") and who suffered losses on their investments.

The complaint alleges that the Company and certain of its officers made
materially false and misleading statements concerning the business and
financial operations of Accelr8, which had the effect of substantially
inflating the trading price of the Company's stock during the Class
Period. Specifically, the complaint claims that the defendants
materially overstated the Company's revenue, improperly recognized
revenue relating to licensing and maintenance fees, and failed to
amortize capitalized software development costs. It also claims that the
Company failed to disclose that Accelr8's Navig8 2000 software, created
to fix the millennium bug (where computers may read the year 2000 as
1900 and malfunction), was in fact only available to a computer system
manufactured by Digital Equipment Corp. ("DEC"), and was not available
as a general Year 2000 remediation tool to the total universe of the
programs that need Year 2000 solutions, contrary to the Company's
repeated assertions during the Class Period. When these accounting
violations came to light, the Company's auditors, Deloitte & Touche LLP
("Deloitte & Touche"), informed the Company that their audit report,
dated September 15, 1998, on the Company's financial statements for the
years ended July 31, 1997 and 1998 should no longer be relied upon, and
resigned as Accelr8's auditors. Trading in Accelr8's stock, which had
traded as high as $27 during the Class Period, was halted at a last
price of $1 5/16 on November 17, 1999.

Contact: Patrick T. Egan, Esq., of Berman, DeValerio & Pease LLP,

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

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

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

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

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

On June 30, 1998, the plaintiff amended the complaint to add additional
plaintiffs, to add as a defendant Mego Financial, the Company's former
parent, and to extend the class period through and including May 20,
1998. On September 18, 1998, the Company, Jeffrey S. Moore and Mego
Financial filed motions to dismiss the complaint. On April 8, 1999, the
court granted each of these motions. In the court's order dismissing the
complaint, the plaintiffs were permitted, upon proper motions, to serve
and file a second amended and redrafted complaint within 30 days. On May
10, 1999, the Plaintiffs moved for leave to file and serve the second
amended and redrafted complaint contemplated in the earlier order. The
court granted Plaintiffs' motion and accepted the second amended
complaint on June 8, 1999. On July 19, 1999, the Company, Jeffrey S.
Moore and Mego Financial filed motions to dismiss the second amended and
redrafted complaint. On March 9, 2000, the court granted the Company's,
Moore's and Mego Financial motions and dismissed the case with
prejudice. The plaintiffs have 30 days to appeal the ruling. The Company
believes that resolution of this matter will not result in a material
adverse effect on the business or financial condition of the Company.

Anika Therapeutics: Berman DeValerio Files Securities Lawsuit in MA
Berman, DeValerio & Pease LLP, announces that Anika Therapeutics, Inc.
(Nasdaq: ANIK) was named as a defendant in a shareholder class action
filed in the United States District Court for the District of
Massachusetts. The action, brought by Berman, DeValerio & Pease, LLP,
www.bermanesq.com, seeks damages for violations of the federal
securities laws on behalf of all investors who purchased Anika common
stock between April 15, 1998 and May 30, 2000 (the 'Class Period").

The lawsuit charges Anika and certain of its officers, with violations
of the federal securities laws by issuing materially false and
misleading financial statements for the Company's 1998 fiscal year and
the first three quarters of On March 15, 2000 Anika announced that,
after an informal inquiry buy the Securities and Exchange Commission
("SEC"), it would restate its previously reported financial results for
1998 and the first three quarters of 1999 due to improperly recording
revenue. Further, on May 30, 2000, Anika revealed that the SEC commenced
a formal investigation into its accounting practices. Following this
announcement, Anika's common stock plunged 66 percent to $2 1/2 per
share on May 31, 2000.

Contact: Jennifer L. Finger of Berman, DeValerio & Pease LLP,
800-516-9926, or bdplaw@bermanesq.com

BRANCH DAVIDIAN SIEGE: Trial Set for June 19; Waco Awaits Replay in Ct
Seven years after the FBI's siege of the Branch Davidian compound near
here ended in fire and death, the city of Waco is fed up with the awful
images its name evokes. Who's to blame? Did the religious cult cause the
catastrophe, as federal officials contend? Did the FBI use "grossly
excessive force," as a lawsuit against the government alleges? Waco's
citizens aren't much interested. The disaster is an ugly memory they'd
like to forget.

But of course they can't, the Washington Times says. And now this
central Texas city is wearily braced for a courtroom replay of the
nightmare. The federal government is scheduled to go on trial here June
19 as the defendant in a wrongful-death civil case brought by scores of
plaintiffs, most of them relatives of Branch Davidians who perished in
the April 19, 1993, conflagration.

The raid, in which 75 Branch Davidians died, climaxed a 51-day standoff
at the compound that started when federal agents arrived to arrest cult
leader David Koresh on weapons charges and became involved in a deadly
shootout. Questions and accusations concerning the FBI's conduct in the
final assault began raging as flames were still licking the sky that
day, and years after the smoke cleared, the controversy continues to
burn: Who ignited the blaze, the Branch Davidians or the FBI?

To a lot of people--particularly those who inhabit an Internet realm
where tales of sinister government conspiracies abound--"Waco" has
become a shorthand term for a mass murder and coverup orchestrated by
secret enemies of freedom in Washington. But that's not what "Waco"
means to Tracy Maughn, a local restaurateur. To him and others, it means

"I travel from time to time," said Maughn, who also owns restaurants in
Iowa, Wisconsin and Nebraska. "People ask me where I'm from, and I go,
'Waco.' And right away they go, 'Branch Davidians!' And then it starts.
. . . It was a black eye for our community and for the whole country,
and I'm really sick of hearing about it. People ask me where I'm from
now, and I just tell them, 'I'm from Texas.' "

In interviews here, Waco residents voiced scant interest in the
questions lingering from the 1993 tragedy and said they dread the glare
of national attention likely to be focused on this city of 108,000 when
the trial starts. After years of official and unofficial investigations,
after several congressional inquiries and a criminal trial of cult
survivors that was held in San Antonio, the civil case will examine the
catastrophe for the first time in the county where it occurred.

"We wish it never happened, but, good Lord, if it was going to happen,
we wish it would have been somewhere else," said John Segrest, the
McLennan County district attorney, who has lived in Waco all of his 50
years. Segrest, who is not involved in the case, added: "The feeling is,
it'll never go away. . . . The Davidian siege is like that bad penny. It
keeps coming up."

Four federal agents and six members of the apocalyptic cult died in the
Feb. 28, 1993, gun battle that led to the standoff at the Branch
Davidians' rural compound, called Mount Carmel, about 10 miles east of
here. In the climactic raid 51 days later, the FBI assaulted the group's
main building with armored vehicles and tear gas. Many of those who
perished in the subsequent inferno were children.

In U.S. District Court here, the plaintiffs allege that FBI agents
ignited the blaze with pyrotechnic tear-gas projectiles, then fired
gunshots into the building, pinning down the Branch Davidians and
preventing them from escaping the flames. The Justice Department has
long maintained that cult members started the conflagration and that FBI
agents never fired a shot during the assault.

"We certainly feel the evidence is very clear that the cause of this
tragedy was the Branch Davidians," Mike Bradford, the U.S. attorney for
the Eastern District of Texas, said. Bradford, the government's chief
lawyer in the case, said that "while law enforcement faced difficult
circumstances that day and didn't do everything perfectly, they were
dealing with a man in David Koresh who was willing to bring down his
entire group to avoid giving up." Koresh died in the assault.

Michael A. Caddell, the lawyer for the biggest group of plaintiffs in
the case, has annoyed many conspiracy theorists who accuse the FBI of
deliberately carrying out a slaughter. Caddell, who rejects those
allegations, said he will argue in the trial that FBI commanders at
Mount Carmel made errors in judgment for which the government should be
held liable.

"They made bad decisions," Caddell said in an interview. "That doesn't
mean they had ill motives or they were part of some huge conspiracy.
They got frustrated and angry at the refusal of the Branch Davidians to
come out, and they began to feel pressure to make something happen."

U.S. District Judge Walter S. Smith Jr., who is presiding in the case,
surprised attorneys on both sides recently when he announced he would
impanel a jury to hear the lawsuit. With numerous accused individuals
having been dismissed from the case, leaving only the government as a
defendant, the plaintiffs have no legal right to a jury trial, and
normally such a case would be heard by the judge.

"Given the circumstances, I think [Smith] recognizes that a jury verdict
will be perceived as more fair by the American people than a verdict by
a judge who gets his paycheck from the U.S. government," said Caddell,
who applauded the decision.

Smith, a Reagan judicial appointee, also presided at the 1994 Branch
Davidian criminal trial, which was moved 160 miles south to San Antonio.
Several cult members were convicted of manslaughter and gun charges
stemming from the initial Mount Carmel shootout, and Smith imposed
40-year prison terms in some cases. But the Supreme Court ordered new
sentencings for five of the defendants, ruling that the punishments
meted out by Smith were improperly harsh.

The jury pool will come from the geographic Waco division of the federal
court system's Western District of Texas--mostly McLennan County, a
largely white, middle-class jurisdiction of 200,000 residents, about
half of whom live in Waco.

"I don't think either side [in the case] has an advantage," said
Segrest, the district attorney, discussing jurors in his county.
"They're conservative, but they're not way-out militia types. They're
very religious. And they support the government. But they keep an eye on
the government, too."

And they're not looking forward to news coverage of the trial--reporters
reminding the world of Waco's tragedy, the fire video airing again and
again on TV.

"People are bored with it and embarrassed by it," said Jay Charles, who
hosts a morning radio show here. "They don't want to talk about it. And
when they do, they'll always say, 'It wasn't even in Waco! It was way
out in the country!'" (The Washington Post, June 9, 2000)
BRUNSWICK CORP: 8th Cir Reverses $133 Mil Judgment in Boat Engine Case
The Eighth Circuit reversed and vacated a $ 133 million judgment in
favor of pleasure-boat builders against a dominant engine supplier. The
boat-builders' claim that the supplier had made two unlawful
acquisitions was held time-barred in the absence of evidence that the
limitations period had been extended. Another claim - that the
manufacturer violated the antitrust laws by making discounts dependent
upon the percentage of requirements purchased by builders from the
manufacturer - failed because of inadequate support in the expert
testimony. The court said that the expert's economic model did not fully
reflect the engine market, nor did it separate lawful from unlawful
conduct. The court also commented that the percentage discounts were not
exclusive, that there was insufficient evidence to demonstrate that they
had foreclosed a substantial share of the engine market, and that it did
not appear that there were significant barriers to entry into that
market. Concord Boat Corp. v. Brunswick Corp., 2000-1 CCH Trade Cas. P
72,836 (New York Law Journal, May 25, 2000)

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

CONNECTICUT: Parents Sue State over Dental Care
Three families on Medicaid filed a class action lawsuit last Thursday
June 8 charging that poor children and adults are being deprived of
needed dental care.

The suit, filed in U.S. District Court, charges that the Department of
Social Services fails to fund dental care sufficiently to attract enough
dentists willing to treat Medicaid managed care recipients. The lawsuit
also contends that procedures for payment are so burdensome that
dentists don't provide care to Medicaid patients.

The plaintiffs seek to represent approximately 182,000 children and
51,000 adults in Connecticut who depend on Medicaid, a federal health
care program for the poor, for essential dental services.

The children and adults have suffered serious dental problems or have
been unable to get care as far back as late 1998, said lawyers for
Greater Hartford Legal Assistance and Connecticut Legal Services, who
are representing the plaintiffs. "Some of these people are living in
pain for six and seven months without seeing a dentist," said Priya
Cloutier, an attorney for Connecticut Legal Services. "They don't
remember what it's like to not be in pain." Cloutier cited the case of a
five-year-old boy with an infected tooth who hasn't been treated. "He
can't sleep. He can't eat," Cloutier said. "All of them are in pain."

Claudette Beaulieu, spokeswoman for DSS, said the agency can't comment
because it hasn't had a chance to review the lawsuit. She did say DSS
has been working to improve access to dental services and that access is
a national problem.

The legal action in Hartford mirrors lawsuits filed in New York,
Massachusetts, and New Hampshire, lawyers said.

U.S. Surgeon General David Satcher issued a report two weeks ago warning
of a "silent epidemic" of oral diseases across the country affecting
poor people because of economic and social barriers to getting dental
care. One Connecticut woman had to go to the emergency room a month ago
after she developed a fever from an infected tooth, Cloutier said. She
was given penicillin and told she must have the tooth removed within a
week, she said. "She still hasn't found a doctor," Cloutier said. (The
Associated Press State & Local Wire, June 9, 2000)

CYBERSHOP.COM INC: Securities Suits Consolidated, Abbey, Gardy Notifies
Notice by Abbey, Gardy & Squitieri, LLP says that in March and April
2000, thirteen (13) putative class action lawsuits, which have now been
consolidated into a single action, were filed in the United States
District Court for the District of New Jersey. Plaintiffs in the Action
seek to represent all persons who purchased the common stock of
Cybershop.com Inc. ("CYSP"), now known as GSV, Inc. ("GSVI") (Nasdaq:
CYSP; GSVI), between October 26, 1999 and February 24, 2000, inclusive
(the "Class Period"). The Action is captioned "In re Cybershop.com, Inc.
Securities Litigation," Civil Action No. 00-CV-1993 (AJL). The case is
pending in the United States District Court for the District of New
Jersey, and has been assigned to the Hon. Alfred J. Lechner, Jr. The
address of the Courthouse is Martin Luther King, Jr. Federal Building
and U.S. Courthouse, 50 Walnut Street, Newark, New Jersey 07101-0999.

The Action seeks damages for alleged violations of Section 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The defendants are: CyberShop.com, Inc. ("CyberShop");
Jeffrey Tauber, Cybershop's President, Chief Executive Officer and
Chairman of the Board; Jeffrey Liest, formerly CyberShop's Chief
Operating Officer and Chief Financial Officer; and Linda Wiatrowski,
formerly CyberShop's Vice President, General Merchandise Manager and an
Executive Officer of the Company.

Plaintiffs allege that, during the Class Period, CyberShop issued
materially false and misleading statements concerning its business and
financial results, and included these false and misleading statements in
various press releases and filings with the Securities and Exchange
Commission. Specifically, CyberShop publicly announced in a press
release on October 26, 1999 that its net sales had increased 458% for
the quarter ended September 30, 1999 compared to the same quarter of the
prior year. In that press release, CyberShop's Chairman, Jeffrey Tauber,
stated further the exceptional growth that CyberShop had experienced in
1999 and that the Company was gearing up for the holiday season.

Plaintiffs allege that the defendants concealed from investors the
material fact that sales of CyberShop.com, the Company's flagship
operation, actually declined 28% from the same period a year earlier.
Moreover, the tremendous 458% net sales increase reported in the press
release allegedly came from an acquisition and from a joint venture that
was facing substantial problems caused by a change of strategy by the
venture partner, Tops Appliance City, which has since filed for
bankruptcy protection.

Plaintiffs further allege that these false statements, and others set
forth below, caused the price of CyberShop common stock to be
artificially inflated, trading as high as $14.25 per share during the
Class Period. Plaintiffs further allege that, certain defendants, while
in possession of this material adverse information, sold approximately
$7.4 million worth of their CyberShop holdings and CyberShop sold $6
million worth of stock and warrants in a private placement. Plaintiffs
allege that at the end of the Class Period, the Company disclosed that
sales for its flagship operations were extremely poor and that the
Company would have to close its two largest online stores and
effectively exit the e-tailing business, and become an Internet
incubator. Following these announcements, the price of CyberShop common
stock closed at $3.9375 per share, reflecting a decline of more than 70%
from its Class Period high of $14.25 per share.

The following statements, among others, are alleged to have been
materially deceptive:

   -- On October 26, 1999, defendants issued a press release reporting
CyberShop's 1999 third quarter financial results for the period ending
September 30, 1999. CyberShop reported net sales of $2.788 million, as
compared to $ 500,000 in the third quarter of 1998 -- a purported 458%
increase. These financial results were incorporated into CyberShop's
Form 10-Q for the period ended September 30, 1999 filed with the SEC on
November 12, 1999 and signed by defendants Tauber and Leist.

   -- Commenting on these financial results, defendant Tauber, Chairman
and CEO of CyberShop noted: "We are excited about the exceptional growth
that CyberShop.com has already experienced in 1999 ... A number of
successfully executed merchandising and marketing initiatives have
helped us achieve rapid growth over the last three quarters. We are now
gearing up for the upcoming holiday season with a host of online and
offline initiatives to promote a number of hot products."

Plaintiffs allege that defendants knew that reporting a decrease in
sales in the Company's core electronic retailing business, an industry
where investors focus on revenues as an indicator of success, would
cause CyberShop's stock price to plummet. So instead, defendants
allegedly chose to conceal this material information from the public
until they were able to sell their own holdings of CyberShop for
handsome profits.

Plaintiffs allege that after announcing these purportedly soaring net
sales, defendants continued to flood the market with press releases
about the upcoming holiday season in an effort to further inflate and
maintain the Company's already inflated stock price. Defendants noted
agreements with America Online, Merrill Lynch Online and Women.com,
announced purported improvements in the Company's customer service
capabilities, and discussed holiday promotions. Defendant Tauber was
quoted on November 5, 1999, in an interview with the Wall Street
Reporter, as noting the success of CyberShop's "new business model,"
claiming that the Company's "34% gross margin could be double that of
the next online retailer." Tauber further stated that, "right now we are
expecting an enormous fourth quarter."

On or about November 12, 1999, CyberShop filed its 1999 third quarter
Form 10-Q with the SEC, which confirmed the Company's third quarter
financial results and which was signed by defendants Tauber and Liest.
The Form 10-Q also contained the Company's alleged assurances that its
publicly reported results for the third quarter of 1999 "contain all
adjustments (consisting only of normal recurring adjustments) which the
Company considers necessary for the fair presentation of the Company's
financial position as of September 30, 1999." The Form 10-Q also
represented that the 458% increase in net sales during the third quarter
"was primarily attributable to greater marketing efforts, an expanded
customer base, repeat purchases from existing customers, acquisition,
and strong sales of four products, which represented approximately 45%
of total revenues in the three months ended September 30, 1999."

The third quarter Form 10-Q stated that, in October 1999, Tops Appliance
City, Inc. ("TOPS"), the Company's joint venture partner in
electronics.net, announced that it was discontinuing the sale of
consumer electronics products. At the time of this announcement by TOPS,
all of the products offered by sale by electronics.net were obtained
from TOPS. Nevertheless, despite the loss of electronics.net's sole
supplier, defendants allegedly downplayed the impact this would have on
the Company's business, stating in the Form 10-Q that "[w]e believe the
electronics.net will have sufficient inventory available to it from TOPS
to fulfill customer orders for the near term," and that "the Company is
currently considering long term alternatives for electronics.net
including alternative supplier arrangements."

On December 10, 1999, CyberShop announced that it had completed a
private equity financing for gross proceeds of $6 million, which
involved the issuance of common stock and warrants. The financing was in
addition to a private financing that had been completed on September 30,
1999, which had generated $ 5.1 million for the Company. In the
Company's press release, defendant Tauber stated that "[t]his second,
even larger financing, within less than three months, I believe speaks
to the success of the original financing and confidence that these
investors have in CyberShop.com."

With the Company's stock price on the rise, allegedly based on
defendants' false reporting of third quarter results, defendant Tauber
and his wife sold hundreds of thousands of CyberShop shares at prices
that plaintiffs allege were artificially inflated by Tauber's own
alleged misstatements. Beginning on November 11, 1999, Jeffrey and Jane
Tauber both directly and indirectly sold hundreds of thousands of shares
of their personal holdings of CyberShop for proceeds approaching $8

On February 1, 2000, defendants issued a press release reporting
CyberShop's 1999 fourth quarter financial results for the period ending
December 30, 1999. CyberShop reported net revenues of $4.2 million for
the quarter and $ 10 million for the year, purportedly doubling revenues
from 1998. The release stated that final audited results would be
disclosed in a conference call on February 14.

Commenting on these financial results defendant Tauber stated "[w]e are
pleased with our financial performance and believe our balanced approach
in growing our business towards profitability versus growth at any cost
will allow us to build a more sustainable business model long term." The
Company press release also described CyberShop as the "leading online
off-price retailer of designer apparel, home furnishings and

Plaintiffs allege that in light of the foregoing positive statements
during the Class Period, the defendants shocked the investing
marketplace when on February 10, 2000 the Company announced in a press
release that it was exiting from the e-tailing business by closing two
of its e-tailing sites and selling the retail assets of these
operations. Instead, the Company announced it would be retaining its
Tools for Living e-tailer and would be launching an Internet incubator.
Then, plaintiffs allege, on February 24, 2000, the Company disclosed for
the first time, on Form 10-Q for the quarter ended September 30, 1999
that sales of one of the Company's CyberShop.com lines of business had
actually declined 28 percent from the same period a year earlier.

The defendants can be expected to deny all of the material allegations,
and the Company and Mr. Tauber already have done so in Mr. Tauber's
letter to shareholders in the Company's most recent Annual Report.

After the initial action was filed, counsel for plaintiffs bringing
certain of these actions disseminated public notices announcing that the
cases had been brought and setting forth a timetable within which
persons requesting to be appointed as Lead Plaintiff should file papers
in support of such an application. In an Order filed on June 7, 2000
(the "Order"), the Court directed that counsel for plaintiffs prepare
and disseminate this Supplemental Notice in order to provide class
members with additional information concerning the Action, and to inform
them that they may still seek appointment as a Lead Plaintiff. If you
are a member of the proposed class, as defined above, and you wish to
file a motion to serve as Lead Plaintiff in the Action, you must file
such a motion by August 7, 2000 in the Office of the Clerk of the United
States District Court for the District of New Jersey, Martin Luther
King, Jr., Federal Building and U.S. Courthouse, 50 Walnut Street,
Newark, New Jersey 07101.

The Private Securities Litigation Reform Act of 1995 (the "PSLRA") sets
forth the following requirements, among others, for any person seeking
to serve as a representative:

(1) Each plaintiff seeking to serve as a representative party on behalf
of a class shall provide a sworn certification, which shall be
personally signed by such plaintiff and filed with the complaint, that
states that the plaintiff has reviewed the complaint and authorized its

(2) states that the plaintiff did not purchase the security that is the
subject of the complaint at the direction of the plaintiff's counsel or
in order to participate in any private action arising under this

(3) states that the plaintiff is willing to serve as a representative
party on behalf of a class, including providing testimony at deposition
and trial, if necessary;

(4) sets forth all of the transactions of the plaintiff in the security
that is the subject of the complaint during the class period specified
in the complaint;

(5) identifies any other action under this chapter, filed during the
3-year period preceding the date on which the certification is signed by
the plaintiff, in which the plaintiff has sought to serve as a
representative party on behalf of a class; and

(6) states that the plaintiff will not accept any payment for serving as
a representative party on behalf of a class beyond the plaintiff's pro
rata share of any recovery, except as ordered or approved by the court
in accordance with paragraph (4).

15 U.S.C. section 78 u-4(a)(2)(A)(i)-(iv).

In addition, the PSLRA provides that the Court shall appoint as Lead
Plaintiff the member or members of the class that the Court determines
to be most capable of adequately representing the interests of class
members. In determining the "most adequate plaintiff," the PSLRA
provides that the Court shall adopt a rebuttable presumption that the
most adequate plaintiff is the person or group that has either filed a
complaint or made a motion for appointment as Lead Plaintiff, has the
largest financial interest in the relief sought by the class, and
otherwise satisfies the requirements of Rule 23 of the Federal Rules of
Civil Procedure.

15 U.S.C. section 78 u-4(a)(3)(iii).

At the Lead Plaintiff selection stage, this latter requirement involves
a preliminary showing that the proposed Lead Plaintiff's claims are
typical of the claims of the class members, and that the Lead Plaintiff
will be an adequate representative of the class. Any member of the
alleged class may seek to be appointed as Lead Plaintiff, even if that
person has not filed a complaint.

The Court has observed that there may be a conflict of interest between
class members who sold their CyberShop shares and those who still retain
them, in that a class member who continues to retain CyberShop (now GSV,
Inc.) shares has a known interest in the possible adverse impact of a
judgment in the class action against CyberShop, whereas the class member
who has sold his or her shares would be indifferent to the possibly
negative effect on CyberShop of a large damage award. The Court has not
yet decided what impact, if any, such a possible conflict of interest
(or other possible conflicts, if any, as may exist) might have on the
decision whether to certify the Action as a class action, or with regard
to the selection of a Lead Plaintiff or Lead Counsel for the class.

Source: Abbey, Gardy & Squitieri, LLP CONTACT: Stephen J. Fearon, Jr.,
Esq. of Abbey Gardy & Squitieri, LLP., 800-889-3701 or 212-889-3700,

FEN-PHEN: Judge Bechtle Blocks Texas Opt-outs En Masse
U.S. District Judge Louis C. Bechtle has granted American Home Products
Corp. and the settlement class plaintiffs a permanent injunction
nullifying a Texas court order that would have established an opt-out
class of Texas residents who had used diet drugs but had not previously
filed suit. In re Diet Drugs (Phentermine, Fenfluramine,
Dexfenfluramine) Products Liability Litigation, MDL No. 1203; Brown et
al. v. American Home Products Corp. et al. , Ind. No. 99-20593 (E.D.
Pa., Apr. 5, 2000).

Judge Bechtle's order voids an order issued by Texas District Judge
Fernando Mancias on March 24 that would have opted out the Texas
plaintiffs from the national settlement proposed by American Home
Products Corp. (AHP). The case that established that class is Gonzalez
v. Medeva Pharmaceuticals Inc. et al., No. C-4223-97B (Tex. Dist. Ct.,
Hidalgo County, 93rd. Jud. Dist. 1997).

The defendants then removed the suit to the Southern District of Texas
on March 28 on the grounds that the amount in controversy would exceed
the $75,000 threshold for establishing federal jurisdiction. Calling
that action "frivolous," plaintiffs' attorney Keith M. Jensen of the Law
Office of Keith M. Jensen in Fort Worth said that he will seek remand to
state court and may also appeal Judge Bechtle's order to the U.S. Court
of Appeals for the Third Circuit.

Jensen explained that the Gonzalez suit, filed on behalf of three named
plaintiffs, is not a personal injury action but rather it is a statewide
class action alleging violation of the Texas Deceptive Trade Practices
Act (DTPA).

"I filed the first purchase price reimbursement case in the nation, long
before anyone else thought about it," said Jensen. Filed in July 1997,
the suit seeks damages equivalent to treble the cost of the diet drugs
for each plaintiff, Jensen said.

Judge Mancias issued two separate orders, according to Jensen, one on
March 23 certifying the class of all Texas residents who ingested the
diet drugs and are alleging injury under the DTPA, and the second on
March 24 opting out the class he had certified the day before from the
proposed national settlement.

American Home Products Corp. and the Plaintiffs' Management Committee,
which represents all of the plaintiffs in the federal multidistrict
litigation (MDL), then obtained a temporary restraining order from Judge
Bechtle on March 29.

The permanent injunction prohibits counsel for the Gonzalez plaintiffs
"from taking any action to effect, secure, or issue notice of any
purported class opt out, on behalf of the unnamed absent members of any
class which may have been certified in Gonzalez, from the class action
settlement which this court has conditionally certified."

Judge Mancias' order opting out the class (the Hidalgo County order)
interferes with the federal MDL court's authority to determine the means
and methods by which members of such a class may elect to opt out, Judge
Bechtle said in the order.

"Insofar as the Hildalgo County order purports to affect or determine
the opt out status of any member of the MDL-1203 class it is null and
void and of no effect," the federal court order decreed.

Judge Bechtle noted that neither of two orders issued by him
conditionally certifying the proposed national settlement class permits
any kind of mass opt-out nor allow class members to stay in the
settlement for certain purposes, but opt out for other reasons. The
Gonzalez plaintiffs sought to opt out of the provision of the proposed
settlement for reimbursing diet drug users up to $500 of their costs for
purchasing the drugs.

Judge Bechtle said the grounds for issuing the temporary restraining
order and the permanent injunction are the same as those cited in
Carlough v. Amchem Products Inc., 10 F.3d 189 (3d Cir., 1993), which
upheld an a federal court injunction barring all West Virginia
plaintiffs from opting out of an asbestos settlement. The Third Circuit
said in that case that such a mass opt out would disrupt the ability of
the federal court to manage the settlement and would confuse the West
Virginia claimants as to their status in "dueling lawsuits."

In addition to Jensen, the Gonzalez plaintiffs are represented by
Francisco Javier Rodriguez of Rodriguez, Pruneda, Tovar, Calvillo &
Garcia in McAllen, Texas, Francis I. Pena and Jaime Pena of Edinburg,
Texas, and Michael B. Hyman and Carol Gilden of Much, Shelist, Freed,
Denenberg, Amant, Bell & Rubenstein in Chicago. (Diet Drugs Litigation
Reporter, May 2000)

GASOLINE SPILL: Charmingdale Residents Forced from Homes Sue
A class action lawsuit has been filed over an April 1 gasoline spill
that forced residents from more than 100 homes in early April near the
Charmingdale subdivision south of Monroe. The petition was filed last
Thursday June 8 in state district court in Monroe by five different law
firms. The suit was filed on behalf of Wendell Loving Sr. and his two
minor children and Lacheryl R. Bass, Johnny McGee, Isabel Butler, "and
all persons similarly situated."

Defendants are listed in the lawsuit as Davidson Transport (Don D.
Davidson Transport Inc.) and Sunshine Oil and Storage Terminal (James
Davison) of Ruston.

Greg Gossler, a spokesman for Davison Transport of Ruston, said that the
companies, as named, do not exist, and he has never heard of Don D.
Davidson. There is, however, a Sunshine Oil and Storage Inc. He said
that his company has taken the erroneous information and turned it over
to its legal counsel, Don Kneipp.

The evacuations occurred the night of April 1 when a truck unloading
gasoline from a barge into a service tank overflowed, spilling more than
10,000 gallons of gasoline. State police reopened U.S. 165 around 9 a.m.
April 3 and allowed residents to start returning to their homes. At the
time, state police Sgt. Howard McKee blamed operator error for the
spill, in which a Davison Transport storage tank overflowed as workers
moved gasoline through a pipeline from a barge on the Ouachita River 5
miles south of Monroe. "Not paying attention.... They misread the gauge
on the tank. Thought they had more room than they did," he said. There
were no reported injuries.

Greg Gossler, a Davison employee in Ruston, said that he has not seen a
copy of the petition and would not comment until then. One of the
plaintiffs' attorney, Bobby Manning of Monroe, said the incident should
be ruled a class action because "people living in that area all had to
inhale the gasoline fumes."

Charmingdale resident Sue McDonald said she didn't want to be a part of
any class action suit. "Don't put me in any class action suit. If I want
to sue somebody, I'll do it myself. I think it's ridiculous," she said.
McDonald said there have been at least two other spills at the terminal
through the years. (The Associated Press State & Local Wire, June 9,

INTERNET PRIVACY: Clicking 'Yes' for Merger Raises Dicey Web Issues
A host of new Internet privacy issues faces companies when acquiring an
e-commerce firm. Information itself has become one of the more common
and attractive assets motivating acquisitions. These transactions can
present novel issues in structuring a transaction, as well as in
conducting due diligence.

Historically, many businesses have gathered extensive information about
their customers, potential customers, suppliers and competitors. The
information has been gathered using data supplied by the customers, as
well as data obtained from third-party sources, such as directories or
commercial mailing lists. This has never created as much controversy as
has the gathering and use of customer information by companies doing
business on the Internet. This issue has become the subject of
regulation, legislation and legal action, and in this legal climate,
business initiatives based on the use or availability of such customer
information require both careful due diligence and legal analysis, and
thorough risk analysis.

                     Complex Internet Privacy Issues

For example, imagine a firm that represents a successful regional toy
and game retailer and is looking to expand its retail distribution to
the Internet. Management has contacted the firm's leading Internet
attorney to assist in an acquisition. They have identified a struggling
Internet portal company as a potential target. Although the portal has
failed to attract adult users, its content and graphics have generated a
particularly strong following in the teen-age and preteen set. The
target has had some success in marketing toys and trading-card games to
its young members, but efforts to broaden its e-commerce business have
met with little success. Venture capital has dried up, and as a last
resort, the target is looking to be acquired.

The client believes that if it acquires the target, it can take
advantage of the target's Web site and its popularity among
7-to-14-year-old children. The client is especially interested in the
target's list of members and the information it has accumulated
regarding the surfing and shopping habits of these members. In addition
to the usual concerns and difficulties of performing due diligence on
intangible assets, this acquisition presents some unique challenges.

The firm's examination of the target's Web site reveals that the target
gathers and retains personally identifiable information regarding its
members during the registration process; uses "cookies" (small software)
to track the movements of its members on the Web; and gathers further
information about its members when processing purchase transactions. The
target does have a "generic" privacy policy posted on its Web site. This
policy does not contain any "opt-in" provision, which would provide the
member with an opportunity to consent in advance to the sale and use of
the member's personal information, and a commitment not to use that
information without consent, or even an "opt-out" provision, which would
give a member an opportunity to make an election preventing the use of
his or her information for marketing or other purposes. The policy does
state, however, that personally identifiable information regarding a
member will not be sold or disclosed to a third party without the
member's consent. In addition, no parental consent is required for
minors to register, submit information or make purchases on the Web
site, and the policy does not include a clause giving the target the
right to make a "change-in-terms" to the privacy policy and post the
change at its Web site.

Further due diligence reveals that the target has rented its member list
to several third parties for marketing and similar purposes, and has
itself used the list on several occasions to promote its e-commerce
initiative. Finally, the target had, in an effort to increase its
revenues, used the profile information it developed about its members to
solicit and negotiate pricing for banner advertising on its Web site.
One of the third parties who rented the mailing list was an Internet
bank, building a list of potential customers for a new online credit
card the bank is introducing. The bank was seeking customers with a
history of making credit card purchases over the Internet. The target
has agreed, for a fee, to update regularly the list provided to the bank
with information regarding new members who make online purchases using
credit cards, as well as changes in patterns of online purchasing by
regular customers.

                           What to Advise The Client?

Having digested all of this information, the lead attorney is now asked
to advise the client about the advisability of going forward with the
acquisition, and what potential problems exist. As the lead attorney
knows, the Children's Online Privacy Protection Act (COPPA) took effect
on April 21. (Children's Online Privacy Protection Act, 15 U.S.C. 6501.)
COPPA requires certain relatively stringent measures as a condition for
collecting personal information regarding children 13 or younger,
including providing notice of what information is collected, how such
information is used, and when and how it may be disclosed. In addition,
COPPA requires that the parent, at any time, be permitted to elect that
no further use be made of the information. In the hypothetical used
above, the target's information-gathering and disclosure practices
clearly do not meet COPPA's requirements.

The attorney is also aware that there are bills that have been
introduced in the U.S. House (H.R. 3560 (Frelinghuysen), the Online
Privacy Protection Act of 1999.) and Senate (S. 809 (Burns), the Online
Privacy Protection Act of 1999.) which would extend similar protections
to all information gathered online, regardless of the person's age.
Because the information collected by the target was collected before
COPPA's effective date and before the adoption of similar statutes of
general application, the gathering of the information did not violate
applicable laws when it occurred. However, COPPA specifically requires
that implementing regulations be adopted by the Federal Trade
Commission, and these regulations may further restrict the use of
information not gathered in compliance with COPPA.

In addition, counsel will need to determine whether the target company
violated any state laws through its actions. Several states, including
New York, Florida, California and Washington, are in the process of
considering and enacting privacy-related laws, and as the target's site
is accessible throughout the United States, the acquiring firm will need
to perform a multistate review of these laws to determine whether any of
them have been violated. (See, California (A.B. 2246 (Wayne), introduced
Feb. 24), New York (A.B. 11031, introduced May 9, and S.B. 5590
(Nozzolio), introduced May 6, 1999), Washington (S.B. 6513 (Prentice and
McCaslin), introduced Jan. 17).)

                                 A Ltigious Net

Although federal laws generally do not impose significant restrictions
on the information that companies can collect about their members --
information that the companies use internally -- there are both federal
and state restrictions on what personally identifiable customer
information a company may share with third parties and the purposes for
which the information may be shared, such as the Fair Credit Reporting
Act (15 U.S.C. 1681.) and similar state financial privacy laws.

Moreover, given that several pending lawsuits allege that companies
violated the promises they made in their own privacy policies, a privacy
policy that makes sweeping promises about privacy to its customers may
pose a significant risk to an acquiror. These cases make it clear that a
failure by the target to follow its own stated privacy policy is likely
to give rise to litigation, and probably to liability. The FTC has taken
the position that failure to comply with a stated privacy policy is a
violation of the Federal Trade Commission Act. A similar result is
likely to be reached under various state unfair-business-practice and
trade-regulation statutes. For example, failure to follow a stated
privacy policy has been alleged as a cause of action as a violation of
California's statute against the use of unfair business practices.

Recent cases alleging violations of the California unfair business
practices law include a class action filed on Nov. 5, 1999, in state
Superior Court against RealNetworks, a leading maker of Internet
multimedia software, and a separate action brought against DoubleClick
Inc. on Jan. 27.

Last, but certainly not least, the use of the target's member
information by an Internet bank to create a solicitation list for an
online credit card raises the possibility that the target's activities
may cause it to be deemed to be a consumer reporting agency under the
Fair Credit Reporting Act. The act has extensive and complex provisions
regulating the gathering and use of information "bearing on a consumer's
credit worthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living which is used or
expected to be used or collected in whole or in part for the purpose of
serving as a factor in establishing the consumer's eligibility for . . .
credit. . . . "

The mere sharing of nonexperiential or nontransactional information with
a third party, even if there is no financial compensation for doing so,
can bring the sharing entity within the definition of a "consumer
reporting agency," which in turn triggers a variety of requirements
applicable to such agencies.

                                  Is It a go?

Having completed this due diligence, can the client complete the
transaction and obtain the benefit of the member information gathered by
the target? It depends. Moreover, by acquiring the target, the client is
also acquiring substantial potential liability arising from the target's
use of the member information it has gathered.

By providing member information to third parties without getting the
member's consent, the target has already violated its own privacy
policy. Additionally, the target may be subject to claims under the FTC
Act, COPPA, the Fair Credit Reporting Act and various state statutes, as
well as subject to contractual claims brought by its members. Although
COPPA was not in effect at the time the information was gathered,
COPPA's regulations may limit prospectively the client's use of the
information that has been gathered.

The original reason for the proposed acquisition of customer information
was to use the information for marketing purposes. Although an
acquisition of the target, with a recognition of the potential
liability, might still be worthwhile, the perceived value of the
acquisition is certainly less than both parties had anticipated. In
addition, the acquiror will have to bear substantial legal costs in the
future for designing and implementing an information and privacy policy
that does comply with applicable state and federal laws.

Given that the "free flow of information" on the Internet no longer
applies to personally identifiable customer information, the target
could have avoided these problems by doing several things. First, it
could have created and followed a clearly defined privacy policy that
provided reasonable protections to its members, allowed the target some
flexibility in the use of the information gathered and provided a
mechanism for a "change-in-terms" to meet changing requirements. It also
should have surveyed applicable state and federal laws relating to
information use before creating its policy, a step that would have made
it aware of information transactions which might trigger the application
of one or more of these laws. (The National Law Journal, June 5, 2000)

LINCOLN LIFE: Faces Lawsuits over Fraud in Interest-Sensitive Policies
As revealed in the SEC report of Lincoln National Corp., which has the
marketing identity of Lincoln Financial Group, Lincoln Life Insurance
Company, which is Lincoln National's primary insurance subsidiary, now
has three lawsuits against it alleging fraud in the sale of
interest-sensitive universal and whole life insurance policies.

While each of these lawsuits seeks class action status, the court has
not certified a class in any of them.

In each of these lawsuits, plaintiffs seek unspecified damages and
penalties for themselves and on behalf of the putative class. While the
relief sought in these lawsuits is substantial, they are in the
discovery stages of litigation, and it is premature to make assessments
about potential loss, if any.

In a fourth lawsuit, a settlement has been preliminarily approved by the
court and a class has been conditionally certified for settlement
purposes. Two similar lawsuits were previously resolved and dismissed. A
third such lawsuit will proceed as an individual action after
plaintiff's counsel agreed to have class action allegations stricken
from his complaint.

LINCOLN LIFE: Sued for Marketing Variable Annuities in Retirement Plan
A lawsuit has been filed against Lincoln Life by an annuity
contractholder. In that case, plaintiff seeks class certification on
behalf of all contractholders who have acquired a variable annuity from
Lincoln Life to fund a tax- deferred qualified retirement plan.
Plaintiff claims that marketing variable annuities for use in such plans
is inappropriate. Management intends to defend these lawsuits
vigorously. The amount of liability, if any, which may arise as a result
of these lawsuits cannot be reasonably estimated at this time.

LOS ANGELES: One Year Limit for Rampart Police Scandal Runs out
Very quietly, Los Angeles city officials are allowing the one-year limit
during which Rampart victims have to file a claim in state court against
the city to run out, according to the Los Angeles Times. As a result,
many people who were harmed, framed or improperly convicted through
official police misconduct will never get their day in court, the report

This must not be allowed to happen, says Los Angeles Times. Justice
would be better served if the City Council instructs City Atty. James K.
Hahn not to employ the state statute of limitations in certain cases. As
an alternative, the Legislature could vote to extend the time limit on
these cases by a full year.

Using current state law, cities may move to dismiss police misconduct
lawsuits filed after a year of the alleged wrongdoing. This one-year
statute of limitations is the shortest in the country. By contrast, in
New York it is three years.

What does this mean for a victim of any of the Los Angeles police
officers suspected of misconduct? While there are exceptions to the
statute of limitations rule, generally anyone who hasn't filed his or
her lawsuit within a year will be out of luck, regardless of the harm
done to them. These legal technicalities are likely lost on a young
immigrant in Pico-Union who not only knows very little about U.S.
constitutional rights but also fears to demand them.

Hahn, whose job in part is to protect the public from rogue police
officers, knows the clock is running. Yet he has so many institutional
conflicts of interest that he might as well have two heads.

For example, Hahn is required by law to investigate and prosecute police
misconduct and to disclose to defendants and their lawyers all previous
cases of such misconduct--including the use of excessive force--that
might contaminate a pending criminal case or even a prior criminal
conviction. Yet Hahn also must defend the city against police-abuse
lawsuits. Making matters even more complicated is the fact that Hahn's
office originally prosecuted some of the tainted Rampart cases.

So perhaps it's not surprising that the city attorney would be reluctant
to provide information about corrupt police officers, knowing this could
be the basis of a future lawsuit for damages, the report points out.

While Hahn's conflict of interest is vivid, he is not alone in his moral
and fiscal dilemma. The mayor and many City Council members also have
participated in closed-door hearings on how to respond to disturbing and
costly lawsuits against police. It is a sorry state of affairs that, in
the wake of the alarming disclosures on Rampart, little is being said
about the ticking of the clock.

While city officials allow Hahn to raise the statute of limitations as a
defense against Rampart civil suits, one has to wonder why no one
previously has exposed the pattern and practice of what the Justice
Department describes as unconstitutional behavior in the LAPD. After
all, these city officials have attended many a background briefing over
the years to discuss lawsuit settlements brought against the city
because of abusive cops.

Another hurdle for Rampart victims to clear before filing a lawsuit
against the city is set up by Dist. Atty. Gil Garcetti, who has been
reluctant to turn over transcripts of LAPD Officer Rafael Perez's
interviews to defense attorneys. These lawyers still await information
about whether their clients were victims of abuses at the hands of Perez
and other Rampart cops.

The attitude of many leaders is to get Rampart behind us rather than to
get to the bottom of it. There is the desire to limit the fiscal damage.
Yet the cost of letting the Rampart victims have their day in court--by
waiving the one-year statute of limitations--would be under $ 10
million, according to plaintiffs' civil rights lawyers. That's only a
fraction of the $ 200 million or more that Rampart will end up costing
the city. It's worth the price to do what's right.

Of course, there's no mileage in telling citizens their tax dollars
could have been spent opening parks and libraries or hiring new police,
but instead will be paying for police misconduct settlements that might
have been prevented if the Christopher Commission reforms had been
implemented. But that is a lesson for another day.

Lengthy and public court proceedings about police misbehavior toward
innocent people might crack the comforting myth of a "thin blue line"
protecting the middle class from the underclass. But if the truth hurts,
so be it.

The search for the truth of Rampart should not be limited prematurely.
The ticking clock should be stopped. The state's statute of limitations
should be extended for a full year. (Los Angeles Times, June 9, 2000)

MBTA: Beacon Hill Residents Urge to Slow Trains for Noise Level
Fed up with shaking glasses, and conversations drowned out by subway
cars running underneath their homes, residents of one of Boston's most
desirable neighborhoods are taking the MBTA to court to demand it slow
down its Red Line cars.

The Beacon Hill residents' group says the 450 trains passing over
improperly installed tracks each day cause excessive vibration and

They want the MBTA to slow the trains to 25 miles-per-hour under their
homes, which would add an estimated 54 seconds to Red line riders'

Sally Brewster, a 35-year resident of Pinckney Street, said residents
barely noticed the Red Line before new tracks were installed in 1987.
But since then it's become too much to bear.

"You have to stop conversations sometimes on the first floor," said
Brewster, a member of the Red Line committee. "Thousands of persons on
the third and fourth floors are being awakened in the morning by the
first train that goes through."

The MBTA's northbound and southbound Red Line trains run in a tunnel
between the Park Street and Charles Street stations. The tunnel was
constructed in 1909.

But the MBTA replaced the old tracks without installing noise-dampening
materials in 1987. David Thomas, Pinckney Street resident and chairman
of the neighborhood committee, says only since then have residents found
the noise and vibration intolerable. People in many neighborhoods over
MBTA train corridors throughout the Boston area complain about noise.

"What's different about our case," said Thomas, "is the T screwed up,
they've created a problem, and now they've got to fix it."

But on the track installation issue, MBTA spokesman Brian Pedro said,
"We did nothing wrong."

Though there are no hard and fast rules, Thomas said the Federal Transit
Administration suggests a maximum of 35 decibels for trains running
frequently in residential areas.

Beacon Hill residents support a noise study done for the MBTA,
indicating that noise exceeds that level at 16 representative homes -
reaching almost 60 decibels in some locations.

"The thunder heard in homes across the Hill is far in excess of federal
standards," the committee said.

But Andrew Brennan, director of environmental affairs for MBTA, said
tests before and after the 1987 track replacement show that noise levels
are the same.

Thomas said residents met about two years ago to deal with the problem
and have prevailed on politicians and MBTA officials, with no results.

So they have hired attorney Timothy Wilton, who specializes in
class-action lawsuits, and the law firm of Lawson and Weitzen.

Residents don't know if slowing the trains to 25 miles-per-hour will
solve the problem. But they do want the MBTA to try it - and commit to
solving the problem permanently by installing rubber mats under the

According to documents the MBTA sent to the Red Line Committee, a
permanent solution like that would cost at least $4.7 million.

The mats have been successful in a particularly noisy 200-foot section
near Charles Street Station. (The Boston Globe, June 9, 2000)
PAINEWEBBER, INC: Klayman & Lazarus Files Customers' Suit on Trading
The law firm of Klayman & Lazarus LLP filed suit on June 9 against
PaineWebber, Inc., a subsidiary of PaineWebber Group, Inc. (New York
Stock Exchange: PWJ) before the National Association of Securities
Dealers, Inc. for alleged unlawful conduct at its Mitchell Field, New
York branch office.

The Mitchell Field office is part of PaineWebber's Garden City retail
complex which is one of three top producing branch offices.

The suit brought on behalf of three customers alleges that PaineWebber,
through its registered representative, Michael D. Prokop, took advantage
of a 17 year relationship with the Plaintiffs to engage in unsuitable
and excessive trading. The claim seeks compensatory and punitive damages
for violations of the Securities and Exchange Act of 1934, the New
Jersey Securities Laws N.J. Rev. Stat. 49:3-71, common law fraud, breach
of contractual and fiduciaries duties, and gross negligence. The claim
alleges that PaineWebber's Mitchell Field branch office is plagued by
systemic and pervasive fraud. The unlawful conduct perpetrated on the
Plaintiffs, as alleged in the claim, reflects what appears be a complete
failure of supervision and compliance at the Mitchell Field Branch.

On March 15, 1999, Martin Kiffel, a broker at its Mitchell Field branch
office was terminated for cause after admitting to misappropriating
funds from clients. As a result, the United States Attorney's Office for
the Eastern District of New York commenced an investigation.
Subsequently, Kiffel pleaded guilty to a charge of Federal wire fraud.
In August, 1999, it was reported that the PaineWebber branch had
undergone several managerial changes. At that time, a PaineWebber
spokesman stated that the changes "have absolutely no relationship with

Contact: Klayman & Lazarus LLP Lawrence L. Klayman, Esq., 888/997-9956
lklayman@nasd-law.com www.nasd-law.com

PRUDENTIAL SECURITIES: Wolf Haldenstein Files Suit Re Annuity Contract
On June 8, 2000, Wolf Haldenstein Adler Freeman & Herz LLP filed a class
action lawsuit in the Supreme Court of the State of New York, New York
County, against Prudential Securities and against other defendants which
are affiliated with each other as part of the AEGON group of companies
(the "AEGON defendants"). The class action is brought on behalf of all
persons nationwide who purchased an individual tax-deferred annuity
contract or who received a certificate to a group deferred annuity
contract, sold by Prudential Securities or the AEGON defendants, which
was used to fund a contributory (not defined benefit) retirement plan or
arrangement qualified for favorable income tax treatment pursuant to
Internal Revenue Code, including but not limited to an IRA, rollover
IRA, Keogh account or 401(k). Excluded from the class are officers,
directors, and agents of the defendants.

The lawsuit alleges that Prudential Securities and the AEGON defendants
breached their fiduciary duties, violated the state deceptive acts and
practices statute, and committed common law fraud, negligent
misrepresentation, negligence per se, gross negligence and unjust
enrichment, in the marketing and sale of deferred annuities to members
of the public. The complaint alleges that: Prudential Securities and the
AEGON defendants marketed and sold deferred annuities, which already are
tax-deferred, for purchase in qualified tax-deferred retirement accounts
such as IRAs, rollover IRAs, Keogh accounts and 401(k)s; these deferred
annuities sold by defendants are never suitable investments for
tax-deferred retirement accounts because earnings on any investment
placed in such an annuity already are tax-deferred, and purchase of a
deferred annuity in an already tax-deferred retirement account
represents a completely useless approach which simply increases carrying
costs. Plaintiffs seek to recover damages, obtain reformation of the
annuity contracts at issue, impose a constructive trust, and obtain
other declaratory and injunctive relief, on behalf of all class members
and is represented by the law firm of Wolf Haldenstein Adler Freeman &
Herz LLP (http://www.whafh.com).

Contact: Michael Miske, or Robert B. Weintraub, Esq., or Gregory
Nespole, Esq. of Wolf Haldenstein Adler Freeman & Herz LLP,
800-575-0735, whafh@aol.com, or classmember@whafh.com

TOBACCO LITIGATION: Lawmakers Try to Cut Off Funds for Fed Suit
Key members of Congress are attempting to derail a high-stakes Justice
Department lawsuit against the tobacco industry by cutting off a vital
source of funds to finance the government's litigation.

The government is seeking tens of billions of dollars in damages from
large tobacco companies to cover federal health care programs' costs of
treating cigarette-related illnesses. The tobacco industry settled a
similar lawsuit with the states in 1998 for $ 206 billion.

As the industry pressed in federal court here to have the suit
dismissed, some of its allies on Capitol Hill were adding provisions to
fiscal 2001 spending bills that would effectively throttle the
government's case.

The effort is being spearheaded by tobacco state lawmakers--including
Rep. Harold Rogers (R-Ky.)--who want to kill the lawsuit and
appropriations committee leaders who disapprove of the administration
shifting funds from the departments of Defense, Veterans Affairs, and
Health and Human Services to underwrite the cost of the litigation.

Attorney General Janet Reno warned recently that if the lawmakers
prevail, it will "severely hamper" efforts to recover tens of billions
of dollars and will set "an extremely troubling precedent" of lawmakers
using the appropriations process to interfere with Justice Department

"To put an end to this litigation by defunding it now would deprive
federal taxpayers of their day in court," Reno said in a letter to

William Corr, executive vice president of the Campaign for Tobacco-Free
Kids, an anti-tobacco group, complained that "it is clear that the
Republican appropriators are trying to do one huge favor for the tobacco
companies, which is to protect them from litigation."

Added Roger Salazar, spokesman for the American Cancer Society: "Tobacco
should not be allowed to short-circuit the legal process by going to
Congress and asking for special protection."

House Majority Leader Richard K. Armey (R-Tex.) replied that "we don't
believe that the Justice Department ought to start down this road of
'Let's use class action lawsuits as a cash cow device.' "

The move marks the second time this year that lawmakers have intervened
in a controversial government case. In May, the House voted to bar the
Defense Department from giving Smith & Wesson preferential treatment in
government contracts, part of a new effort to block the Clinton
administration from rewarding gun manufacturers that adopt safety

Administration officials agreed to leave Smith & Wesson out of any
similar lawsuit against gun manufacturers after the company pledged to
install trigger locks on its products and ban all gun sales without
background checks.

The federal government sued the tobacco industry in September for having
allegedly "conspired to deceive and mislead the American public about
the danger of their products in order to maintain and attract customers
generally, and children in particular." The suit includes an effort to
recover billions of dollars in past Medicare expenses under the Medical
Care Recovery Act, as well as civil racketeering charges against the

Congress and the administration first clashed over the litigation late
last year, when GOP leaders rebuffed a White House request for $ 14
million to finance the case. Desperate for the financial wherewithal to
launch the litigation last fall, the administration seized on a
provision of the spending law--called Section 109--that allows agencies
enlisting Justice Department assistance in civil litigation to share in
the cost of the government's defense.

The Justice Department has received $ 36 million in reimbursements from
other agencies over the past five years.

In a twist on the original intent of Section 109, the administration
decided to assess departments and programs that stand to benefit from
the tobacco suit to help cover the expense of pursuing the case. In all,
the Justice Department claimed about $ 8 million from other departments
for the fiscal year beginning Oct. 1.

When lawmakers learned of the administration's maneuver, they reacted
angrily. Senate Appropriations Committee Chairman Ted Stevens (R-Alaska)
inserted language in the new agriculture spending bill that would
rescind Section 109. Democrats strongly objected to the move, and
President Clinton threatened to veto the legislation if it contains
"special-interest provisions for the tobacco industry."

In the House, Rogers, chairman of the Appropriations subcommittee on
Commerce, Justice and State, modified Section 109 to prevent the Justice
Department from using other agencies' funds to initiate litigation,
including the tobacco suit.

Rogers, a strong ally of the tobacco industry, said he wants to kill the
Justice Department lawsuit because it poses a threat to Kentucky tobacco
growers and because he strongly objects to the Justice Department "going
through the back door" to finance its litigation.

"I don't like the litigation and I don't think they have the
constitutional authority to bring it," Rogers said. "I wouldn't think
that the Justice Department would be playing games with congressional

Stevens signaled recently that he was softening his position in the face
of the president's veto threat, but Rep. Jerry Lewis (R-Calif.),
chairman of the defense appropriations subcommittee, Rogers and Armey
indicated that the House was likely to stand firm against the Justice
Department. (The Washington Post, June 9, 2000)

TOBACCO LITIGATION: Worth of Companies Debated at Trial in Florida
How much are the country's top tobacco companies worth? That has been a
key issue at the Engle class-action trial, when an expert witness took
the stand to present what he believes is an accurate way to put a
valuation on the defendant cigarette makers.

I came up with a present value of future expected excess cash, George
Mundstock, a University of Miami law professor, said under
cross-examination by Brad Lehrman, representing Philip Morris Cos.

In this punitive phase of the trial, attorneys and a parade of witnesses
are trying to pin down the worth of tobacco defendants, the size of the
Florida class of sick smokers, and the amount of punitive damages, if
any, the tobacco companies must pay.

In considering the cash flow of the tobacco companies, Did you consider
the size of the Engle class and the size of the overall potential
judgment in the case, Lehrman asked Mundstock. Mundstock said no.

Earlier, Mundstock had told Judge Robert Paul Kaye that for purposes of
punitive damages, Philip Morris had a value of $ 118.4 billion,
including domestic and international operations.

Mundstock testified that he used, as a valuation tool, the 1999 deal in
which Philip Morris paid Liggett $ 300 million for three minor cigarette
brands, which represents only 0.02 percent of the domestic cigarette
market. Those figures were then used to extrapolate an overall value for
Philip Morris.

In a later cross-examination by Gordon Smith, a defense attorney for
Brown & Williamson Tobacco, Mundstock said that methodology was not his
preferred method and he didnt use it to estimate valuation for the four
other tobacco defendants in this case. (Broward Daily Business Review,
June 8, 2000)

WASHINGTON MUTUAL: Class Members Not Liable for Other Side's Atty. Fees
Absent members of a putative class who do not exercise the right to opt
out of a class action aren't liable for the other side's attorney fees
if the suit is unsuccessful, district Court of Appeal has ruled. Div.
Three issued a writ of mandate ordering changes in a notice sent to
employees of now-defunct Home Savings of America. Three former workers
brought suit against Washington Mutual Bank, claiming that Home placed
more than 500 employees on three- or four-day workweeks without paying
daily overtime as required by law.

Washington Mutual took over Home following a merger with Home's parent,
H.F. Ahmanson & Co., in 1998.

As part of the class certification process, Los Angeles Superior Court
Commissioner Bruce Mitchell last year ordered that a notice be mailed to
60 members of an identified sub-class.

Over the objections of plaintiffs' counsel, the following language was
ordered included in the notice: "If Home Savings prevails, plaintiffs
likely will be liable for all or part of Home Savings' attorneys' fees
and costs in defending the class claims. If you choose to remain a class
member, you may be liable for some of Home Savings' fees and costs if
Home Savings prevails. Plaintiffs contend that Home Savings has no right
to recover fees under [Labor Code] Section 218.5 even if Home Savings

Sec. 218.5 provides for an award of fees to the prevailing party in an
action "for the nonpayment of wages...if any party to the action
requests attorney's fees and costs upon the initiation of the action."
The plaintiffs asserted that the section doesn't apply to a claim for
unpaid overtime, and that even if it applies to such claims it doesn't
authorize an award against class members who aren't named plaintiffs.

Justice Walter Croskey, writing for the Court of Appeal, agreed as to
both issues. Attorney fee awards in overtime cases, Croskey said, are
governed by Sec. 1194, not Sec. 218.5. Sec. 1194 contains a "one-way"
fee-shifting provision that authorizes recovery of fees by a successful
employee in overtime and minimum-wage cases. Croskey said the "obvious"
intent of the Legislature when it enacted the fee-shifting provision of
Sec. 1194 in 1991five years after Sec. 218.5 was adoptedwas to grant
special protection in unpaid-wage and overtime cases by relieving
employees of potential liability for employers' attorney fees.

The justice went on to conclude that absent class members cannot be held
liable for attorney fees incurred if the other side prevails, at least
not in cases where an "opt-out" procedure is used to determine the
class. Saddling class members with such liability, Croskey said, would
blur the distinction between class representatives and absent members.

Citing Danzig v. Superior Court (1978) 87 Cal.App.3d 604, which severely
limited the ability to take discovery from absent class members, the
jurist wrote: "A class action is a representative action in which the
class representatives assume a fiduciary responsibility to prosecute the
action on behalf of the absent parties....The representative parties not
only make the decision to bring the case in the first place, but even
after class certification and notice, they are the ones responsible for
trying the case, appearing in court, and working with class counsel on
behalf of absent members. The structure of the class action does not
allow absent class members to become active parties, since 'to the
extent the absent class members are compelled to participate in the
trial of the lawsuit, the effectiveness of the class action device is
destroyed.'...The very purpose of the class action is to 'relieve the
absent members of the burden of participating in the action.'"

The case is Earley v. Superior Court, Washington Mutual Bank RPI, 00
S.O.S. 2438. (Metropolitan News-Enterprise; Capitol News Service, April
24, 2000)
WATER CONTAMINATION: Ontario Announces Compensation for E.Coli Victims
Officials in Canada's Ontario province have announced a
multimillion-dollar compensation package for residents devastated by a
deadly bacterial outbreak if they waive their right to participate in
class-action suits. ''Obviously it's going to cost millions of
dollars,'' Attorney General Jim Flaherty said. ''This is about doing the
right thing. It isn't about money.''

At least seven people died and up to 2,000 others were sickened by E.
coli bacteria that turned up three weeks ago in the drinking water in
the farming community of Walkerton, 90 miles west of Toronto. Four other
deaths are being investigated.

The epidemic Canada's worst E. coli outbreak is thought to have been
triggered after a torrential May 12 downpour washed manure into the
town's wells.

Flaherty said that although Canada's Supreme Court has imposed a limit
of $186,000 per person on pain and suffering damages, there is more
assistance available from the government of Ontario. ''There can be
future loss of income claims, medical expenses not covered by (health
care), future rehabilitation expenses that kind of thing, which can
result in very large sums of money,'' he said. ''The government is going
to a group of victims and saying ... 'You're going to be compensated
quickly and there is no limit on your compensation,''' said Flaherty,
who added that insurance and Ontario's budget surplus would cover the

Although residents who accept government money waive their right to
pursue class-action suits, the province said it would fund initial legal
fees incurred by residents who decide to seek legal recourse.

At least six law firms have said they plan to launch class-action suits
on behalf of residents. (AP Online, June 9, 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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Copyright 1999.  All rights reserved.  ISSN 1525-2272.

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