/raid1/www/Hosts/bankrupt/CAR_Public/000614.MBX                   C L A S S   A C T I O N   R E P O R T E R

                  Wednesday, June 14, 2000, Vol. 2, No. 115


BAPTIST FOUNDATION: Former Investors Want to Sue Bankrupt Foundation
BOSTON GLOBE: Freelancers Seek Injunction in MA on Rights to Works
CITRIX SYSTEMS: Milberg Weiss Announces Securities Lawsuit in Florida
DAIMLERCHRYSLER CORP: Consumers Sue in TX over Insurance Policies
DR. lIEBMAN: Pediatrician Agrees to Forfeit License; Action Not Settled

FIBREBOARD CORP: Appeals Court Reverses Certification In Bias Lawsuit
HMOs: High Court Case Says Patients Can't Invoke Employee Benefits Law
HMOs: USA Today Says Ruling Helps Stock, But More Cases in Wings
HOLOCAUST VICTIMS: US, Germany Reach Agreement on Legal Closure
INTERNET PRIVACY: A.G. Granholm Fights Snoops on Michiganian Browsers

MICROSOFT CORP: Appeals Ct Will Hear Antitrust Case
MCKENZIE CHECK: Liebenberg & White settles Lawsuit Re Lending in PA
PFIZER: Lawsuit Claims Failure to Warn of Hypertensive Cardura Problems
SANDERSON PLUMBING: Sp Ct Reinstates Award in Workplace Bias Case in MS
SMITHKLINE BEECHAM: 3 Suits Say Lyme Vaccine Caused Severe Arthritis

SITHKLINE BEECHAM: Long-Term 'Temps' File ERISA Suit for Benefits
STATION WABC: Investors in New Age Charge Berg's Vouch for Integrity
TOBACCO LITIGATION: Philip Morris CEO Admits Risks of Smoking
TOBACCO LITIGATION: Philip Morris CEO Issues Price Warning
TOBACCO LITIGATION: Philip Morris CEO Tells Jury Company Has Changed

VARI-L COMPANY: Milberg Weiss Files CO Suit Alleging Insider Trading
VISA, MASTERCARD: CNN Coverage on DOJ's Action on Antitrust
WRITERS GUILD: Law Firm Promises Not to Charge Members in Age Bias Suit


BAPTIST FOUNDATION: Former Investors Want to Sue Bankrupt Foundation
The U.S. Bankruptcy Court must approve a plan by the bankrupt Baptist
Foundation of Arizona and two committees of investors to hire a law firm
to sue former foundation officials.

The firm, Bernstein Litowitz Berger and Grossman of San Diego, is one of
five handling a class-action lawsuit for former investors.

The foundation filed for Chapter 11 bankruptcy protection in November.
It owes $590 million to 13,000 investors but lists assets of only $240
million. Some former foundation officials are under investigation in
connection with their handling of investor funds.

The foundation also plans to seek Bankruptcy Court approval to hire
Dallas lawyer Clifton Jessup as trustee to oversee the sale of its
assets. (The Associated Press State & Local Wire, June 13, 2000)

BOSTON GLOBE: Freelancers Seek Injunction in MA on Rights to Works
The following was released by The National Writers Union, Local 1981 of
the International Union, UAW; the Graphic Artists Guild, Local 3030 of
the International Union, UAW; and the American Society of Media
Photographers (ASMP):

    Freelance writers, illustrators, and photographers of the Boston
Globe today [June 12] filed a class action lawsuit on behalf of one
thousand freelancers, seeking an injunction in Massachusetts Superior
Court against the Globe's unfair and deceptive trade practices.

The lawsuit was filed after the Globe attempted to coerce writers,
illustrators and photographers into signing an unfair contract which
demands all rights in all mediums to all past, present, and future
creative works by freelance contributors. The Globe informed freelancers
that they would never be hired again unless they agreed to the paper's
demands, which include granting the Globe rights to re-publish in all
mediums -- including the Internet -- articles, photographs and
illustrations that were previously sold to the paper, for no additional

The legal action, Marx et. al. v. The Globe Newspaper Co., is supported
by three organizations representing freelancers, on behalf of their
members who contribute to the Globe: The National Writers Union, Local
1981 of the International Union, UAW; the Graphic Artists Guild, Local
3030 of the International Union, UAW; and the American Society of Media
Photographers (ASMP).

"The last thing we need is more sweatshops in cyberspace," said
Elizabeth Bunn, Vice President of the International Union, UAW, and
director of its Technical, Office and Professional (TOP) Department.
"The power of new technology should be harnessed to empower creative
workers, not used as a club to re-create 'my-way-or-the-highway'-style
working conditions, reminiscent of the 19th century."

"We're not going to stand by while irresponsible publishers impose non-
negotiable, retroactive agreements on creators," said Richard Weisgrau,
executive director of ASMP. "We're confident that the Massachusetts
courts will put a stop to this kind of egregious behavior."

The Globe is attempting a "brazenly deceptive strategy to grab our
rights for decades of work in the past for nothing, and for no specified
compensation in the future" according to plaintiff Bill Marx, a book
critic for the Globe and a member of UAW Local 1981. "The Globe wants to
make available under their name, for their exclusive use and profit, the
intellectual property owned by freelancers on the Globe's web site,
boston.com , across the Internet."

"The Globe claims I will be able to retain a copyright interest in my
work," said photographer Greg Mironchuk, an ASMP member, who is another
of the named plaintiffs. "But what good is that if they force me to give
to them the right to take everything I have given them over the years I
have worked and allow them to distribute and sell it over the Internet
and elsewhere forever?"

The lawsuit, citing Massachusetts laws that prohibit deceptive and
coercive business practices, seeks an injunction to strike down the
Globe's contract demands, and to nullify the contract for those who felt
coerced to sign it, for fear of losing their position with the Globe.

The Globe's coercive and deceptive business practices "would merit a
Spotlight Team expose, if these actions were committed by any other
company than the Globe itself," said Ira Sills, a Boston labor and
employment attorney who is representing Globe freelancers. "We doubt the
paper will devote much coverage to its own misbehavior, but the state of
Massachusetts has laws which prohibit this kind of unconscionable
behavior. We intend to enforce them."

The National Writers Union recently prevailed against the Globe's parent
company in a landmark lawsuit, Tasini vs. The New York Times, which
established work contributed by freelancers cannot be re-used,
electronically or by other means, by a publisher without the consent of
the creator. The Times and other publishers, including the Globe, now
face uncertain financial liabilities because they routinely violated
copyright law by re-selling electronic versions of articles contributed
by freelancers without their consent. (Source: National Writers Union,
Local 1981 of the International Union)

CITRIX SYSTEMS: Milberg Weiss Announces Securities Lawsuit in Florida
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that
a class action lawsuit was filed on June 12, 2000, on behalf of
purchasers of the securities of Citrix Systems Inc. (NASDAQ: CTXS)
between October 20, 1999, and June 9, 2000, inclusive. A copy of the
complaint filed in this action is available from the Court, or can be
viewed on Milberg Weiss' website at:

The action, numbered 00-6796, is pending in the United States District
Court for the Southern District of Florida, Fort Lauderdale Division,
located at 299 E. Broward Blvd., Ft. Lauderdale, Fl. 33301, against
defendants Citrix, Mark B. Templeton (Chief Executive Officer and
President), John P. Cunningham (Chief Financial Officer), and Edward E.
Iacobbucci (Chairman of the Board). The Honorable William P.
Dimitrouleas 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 October 20, 1999, and June 9, 2000. For example, as
alleged in the complaint, on January 19, 2000 defendants reported record
operating results for the Company's fourth quarter and fiscal year 1999
and stated that customer demand for the Company's products, along with
its business strategy, favorably position the Company as a leading
provider of information technology in the new millennium. This statement
was materially false and misleading because it did not disclose what the
Company knew or recklessly disregarded, primarily that the Company's
true financial status was deteriorating, and that its seemingly stellar
growth was not likely to continue into 2000. On April 19, 2000,
defendants reported record operating results for its first fiscal
quarter of 2000, and stated that its results were fueled by the release
of three new products, key acquisitions of companies in Asia which
expanded its market, and the launching of an advertising campaign to
raise its market visibility. In fact, the Company knew, or was reckless
in disregarding that its market had shifted to a different type of
program delivery and installation system than the Company was then
offering, that its gross margins were declining, and that its sales in
the Asian market were decreasing. When the Company announced, on June
12, 2000, that its first quarter 2000 financial results would be
dramatically lower than the market had been led to believe, due to,
among other things, poor overall sales attributable to a market shift
towards an electronic delivery of programs and upgrades, and
particularly poor sales in its Asian market, the price of Citrix common
stock dropped by 48%.

Contact: Steven G. Schulman or Samuel H. Rudman Phone number: (800)
320-5081 Email: Citrixcase@.milbergNY.com Website:
http://www.milberg.comor Kenneth J. Vianale or Maya S. Saxena (561)

DAIMLERCHRYSLER CORP: Consumers Sue in TX over Insurance Policies
Litigation surrounding automobile payment packing is far from over.
Consumer Financial Services Law Report recently learned of a class
action suit filed in Texas where consumers are accusing DaimlerChrysler
Corp., an automobile dealership and a credit service company of
fraudulently inducing them to purchase credit life and disability
insurance policies and service contracts that allegedly provided little
or no benefit. (Randle, et al. v. Archer Motor Sales Corp., et al., No.
1999-62734 (D. Harris County, Tex. filed 12/22/99).)

Kimberly Randle, Marcus Johnson and Debbie J. Sampson, individually and
as representatives of the class seeking certification, assert that
DaimlerChrysler, Archer Motor Sales Corp. and Consumer Portfolio
Services Inc. violated the Texas Deceptive Trade Practices Act and
committed acts of fraud and misrepresentation through the sale of the
contracts and policies.

Specifically, the purported class contends that Archer's sales
representatives told customers that Consumer Portfolio Services required
that they purchase the credit insurance to protect Archer and the credit
company in case of a disability or death. However, the claim states that
Archer failed to provide its customers with a copy of their policies or
with information on how to make a claim.

According to the complaint, Archer sold the insurance at rates much
higher than the market rates for term life and disability insurance and
its representatives were not licensed to operate an insurance business
in Texas. Randle, Johnson and Sampson further aver that Archer never
purchased insurance policies on their behalf. They contend that, after
paying a "commission" to its sales representatives, Archer used the
premiums as operating capital and profits.

The suit charges that Archer's representatives informed customers that
Consumer Portfolio Services also required them to purchase a service
contract for their vehicles. According to the complaint, the service
contract excluded any item covered by the manufacturer's warranty and
did not cover repair necessitated by ordinary use or a preexisting
condition. The purported class states that the exclusions made the
service contracts worthless because DaimlerChrysler and its authorized
repair facilities "can always claim that one of the exclusions applies."
They argue that DaimlerChrysler routinely denies repairs under its
service contracts.


The complaint requests certification for a class of customers who
purchased the service contracts and insurance policies. It asserts that
the questions of law or fact common to the class predominate over
individual claims and that, because of the relatively small amount of
individual damages, a class action is superior to other available
methods of adjudication.

The class seeks refunds of all insurance premiums collected by Archer
and of all monies collected by Archer and DaimlerChrysler for service
contracts sold in Texas. Class members also seek punitive damages and an
injunction prohibiting Archer from requiring that its customers purchase
credit life insurance and service contracts as prerequisites for


Consumer Portfolio Services, represented by the Houston-based firm of
Hughes, Watters & Askanase L.L.P., denied liability on the class action
charges, stating in its answer that it is not responsible for any
injuries suffered by the purported class. It also pleaded numerous
affirmative defenses, including waiver, estoppel, accord and
satisfaction, contributory negligence and the statute of frauds.
Additionally, the credit service filed a counterclaim against Randle and
Johnson for failure to make payments on their retail installment

James H. Miller P.C., of Houston, represents Randle, Johnson, Sampson
and the purported class. (Consumer Financial Services Law Report, May
30, 2000)

DR. lIEBMAN: Pediatrician Agrees to Forfeit License; Action Not Settled
A pediatrician accused of diluting vaccines to save money has agreed to
forfeit his license to avoid being prosecuted on felony charges.

Dr. William Liebman, who has maintained his innocence, allegedly diluted
vaccines with saline solution, jeopardizing children's immunity to
hepatitis, polio, diphtheria and other diseases. He was charged with
three felony counts of fraud and tampering with vaccines. If convicted,
he could have been sentenced up to six years in prison. Under the terms
of a plea bargain agreement reached Monday, Liebman, 59, agreed to close
his medical practice Aug. 15.

Authorities believe Liebman had been diluting vaccines since 1997. His
office in an upscale suburb vaccinated 35 to 40 children each year.
Liebman was investigated after one of his nurses reported noticing
discrepancies in the serum levels in vaccine vials last year. Tests by
the Food and Drug Administration in October confirmed that some vials of
vaccines were ''adulterated or diluted.''

Some former patients rallied behind the doctor and held candlelight
vigils to show support, but dozens of others joined a class-action
lawsuit that has not been settled. (AP Online, June 13, 2000)

FIBREBOARD CORP: Appeals Court Reverses Certification In Bias Lawsuit
A federal appeals court panel has directed a trial judge to reconsider
his decision to certify a class in a lawsuit accusing a hiring hall of
discriminating against female and minority heavy-equipment operators. A
panel of the 7th U.S. Circuit Court of Appeals held last Friday June 9
that the judge abused his discretion by certifying the class without
giving the class members personal notice or the opportunity to opt out
of the suit.

Citing Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S.Ct. 2295 (1999),
the panel said class members in actions seeking money damages have a due
process right to notice and a chance to opt out.

The panel's decision stemmed from a lawsuit that claimed a union
representing workers in Wisconsin discriminated against women and
minorities in its operation of an employment-referral hall. The suit
accused Local 139 of the International Union of Operating Engineers of
diverting work opportunities to white men. The suit sought both
equitable relief and compensatory and punitive damages for alleged
violations of Title VII of the Civil Rights Act, 42 U.S.C. sec2000e.

The plaintiffs moved for the certification of a class of more than 400
union members who allegedly were the victims of discrimination.

U.S. Magistrate Judge Patricia Gorence of the Eastern District of
Wisconsin recommended that a class be certified under Rule 23(b)(2) of
the Federal Rules of Civil Procedure. U.S. District Judge John W.
Reynolds adopted that recommendation and certified a class to proceed
with the Title VII claims. Nine union members were designated as the
class representatives.

The 7th Circuit panel said Reynolds erred in his decision. Certification
under Rule 23(b)(2) is appropriate when the opposing party has acted --
or failed to act -- on the same grounds generally applicable to the
entire class, the panel said. Under Rule 23(b)(2), the panel said, the
results of the litigation are binding on all class members even though
they are not guaranteed personal notice or the opportunity to opt out of
the suit.

Such restrictions are appropriate because any injunctive or declaratory
relief granted would be appropriate for all class members, according to
the panel. The panel said the situation is different in class actions
seeking money damages. Even if the plaintiffs also seek equitable relief
in such a case, the potential divergence of interests within the class"
when it comes to claims for compensatory or punitive damages entitle
class members to notice and a chance to opt out, the panel said. Citing
Jefferson v. Ingersoll International Inc., 195 F.3d 894 (1999) -- an
opinion in which the 7th Circuit adopted the 5th Circuit's reasoning in
Allison v. Citgo Petroleum Corp., 151 F.3d 402 (1998) -- the panel said
there is an exception to this rule.

Money damages may be obtained in a class action certified under Rule
23(b)(2) if those damages are incidental to the equitable relief sought,
the panel said. The panel said money damages are incidental if they stem
directly from liability to the class as a whole and do notdepend on the
individual circumstances of each class member. But the damages sought by
the union members are not incidental because they require judicial
inquiry into the particularized merits of each individual plaintiff's
claim," the panel said. Citing Miller v. American Family Mutual
Insurance Co., 203 F.3d 997 (7th Cir. 2000), the panel said money
damages may be awarded only after plaintiffs have offered proof of
discrimination and injury specific to themselves.

Even if the plaintiffs prove that Local 139 administered the referral
hall in a discriminatory manner and won injunctive and declaratory
relief on that ground, each individual plaintiff pursuing damages claims
still would need to establish that Local 139's discrimination caused her
personal injury and would need to show the magnitude of injury to
determine compensatory damages," the panel said. Citing Kolstad v.
American Dental Association, 527 U.S. 526, 119 S.Ct. 2118 (1999), the
panel said an individual plaintiff also would have to show that the
union possessed a reckless indifference to the plaintiff's federal
rights" to win punitive damages.

The panel said the 7th Circuit in Jefferson -- an opinion issued after
Reynolds certified the class in the suit against Local 139 -- instructed
trial judges to consider three alternatives for handling class actions
in which the money damages sought are not incidental to the requested
equitable relief.

The panel said the judge could certify a class under Rule 23(b)(3) --
which requires that class members receive personal notice and an
opportunity to opt out -- for all proceedings. Or the judge could
certify a class under Rule 23(b)(2) for the part of the case concerning
equitable relief and a class under Rule 23(b)(3) for the part concerning
damages, the panel said.

The panel said the third alternative calls for the judge to certify a
class under Rule 23(b)(2) for both the monetary and equitable parts of
the case, but to use his plenary authority under Rules 23(d)(2) and
23(d)(5) to provide class members with personal notice and a chance to
opt out.

Judge Michael S. Kanne wrote the opinion for the panel. Joining in the
opinion were Judges Richard D. Cudahy and John L. Coffey.

Jeff Lemon, et al. v. International Union of Operating Engineers, Local
No. 139, AFL-CIO, No. 99-4101. (Chicago Daily Law Bulletin, June 12,

HMOs: High Court Case Says Patients Can't Invoke Employee Benefits Law
Health maintenance organization patients can't invoke a federal
employee-benefits law to sue their plans for allegedly putting profits
ahead of proper medical care, the U.S. Supreme Court ruled.

The high court unanimously threw out a lawsuit by a patient who said her
Illinois HMO's cost-containment system was to blame for her ruptured
appendix. Cynthia Herdrich claimed the HMO violated its fiduciary duty
under the Employee Retirement Income Security Act, known as ERISA.

The ruling eliminates one of the legal avenues -- though not the most
common one -- used by patients and their lawyers to sue health plans. It
could help such insurers as Humana Inc., Aetna Inc. and Cigna Corp.,
which are facing similar claims as part of class-action suits. (The
Detroit News, June 13, 2000)

HMOs: USA Today Says Ruling Helps Stock, But More Cases in Wings
Wall Street gave the Supreme Court's decision on managed care a thumbs
up Monday, but HMOs' legal battles are far from over. Managed care
stocks rose on news that the court did not rule against the use of
bonuses and other financial incentives paid to doctors who limit

"The decision was saying you can't punish a managed care company for
managing," says Stuart Gerson, an attorney who represents health care
plans for Epstein Becker & Green in Washington. The court acknowledged
that managed care came in to solve the problem of rapidly rising health
care costs caused, in part, by a lack of checks on doctors.

Financial incentives -- and disincentives -- play a key role in managed
care's cost-control efforts. Doctors are often paid a set amount per
patient, per month, whether or not that patient needs treatment.
Proponents say that gives doctors an incentive to keep patients healthy,
while critics say it means patients get short-changed. Bonuses are
sometimes offered to doctors or medical groups for meeting annual
financial goals.

The case, known as Pegram vs. Herdrich, was brought by Cindy Herdrich,
who went to her doctor complaining of abdominal pain. Her doctor told
her she had to wait eight days for an ultrasound; her appendix burst
while she waited, requiring emergency surgery. Herdrich argued that
financial incentives caused her doctor to delay the test. The case was
the first addressing managed care's financial incentives to make it to
the Supreme Court.

However, more than a dozen class-action cases against managed care
companies are now in lower courts, challenging financial arrangements
and health plans' responsibility to tell their customers about such
incentives. Most of those cases were brought under federal
anti-racketeering laws. Because the Supreme Court did not rule against
the use of financial incentives, it undermines part of the arguments in
those lower court class-action cases. "It takes the legs out from under
a lot of the class-action lawsuits," says Andy Bressler, an analyst with
Bank of America. "But there's a lot of other things on the table to be
worried about."

For one thing, Monday's ruling could result in more cases challenging
managed care in state courts. "The managed care industry lost by
winning," says Gregg Bloche, co-director of the Georgetown/Johns Hopkins
joint program in law and health policy. "The door is now open, perhaps
wide open, for an influx of state cases against HMOs for withholding
treatment," Bloche says. And in state courts, "the hurdles are lower and
the damage awards greater," says Jamie Court of the advocacy group
Consumers for Quality Care in Santa Monica, Calif.

The court ruling also left open the question of whether health plans
need to do a better job of informing consumers about such financial
incentives. "We are going to have decisions saying HMOs must be honest
and straightforward," says Marc Machiz, whose Washington law firm has
brought class-action cases against managed care companies. (USA Today,
June 13, 2000)

HOLOCAUST VICTIMS: US, Germany Reach Agreement on Legal Closure
US and German negotiators reached agreement here on a deal that would
protect German companies against legal claims in the United States by
Nazi-era forced and slave laborers, officials said. The deal, which lead
German negotiator Count Otto Lambsdorff said he would recommend to
affected industries, overcomes a significant obstacle to the creation of
a five-billion-dollar compensation fund for the victims though further
steps are still needed, they said.

President Bill Clinton said in a statement late Monday that he was
"pleased" that "a major hurdle to agreement on the historic German
initiative dealing with wrongs arising from World War II has now been
overcome." Clinton said it was "an important day for those victims of
Nazi-era wrongs who have waited 50 years for justice." "We're on the
verge of a historic agreement," said deputy Treasury Secretary Stuart
Eizenstat, the chief US negotiator. "It's not the end of the road, but
this is a major, major step," Eizentstat told reporters here Monday
following nearly 10 hours of intense negotiations with Lambsdorf and
Manfred Gentz, the financial director of DaimlerChrysler who is
representing German firms in the talks.

Under Monday's agreement Washington will oppose present and future
lawsuits against German companies and their subsidiaries filed in the
United States by Holocaust-era victims. Washington's opposition to such
cases will come in the form of a so-called "Statement of Interest" that
says such suits would not advance US foreign policy goals.

Both Eizenstat and Secretary of State Madeleine Albright will submit
letters to that effect that would be included in court briefs filed by
the justice department. Eizenstat said the proposed deal, while not
giving German firms and their subsidiaries 100 percent immunity from
civil suits, "will create a high probability that all legal cases will
be dismissed and enduring legal peace achieved."

Legal closure for the current 55 class action suits now pending in the
United States as well as other possible future claims had been a key
sticking point for German acceptance of the compensation fund to be
administered by a foundation known as "Remembrance, Responsibility and
Future." "I think we have a good result ... one which I can recommend
(to German Chancellor Gerhard Schroeder)," Lambsdorff said. "The results
are sufficient to go ahead with the setting up of the foundation."

Gentz said Monday's pact was "an agreement on the last issue we had,"
adding: "We will recommend that they (German industry) should accept
what we agreed to." "The commitments ... ensure with near certainty that
all present and future cases will be dismissed," Gentz added.

German firms must still sign on and legislation to set up the foundation
must still be approved by the German parliament for the fund to be
created and start paying compensation to the estimated 870,000 surviving
slave and forced labor victims of Adolf Hitler's Third Reich.

In addition, the attorneys for plaintiffs in the existing lawsuits must
agree when, as the agreement envisions, the 55 cases are grouped
together and the US Justice Department asks for their permanent
dismissal, Eizenstat said. "There remain issues with the plaintiffs'
attorneys and I hope those can be worked out," he said, declining to
specify what those issues were.

Eizenstat said he hoped to be able to have a final meeting in Berlin
with German negotiators to complete the comprehensive terms of the fund
by mid-July.

The timing of Monday's agreement was important as both sides said if a
deal had not been struck, the chances that payments to the elderly
survivors, who are mostly in their 80s and passing away at the rate of
one percent a month, could not begin this year. (Agence France Presse,
June 13, 2000)

INTERNET PRIVACY: A.G. Granholm Fights Snoops on Michiganian Browsers
Atty. Gen. Jennifer Granholm launched a first-of-its-kind legal crusade
Monday against companies she says are violating the privacy of
Michiganians who browse the Internet.

Granholm sent notice that she'll seek a precedent-setting lawsuit
against four commercial Web site companies that allow the use of
Internet "cookies" -- tiny bits of text that track a person's activities
on the Web to develop profiles of potential customers -- without
properly informing customers they're being watched.

Some businesses that get information from the Web bugs could pass it on
to marketers and others on the Internet -- information that could wind
up damaging the customers' relationships with insurers and employers,
Granholm said. The companies -- a medical site, a pornography site, a
stock-trading site and a baby-clothing site -- have 10 days to respond
before a lawsuit is filed.

At issue is whether these so-called Web bugs violate the Internet user's
privacy, subject them to unwanted solicitations by advertisers and
potentially put sensitive, private information in the wrong or
unintended hands, Granholm said. "It's similar to Big Brother, but I
like to call it Big Browser," Granholm said. "People have no idea their
thoughts and practices on the Internet are being tracked or policed.
We're going after this secret, third-party surveillance."

Cookies have been a controversial issue in the Internet world for
several years. Many major companies, including The Detroit News, use
cookies to tailor their Web sites to the users' interests. But the News,
like some companies, does not share the information.

The sharing of information from cookies is part of the growing concern
about a loss of privacy on the Internet and how commercial Web sites use
information. "They are an invasion of privacy and do not always say how
to delete them," said Pete Jimenez, 25, a party-store manager in Detroit
who regularly surfs the Internet. "We should have privacy laws to
protect us from them."

Granholm will use the Michigan Consumer Protection Act as her hammer.
The act bars companies from "engaging in certain unfair, unconscionable
or deceptive methods, acts and practices in the conduct of trade or
commerce." The law allows for civil penalties up to $25,000 per

                        Creative Cookie Cruncher

Jeffrey Rosen, George Washington University law professor and author of
the book Unwanted Gaze: Destruction of Privacy in America, said Granholm
may have hit on a creative way to attack Web privacy issues.

"Judges generally have ruled that any time you surrender information to
a third party for one purpose, you abandon protection against having
that information used for other purposes," Rosen said. "But if the
Michigan law is carefully drafted, it might be an innovative and
potentially useful way of combating a serious problem in this country."

The four companies selected -- Ortho Biotech Inc., a medical subsidiary
of Johnson & Johnson in Raritan, N.J.; Intimate Friends Network, a
pornography site in Lake Worth, Fla.; Stockpoint Inc., a stock-trading
site in San Francisco; and AmericasBaby.Com Inc., a site in New York
that sells baby clothing and furniture were chosen simply because they
are representative of the electronic marketplace, Granholm said. They're
not the only or even the most serious violators of privacy rights, she

"We know this is the tip of the iceberg," Granholm said. "We're holding
up these four as examples." The companies can avert a lawsuit by
promising within 10 days to write "true, accurate, clear and conspicuous
privacy policies" that inform customers about the Web bugs and how to
delete them, Granholm said.

                          Fighting for Consumers

Granholm has staked out consumer protection as a critical mission of her
office, just as her predecessor Frank Kelley did for decades. State
attorneys general have taken a stronger hand in dealing with societal
problems in recent years, most notably the class-action suit against the
big tobacco companies. Michigan will receive $8 billion from the
companies over the next decade under terms of the settlement.

Defending her cookies campaign, Granholm said Internet users can erase
the cookies, but most aren't sophisticated enough to know how to do it,
and these companies tend to make it more difficult.

A spokesman for Johnson & Johnson said the action by the attorney
general is misdirected. "Our privacy policy promises that any
information gathered from users of our Web site will be anonymous and it
will not be shared with anyone," said John McKeegan, spokesman for the
New Jersey-based company. McKeegan said the company's PROCRIT.COM site
does contract with DoubleClick Inc., a leading on-line services company
that uses cookies. But the information collected is used only by Ortho
Biotech to determine the characteristics of its audience and the
effectiveness of the Web site, he said.

Granholm said questions on the site ask users whether they take AZT, a
drug used by some patients with AIDS. That information could be damaging
if sold to a prospective employer or health insurance company that
refuses to write polices for people with HIV or AIDS, she said.

She added that people who browse the Intimate Friends Internet site
probably are unaware they're being tracked and labeled by advertisers as
pornography users. That information could be passed on to a prospective
employer who could use it in hiring decisions, Granholm said. She added
that she is unaware of any such cases in Michigan.

Stockpoint Inc. said it intends to cooperate with Granholm. "We support
the privacy rights of consumers using the Internet," the company said in
a statement. It said its privacy policy is currently not posted on its
site because it is undergoing internal review. But the policy will soon
be posted, it said. (The Detroit News, June 13, 2000)

MCKENZIE CHECK: Liebenberg & White settles Lawsuit Re Lending in PA
Senior Judge Thomas J. O'Neill entered an order certifying a class and
granting final approval to a settlement in the amount of $4.1 million in
a consumer class action against McKenzie Check Advance of Pennsylvania,
LLC, which did business under the names "National Cash Advance" and
"United Cash Advance" and its principals and majority owners, defendants
Steve and Brenda McKenzie.

Roberta Liebenberg and Natalie Finkelman of Jenkintown's Liebenberg &
White filed this class action in December, 1999. The Complaint asserted
causes of action under the Truth-in-Lending Act, the Racketeer
Influenced and Corrupt Organizations Act, Pennsylvania usury laws,
Pennsylvania Check Casher Licensing Act, the Pennsylvania Unfair Trade
Practices and Consumer Protection Law and common law fraud.

According to the complaint, the loans that are the subject of this
lawsuit go by a variety of names, including payday loans and cash
advances. Whatever they are called, they all work in the same way: the
consumer provides the lender a document in the form of a check for the
amount borrowed plus a "fee." The complaint alleges that the fee is
interest with an annual percentage rate typically not less than 390%,
and averaging close to 500%. The complaint also alleges that the "check"
is held for about two weeks (usually until the customer's pay day) when
the consumer either redeems the check by paying the face amount, or pays
another fee to extend the loan, otherwise the checks are deposited.
There has been extensive media coverage of purported abuses in
connection with these so called payday loans, in part since many
consumers, including many in Pennsylvania, have difficulty getting off
of the debt treadmill.

The class certified by Judge O'Neill consists of all persons who were
customers of defendants in the Commonwealth of Pennsylvania who wrote a
check to defendants and paid a fee in return for cash during the period
December, 1, 1996 through April 19, 1999. There was no admission of
liability by defendants, who, pursuant to the settlement, paid into
escrow the sum of $3.5 million, which is accruing interest, and agreed
to release the class members from approximately $ 600,000 of debt they
owed. The settlement also requires defendants to: notify Bankruptcy
Trustees in Pennsylvania that they will not seek to enforce any claims
in bankruptcy that were filed against the members of the class; return
any checks received from any Bankruptcy Trustee; and update and correct
any credit history affected by class members' transactions with

According to Liebenberg & White, an important issue during negotiations
was ensuring that the claims process would be easy to understand and
very consumer friendly. Most settlements require class members to go
back through their records and detail on the claim form each transaction
with defendants. Here, defendants compiled the information about class
members' transactions and listed it on individualized claim forms. All a
class member had to do to participate in the settlement was to confirm
that the transaction history set forth on the claim form was correct and
to sign and return it or challenge the accuracy of the transaction
history set forth in the claim form. Signs were placed at defendants'
former stores to notify class members of their right to participate in
the settlement.

This settlement is also extraordinary in that it has met with
overwhelming approval by the class. Not one of the approximately 46,000
class members who received a notice objected to the settlement.
According to Liebenberg and Finkelman, experienced class action
attorneys, "yet another remarkable aspect of this settlement is the fact
that there has been a very high percentage of claims filed by class
members. So far the claims administrator has logged approximately 27,000
claim forms, which represents an almost 60% return rate, an
extraordinarily high rate of return."

Contact: Liebenberg & White Roberta Liebenberg or Natalie Finkelman
877/481-0272 or 215/481-0272 attorneys@lw-law.com

MICROSOFT CORP: Appeals Ct Will Hear Antitrust Case
The U.S. Court of Appeals late June 13 said it will convene a full panel
of judges to hear Microsoft's challenge of a breakup order, an unusual
move that could favor the software giant in its historic antitrust
battle with the government.

The appeals court's acceptance of the case was not unexpected and
followed Microsoft's request for such a hearing. But in an unusual move,
the court immediately ruled that a full panel of judges will hear the

Meanwhile, the government attempted to take the case out of the
appellate court’s jurisdiction by filing a petition asking the U.S.
Supreme Court hear the case directly.

But the appeal's court's action suddenly puts the government and
presiding jurist U.S. District Judge Thomas Penfield Jackson in a
defensive position. Several experts said that by giving Microsoft an
expedited hearing before a full panel of judges, the Supreme Court would
be less likely to intercede in the case.

"Microsoft is looking forward to the next phase of this case, and we are
optimistic that the appellate courts will reverse the recent ruling,"
Microsoft CEO Steve Ballmer said in a statement.  "Obviously, we will
comply with any final order in this case, but we believe this judgment
is both wrong and unfair. We believe the appellate courts will recognize
that Microsoft's product innovation is the heart and soul of competition
in the high-tech industry."

The Justice Department issued a statement explaining why it would be
asking Jackson to send the case to the Supreme Court.  "Immediate
Supreme Court review of this case is in the public interest because of
its importance to the American economy,” the statement said. “We are
filing today a request that Judge Jackson certify the case for immediate
review by the Supreme Court under the Expediting Act. If Judge Jackson
grants our request, we will ask the Supreme Court to hear Microsoft’s
appeal promptly.”

But by agreeing to give Microsoft a full, expedited hearing, the appeals
court may have removed any reason for the Supreme Court to intervene.
"The appeals court agreeing to act expeditiously and before the full
panel, that surely would make it more unlikely the Supreme Court takes
the case directly," said University of Baltimore Law School professor
Bob Lande.

Rich Gray, an intellectual property attorney with Outside General
Counsel Silicon Valley in Menlo Park, Calif., agreed that "it's
certainly more likely the Supreme Court will pass on the case."

The Supreme Court, which is under no compulsion to accept the case, is
not expected to issue a decision until early October.

Jackson last week ordered that Microsoft be broken into separate
operating system and software application companies, which he stayed
pending an expected appeal. He previously determined that Microsoft
violated two sections of the 1890 Sherman Act by illegally maintaining
its operating system monopoly and trying to unlawfully extend that to
Web browsers.

In June 13's order, the appeals court agreed to take the case "by the
court sitting en banc," or lacking only those judges who opt out.
According to the order, three judges will not hear the case for various
reasons, leaving seven to decide Microsoft's fate.

George Washington University School of Law professor Bill Kovacic said
it is all but "unprecedented" for the entire appeals court to hear a
case. Typically, only three judges would hear the appeal.

June 13's announcement by the appeals court could put the case exactly
where Jackson and the government apparently did not want it to go. On
two previous occasions, in 1995 and 1998, the appeals court overturned
rulings against Microsoft.

"This shows the D.C. Circuit (Court) is prepared to devote the resources
necessary to considering the appeal and hearing the case expeditiously,"
said Microsoft spokesman Jim Cullinan. "That's what all parties are
interested in."

Of the panel of 10 active judges, seven will hear the appeal: Douglas
Ginsburg, Stephen Williams, David Sentelle and Raymond Randolph, who are
appointees of Ronald Reagan or George Bush; and Harry Edwards, David
Tatel and Judith Rogers, who were appointed by Jimmy Carter or Bill

"Who knows how they are going to respond to this? But that is a
pro-Microsoft lineup," Kovacic said. "The lineup features four
conservatives. Those are good numbers for Microsoft."

In its appeal, Microsoft argues that "an array of serious substantive
and procedural errors" resulted in a breakup order that "extends far
beyond the case that was presented, without affording Microsoft an
evidentiary hearing." According to the company, Jackson:

* failed to consider the benefits to consumers and developers of
  Internet Explorer free with Windows;

* did not address the design benefits of integrating Internet support
  Windows, benefits that cannot be achieved by combining an operating
  system with a standalone browser such as Netscape Navigator;

* and failed to consider that Navigator was preinstalled on 22 percent
  new personal computers, indicating that the rival browser was not
  out of that market.

"The factual errors are the tip of the iceberg," Microsoft lead attorney
Bill Neukom said in a statement. "The district court's judgment should
also be stayed, and its Findings of Fact and Conclusions of Law should
be reversed because it misapplied longstanding legal precedent and
presided over a pretrial process and a trial that did not afford
Microsoft a fair opportunity to defend itself."

The government, meanwhile, faulted Microsoft's appeal and separate
motions the company filed asking the court to stay the provisions of the
breakup order.  “Microsoft’s filing in the Court of Appeals, which was
made when Judge Jackson has not even ruled on its stay motion, is an
ill-conceived attempt to end-run the Expediting Act,” the Justice
Department statement said.

But Kovacic faulted the government for trying to pull its own end-run
around the appeals court by asking Jackson to withhold ruling on stay
requests until after Microsoft filed its larger appeal.  “The government
blundered,” he said. “They did not look at the interaction of these
different procedural mechanisms, and they made this astonishing request
that Jackson join them in forestalling Microsoft’s exercise of a right
given in the existing rules.”

                Bill Gates Terms Suit a Waste of Resources

Microsoft chairman Bill Gates terms the government's antitrust suit
against his company a "waste of resources" but says it should all be
over in a year.  In a tersely worded brief, Microsoft attacks the
government, saying it is trying to sidestep the law so it can petition
the Supreme Court to take the case directly.

    TAIPEI, Taiwan--Microsoft chairman Bill Gates termed the
government's antitrust suit against his company a "waste of resources"
but said it should all be over in a year.

Likening the case to a famed intellectual property suit brought by Apple
Computer against Microsoft years ago, Gates called the government's
antitrust action "misguided" and an "unfortunate distraction." Speaking
at a press conference here today, Gates said the appeals process, and a
final determination of the case, should be obtained in approximately 12

Last week, a U.S. District Court issued an order to break the company
into two parts. The court also placed restrictions on Microsoft's
business practices.

As usual, Gates maintained that the suit was unjustified and compared it
with a bitter suit brought by Apple Computer in the 1980s. Apple alleged
that Microsoft violated its intellectual property rights by adopting the
"look and feel" of the Macintosh operating system in its Windows
operating system. The suit was eventually settled out of court years
later. Subsequently, Microsoft became an investor in Apple.

"We had a lawsuit with Apple that was a waste of resources. I'd put this
one in the same category," Gates said.

Since before the verdict earlier this year, in which the court found
Microsoft violated the Sherman Antitrust Act, the company has been
gearing up for an appeal. The company has long maintained that many of
U.S. District Judge Thomas Penfield Jackson's rulings in the case,
including the determination that Microsoft wields monopoly power
illegally, will be overturned on appeal.

The 12-month horizon that Gates put on the suit once again indicates
that Microsoft will direct its appeal straight to the Supreme Court.
Legal analysts have said that an expedited appeal to the Supreme Court,
assuming the court agrees to hear the case, could resolve the suit in a
year. Going through the normal appeals process, legal experts have said,
could drag the suit out for two years or longer.

"This is a case that will be decided by a higher-level court.
Microsoft's behavior has been pro-competitive in every aspect," Gates
said. "All cases of this type are resolved by a higher-level court."
The only indirect benefit for the company has come in workplace
camaraderie.  "Having that misguided lawsuit has drawn our team
together," he said.

Gates also declined to state which of the two Microsofts he would work
for in the event of a breakup.  "That is a hypothetical question that
fortunately I will never need to answer," he said.  (CNET News.com, June
13, 2000)

PFIZER: Lawsuit Claims Failure to Warn of Hypertensive Cardura Problems
Patients who have been treated with Pfizer's antihypertensive Cardura
(doxazosin mesylate) have filed a class action lawsuit against the firm
claiming that it failed to warn them of serious risks related to the

The suit relates to the results of a substudy of the 42,000-patient
Antihypertensive and Lipid-Lowering Treatment to Prevent Heart Attack
Trial (ALLHAT), presented in March, which found that patients with high
blood pressure who receive treatment with Cardura were more likely to go
on to develop congestive heart failure than those treated with the
diuretic chlorthalidone (Marketletter April 10).

Although Cardura has been on the market since 1987 for hypertension,
ALLHAT is the only large-scale trial to compare its effects on CHF risk
to a diuretic. The lawsuit, which was filed in a New York federal court
on May 30, claims that Pfizer failed to take any "affirmative" steps to
communicate the findings of the study to patients on Cardura, and is
seeking to mandate emergency notification of all users of the drug.
Reuters notes that more than one million people in the USA are taking
the drug, for hypertension as well as for benign prostatic hyperplasia,
and that it has annual sales of around $ 800 million.

The lawsuit is also seeking an unspecified amount of money to cover
refunds and other economic losses relating to Cardura use, including
medical expenses for consulting physicians on the new findings, as well
as a medical monitoring program.

Pfizer declined to comment on the lawsuit until it has been reviewed by
the firm's legal team. However, the company noted that it supported the
discontinuation of the Cardura arm in ALLHAT and pointed out that the
use of alpha blockers as first-line in hypertensive patients is not
recommended. The company also informed physicians of the results, it was

The study, which has since been published in the Journal of the American
Medical Association (April 19), found that while the two drugs were
similarly effective in preventing myocardial infarctions and overall
mortality, patients on Cardura were 25% more likely to be hospitalized
for congestive heart failure or suffer a cardiovascular event. There
were also negative trends for stroke, coronary revascularizations and
angina, and more patients on Cardura discontinued drug therapy compared
to the chlorthalidone group.

As a result, the Cardura arm of ALLHAT was discontinued by the US
National Heart, Lung and Blood Institute, which was running the trial.
It now continues with just two treatment arms, chlorthalidone and
AstraZeneca's ACE inhibitor Zestril (lisinopril).

A statement issued by law firm Milberg Weiss Bershad Hynes & Lerach LLP,
which is representing the plaintiffs, notes that "given the NHLBI's
findings, Cardura should no longer be considered 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." A copy of the
complaint is available on the Internet at www.milberg.com/cardura.
(Marketletter, June 12, 2000)

SANDERSON PLUMBING: Sp Ct Reinstates Award in Workplace Bias Case in MS
According to the Washington AP, a Supreme Court ruling on Monday in
Reeves v. Sanderson made it easier for employees to prove they were
victims of on-the-job discrimination, or at least to get their claims
before a jury. The court ruled unanimously that employees can win such
lawsuits without direct evidence of an employer's illegal intent,
according to the report.

The court also reinstated an award of nearly $100,000 won, and then
lost, by a Mississippi man who said age discrimination cost him his
supervisory job at a toilet-seat manufacturing plant, the report says.
According to the Press, the decision is likely to extend beyond age-bias
disputes and carry enormous practical impact for all other forms of
employment-bias lawsuits as well.

SMITHKLINE BEECHAM: 3 Suits Say Lyme Vaccine Caused Severe Arthritis
Three patients sued the maker of the new Lyme disease vaccine on June
12, contending that it had given them a severe form of arthritis.

The lawsuits are the first to be filed individually by members of a
group that brought a class-action suit last winter against the
manufacturer, SmithKline Beecham, asking that it expand its vaccine
labeling. The class-action suit seeks to have the labels include the
concerns of some scientists that a new form of so-called autoimmune
arthritis -- in which the body's immune system begins to attack its own
tissue -- could be triggered by the vaccine, which has been on the
market since December 1998.

Stephen A. Sheller, of Sheller, Ludwig & Badey of Philadelphia, the firm
that filed both the suits by individuals who seek personal damages and
the class-action suit, said a fourth patient has also filed a suit in
the Philadelphia Court of Common Pleas, charging that the vaccine caused
a resurgence of his apparently dormant Lyme disease. Mr. Sheller said
the firm was also reviewing the complaints of more than 100 other

SmithKline Beechham said it had not seen the suits and could not comment
but defended the safety of the vaccine. And Food and Drug Administration
officials stood by their decision to approve the vaccine.

Dr. Karen Elkins, the F.D.A. official who oversaw the vaccine's
evaluation, said approval was warranted because any risks were far
outweighed by the protection afforded by the vaccine for people who live
in areas with high instances of Lyme disease. The agency also stressed
that risks exist with all vaccines and that few cases of adverse
reactions had been reported since the vaccine began to be sold.

The F.D.A. said 500 cases of adverse effects have been reported from
among the more than one million vaccine doses SmithKline Beecham says it
has sold. Of those 500 cases, the agency said 45 were considered
serious, which means an individual needed hospitalization, or developed
a life-threatening illness or a permanent disability. Three cases
involved reports of rheumatoid arthritis and 22 reported other forms of
arthritis. None of the arthritis reports could be directly linked to the
vaccine, the agency said.

"We have not seen red flags in the data reported to the F.D.A," said
Lenore Gelb, an agency spokeswoman. "We continue to be closely
monitoring the safety of the Lyme vaccine, and all serious reports are
followed up on."

In one of the new suits, Lydia Marra of Ocean Township, N.J., a hospice
nurse, said that a week after the second of three shots required for
immunization she found herself in unbearable pain, and within months,
she was so stiff and suffering such pain in her chest and arms that she
could barely move for hours in the morning, and her husband would have
to lift her out of bed. Her husband, Frank, also a plaintiff in the
suit, said he developed the same form of arthritis that afflicts his
wife after getting the vaccine.

The lawsuit also accused Yale University of apparent conflicts of
interest in developing and patenting the vaccine, taking part in its
safety trials and then earning large profits on its sale. Yale and three
of its researchers are named in the suit, but they were not made
defendants. A Yale spokesman, Thomas P. Conroy, said the university had
not seen the complaint, and that it was not aware of any conflicts of
interest in its research on the vaccine. Yale researchers developed the
vaccine in 1989, patented important aspects of it and share the
royalties with the university. The allegation in the suits comes at a
time when ethicists and scientists, including the editor of The New
England Journal of Medicine, have begun expressing concern over the
increasingly close ties between the academic and business worlds.

F.D.A. officials conceded that some scientists had expressed concerns
that people with a particular genetic complement, called HLA-DR4, might
be susceptible to a form of autoimmune disease from the vaccine. The
theory is that a genetically engineered piece of material in the vaccine
closely resembles a natural protein in the human body and that the
vaccine could prompt the body's immune system to attack its own tissue.
Some estimates say 30 percent of the population has the HLA-DR4 marker.
Dr. Elkins of the F.D.A. said no scientific evidence had been found to
support the theory that the adverse reaction occurs in humans. But one
study, published in February, did find such evidence in animals.

Mrs. Marra's physician, Dr. Charlene C. Demarco, said Mrs. Marra tested
positive for HLA-DR4 and so far had not responded to treatment.
"Shouldn't I have been informed" about the possible side effects? asked
Mrs. Marra. "Then if I wanted to take the risk, it would have been my
decision to take it."

The vaccine is recommended only for people 15 through 70; for people who
have not had active Lyme disease within the last three months; for those
who do not have severe arthritis; and for those who live in, work in or
frequent areas with high instances of the tick-borne disease, such as
suburban and rural areas, particularly in the Northeast and the northern

Doctors generally restrict their advice to get the vaccine to patients
in the recommended categories. In those cases, they say, the risks
appear small while the benefits are substantial. Other doctors, however,
take a wait-and-see attitude, saying that often with new vaccines
unexpected adverse reactions do not appear for two years or so.

Dr. Henry Feder, who treats Lyme patients at the University of
Connecticut Medical Center in Farmington, Conn., said, "I do worry about
giving something that's dangerous that people don't absolutely need, but
none of my patients or people have had adverse reactions."

But Dr. Laura Fisher, an infectious disease and Lyme specialist at New
York Presbyterian Hospital, said, "Personally, I'd sit tight another
year and wait for more definitive answers because of specific concerns
as well general concerns." She said more information was needed on
whether certain patients would be more prone to autoimmune arthritis.
She said, too, that the vaccine trial lasted only 20 months, and "that
might not be long enough to show for serious side effects that were not
at first appreciated." (The New York Times, June 13, 2000)

SMITHKLINE BEECHAM: Long-Term 'Temps' File ERISA Suit for Benefits
SmithKline Beecham Corp. was hit with a class action ERISA suit on June
12 by workers who say the pharmaceuticals giant avoids providing
benefits by improperly classifying hundreds of its employees as
"temporary" even though they've held their jobs for years.

The suit, filed in U.S. District Court in Philadelphia, was brought by
two "longtime" SKB workers who say they and other "temps" work
side-by-side with permanent workers and perform the same jobs but are
denied participation in the company's health and dental plans, as well
as life insurance and pension benefits.

Attorneys John Shniper of Phoenixville, Philip Stephen Fuoco of
Haddonfield, N.J., and Paula Markowitz of Markowitz & Richman in
Philadelphia joined forces to file the suit, which seeks primarily
declaratory and injunctive relief. "We hope to establish sufficient
precedent to protect workers from the recent legal maneuverings of large
corporations designed to deny benefits," Fuoco said. Fuoco, a former
Assistant U.S. Attorney, said he will be urging U.S. District Judge
William H. Yohn Jr. to follow the 9th Circuit's decision in Vizcaino v.
Microsoft Corp., in which the court held Microsoft had violated ERISA by
its designation of certain employees as temporary.

The two named plaintiffs in the suit against SKB are Louise D. Thomas of
Phoenixville and Dennis D. Darden of Norristown. Both claim they are
"common law employees" of SmithKline but that they have been denied
benefits. They seek to represent a class of about 300 workers in SKB
plants and offices in Pennsylvania, New Jersey, South Carolina and
Tennessee who have been classified as temporary. The suit outlines the
work history of the two named plaintiffs, as well as their efforts to
secure benefits.

Thomas began working for SKB in October 1992, when she was hired through
Olsten Temporary Services. Until April 1994, the suit says, she worked
full-time in the SKB warehouse in King of Prussia as a coordinator. In
April 1994, Thomas was laid off, the suit says, when she was bumped by a
long-term SKB employee during a staff reduction. But in December 1994,
Thomas was notified by SKB that the coordinator job was open again and
that she should return to work, the suit says. But to keep her status
"temporary," the suit says, SKB told Thomas to report first to the
offices of Kelly Services. Kelly Services had an office at SKB's King of
Prussia warehouse, the suit says, and the agency became her "nominal
employer" in December of 1994. Thomas was paid as an employee of Kelly
Services from December 1994 until March 1, 1999, when she became a
"full-time active" SKB employee. But the suit alleges that during the
entire period that she was classified as a Kelly temp, Thomas was
actually "a common law employee of SKB doing SKB's regular work under
SKB's supervision and control." The suit says Thomas' lawyers began
demanding in October 1999 that she be treated as a permanent employee
for purposes of the retirement and pension plans and that SKB decided in
January 2000 that it would make her eligible for benefits in March.
Thomas has since appealed the company's decision to deny her request for
accrual credits.Darden was originally hired in October 1993 through
Kelly Services, the suit says, and he worked in SKB's warehouse as a
"temporary" material handler until March 2000, when he was re-classified
as a "full-time active" SKB.

Like Thomas, the suit says, Darden asked for benefits late last year but
was told that he was to be treated as a "leased" employee until March 1.
Darden has also appealed from the denial of benefit-accrual credits in
the SKB employee benefit plans. The suit seeks a court order declaring
that the SKB temporary workers are entitled to accrue benefits from the
SKB benefit plans "for the periods of time that they have been common
law employees of SKB." It also seeks an injunction barring SKB from
continuing to classify permanent workers as temporary and an award of
monetary damages to reimburse all the wrongly classified workers for the
benefits they were improperly denied.The case, Thomas v. SmithKline
Beecham Corp., has been assigned to U.S. District Judge William H. Yohn
Jr. (The Legal Intelligencer, June 13, 2000)

STATION WABC: Investors in New Age Charge Berg's Vouch for Integrity
A group of investors allegedly snared in a $35 million stock swindle are
suing radio talk show host Adriane Berg and her station, WABC (770 AM).

In a class-action suit filed in Brooklyn federal court, dozens of people
who invested in William Goren's New Age Financial Services - which
sources say is now the target of a far-flung federal probe - say they
only did it because Berg vouched for its "integrity" on her WABC talk

"In order to deliver new investors to Goren . . . Berg repeatedly [and]
knowingly made false claims and representations about Goren and New Age
on her weekly radio show," the suit, which was filed last Friday June
9,  charges. "But for Berg's . . . repeated vouching for Goren's
integrity and trustworthiness," the suit says, "many of the plaintiffs
and members of the class would never have even heard of Goren."

The suit also accuses Berg of being in cahoots with Goren and New Age.
Within the past two years, the suit claims, Berg and Goren were working
on forming a formal business partnership where she would bring him

Sigmund Wissner-Gross, a lawyer for the plaintiffs, said he's spoken
with over a hundred people who were "duped" by Berg into investing -
including a blind Manhattan newsstand operator, a widowed Long Island
grandmother and a married couple who survived the Holocaust.

The suit names WABC-AM, Berg and her husband, Stuart Bochner. It also
names Goren's brother and father, who the suit claims helped Goren in
the alleged, decade-long "ponzi" scheme.

Goren was recently arrested on mail fraud charges in connection with the
ponzi scheme, and is free on $1 million bail. (The New York Post, June
13, 2000)

TOBACCO LITIGATION: Philip Morris CEO Admits Risks of Smoking
The head of the world's largest cigarette company told a Miami jury on
Monday that if he could change one thing, he would stop children from

"I don't want any kids to smoke," said Philip Morris President and Chief
Executive Officer Michael Szymanczyk. He was called to testify as a
defense witness in the precedent-setting class-action case against the
country's five biggest tobacco companies. "Smoking is bad for your
health. I don't know anyone who wants their kids to smoke," he said. It
was the first public admission of the health risks of smoking by a top
Philip Morris executive. "If I could make one thing go away altogether,
it would be (youth smoking)," Szymanczyk said. "It's bad for our

Szymanczyk, the first of five cigarette company CEOs expected to take
the witness stand in the first statewide class action against the
industry ever to go to a jury, spent several hours Monday explaining the
"enormous changes" he has seen during the past several years.

The jury already determined cigarettes cause lung cancer and more than
20 other diseases, and the tobacco companies conspired to hide the
health risks of smoking. In April, the panel awarded $ 12.7 million in
compensatory damages to three people representing the entire class.

Now the jury must determine how much the companies should pay as
punishment for their actions to the class of 300,000 to 500,000 sick or
dead smokers.

Lists of names and addresses of smokers, maintained by four of the five
companies on trial and admitted into evidence on Monday, show the
cigarette makers can reach about 66.5 billion Americans directly,
including 3.7 billion Floridians.

Dan Webb, the lawyer representing Philip Morris, questioned Szymanczyk
about the company's Youth Smoking Prevention Program. It is a department
within the corporate structure at Philip Morris, started voluntarily and
funded with $ 100 million annually, Szymanczyk said.

Millions from the department's budget fund programs run by 4-H and the
Boys and Girls Clubs, as well as a life-skills program taught in schools
in 17 states. But the cornerstone of the program is anti-smoking
commercials aimed at children. The jury saw several of the 30-second
commercials, including one the company paid $ 2 million to air during
the Super Bowl in January.

Last year the company spent about $ 74.1 million on its anti-smoking
commercials, Szymanczyk said. That's $ 7.4 million more than the $ 66.7
million it spent advertising Marlboro, the company's biggest seller and
the choice of about 50 percent of all smokers, he said.

Szymanczyk, 51, has served as CEO of New York City-based Philip Morris
Inc. since Nov. 1, 1997. He joined the company in October 1990 as a
senior vice president of sales. "I'd always been involved in businesses
like soap and food," Szymanczyk said. "I viewed the tobacco business as
a controversial business," because of issues concerning smoking and

"When I became CEO, the company was involved in substantial litigation,"
he said, referring to a number of class-action lawsuits filed against
the industry by the attorneys general of several states. "It was pretty
clear (the industry) was out of alignment with society's expectations of
it." "The lawsuits represented a financial threat to us, and I wanted to
resolve it by determining what the states want us to do differently and
get about doing it," he said. And that, he said, is when the industry
agreed to settlements with all 50 states, which required the companies
to pay out $ 254 billion during the next 25 years. Florida so far has
received $ 1.7 billion.

The tobacco companies recouped a lot of that money by increasing the
price of cigarettes by $ 1 a pack, he said. The attorneys general wanted
the price of cigarettes to go up, he said, thinking it would be a
deterrent to youths on tight budgets. Since the agreements with the
states, the volume of Philip Morris cigarette sales is down about 13
percent and is expected to continue declining, he said.

But the core values Philip Morris executives spent $ 30 million to teach
to their employees, state the company will exceed any requirements set
down by the government, he said.

In that vein, Philip Morris announced last week that because of its
concern its advertising could be reaching youths through adult
magazines, it would no longer buy space on back covers. The company also
announced it would pull all advertising in 42 publications where youths
constitute a readership of more than 15 percent.

Anti-smoking activists said it was a strategic move so the CEO could
take the stand and talk about the action in the past tense.

Indeed, the jury learned about the changes in Philip Morris magazine
advertising from Szymanczyk, who testified that the company made the
decision in April. He also testified he voluntarily pulled an
advertising campaign for Virginia Slims after Stanley Rosenblatt, the
smokers' attorney, took his deposition in May. Rosenblatt asked him
whether he thought the theme of the advertisements, "Find your voice,"
would be offensive to throat cancer victims. "My point of view is that
we don't want controversial advertising," Szymanczyk said.

Several throat cancer victims, most of whom lost their voice boxes and
must use an electronic device to communicate, were there on Monday.

When asked to grade Philip Morris on its efforts to change the corporate
culture so that it is more responsive to public concerns, Szymanczyk
said he would give it a B. "We made good progress but I don't think
we're finished yet," he said. Szymanczyk is expected to return to the
witness stand.  (Sun-Sentinel (Fort Lauderdale, FL), June 13, 2000)

TOBACCO LITIGATION: Philip Morris CEO Issues Price Warning
The head of the nation's No. 1 tobacco company told a jury Tuesday he
will have to raise cigarette prices if ordered to pay a damage award.
''There's no bank in the world that will loan us money, pending
resolution of cases like this,'' Philip Morris President and CEO Michael
Szymanczyk said during his second day of testimony. ''To pay the money,
you have to collect it from somewhere.''

Szymanczyk began testifying Monday as the first of five tobacco
executives lined up to tell the jury about how their companies have
reformed amid lawsuits and public criticism. Tuesday, he described
Philip Morris' Web site, saying it was meant to educate people about
smoking, not as a tool to recruit new smokers. His testimony is part of
a bid to dissuade the jury from punishing tobacco companies with a
potential multibillion-dollar punitive damages request on behalf of
300,000 to 500,000 sick Florida smokers.

The six-member jury previously awarded $12.7 million in compensatory
damages to three people in the nation's first smokers' class-action suit
to go to trial.

Szymanczyk, 51, told jurors that when he was named president and CEO in
1997, he intended to make changes, because the company was facing
''substantial litigation.'' ''It was pretty clear that the company was
out of alignment with society's expectations of it,'' Szymanczyk said.
''There was something wrong if all of the states were suing us. ... We
wanted to fix that,'' he said, referring to a 1998 agreement in which
cigarette makers paid $254 billion to settle state lawsuits.

The appearance of Szymanczyk (pronounced sih-MAN-sihk), and the planned
testimony of the other tobacco CEOs, underscored the trial's importance.
Tobacco executives make infrequent public appearances, primarily at
corporate annual meetings, and rarely testify under oath.

Witnesses for the sick smokers have estimated the five tobacco companies
being sued could raise $150 billion to $157 billion to pay a punitive
damages verdict. Those figures would dwarf the national punitive damages
record of $3 billion, assessed against Texaco in 1987.

The tobacco companies have argued no punitive damages should be awarded.
Philip Morris lawyer Dan Webb played several TV ads developed and paid
for by the tobacco company in hopes of curbing underage smoking. He said
the company, under the settlement with the states, has stopped
promotional campaigns that appeal to youths, such as free samples and
ads with cartoon characters.

The other CEOs expected to testify are Andrew Schindler of R.J. Reynolds
Tobacco Co., Nicholas Brookes of Brown & Williamson Tobacco Corp.,
Martin Orlowsky of Lorillard Tobacco Co. and Bennett LeBow of Liggett
Group Inc. (AP Online, June 13, 2000)

TOBACCO LITIGATION: Philip Morris CEO Tells Jury Company Has Changed
The chief executive for Philip Morris USA told Florida jurors that the
company is trying to keep kids from smoking and that payments under
state settlements will more than double profit earned over the last 25

In the punitive damages phase of a state court class-action lawsuit that
could cost the tobacco industry billions of dollars, Michael Szymanczyk,
chief executive of the Philip Morris Cos. unit, told the six-member jury
about his company's efforts to educate children.

Using inflation-adjusted numbers, Szymanczyk, who is also president of
Philip Morris USA, said the company will make more than $ 93 billion in
payments under settlements with the states between 1997 and 2021. The
company made $ 40.9 billion in profit from 1972 to 1996, he said.

The six-person jury already has awarded $ 12.7 million in compensatory
damages to three class representatives. Testimony now centers on
punitive damages for the entire class of Florida smokers.

Philip Morris attorney Dan Webb has been trying to convince the jury
that the company has already changed significantly and doesn't deserve
to be punished further. (Los Angeles Times, June 13, 2000)

VARI-L COMPANY: Milberg Weiss Files CO Suit Alleging Insider Trading
Milberg Weiss (http://www.milberg.com/vari/)announced on June 12 that a
class action has been commenced in the District Court of Colorado on
behalf of purchasers of VARI-L Company, Inc. ("VARI-L") (NASDAQ:VARL)
publicly traded securities during the period between January 20, 1998
and May 17, 2000 (the "Class Period").

The complaint charges VARI-L and certain of its officers and directors
with violations of the federal securities laws by making
misrepresentations about VARI-L's business, earnings growth and
financial statements and its ability to continue to achieve profitable
growth. By issuing these allegedly false and misleading statements,
defendants artificially inflated VARI-L's stock price from just $5 in
1998 to a Class Period high of $36-7/16 on December 23, 1999, allowing
VARI-L's top insiders to sell or otherwise distribute 583,000 shares of
their VARI-L stock at as high as $27 per share, for over $10 million,
before the true facts about VARI-L's troubled operations, diminished
profitability and false financial statements were revealed and VARI-L's
stock collapsed to as low as $9-1/4 per share.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach,
800/449-4900 wsl@mwbhl.com

VISA, MASTERCARD: CNN Coverage on DOJ's Action on Antitrust
Broadcase on Cable News Network on June 13, 2000

Guests: Dan Carney, Kevin Arquit, Steve Berk

Byline: Roger Cossack, Greta Van Susteren, Bob Franken

Highlight: The Justice Department says Visa and MasterCard are blocking
out competition and takes the credit card giants to court.

    UNIDENTIFIED FEMALE: Well, it would be nice if there were more card
companies instead of MasterCard and Visa. I think so. A little
competition would never hurt.

    KEVIN ARQUIT, COUNSEL TO MASTERCARD: There are thousands of
different card products. Some are offered with low interest rates, some
are offered at no fee, some give you cash rebates. If anything, people
complain that they get too many choices in their mailboxes, not too few.

were allowed to issue other products -- and I think that's what this
suit is all about, is who ultimately gets to control the payment system.
And should there be one or two companies that dominate, or should there
be a lot of companies that can get into that market?


Department says Visa and MasterCard are blocking out competition and
takes the credit card giants to court.

    ANNOUNCER: This is BURDEN OF PROOF, with Greta Van Susteren and
Roger Cossack.

    COSSACK: Hello and welcome to BURDEN OF PROOF.

Yesterday in New York, the U.S. Justice Department took on the nation's
two largest credit card companies. Government lawyers claim Visa and
MasterCard act as a duopoly.

    GRETA VAN SUSTEREN, CO-HOST: In its federal antitrust lawsuit, the
Justice Department charges that the two credit card companies have
agreements with banks which squeeze out competitors. Lawyers for Visa
and MasterCard deny those charges and stress that they're in competition
against each other.

    COSSACK: Joining us today here in Washington, Dan Carney of
"Business Week"; former federal prosecutor Steve Berk; and Kevin Arquit,
counsel to MasterCard.

    VAN SUSTEREN: And in our back row, Rebecca Avery (ph), Merritt
Johnson (ph), and Summers Mattern (ph).

Also joining us here in Washington is CNN national correspondent Bob
Franken, who was in court yesterday.

Dan, first to you: I read the Justice Department complaint. It describes
MasterCard and Visa as nonprofits. Explain this corporate entity to me.

    DAN CARNEY, "BUSINESS WEEK": Well, it's a pretty complex structure.
They're joint ventures of their member banks, unlike American Express,
which is a publicly traded for-profit company. And the Visa and
MasterCard themselves, the brands, are not set up to make profits, but
the banks that use them use these brands to make profits for themselves.

    VAN SUSTEREN: But yet they are individual, corporate entities so
that they are capable of being sued?

    CARNEY: They're -- the Justice Department is bringing suit against
them, yes. I mean, they're independent enough that they can be sued.

    COSSACK: Kevin, first of all, I want to say that I mispronounced
your name. It's not "Aquit," it's Arquit. So I wanted to straighten that
out right now.

And then I want to go to Bob Franken.

Bob, tell us about the trial. What's going on? You were up there.

the next big antitrust action on the part of the Justice Department
following its Microsoft venture which, at this point so far, has been a
victory for the Justice Department.

They're taking on now these two credit card companies because they're
saying that because of the arrangement with the banks, they almost
amount to one: the member banks of one credit card or the member banks
of another for all practical purpose. The government calls it, as you
said, a "duopoly." They prefer to call it "dual governance."

The government charges that as a result of this duopoly, decisions are
made that benefit each other to the detriment of competitors and to the
detriment of the consumers. Consumers are denied services when they're
deemed too expensive to be gone into by the two companies acting in
collusion, says the government, and there's a fundamental part of this
case which has to do with the decision by the member banks to not allow
these member banks to issue American Express or Discover Cards. And the
government says that that restrains trade, it violates the antitrust
laws, again, to the detriment of the consumers.

    VAN SUSTEREN: Kevin, I'm reading the Justice Department complaint
and it says Visa and MasterCard account for approximately 75 percent of
general purpose card dollar volume. Is this a competitive market?

   ARQUIT: It's a very competitive market. And it's so easy for the
Justice Department to contrive something they call a "market" and then
say it's 75 percent. The fact of the matter is that neither Visa nor
MasterCard sets the interest rates, sets the fees, all those things that
consumers care about.

    VAN SUSTEREN: Who sets these interest rates?

    ARQUIT: The individual banks. What Visa and MasterCard do is that
they provide the network, if you will, the railroad tracks, so that if
you have a card issued by one bank, you can go in a store and use it and
not worry about whether it's the same bank that issued the card there.
And what the associations do is provide this network so that you know
when you go in you can make this purchase.

But all of these terms are set individually by the banks, and that's why
it's so important to know that there's over 7,000 different banks that
issue cards and over 20,000 card products. It's hard to imagine an
industry that's more competitive.

    VAN SUSTEREN: I got to tell you, though, Kevin -- and let me go to
you, Steve. It's very -- I mean, obviously we're just at the sort of --
at least I am -- at the beginning of studying this particular case. For
some reason, I don't have a particular amount of sympathy for the banks
when the interest rates don't seem to be going down on the cards. Kevin
says it's very competitive. Do you agree?

interesting, Greta. If the interest rates were an issue here, I think
consumers would be all excited about that, right? I mean, no one likes
to pay 18 or 19 percent interest rates on their credit cards. But that's
really -- and Kevin's absolutely right -- that's not the issue here.

But what your viewers also have to understand is that the 75 percent
market share, even if that's a true marketshare, is not in and of itself
a problem either. To violate the antitrust rules, you have to do
something wrong with your marketshare. You have to do something that's
improper. You have to use it...

    VAN SUSTEREN: Squeezing out competitors improperly would be wrong.
Having the best mousetrap is not wrong.

    BERK: Exactly, Greta. That's exactly right.

    COSSACK: And, Dan, that's -- to go back to the Microsoft case, no
one has ever said that Microsoft was wrong simply because they were a
monopoly. Microsoft got in trouble because this judge found that they
acted illegally as a monopoly.

So in this situation, what are MasterCard and Visa doing that is so
illegal? I mean, we've heard allegations that they've gone to the banks
and said, listen, you either do it this way, or don't work with other
people. Sounds a little bit reminiscent, I suppose, of what Microsoft is
accused of doing. CARNEY: Well, there are essentially two elements to
Justice's case. One is that the member banks are not allowed to deal
with American Express and Discover. And over and above that, there's an
issue that's sometimes called "duality" or "duopoly" or "dual
governance," in that the structure of the two brands is built, Justice
would say, in such a way that any kind of competition between the two
brands or any kind of innovative new products are stifled.

    VAN SUSTEREN: Steve, is there anything wrong with the banks telling
them not to deal with -- member banks -- telling them not to deal with
American Express and Discover?

    COSSACK: Or you won't be able to deal with us -- that's the comma
end of it.

    BERK: It's a pretty close call, Greta. It really is. I mean, if
you're telling companies that you cannot deal with and even negotiate
with competitors of ours, that could be a potential problem. But they're
going to have to prove that, and they're also going to have to prove
some harm to the consumers, which is really, you know, the essence of an
antitrust case. I mean, the antitrust laws are the government saying,
we're going to protect the consumers by these laws.

    FRANKEN: The government also gets into the "smart chip" aspect.
These are the very sophisticated credit cards. And the government says
that MasterCard and Visa agreed not to develop that technology, stifled
innovation as a result, and that it's only now coming out through
American Express. And the government, of course, says that's collusion
which, in fact, did harm the consumer, they say.

     COSSACK: I just want to say, Kevin, but isn't it a fact -- is in
Microsoft one of the things that the government was successful in
proving was that, one, that Microsoft acted in a way somewhat like
they're alleging Visa in doing -- MasterCard and Visa in doing, and they
said the competition was -- we can't show you that there wasn't
innovation done, but we can show you that there was not innovation being
done, and therefore we can imply that things were stifled?

    ARQUIT: Well, huge differences between this and Microsoft. I mean,
in Microsoft, when you turn on your PC, you've got one operating system.
Here when you open your purse or wallet, you've got any number of
choices of credit cards; you've got cash or check with which to make a

But the fact of the matter is, in going to this whole smart card issue,
what the evidence will show there -- this is all stuff from 10 years
ago, by the way. If the government's got such great stuff, why did they
wait 10 years -- all this stuff way back over a decade?

But on the smart card, there'll be a study that's shown MasterCard did
long before this lawsuit was ever considered that suggested it would
cost a billion dollars to develop it; it would take at least 10 years
before it turned a profit. That's not a good business proposition.
That's why there wasn't a smart card at the time. Amex, American
Express, tried to develop a smart card. Their head guy, Harvey Golub,
says over 300 experiments, none of them has turned a profit. So that's
the reason that up until now you haven't seen a lot of smart card

    VAN SUSTEREN: We're going to take a break.

Up next: With all this talk about monopolies, duopolies and competition,
what will it mean to the U.S. consumer? Stay with us.


For the first time ever, an African-American man will be the foreman of
a grand jury impaneled in California's Orange County. With three Latinos
and two Asians on the panel as well, it is the most racially diverse
Orange County grand jury in years.



    COSSACK: Good news for our Internet-savvy viewers: You can now watch
BURDEN OF PROOF live on the World Wide Web. Just log-on to
CNN.com/Burden. We now provide a live video feed, Monday through Friday,
at 12:30 p.m. Eastern time. And if you miss that live show, the program
is available on the site at any time via video-on-demand. You can also
interact with our show, and even join our chatroom.

    VAN SUSTEREN: The Justice Department is suing Visa and MasterCard,
claiming the credit card companies are squeezing out competitors with
their marketing campaigns and keeping options out of the wallets of the
American consumer. But the credit card companies say consumers have
thousands of choices in cards, with varying interest rates, and some
with no annual fees.

Dan, Kevin says that there's lots of competition, lots of card, Steve
says this isn't about interest rates on credit card. Why should I care
as a consumer? what difference does this lawsuit make to me?

    CARNEY: Well, an interesting way of looking at it is comparing it to
the automobile industry, and the argument here is that maybe there are
lots of dealerships, but there is only two basic products they have to
offer, and Justice would say they are kind of like the Ford Taurus and
the Mercury Sable, they are basically two sides of the same coin.

If Justice wins, the argument is that there will be a lot more, not just
dealerships offering cars, but cars themselves.

     VAN SUSTEREN: Yeah, but the way it seems to be set up, there will
be more Ford Taurus types out there. I mean, there will be more credit
card, so my wallet will be six inches fatter with 10 more card, you
know, big deal. I mean, like, how does it really affect me in terms of
money? I mean, does it really make a difference to me as a consumer?
CARNEY: Well, long-term, I think this is more really about debit cards
than credit cards in a way. There already is some competition between
the various credit card makers. What American Express would like to do
is form relationships with banks, and one of the things this would do it
would allow them to do debit cards. They can't debit cards very well now
because they don't have bank accounts.

     VAN SUSTEREN: Kevin, let me interrupt for one second, which raises
another issue, is that it isn't just the Justice Department going after
these credit card companies, the retailers have filed a class-action
dealing with these debit cards. Is that something that is going to more
directly impact the consumers?

    ARQUIT: The -- well, there is another lawsuit that has been brought
by the retailers, but the fact of the matter is what they challenge is
something called an "honor all cards" rule. If you walk into a store
with a MasterCard, you have seen the logo outside, you want to be able
to use your card, and you don't necessarily want to decide whether it is
a credit card, a debit card or from a particular issuer, you need to
know you can use your card. And MasterCard has a rule that requires the
store to honor that. That is what that lawsuit is about, but it is a
different one from what the Department of Justice is bringing.

     COSSACK: Kevin, how do you respond to the allegation that Visa and
MasterCard stop other credit card companies from making -- having
relationships with banks? Isn't that a direct consequence to me as a

     ARQUIT: What -- again, you have to look at what the reality is
versus the allegations. This is what American Express has said in their
years of lobbying to get the Justice Department to bring this case. But
the fact of the matter is, Roger, that when you look at how credit cards
are actually issued, over 85 percent of them are done by the mail, OK?
And American Express has the same access to the consumers' mailbox as
does Visa or MasterCard. Something like only six percent of the cards
are issued by banks where people actually hold their account. So this is
really a red herring.

What American...

    COSSACK: You are not saying there is no benefit in having a bank --
having a relationship with a bank, then, are you? I mean, that is not
your argument.

     ARQUIT: No, no, not at all.

COSSACK: So there is a benefit. So then, if you deny that benefit to
another company, aren't you denying them something that would help the

    ARQUIT: American Express, for years, bragged about the fact that
they didn't distribute through banks, and they let MasterCard build up
its network, spent tens of millions of dollars, and now that someone has
built the house and paid the mortgage, now American Express wants to
move in. But the fact is, it doesn't hurt them anyway because there are
thousands of other banks out there that are not members of either
MasterCard or Visa, and the fact of the matter is that most cards are
distributed through the mail anyway.

    VAN SUSTEREN: You know, it is funny, Kevin, that the 18 percent
interest on many cards is what sort of sticks with me, which you know I
will get back to you not all of them are 18 percent either. But let me
go to Bob.

Bob, you were in the courtroom yesterday. Tell me, is this a judge-
decided case, and not a jury, and how much interest seemed to be by the

    FRANKEN: Well, first of all, yes, it is a judge-decided case, just
like Microsoft. There is no jury, and it is a good thing because this is
going to get highly technical before it's all over.

Secondly, the courtroom was packed. There is considerable interest in
this because, like Microsoft, this is not just about some arcane legal
concept. This is about something that affects just about everybody in
the United States. Credit cards have become an absolutely essential part
of our society.

    VAN SUSTEREN: That's what I'm not -- that's what I still don't get,
how that affects everybody in the United States. If it's not going to
affect my ability to go in and shop, and if it is not going to change
the interest rate. I don't get...

    FRANKEN: Here is the fundamental argument, and it was articulated
this way in court. On the one hand, you had the government saying,
forget about for the moment the American Express experience, that since
the banks can decide what innovation is out there, some innovation may
be limited. They discussed the smart chip. And the bank cards, that is
to say Visa and MasterCard, decided, for whatever reason, that
preferable was the magnetic stripe, that it in fact did the job.

Now, on the other hand...

    VAN SUSTEREN: Strip versus chip. Big deal. I mean, that's the way I
feel. Is there a reason I should care?

    FRANKEN: You are right, except for the fact that decision was made
by the people that the government argues were doing it for their
interest as opposed to necessarily the consumer interest.

On the other side, was the argument that in fact there were very good,
solid business decisions that went into this decision, and that it would
have come out this way whether or not there was this dual operating

    COSSACK: Kevin, isn't that sort of the Microsoft argument, that
innovation has been stifled by the ability of these two companies to
control the way this product progresses? ARQUIT: That's what the
government alleged, and there, of course, since there is the one
operating system, and it hasn't developed that much over the past
several years, it's a pretty good argument. Here you have seen all kinds
of innovation, and in fact competition particular Visa and MasterCard.
For example, MasterCard decided to have the first joint calling card and
credit card with AT&T. That is something Visa had no interest in.
MasterCard went out and did that. American Express turned down the
opportunity to do it.

    COSSACK: What is the relationship between Visa and MasterCard, don't
they have some interlocking members on their boards?

    ARQUIT: No, that is not true. What they do have, Roger, is that they
have the same member banks, the same financial institutions own Visa and
MasterCard to a large extent.

    VAN SUSTEREN: It's a pretty cozy relationship.

    COSSACK: So the profit goes to the same person.

ARQUIT: No, because there is no profit. This is a not for profit. And
the government doesn't challenge that.

    COSSACK: I need to figure this one out, this not for profit.

    VAN SUSTEREN: I have yet to figure this out, but I got to tell you,
the fact that the consumers still pay this high interest rate, I don't
care whether we have strips or chips, or whatever this is, the bottom
line is it doesn't seem to, you know, the consumers are still paying a
lot to borrow money off these credit cards, at least I think so.

    ARQUIT: I just want to clear up one thing, the government's expert
in this case has already testified that the fact of the joint ownership
and the joint issuance is actually pro-competitive because it allows
each bank to trade off the two associations so they get the best
products and services and they have the choice between the two.

What the government is challenging, as Bob was saying, is simply the
fact that some of the board members actually issue a large number of
cards of the other association. That's the extent of it.

    COSSACK: All right, let's take a break.

Up next, a look at how long this trial will take, and how will a
judgment affect the marketplace? Stay with us.


Q: On June 13, 1967, President Johnson appointed Thurgood Marshall to
the Supreme Court. Whose seat did he fill?

A: Retiring Associate Justice Tom. C. Clark. Thurgood's nomination was
confirmed by a vote of 69-11.


    COSSACK: The nation's two largest credit card companies are being
sued in federal court by the U.S. Justice Department. Government lawyers
say Visa and MasterCard, both nonprofit organizations, have negotiated
deals with U.S. banks, which keep competitors out of the market.

Well, Steve, now you're going to prosecute this case...

    BERK: Right.

    COSSACK: ... on behalf of the Justice Department. How do you go
about doing this? Do you start with the depositions? What do you have to
show immediately?

    BERK: Well, you know, you have to make it a compelling story. I
mean, even though it's a bench trial, you really have to make it
compelling. And that's sort of the first job of the prosecutor.

    VAN SUSTEREN: How about simple?

    BERK: And simple, that's true, compelling and simple. And what
you've got to be able to say is: Look, if these two entities did not
conspire, or there was not this duality, or there was not this
collusion, we would have had a flowering of different companies,
different services, different things that would have benefited the
consumers. But you then have to back that up, that fluff up with some
real substance to it.

    COSSACK: That's almost impossible, because you have to prove the

    BERK: Well, that's why, Roger, in these cases, it's really a battle
of experts. I mean, you get some really smart people that know these
industries quite well. And you trot them out. And you try to get them to
show what could have been if there wouldn't have been this situation,
and what will there be if there's a...

    COSSACK: Oh, what could have been.

    BERK: ... what could have been and what will there, you know, what
will be if, in fact, there is some of resolution in favor of the

    VAN SUSTEREN: Dan, we're seeing a real aggressive Justice
Department, at least with Microsoft, and we have a Democratic
administration. We don't know what's going to happen in November. But
frankly, looking at this, I see sort of the tip of the iceberg.

Do you think, if we have another Democratic administration, that banks
may be next as sort of in the line of fire?

    CARNEY: Well, Justice already has so many things on its plate, it's
hard to think of them coming up with new cases. They've got five major
cases going to trial in the next year or so -- or actually four or five
have already been to -- one's already been to trial, Microsoft.

I think they've got more than enough to handle right now.

    VAN SUSTEREN: Do you disagree with me, though, about whether this is
really a credit card, or if this is really a bank issue. Which is it?

    CARNEY: Well, it's both, really. But if you're going to go after
banks, you know, which ones are you going to pick? Are you going to sue
every single bank that issues a Visa or MasterCard? Are you going to
selectively choose some of them? It quickly gets out of hand.

    COSSACK: Kevin, I know there's probably a real obvious answer for
this, but can you explain to me how these companies or these
corporations are non-profit? Where does this nineteen percent interest

    ARQUIT: Well, you see, it's each bank that actually issues the card.
And so when it sets the fee and it sets the interest rate -- and some
cards come out of course with no interest rate for an introductory
period -- that all goes to the banks. It's not as if there's a profit...

    COSSACK: The issuing bank?

    ARQUIT: The issuing bank; it doesn't go to MasterCard. And that's
the difference between that and American Express, which is a for-profit
company, which tries to get money so that it can pay its shareholders.
This is, these are...

    COSSACK: Well, these banks are getting profit to pay their

    ARQUIT: Yes, sure, the bank is, but the association isn't. The
association is the railroad, the network through which all this runs.
And it's the banks that actually set the terms for the card.

    VAN SUSTEREN: Bob, in the 20 seconds we have left, what -- give us
the progress. How long is this going to take?

    FRANKEN: Well, they say it takes four to six weeks. And I have a
rule that you should always count on at least twice as long as they say.
So figure two to four months.

    VAN SUSTEREN: And that's because it's the lawyers that are doing the
saying, and you don't like lawyers, right?

Anyway, that's all the time we have for today. Thanks to our guests, and
thank you for watching.

Tonight on CNN "NEWSSTAND," "The Boss" is taking on "The Man" in New
York City; a controversial song by rocker Bruce Springsteen has Gotham
City police pushing for concert boycotts. That's at 10:00 p.m. Eastern
time. COSSACK: And today on CNN's "TALKBACK LIVE," the case of a 13-
year-old boy accused of killing his teacher after being sent home for
throwing water balloons. That's at 3:00 p.m. Eastern time, noon Pacific.

And we'll be back tomorrow with another edition of BURDEN OF PROOF.
We'll see you then.

WRITERS GUILD: Law Firm Promises Not to Charge Members in Age Bias Suit
A law firm probing age-discrimination allegations by Writers Guild of
America West members has promised it will represent members without
cost, following complaints about the firm's heavy-handed tactics.

The pledge came after the WGAW's board expressed "strong
dissatisfaction" about reps for Sprenger & Lang pressuring them for a $
1,000 non-refundable retainer even if it did not file a class-action
suit. "We have not collected a penny from anyone at the WGA and we do
not plan to," said attorney Maia Caplan of Sprenger & Lang, which
notified members over 40 of the investigation earlier this year (Daily
Variety, Feb. 2). "We dropped the idea very quickly after people

The board of the WGAW, in a June 7 notice to members who had been
solicited, said several members had cited "overzealous demands" by the
D.C.-based firm for a signed agreement for representation and the
retainer. "The guild's board believes that Sprenger & Lang's conduct is
a breach of their commitment to us and to members to conduct their
investigation 'without cost' and to seek only a contingent fee
arrangement," the union told its members.

Caplan said her firm, which specializes in employment discrimination
suits, has not yet determined if it will file a class-action suit. The
probe followed a 1998 report showing sharply decreased opportunities for
scribes over 40 and asked WGAW members about discrimination in hiring at
networks, studios and production companies as well as discrimination in
obtaining representation by agencies. (Daily Variety, June 13, 2000)


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