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                  Wednesday, June 21, 2000, Vol. 2, No. 120


AUTO FINANCING: Ct OKs Case over Ford's Post-Repossession Notices
BRANCH DAVIDIAN SIEGE: JUry Chosen in Waco; Wrongful Death Case Opens
BURNHAM PACIFIC: Milberg Weiss Responds to Misleading Press Release
CHURCHES IN CANADA: Govt and State Debate over Who Will Pay Penalty
CIBA/NOVARTIS: TX Suit Says Conspire in Ritalin Sale

CONNECTICUT DEPT: Court OKs Case Regarding Parking Placard Fees
FLOORING AMERICA: Kirby McInerney Seeks to Include Recent Restatements  GUN
MANUFACTURERS: NYC Suit Says Sale Practice Contributes to Violence
HMO: Plaintiff Counsel in RICO Case against Aetna Grilled By 3rd Cir.
HMOs: High Court Upholds Shield against Threat under ERISA

INMATES LITIGATION: 5th Cir Says MS ACLU Attorneys Can See HIV Inmates
INMATES LITIGATION: Videos Entered into Record in Case against D.C.?
LAKE VIEW: State to Show School Funding Constitutional, Judge Rules
MICROSOFT CORP: Panel to Stand Aside If Case Sent to High Court
NEXTEL COMMUNICATIONS: Workers Plan Racial and Gender Bias Lawsuits

RACING CHAMPIONS: Weiss & Yourman Files Securities Lawsuit in Illinois
ST JOHN: To Pay Shareholders and Give Proceeds to Settle Lawsuit
SOTHEBY’S: Fund Manager Wants Board That Is Resolute in Antitrust Case
TOBACCO LITIGATION: R.J Reynolds CEO Defends Industry
USDA: Black Farmers' Awards for Racial Bias May Top $1 Billion

WILLIAMS COMMUNICATIONS: Landowners Sue over Cable Installation


AUTO FINANCING: Ct OKs Case over Ford's Post-Repossession Notices
In the first of the California post-repossession cases to reach the class
certification stage, the Santa Clara County Superior Court recently granted
the plaintiff's motion for class certification in Mortera v. Ford Motor
Credit Co., No. CV 779239 (5/19/00). Judge William J. Elfving ruled that
Isabel Mortera established all of the requirements for class treatment.

Mortera sued Ford Motor Credit Co. on behalf of a class of borrowers whose
vehicles were repossessed and who were issued post-repossession notices
that failed to include the disclosure of information specified in
California Civil Code 2983.2(a)(9). Specifically, Mortera alleged Ford
Credit was barred from collecting any deficiency balances given the lack of
proper disclosures.

In March 2000, Judge Mary Jo Levinger ruled in favor of Mortera on the
liability issue prior to class certification and notice (see Consumer
Financial Services Law Report, April 14, 2000, p.3 ). Judge Levinger
granted the plaintiff's motion for summary adjudication of her declaratory
relief cause of action and denied Ford Credit's motion for summary
judgment. The court held the Civil Code 2983.2(a)(9) disclosure must be
included in post-repossession notices.

Subsequently, Mortera moved for class certification. Ford Credit countered
that a class action was inappropriate "when doing so would impose a penalty
wholly out of proportion to any harm cause by defendant's alleged misstep."
Ford Credit additionally argued that the voluntary payment doctrine and
whether or not Section 2983.2(a)(9) applies to post-repossession notices
concerned predominately individual issues. Ford also contended that
certification was inappropriate where the Rees-Levering Act was involved.

After the court took the motion under submission, it issued an order on May
19, 2000, granting Mortera's motion for class certification. The order did,
however, exclude some potential class members who were subject to a final
deficiency judgment.

Plaintiff's counsel, Mark A. Chavez of Chavez & Gertler LLP in Mill Valley,
Calif., said, "We are quite pleased that the court's class certification
ruling puts us one step closer to a judgment in favor of the class ... ."
Chavez did, however, express surprise that Ford Credit is continuing to
expend hundreds of thousands of dollars fighting a "clear liability case
that over two dozen other automobile lenders have settled." (See, Consumer
Financial Services Law Report, Jan. 21, 2000, p .4.)

Mark J. Kenney of Severson & Werson in San Francisco who represents Ford
Credit said there are still several substantive issues and defenses which
have not yet been resolved.

Chavez, Jonathan E. Gertler and Kim E. Card of Chavez & Gertler LLP
represent the plaintiffs. Kenney, Jan T. Chilton, Mark D. Lonergan and
Lorraine Eber of Severson & Werson represent Ford Credit. (Consumer
Financial Services Law Report, June 12, 2000)

BRANCH DAVIDIAN SIEGE: JUry Chosen in Waco; Wrongful Death Case Opens
Both sides won pretrial victories Monday, and U.S. District Judge Walter
Smith Jr. of Waco made quick work of picking an advisory jury for the
wrongful-death lawsuit filed by surviving Branch Davidians against the
government. Opening statements in the case were scheduled for 9 a.m. June

The jury, chosen in less than two hours, is made up of four women and three
men. At least two jurors are from Waco and all live in the 13-county
Western District of Texas. Their jobs range from physical education teacher
at an elementary school to aircraft electrician. Their job now is to issue
a nonbinding verdict that Smith will weigh in reaching his own decision on
whether the government helped cause the deaths of 81 Branch Davidians in

Smith chose the jury from a pool of 60 candidates. During questioning, he
asked if anyone had ever lost a child and if any of them had ever been in a
dispute with the government.

Members of the plaintiffs' legal team literally gave each other a thumbs-up
after the jury was announced. ''I think the jury will be fair,'' said
Houston attorney Mike Caddell, lead plaintiffs attorney. ''The judge
conducted things in an appropriate manner.'' Former U.S. Attorney General
Ramsey Clark and Houston attorney James Brannon are also representing

Smith got his point across to attorneys. ''The judge has made it clear that
he wants it to go quickly,'' said U.S. Attorney Michael Bradford,
co-counsel for the government.

Both the government and the plaintiffs squared off early Monday over the
admittance of key evidence in the case. The government kept the autopsy
photographs of Davidians from being admitted into evidence and limited
discussion of Ruby Ridge, the fatal shootout in Idaho involving many of the
same FBI personnel at Mount Carmel, the Branch Davidian compound.
Discussion of Ruby Ridge will be restricted to its influence in the
decision by some Davidians not to leave Mount Carmel.

Bradford, however, said he will ask Smith to bar mention of Ruby Ridge
entirely. ''We're going to revisit it,'' Bradford said. ''It's irrelevant
to this case. What is at issue is what happened here, not what happened at
Ruby Ridge. ''

The civil trial will deal with four issues:

  -- Whether agents with the Bureau of Alcohol, Tobacco and Firearms used
      excessive force in the Feb. 28, 1993, raid on Mount Carmel.

  -- Whether using tanks to drive through the compound deviated from the
      plan approved by U.S. Attorney General Janet Reno.

  -- Whether FBI agents helped cause the fires.

  -- Whether the government was negligent by withholding firefighting

Smith removed what could have been the most contentious issue of the
lawsuit --- whether government agents shot at Davidians during the final
hours of the siege. He said the issue would not be addressed because a
court- appointed expert was unable to attend the trial due to illness. The
issue will be decided later, probably by summary judgment. (The Atlanta
Journal and Constitution, June 20, 2000)

BURNHAM PACIFIC: Milberg Weiss Responds to Misleading Press Release
Milberg Weiss Bershad Hynes & Lerach LLP (http://www.milberg.com)on June
20 responded to an inaccurate and misleading press release by Burnham
Pacific Properties Inc. (NYSE:BPP) issued to the general public on June 14,
2000. In their company press release Burnham responded to further
shareholder outcries over managements' strategy of delaying Burnham's
annual meeting, postponed for the third time until Oct. 18, 2000, and
commented on the dismissal of a class action lawsuit filed by shareholders
against the company in 1999.

Specifically, Burnham Pacific's CEO, David Martin, stated "We are extremely
pleased by the court's decision to reject this suit as the plaintiffs were
unable to produce any facts establishing impropriety on our part." Martin's
statement is not only inaccurate, but completely inapposite to the Court's
ruling and the factual record established in this case. In its ruling the
Court did not address the adequacy of the factual support put forth by the
shareholder plaintiffs in support of their claims of wrongdoing by
Burnham's management. Martin's June 14, 2000 statement also fails to
disclose that Courts have not dismissed at least two other actions brought
by Burnham shareholders, which actions are proceeding against Martin and
his colleagues for their alleged breach of fiduciary duty.

Unfortunately, the voluminous factual details submitted by the shareholder
plaintiffs in this case were designated confidential and filed under seal
at the request of Burnham. Over the defendants' objection, plaintiffs
sought to unseal the record. To clarify the record and inform the public of
the true facts of this case, the plaintiff shareholders request that
Burnham Pacific publicly agree to unseal the court record so that Burnham
shareholders and the general public can make their own determination as to
any wrongdoing by Burnham's directors and senior management.

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

CHURCHES IN CANADA: Govt and State Debate over Who Will Pay Penalty
The Toronto Star reports that a Toronto law firm is launching a $10-billion
class action lawsuit on behalf of aboriginal people against the Canadian
government and the country's major church groups for more than 50 years of
''pain and suffering" at church-run residential schools.

The multi-billion-dollar lawsuit represents more than 1,000 claimants from
Northern Ontario who attended the residential schools between 1920 and the
1970s. The class action may later be extended to include claimants from
across Canada. ''We don't know yet how many people we'll be representing,
but it's right across the country," said Lawrence Mandel, a senior partner
at Thomson Rogers in Toronto. ''It's not known, but I suspect it will only
be the tip of the iceberg."

The suit involves claims for isolation, forced confinement, assault, sexual
assault, emotional abuse and physical abuse at the schools, which were
established by the federal government and operated by various Catholic and
Protestant denominations.

The suit is the latest in a growing number of legal claims - now amounting
to several billion dollars - made by aboriginal Canadians over their
treatment at the residential schools.

The Anglican Church of Canada warned last month the suits against it have
become so costly it may be forced into bankruptcy. The schools, which were
first opened in the 1920s and closed in the 1970s, were jointly operated by
the Canadian government, the United Church of Canada, Presbyterian Church
of Canada, the Anglican Church of Canada and the Roman Catholic Church of
Canada. All these groups were named in the suit.

According to Mandel, native children were taken from their families and
homes and forced to attend the schools, where they were to be assimilated
into the white culture, encouraged to give up native traditions and
forbidden to speak their native language. ''These people are entitled to
compensation. That's all you can do for them, " Mandel said. (The Toronto
Star, June 20, 2000)

According to the South China Morning Post, there are already 6,000
individual lawsuits and four large class actions brought by native people
against the various churches as a result of abuses suffered at residential
schools, which were run by the churches for the Government.

The schools began in 1880 as a means of assimilating Indian and Inuit
children into the mainstream of Canadian life. They were forbidden to use
their own language and were frequently whipped if they broke the rule.

During the 120 years in which the 100 residential schools were in
operation, the 160,000 native children who were pupils were also frequently
victims of sexual and other physical abuse by the priests, nuns and other
teachers who ran the schools.

Less dramatically, but no less harmful, the native youngsters were
literally kidnapped from their reserves and transported to schools hundreds
of kilometres from their parents, whom they did not see for months.

The schools were closed in the 1970s as native people, churches and the
Government all recognised they were an institution whose history was so
bleak, they could not be fixed. But it is only within the past 10 years
that there has been a determined attempt by native people to acknowledge
publicly what they suffered at the residential schools and to demand that
they be compensated for their suffering.

Some of the most prominent of the country's native leaders - including Phil
Fontaine, chief of the Assembly of First Nations, the national Indian
federation have identified themselves as victims of residential school
abuse. Others have pointed to what they call "cultural abuse" as the
explanation for the alcoholism and social collapse that have afflicted too
many of the country's native people.

Settlements of abuse cases have resulted in average payouts of about C$
100,000 (HK$ 530,000). Until now, the churches have been left to carry the
full burden of the misdeeds of their officials, but now there is increasing
pressure on the Government to recognise its responsibility.

The Canadian Government and its main Christian churches are locked in a
painful debate about who will pay the penalty for past abuses of the
country's native people.

For the Government, the debate is another stage in the apparently endless
process of coming to grips with the relationship of Canada's native people
to those "newcomers" who arrived over the past five centuries. For the
Christian churches, the immediate issue is the risk of bankruptcy.

The churches, already suffering from declining attendances, are paying out
millions of dollars in legal and court costs. The Anglican Church, for
example, has warned that it could be bankrupt within a year. The churches
have now entered negotiations with the federal Government in the hope it
will assume part of the rising legal costs. (South China Morning Post, June
20, 2000)

CIBA/NOVARTIS: TX Suit Says Conspire in Ritalin Sale
A class action lawsuit filed in Texas recently against the manufacturer of
Ritalin, along with Children and Adults with Attention
Deficit/Hyperactivity Disorder and the American Psychiatric Association,
alleges these groups either conspired to promote the diagnosis of ADD/ADHD
creating a market for Ritalin, or profited from its sale.

In addition, the lawsuit states that Ciba/Novartis, which has manufactured
Ritalin since 1955:

   -- Actively promoted and supported the concept that a significant
       percentage of children suffer from a "disease" which required
       narcotic treatment/therapy.

   -- Actively promoted Ritalin as the "drug of choice" to treat children
       diagnosed with ADD/ADHD.

   -- Actively supported groups such as CHADD, both financially and with
       other means, so that such organizations would promote and support
       the ever-increasing implementation of ADD/ADHD diagnoses as well as
       directly increasing Ritalin sales.

The suit claims CHADD received 748,000 from Ciba/Novartis from 1991 to
1994. It also claims the APA "conspired, colluded and cooperated with the
other defendants" while taking "financial contributions form Ciba as well
as other members of the pharmaceutical industry ... ."

For more information or to join the lawsuit, contact C. Andrew Waters and
Peter Kraus at (214) 357-6244 or Peter Breggin, medical consultant, at
(301) 652-5580. (Today's School Psychologist, June 15, 2000)

CONNECTICUT DEPT: Court OKs Case Regarding Parking Placard Fees
A federal District Court in Connecticut found that class certification was
warranted in an ADA Title II claim involving a state's imposition of fees
for parking placards. Duprey v. State of Conn. Dept. of Motor Vehicles, 18
NDLR 25 (D. Conn. 2000) (191 F.R.D. 329).

Background . . . The plaintiff, on behalf of herself and others similarly
situated, challenged the state's imposition of a 5.00 fee for removable
windshield placards that permit parking in areas designated for individuals
with disabilities. In a prior ruling, the district court found that the
fees violate the ADA. The plaintiff then moved for class certification. The
members of the putative class included individuals with disabilities that
limit their ability to walk or who are blind and who satisfied the criteria
for a removable windshield placard or individuals who transport such

The plaintiff met the requirements for class certification under
Fed.R.Civ.P 23. The plaintiff satisfied the numerosity requirement since
the members of the proposed class were so numerous that joinder would be
impracticable. The plaintiff also satisfied the commonality requirement
since there were common issues of law and fact shared by the members of the
proposed class - the claims against the DMV arose out of the same set of
operative facts and were based upon the same legal theories. Moreover, an
individual with a disability under the state parking placard statute would
meet the definition of disability under the ADA. The plaintiff also
satisfied the typicality requirement since she asserted the same claims on
her own behalf as the claims asserted on behalf of the class. Further, the
plaintiff would be able to adequately protect the interests of the class.
The court also found nothing to suggest that the plaintiff's interests were
in conflict with the interests of the class. In addition, the requirements
of Rule 23(b)(2) were met because the DMV "acted on grounds generally
applicable to the class as a whole by charging all class members for the
handicapped parking placards ... ."

However, the court also determined that the requirements of Rule 23(b)(3)
were met since common issues pertaining to the interpretation of the ADA
predominated over individual issues. Because the ADA has no statute of
limitations, the court applied the state's three-year general tort statute
of limitations to the case. The continuing violation exception did not
apply under the facts of the case since each fee charged constituted a
discrete act. The court granted the motion for class certification.
(Disability Compliance Bulletin, June 16, 2000)

FLOORING AMERICA: Kirby McInerney Seeks to Include Recent Restatements
By order dated February 8, 2000, the United States District Court for the
Northern District of Georgia appointed Kirby McInerney & Squire LLP as Lead
Counsel in the consolidated securities fraud class actions filed beginning
May 1999 on behalf of purchasers of shares of Flooring America, Inc. (NYSE:
FRA), then named the Maxim Group, Inc. (consolidated case No. 99-CV-1280).

The consolidated class action complaint, which was filed on April 10, 2000,
alleges that the Company and certain of its officers and directors had
committed securities fraud by, inter alia, improperly reporting
artificially inflated revenues and income. Indeed, as the Company admitted
in May, July and October of 1999, the Company had reported false and
misleading financial results for the fiscal year ended January 31, 1999,
and each of the four quarters therein. The complaint alleges that these
results, admittedly inflated by the company's improper recognition of
revenues from vendor rebate programs, misled investors who purchased stock
in a company whose losses were six times larger than it originally reported
for fiscal 1999. The consolidated complaint was brought on behalf of all
investors who purchased the Company's common stock between June 2, 1998 and
July 13, 1999.

Based upon recent events, Kirby McInerney & Squire will seek to file an
amended consolidated complaint to take into account the Company's recent
disclosure that it continued, via further improper recognition of revenue,
to report false and inflated earnings not only for all four quarters of
1999 but for the first two quarters of fiscal 2000 as well. The new
complaint will extend the class period to assert claims on behalf all
investors who purchased Flooring America (or Maxim) common stock between
June 2, 1998 and May 22, 2000, when the Company revealed the necessity for
its most recent restatement of earnings. The amended consolidated complaint
will allege a common, continuous course of misconduct during the extended
class period, and will assert claims based on that common course of
misconduct against certain present and former officers and directors of the
Company (which, on June 15, 2000, filed for bankruptcy protection).

Contact: Kirby McInerney & Squire, New York Ira M. Press, Esq. Orie Braun,
212/371-6600 or 888/529 4787 Fax: 212/751-2540 E-mail: obraun@kmslaw.com

GUN MANUFACTURERS: NYC Suit Says Sale Practice Contributes to Violence
New York City is just piling on in the hopes of either forcing gun
manufacturers to the negotiating table or bankrupting them. So argues H.
Sterling Burnett, senior policy analyst for the National Center for Policy
Analysis (NCPA(SM)), who is available to discuss the class action suit
filed by New York City against approximately 30 gun makers, alleging that
guns and how they are marketed and distributed have contributed to

"If this lawsuit succeeds, it will establish bad law and bad public
policy," said Burnett. "It would establish bad law because it asks the
courts to legislate and it would overturn well-established legal precedence
that manufacturers are not responsible for the criminal misuse of their
products. It would be bad public policy because guns prevent more harm than
they cause."

Burnett is the author of a study entitled "Suing Gun Manufacturers:
Hazardous to Our Health," which notes that citizens use guns in
self-defense as many as 2.5 million times annually (in the vast majority of
cases, merely showing the firearm prevents the crime). That far exceeds the
number of crimes committed with firearms each year, providing cities with a
net social benefit from gun use. Accordingly, Burnett calculates that guns
save U.S. citizens between $1 billion and $38 billion annually.

HMO: Plaintiff Counsel in RICO Case against Aetna Grilled By 3rd Cir.
If the aggressive questions posed to the plaintiffs' lawyer by all three
judges weren't hint enough, it became very clear by the end of the defense
lawyer's argument that the 3rd U.S. Circuit Court of Appeals is poised to
uphold a decision that threw out a civil RICO suit against Aetna Inc.

Plaintiffs' attorney Edith Kallas of Milberg Weiss Bershad Hynes & Lerach
opened her argument by asking to save five of her allotted 20 minutes for a
rebuttal argument. The granting of that request was the only agreement
Kallas heard all morning. Grilled steadily for 15 minutes, Kallas endured
several more minutes of tough and pointed questions even after the red
light on her podium began to glare.

In sharp contrast, Aetna's attorney, Alan Davis of Ballard Spahr Andrews &
Ingersoll, answered only a handful of questions and returned to his seat
while his green light was still on.

"This is a lawsuit about holding Aetna accountable for its promises,"
Kallas said in her opening remarks. The proposed class action suit was
brought by a group of consumers who say Aetna lured them in with false
promises of high-quality care while secretly pressuring doctors to cut
costs and provide only minimum care. The case, Maio v. Aetna, was dismissed
last year when Senior U.S. District Judge John P. Fullam ruled that the
plaintiffs lacked standing since their injury was purely hypothetical.
Fullam ruled that "a vague allegation that 'quality of care' may suffer in
the future is too hypothetical an injury to confer standing." On appeal,
the plaintiffs' lawyers argue that Fullam missed the point since the injury
the plaintiffs suffered occurred as soon as they were induced to pay for a
policy with false promises. Kallas argued that the injury suffered by the
class can be measured by the disparity between the economic value of the
"premium HMO product Aetna represented it was selling" and the product they
actually received.Aetna's advertising campaign, she said, was designed to
lure in members by promising "a level of care not available elsewhere." In
fact, she said, the company's "undisclosed systemic policies" directly
contrasted with those advertising claims and show that they were false

Less than a minute into her argument, Kallas was interrupted by Senior U.S.
Circuit Judge Joseph F. Weis who said, "Aren't many of those promises the
basis of the Supreme Court's opinion in Pegram [v. Herdrich] which said
that it's up to Congress to change?" "Not at all, your honor," Kallas said.

"Isn't this an end-run around the Pegram case?" Weis insisted. Kallas said
the simple answer was that Pegram was an ERISA case and Maio is not, "but
it goes much further than that." In Pegram, she said, the justices held
that existence of financial incentives, in and of itself, does not state a
claim for breach of fiduciary duty under ERISA. But in a footnote, Kallas
said, the court explicitly stated that it was not addressing a claim that
the HMO had failed to disclose financial incentives. The court, she said,
"recognized that HMOs are in the business of keeping costs down, but what
Aetna did here was to go out and attempt to distinguish themselves from all
other HMOs out there and to represent: 'We're not like those other HMOs we
give quality.' The Supreme Court, she said, has recognized that the term
"quality" can have heightened meaning depending on the circumstances and
the subject matter and "this is one of those circumstances."

U.S. Circuit Judge Morton I. Greenberg was next to express doubt, asking
Kallas to explain her theory of the plaintiffs' RICO injury. "What's your
theory there?" Greenberg asked, noting that he saw two possibilities that
the class members paid more for their Aetna policies than they were worth
or that they didn't get what they paid for. Kallas said she suspected
Greenberg was really asking how the plaintiffs would go about measuring
damages. She said one could compare the price of Aetna as a premium HMO to
other HMOs that have a lesser value in the marketplace, such as a
staff-model HMO where the doctors are employees.But Greenberg said, "Maybe
they want to make more money." He asked if there was anything wrong with
Aetna deciding to raise its premiums just to make more profit.Kallas
insisted that no matter what the motive, no company can misrepresent the
product it is giving consumers. But visiting Senior U.S. District Judge
Murray Schwartz of the District of Delaware, sitting on the court by
invitation, asked if there was "any allegation that anyone received
anything less than quality care." "Our position," Kallas said, "is that
what the doctor does or doesn't do is irrelevant." Judge Fullam, she said,
"misunderstood how HMOs operate. "The courts have recognized, she said,
that "an HMO is not a classic insurer through which it is a mere passive
recipient of premiums whose principal interest lies in allocating risks.
They purchase and distribute health care in America."

The Maio case, she said, "is a fraud case. It's about Aetna's
misrepresentations. It does not have to do with any other HMO out there.
This is not a referendum on managed care." Before letting her leave the
podium, Greenberg asked Kallas to "tell us exactly what your theory of
fraud is. It's a little elusive." Kallas said the plaintiffs' fraud theory
"is that Aetna misrepresented the type of health insurance coverage that
its HMO would provide." The theory was not based just on Aetna's
representations that it would provide quality care, she said, but also its
promise that doctors would make all medical decisions.

Aetna attorney Davis said he agreed with Judge Weis that the Maio case "is,
at this point, an end-run around the Pegram case." The plaintiffs, he said,
told the court that the case was an effort to "hold Aetna to its promises."
The only injury that was alleged, he said, "is that these complex insurance
arrangements will somehow produce a malfunction it hasn't produced it yet
in the future, under some undefined set of circumstances." Such a case,
Davis said, "is a classic case of a failure to allege concrete injury." The
plaintiffs in Maio did so for specific reasons, Davis said. On the one
hand, he said, the suit "disclaimed any individualized injury" to make sure
that they could attain class action status. The second disclaimer, he said,
was that the suit was not seeking to recover or clarify any benefits or
promised benefits "because if they do they know it's preempted by ERISA."
Instead, Davis said, "the whole idea here is a damage action for a class of
30 million people." Allowing the case to go forward, Davis said, would
"launch the court below into an investigation of whether the plaintiffs
paid too much [for their benefits]." Such issues, Davis said, are exactly
the type of problems that Justice David H. Souter said in Pegram that
Congress, and not the courts, should deal with. (The Legal Intelligencer,
June 20, 2000)

HMOs: High Court Upholds Shield against Threat under ERISA
By Tony Mauro Fearing that the managed health care industry would be
destroyed if it ruled otherwise, the Supreme Court protected HMOs from
being sued by disgruntled patients for breach of fiduciary duty under a key
federal employment law. "The judiciary has no warrant to precipitate the
upheaval that would follow, " wrote Justice David Souter for a unanimous
court in Pegram v. Herdrich. " The fact is that for over 27 years the
Congress of the United States has promoted the formation of HMO practices."

The ruling removes, at least for now, a legal threat that could have
subjected health maintenance organizations to a wave of litigation under
the Employee Retirement Income Security Act (ERISA), which protects
employee benefit programs and requires that any organization that has a
fiduciary duty to employees must act in their best interests.

Cynthia Herdrich of Bloomington, Ill., made an ERISA claim when she sued
her HMO after one of its doctors failed to order a test that could have
prevented her appendix from rupturing. She said an HMO incentive plan that
rewarded her doctor, Lori Pegram, for limiting the number of tests ordered
for patients amounted to a breach of fiduciary duty under the law.

The Supreme Court didn't see it Herdich's way. "We think Congress did not
intend (HMOs) to be treated as a fiduciary to the extent that it makes
mixed eligibility decisions acting through its physicians," Souter wrote.

Noting that HMOs are profit-making organizations, Souter said that if the
Court agreed with her claim that the profit-motivated incentive plan
violates their fiduciary duty, it would mean "nothing less than elimination
of the for- profit HMO."

Carter Phillips, a D.C. partner at Sidley & Austin and the lawyer for the
CarleCare HMO sued by Herdrich, said the justices had correctly recognized
that if Herdrich won, "all HMOs would be illegal."

The decision "considerably undermines" future plaintiffs' breach of duty
claims, said Stephanie Kanwit, a D.C. partner at New York's Epstein Becker
& Green, author of an amicus curiae brief in the case for health insurers
and the U.S. Chamber of Commerce.

But lawyers for the other side drew comfort from a footnote in Souter's
opinion, which seems to offer an opening for further ERISA claims against
HMOs. "Although we are not presented with the issue here," Souter wrote,
"it could be argued that Carle is a fiduciary insofar as it has
discretionary authority to administer the plan, and so it is obligated to
disclose characteristics of the plan and those who provide services to the
plan, if that information affects beneficiaries' material interests."

Because of that footnote, said Stephen Neuwirth, a partner at Boies,
Schiller & Flexner in Armonk, N.Y., the June 12 holding "does not expressly
limit" suits trying to force HMOs to disclose their financial incentive
programs. Neuwirth is co-lead counsel in a series of major class actions
pending against Humana Inc. and six other providers.

Gregg Bloche, who teaches health care law at Georgetown University Law
Center, said the class action "suffered a terrible blow" in the decision.
But Bloche said the litigation could shift to state courts.

The Court ruling was the second piece of good news for HMOs recently. The
Senate earlier this month defeated a patients' bill of rights that would
have subjected HMOs to malpractice suits and federal damages in federal
court. (Legal Times, June 19, 2000)

INMATES LITIGATION: 5th Cir Says MS ACLU Attorneys Can See HIV Inmates
Attorneys for the American Civil Liberties Union in Mississippi may contact
inmates with HIV under a ruling from the 5th U.S. Circuit Court of Appeals.
A three-judge panel of the appeals court on Monday lifted a no-contact
order issued by a district court in Mississippi, pending a final decision
on the appeal.

Since February 1999, the ACLU's National Prison Project has been fighting a
legal battle to oust Ron Welch of Jackson, Miss., a longtime prisoners'
rights attorney who represents the inmates in a class action suit.

In February, U.S. Magistrate Jerry Davis barred the ACLU from discussing
prison conditions with the inmates. "We're very encouraged by this. This is
a good sign. We thought we would win," said Jane Hicks, with the ACLU in

Welch said he was surprised by the appeals court's order. The ACLU's
contact with his clients hinders his ability to manage the class action
suit, Welch said. "It's too many cooks in the kitchen," Welch said.

The ACLU claims Welch has not adequately represented the inmates living
with the AIDS virus.

In July, the U.S. District Court ruled against the ACLU, saying Welch
represented the inmates competently.

The ACLU is appealing several issues involving the suit, including the
lower court's decision to leave Welch as the court-appointed attorney.

In March, a different 5th Circuit panel denied the same ACLU motion asking
for the no-contact order to be lifted. The ACLU refiled June 12, after both
sides made oral arguments in New Orleans on June 5.

The ACLU believed it would have success with a new motion, Hicks said,
because the court later had the opportunity to consider arguments as well
as written briefs.

Prior to the order, the lower court had limited the ACLU's contact with the
group of inmates only to matters regarding the appeal. "We're very eager to
talk to them about the issues and the lawsuit and how things are going for
them," Hicks said. (The Associated Press State & Local Wire, June 20, 2000)

INMATES LITIGATION: Videos Entered into Record in Case against D.C.
Two videotapes of State Training School employees restraining inmates -
including a male officer cutting the bra off a girl to retrieve pieces of
glass were turned over to a federal judge Monday. The tapes were part of a
written response filed by lawyers from the Youth Law Center of Washington,
D.C., which is suing the state on behalf of six young inmates at the
Plankinton school. Department of Corrections officials shot the video,
which is standard procedure when staff members use force.

"The governor had ordered the staff to videotape all incidents so there was
a documented record of exactly what goes on," Bob Mercer, Gov. Bill
Janklow's press secretary, said.

The videotapes were given to the Youth Law Center as part of the legal
process. The tapes were sealed to protect the young peoples' identities,
but the incidents have been described in court documents.

In one of the incidents submitted on videotape, a girl had pieces of glass
in her bra. Court documents said three staff members, two male and one
female, forced her into restraints. Then one male is seen on the videotape
cutting off her bra. The other tape shows another girl being restrained by
six staff members, according to documents.

The Youth Law Center's latest filing comes after lawyers representing the
state asked federal District Judge Lawrence Piersol not to make the case a
class-action lawsuit.

Class-action status would broaden the lawsuit to represent all past, future
and current inmates, not just the six named.

James McMahon, one of the state's lawyers, said the center's documents
describing actions at the Plankinton facility are misleading. "They took a
number of statements from the depositions out of context. There is some
misrepresentation about what those people said," he said. But Mark Soler,
president of the nonprofit Youth Law Center, disagrees. "The depositions
are on file. Anyone can read them to see what the plaintiffs have said,"
Soler said. "They describe four-pointing, isolation and clearly demonstrate
why the suit was filed."

Four-pointing is a method of restraint used for unruly inmates at
Plankinton in which the youth's hands and feet are secured to the bed.

McMahon said the lawsuit dredges up problems fixed months ago. "My initial
reaction is that they are proceeding with their suit on the grounds of
things they claim were happening in July of 1999," he said. "There have
been many, many changes."

In the response, Soler writes that a change in policy "does not demonstrate
that these problems have been resolved." He contends the abuse is ongoing.

In another development, federal Judge Lawrence Piersol has granted
reporters from the Sioux Falls Argus Leader and KSFY-TV in Sioux Falls
permission to accompany him during an unannounced visit to the State
Training School.

The Department of Corrections and the Youth Law Center asked Piersol to
visit the school as part of the lawsuit. Piersol granted written requests
to allow media coverage of the event. He said in his order that he weighed
the public's right to access against the privacy rights of the juvenile
inmates. The judge will prohibit cameras during the visit and banned the
media from talking to the juvenile inmates.

Besides the federal civil lawsuit brought by the Youth Law Center, the
parents of Gina Score have a federal civil case pending. She died last
summer at the girls' boot camp in Plankinton.

And the criminal trial of two former workers, Raelene Layne and Tamara
Wagaman, is now scheduled for October. They are each charged with four
counts of child abuse, one of which involving Score's death. (The
Associated Press State & Local Wire, June 20, 2000)

LAKE VIEW: State to Show School Funding Constitutional, Judge Rules
Attorneys for state offices and agencies will have the burden of proof
concerning the constitutionality of Arkansas' $1.6 billion school-funding
system, a Pulaski County judge ruled Monday.

At a status conference in the Lake View School District class-action
lawsuit, representatives of the school district and the attorney general's
office told Chancellor Collins Kilgore that a settlement in the case was
unlikely. The suit contends state officials administered an inequitable
system of financing the state's public school districts.

Monday's conference was held in preparation for a five-week hearing to
begin Sept. 18. Also during the status conference, representatives of the
attorney general's office asked that at least parts of a second Lake View
lawsuit filed last year on the adequacy of state school funding be combined
with the 1992 lawsuit now back before the judge.

The Lake View district in Phillips County sued the state Department of
Education, the governor and others in 1992 charging that the state's
school-funding system discriminated against students who lived in districts
with little local tax property wealth.

In 1994, Pulaski County Chancellor Annabelle Clinton Imber agreed with the
Lake View district in finding that funding varied by more nearly $1,800 per
student from one district to another and that districts with higher
property values could generate more money for schools.

Imber, now an Arkansas Supreme Court justice, gave the state two years to
revise the formula. Lawmakers responded by revising the formula in 1995 and
1997 and putting forth a constitutional amendment that was approved by
voters, but attorneys for the Lake View district argued that the formula
still did not comply with Imber's order for a constitutional system. The
attorneys also sought $10.25 millions in legal fees for their work.

Kilgore, who inherited the case from Imber, dismissed the case in August
1998. He said that because the funding laws had changed, the arguments
raised in the lawsuit no longer applied. He also ruled that he did not have
legal authority to order state payment of legal fees to the Lake View

The Lake View district appealed to the Arkansas Supreme Court, which ruled
last March that the Lake View district was entitled to both the payment of
legal fees and to a compliance hearing on the school-funding system. The
case was returned to Kilgore.

In the meantime, the Lake View district filed a second lawsuit on school
funding, focused more on the issue of whether the state funding is adequate
for educating students. (The Associated Press State & Local Wire, June 20,

MICROSOFT CORP: Panel to Stand Aside If Case Sent to High Court
The U.S. Court of Appeals rejected Monday a government request that it stay
out of the huge Microsoft antitrust case, but the victory may be temporary
for the software giant.

The court turned down a Justice Department motion to summarily dismiss
Microsoft Corp.'s request for a stay of a federal judge's order to break
the software giant into two companies and restrict its business practices
as a remedy for violating antitrust laws.

The department had sought to have the appellate court bypassed in the
appeals process after U.S. District Judge Thomas Penfield Jackson's ruling
earlier this month. The department wants Jackson to send the case directly
to the Supreme Court for review.

In its ruling Monday, the appellate court said that the government has 10
days to respond to Microsoft's request for a stay. Microsoft would then
have another week to reply. But the appellate court did say that if Jackson
sent the case directly to the nation's highest court, it would stand aside.
"This moves things along about a foot, with several miles to go," said
Robert Litan, vice president and director of economic studies at The
Brookings Institution. The appeals court's action is part of a complex
interplay between the government, Microsoft, the trial court, the appeals
court and the Supreme Court--where the case is expected to be ultimately

Both sides saw positives in the ruling. Microsoft, which wants the appeals
court to hear the case because it has reversed previous rulings by Jackson,
praised the appeals court. The Justice Department issued a statement
applauding the part of the ruling that the appeals court would bow out if
Jackson certifies the case for high court review. But that victory, too,
may not last.

If five Supreme Court justices decide against taking a direct appeal, they
would send it back to the appeals court, which would pick up its
established timetable.

Jackson postponed his split of Microsoft from taking effect until the case
makes its way through the appeals process. But the restrictions he ordered
on company business practices would start taking effect Sept. 5.

Microsoft scored a separate legal victory Monday when a Nevada judge tossed
out a class-action suit alleging that the software giant bilked consumers
by charging too much for its Windows software.

Judge Gene Porter in the Clark County District Court in Las Vegas granted
the company's motion to dismiss the case, Microsoft said.

The court win is the second on the issue for Microsoft after a judge in
Oregon ruled that consumers there could not sue the Redmond, Wash.-based
company over software they did not buy from it directly.

In addition, Microsoft said it has finished work on the successor to the
Windows 98 home computer operating system and will release the product
Sept. 14.

The new software, called Windows Millennium Edition, was sent to
computer-makers Monday, Microsoft said. It will be included on new
computers purchased after the launch date, and consumers will be able to
purchase it in stores.

A full-install version of the software will cost $209. People running
Windows 98 or Windows 95 who wish to upgrade can purchase it for $109.

The new operating system will include a number of new features, though
fewer changes in the underlying technology than in past upgrades. Windows
ME, as it is called, will feature a new Microsoft Windows Media Player,
which will help users manage digital video and music on their computers.

Analysts who watch the company agreed that Windows ME is not as important
an upgrade as when Microsoft introduced Windows 95. "This is very much
evolutionary, and even then there's not too much there," said Michael
Gartenberg, an analyst and partner in the venture capital firm Dellet. "You
can download IE and the Media Player off the Internet for free anyway."
(Chicago Tribune, June 20, 2000)

NEXTEL COMMUNICATIONS: Workers Plan Racial and Gender Bias Lawsuits
In one of the broadest recent attacks on employment practices in the
telecommunications industry, more than 300 current and former employees of
Nextel Communications Inc., a fast-growing wireless communications carrier,
intend to file complaints of racial and sexual discrimination at the
company, the employees' lawyers said.

The lawyers said that they intend to file 25 complaints with the Equal
Employment Opportunity Commission against Nextel on behalf of workers in
Colorado, Georgia, Illinois, New Jersey, Ohio and Tennessee. The lawyers
intend to file 25 additional complaints representing employees in states
including Alabama, California, Florida and Virginia. The lawyers intend to
file 50 additional complaints each week until all 302 complaints have been

Nextel, based in Reston, Va., is one of the fastest-growing wireless
communications providers in the nation. Financed largely by Motorola Inc.
and Craig O. McCaw, the cellular telephone pioneer, Nextel now serves more
than 5.5 million subscribers.

As they file the complaints with the employment commission, the workers'
lawyers intend to ask the commission's permission to file lawsuits against
the company in federal court under Title VII of the Civil Rights Act of
1964. The lawyers, who say they have worked with the Nextel workers for
nine months, said they intended to seek class-action status for the lawsuit
and said they intended to seek millions of dollars in damages. The lawyers
also said they intended to ask that Nextel, which has a market value of $51
billion, be required to make a multibillion-dollar commitment to
sensitivity training and diversity in hiring and promotion.

"At this point we have not received any official complaints, and when we do
receive any such official complaint we will certainly investigate and
respond appropriately," Randall C. Harris, Nextel's senior vice president
for human resources, said in a telephone interview. "Until such time that
we receive such official complaint there is no other response that would be

Copies of the 25 complaints that are to be filed were provided to The New
York Times by the workers' law firm, Leeds Morelli & Brown, based in
Manhattan. The law firm also provided a list of 302 current and former
Nextel employees that the firm said intended to file complaints. Jeffrey K.
Brown, a partner at the firm, said that he was willing to provide copies of
the complaints to Nextel on request before the complaints were filed.

"Nextel is one of the largest telecommunications companies in the world and
they are trying to promote an image of diversity when the facts are that
within the corridors of Nextel, minority employees are harassed and
mistreated solely on the basis of their race," Mr. Brown said. Mr. Brown
said that his firm contacted Nextel in March. In April, he provided the
company with details of some workers' complaints and also met with Nextel
lawyers in Virginia. "It's been very slow," Mr. Brown said. "In my opinion
they did not take this seriously, nor do they believe thay have a problem
on hand."

Of the 25 complaints to be filed, 24 claim racial discrimination and 6
claim sexual discrimination. Most of the employees set to file complaints
are black. According to the complaints, they were routinely treated
unfairly and many said they were passed over for raises or promotions,
sometimes in favor of less-experienced or less-capable white workers. Some
minority workers said they were made to do more than other employees of
similar experience.

In some of the complaints, the workers said they were made to feel
uncomfortable by derogatory comments made by supervisors or fellow workers.
In his complaint, one black worker said that when he arrived for a job in
Atlanta, he received harassing calls from other Nextel employees in which
he was repeatedly called a racial epithet. The same employee said that he
was punished professionally for not responding positively to the sexual
overtures of a white female supervisor and also overheard comments that
implied that his employment was sufficient to fill a racial quota.

In his complaint, an employee in Colorado said that a white "team leader"
suggested that he call himself "darky" when his office had a "theme day." A
Hispanic worker in Colorado said he was called "thug" in addition to more
pointed epithets. A black salesman in Tennessee said that his manager said,
"Blacks and women have no business in the workplace," and denied a request
for a transfer to a more affluent area because "they don't like black
people there."

Filing with the employment commission is a necessary first step in most
workplace racial and sexual harassment proceedings. The commission rarely
takes cases to court itself; last year, it received 77,444 complaints and
filed 465 suits against employers. But after filing a complaint, a worker
can petition the commission for permission to sue independently.

In earlier decades, the American Telephone and Telegraph Company faced
accusations of racial discrimination. But the telecommunications industry
generally has not faced such broad discrimination lawsuits as those leveled
against Coca-Cola. (The New York Times, June 20, 2000)

RACING CHAMPIONS: Weiss & Yourman Files Securities Lawsuit in Illinois
A class action lawsuit against Racing Champions Corp. (NASDAQ:RACN) and its
senior executives was commenced in the United States District Court for the
Northern District of Illinois, Eastern Division, seeking to recover damages
on behalf of defrauded investors who purchased Racing Champions securities
between February 1, 1999 and June 23, 1999 (the "Class Period").

The complaint charges defendants with violations of the antifraud
provisions of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. The complaint alleges that defendants issued a
series of false, misleading and incomplete information causing plaintiff
and other members of the Class to purchase Racing Champions' securities at
artificially inflated prices during the Class Period.

Contact: Weiss & Yourman James E. Tullman, Mark D. Smilow, David C. Katz,
888/593-4771 or 212/682-3025 wynyc@aol.com

SOTHEBY’S: Fund Manager Wants Board That Is Resolute in Antitrust Case
Sotheby's, the world's leading auctioneer, announced a new set of nominees
for its board of directors, following a six-week battle for control between
its main shareholders. But there were still signs of discord ahead of the
August 3 meeting, when shareholders will vote on the new slate.

The deal represented a compromise between Baron Capital Group, the mutual
fund group that holds 55 per cent of Sotheby's common equity, and former
chairman Alfred Taubman, who resigned in February amid allegations that the
auctioneer had colluded with its main rival, Christie's, to fix

Under the agreement, Sotheby's board will be expanded from 14 to 16
directors. Four new nominees - George Blumenthal, Steven Dodge, Henry
Jarecki and Brian Posner - will be voted on by the common shareholders. The
preferred shareholders, of which Mr Taubman controls 63 per cent, will be
allowed to vote on 12 nominees, including his son, Robert.

Ronald Baron, chairman of Baron Capital Group, said in a filing with the
Securities and Exchange Commission that he remained "dissatisfied with the
independence" of certain directors, and issued a statement questioning Mr
Taubman's conduct.

"If Mr Taubman resigned to avoid the appearance of a conflict of interest,
how can it be okay for his son to take his place as well as other people
with exceptionally close ties to remain on the board?" Mr Baron asked. He
also said he would continue discussions with Sotheby's management and board

The annual meeting had been postponed since April 27, after Baron objected
to the continuing presence of directors with close ties to Mr Taubman.
Those included Max Fisher, Jeffrey Miro and Conrad Black, and Mr Taubman's
son, who was nominated to replace him.

The fund manager wants an independent board so that it can be resolute in
taking legal action against Mr Taubman and other Sotheby's executives if
they are found liable in the government's antitrust case or a class action
civil lawsuit. (Financial Times (London), June 20, 2000)

ST JOHN: To Pay Shareholders and Give Proceeds to Settle Lawsuit
St. John Knits International Inc. announced that it reached an agreement to
settle the class action shareholders' lawsuit arising from the mergers,
which has been reported in the CAR. The terms of the settlement agreement,
which remains subject to final court approval, calls for payment of $13.75
million to the Company's former public shareholders and their attorneys.
Nearly all of this payment will be funded by the Company's insurance
carriers. Additionally, in the event of a future sale, merger or public
offering of the Company, the Company has agreed to provide these former
shareholders with an opportunity to receive a specified percentage of
proceeds from such an event under certain limited circumstances. The court
preliminarily approved the settlement on June 12, 2000 and set a hearing to
consider final approval on August 1, 2000.

TOBACCO LITIGATION: R.J Reynolds CEO Defends Industry
Unrepentant, the chief executive officer of R.J. Reynolds Tobacco told a
Miami jury it was time he spoke up on behalf of the hardworking, honest
people of integrity with whom he has worked the past 25 years. "I've been
at the senior-executive level for 12 years and I've never been invited to
the conspiracy to defraud," Andrew Schindler testified before a jury that
already has ruled the country's top five cigarette makers conspired to hide
the health risks of smoking. "I've never seen it. And I've never
experienced it," Schindler told the jury that now must decide how much the
companies should pay as punishment for their actions.

Schindler, who heads the nation's second-largest cigarette company, was the
third of five tobacco CEOs to take the stand in defense of the industry
being sued by 300,000 to 500,000 ailing Florida smokers.

State Attorney General Bob Butterworth, once a dogged foe of Big Tobacco,
is expected to testify on behalf of the Liggett Group, the smallest of the
five companies on trial. He is expected to tell the jury about the role
Liggett CEO Bennett LeBow played in negotiating a legal settlement with the
attorneys general of all 50 states.

Under that agreement, the tobacco companies will pay $ 254 billion to the
states over the next 25 years. Tobacco lawyers have said they worry the
jury hearing this case could order them to pay at least another $ 100
billion in punitive damages to the members of this class action. And they
have often referred to the attorneys general settlement, saying it is
punishment enough. With the stakes so high, the chief executives of Philip
Morris Inc. and Brown & Williamson were apologetic in their testimony, at
least under direct questioning from their own lawyers. They admitted
smoking causes cancer and apologized for not trying sooner to work with the
public to address the health issues swirling around cigarettes.

But on Monday, when Stanley Rosenblatt, the lawyer representing the sick
smokers, raised his voice and dramatically challenged Schindler to admit
R.J. Reynolds' wrongdoings, the CEO raised his voice to an equal decibel.
"I've never been involved in the fraud or misrepresentation you're alluding
to," said Schindler, who has worked for the parent company of R.J. Reynolds
for 26 years. He also denied Rosenblatt's assertions that R.J. Reynolds'
Joe Camel campaign targeted children.

Schindler and Rosenblatt battled several rounds before the jury Monday.
Although the jury previously ruled smoking causes lung cancer and more than
20 other diseases, Schindler would not agree to such specific allegations.
He also said cigarettes were not addictive like heroin or cocaine. Instead,
he compared tobacco to caffeine in terms of addiction.

"There are significant and inherent health risks to this product, and we
have an obligation to work on eliminating that risk. And that's what we've
been doing," Schindler said. He touted the company's development of the
product Eclipse, a less toxic cigarette that has not shown much success
despite the $ 1 billion the company spent in development and promotion
during the last several years.

Schindler snapped back when Rosenblatt called the product a
"public-relations ploy." "That implies that some product I had access to in
the past could have been marketed to smokers to reduce the risk of illness,
" he said, denying there was one.

At one point, he asked Rosenblatt whether perhaps he had some better ideas
he might want to share with the company. "I'd be happy to try it out,"
Schindler said. "No, you wouldn't," Rosenblatt responded. Schindler
quipped, "You have an idea?" Rosenblatt didn't miss a beat: "I sure do. Get
rid of the product. It's a killer. It's an addictive killer that you sell,
promote, manufacture." "Enough," interrupted Miami-Dade Circuit Judge
Robert Kaye.

In another exchange, Schindler encouraged Rosenblatt to lobby for the
banning of tobacco, if that is what he thinks society really wants. "In the
meantime, it is a legal product," Schindler said. Rosenblatt asked the CEO
if he thought people did not bother to suggest banning tobacco because of
the political power wielded by the industry.

The power of tobacco's money may be on display later, when Attorney General
Bob Butterworth is called to the witness stand. Butterworth and the late
Gov. Lawton Chiles made a mission out of wresting billions from tobacco
companies as settlement of a Medicaid reimbursement suit. The state sought
to retrieve money spent to treat sick smokers.

LeBow, the CEO of Liggett, was the first tobacco company executive to try
to piece together the settlement that was eventually signed by executives
at all five tobacco companies now on trial. The settlement was a major coup
for Democrats Butterworth and Chiles. Then, earlier this year, Butterworth
issued a legal opinion to the GOP-controlled Legislature that appeared to
side with tobacco by criticizing the plan for how this class action would

The legislators had other qualms about the trial, particularly how it might
financially cripple the companies, hampering their ability to continue
making payments on the $ 254 billion settlement. So in a move to protect
tobacco, the Legislature changed the law to lessen the amount the companies
would have to post in bond before they can appeal the jury's findings.
(Sun-Sentinel (Fort Lauderdale, FL), June 20, 2000)

USDA: Black Farmers' Awards for Racial Bias May Top $1 Billion
More than 10,000 black current and former farmers have been cleared to
share in the settlement of a class action lawsuit accusing the Department
of Agriculture of racial discrimination, putting the case on course to
become the largest civil rights settlement in U.S. history.

Already, the government is obligated to pay more than $ 635 million, a
figure that a Justice Department official said is likely to top $ 1 billion
by the time a panel of 46 adjudicators completes the arduous task of
reviewing the 26,000 settlement claims that have been filed. An additional
$ 30 million is expected to be paid in legal fees.

The adjudicators, all retired state and federal judges, have reviewed more
than 16,500 cases, approving just over 60 percent of them. Each eligible
claimant will receive $ 50,000, plus $ 12,500 to cover taxes. Another 150
farmers are seeking to have their settlements decided by arbitrators who
already have awarded payments as high as $ 640,000.

In addition to the cash payouts, the plaintiffs are expected to receive a
total of $ 150 million in debt relief from USDA. The settlement covers
African Americans who farmed or attempted to farm between 1981 and 1996,
had applied for USDA services and could provide at least "substantial
evidence" of discrimination as determined by the adjudicators.

While President Clinton, Agriculture Secretary Dan Glickman and many civil
rights advocates praised the settlement for bringing at least a small
measure of justice to black farmers historically denied government loans,
crop subsidies and other benefits because of their race, the record payouts
apparently have also generated a backlash.

Lawyers for the farmers say flyers have been circulated in Alabama and
Mississippi naming individuals whose claims have been paid and condemning
the 1999 settlement as a "rip-off" rooted in the federal government's
determination to pander to minorities.

"I think it is indicative of the hard feelings surrounding this case," said
J.L. Chestnut, an Alabama-based civil rights attorney representing the
black farmers. "In violation of all kinds of federal privacy laws, certain
right-wing groups put out these ridiculous pamphlets naming these people. I
haven't seen anything like this since the 1960s."

Officials appointed by U.S. District Judge Paul Friedman to handle the
settlement have received anonymous tips alleging widespread fraud among
those attempting to take part in the settlement.

The tips have prompted the FBI to contact several of the farmers who have
filed claims. The FBI declined to comment on the status of any
investigations, and lawyers in the case say no claimants have been charged
with fraud. Still, the FBI inquiries prompted lawyers for the farmers to
contact Justice and Agriculture Department officials about their concerns
that there are efforts to harass their clients.

"We know that white farmers are complaining," said Gary Grant, president of
the Black Farmers and Agriculturists Association, who has raised the issue
with Glickman. "They [think] that because we are being paid, they are being
discriminated against. Of course, this is ridiculous because we wouldn't be
here if we hadn't been discriminated against for all these years. If there
is any fraud here, it is on the part of the federal government."

Despite the size of the overall settlement, Grant and others say the claims
of too many black farmers--nearly 40 percent--are being rejected. About
half of those have asked a court-appointed monitor to review their cases.

Also, many farmers have complained that the adjudicators have been too slow
in processing cases and have applied inconsistent criteria in determining
which claims should be approved.

Some farmers also are being hit with enormous tax bills for the debt that
is being written off in connection with the settlement. For example, Grant
said his brother got a $ 96,000 tax bill for the farm debt that USDA
forgave as a condition of the settlement.

Several dozen black farmers aired those complaints in a rally on the
grounds of the Capitol. Reps. J.C. Watts (R-Okla.) and Jay Dickey (R-Ark.)
addressed the farmers, promising to reintroduce a nonbinding resolution
pointing to the "necessity to expedite" the settlement process. A similar
measure was defeated last month after Democrats labeled it a meaningless
measure aimed at currying support for Republicans among black farmers.

The settlement of the lawsuit filed in 1997 came after years of complaints
about the treatment of black farmers by USDA officials, particularly those
operating in rural outposts across the South.

Discrimination by USDA officials has been cited by civil rights advocates
and others as a major reason why the ranks of black farmers have dwindled
at more than three times the rate of white farmers. Blacks now account for
less than 1 percent of the nation's farmers.

Black farmers alleged that for years they were denied crop assistance or
government loans or given loans smaller than those awarded to white farmers
with similar credit histories. Farmers often borrow money to cover their
considerable operating expenses until their crops come in.

"This case really seems to bring up tremendous animosity. People are always
insinuating that somehow black people are cheating," said Alexander J.
Pires, a lawyer also representing the farmers. "But I tell you this, it
isn't black people who sit up at night figuring out how to farm the
[USDA's] programs." (The Washington Post, June 20, 2000)

WILLIAMS COMMUNICATIONS: Landowners Sue over Cable Installation
Shrier v. Williams was filed on August 4, 1999, in the U.S. District Court
for the Northern District of Oklahoma. Oxford v. Williams was filed on
September 3, 1999, in state court in Jefferson County, Texas.

The Oxford complaint was amended to add an additional plaintiff on
September 24, 1999. On October 1, 1999, the case was removed to the U.S.
District Court for the Eastern District of Texas, Beaumont Division.
Plaintiffs have filed a motion seeking to remand the case to state court.

In each lawsuit, the plaintiff seeks to bring a nationwide class action on
behalf of all landowners on whose property the plaintiffs have alleged
Williams Communications has installed fiber-optic cable without the
permission of the landowner. The plaintiffs are seeking a declaratory
ruling that Williams Communications is trespassing, damages resulting from
the alleged trespass, damages based on Williams Communications' profits
from use of the property and damages from alleged fraud. Relief requested
by the plaintiff includes injunction against further trespass, actual and
punitive damages and attorneys' fees.

Williams Communications believes that installation of the cable containing
the single-fiber network that crosses over or near the named plaintiffs'
land does not infringe on the plaintiffs' property rights. Williams
Communications also does not believe that the plaintiffs have sufficient
basis for certification of a class action. The proposed composition of the
class in the Oxford lawsuit appears to include only landowners who would
also be included in the class proposed in the Shrier suit.

Other communications carriers have been successfully challenged with
respect to their rights over railroad rights of way, which are also
challenged by the plaintiffs in Shrier and Oxford. Approximately 15 percent
of the Williams network is installed on railroad rights of way. In many
areas, the railroad granting Williams Communications the license holds full
ownership of the land, in which case its license should be sufficient to
give Williams Communications valid rights to cross the property. In some
states where the railroad is not the property owner but has an easement
over the property the law is unsettled as to whether a landowner's approval
is required.

Williams Communications did not generally obtain landowner approval where
its rights of way are located on railroad easements. In most states,
Williams Communications has eminent domain rights which it believes would
limit its liability for any trespass damages. It is likely that Williams
Communications will be subject to other purported class action suits
challenging its railroad or pipeline rights of way. Williams Communications
cannot quantify the impact of all such claims at this time. Thus, Williams
Communications cannot be certain that the plaintiffs' purported class
actions or other purported class actions, if successful, will not have a
material adverse effect.

Williams Communications is a party to various other claims, legal actions
and complaints arising in the ordinary course of business.


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

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

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

This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to be
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Additional e-mail subscriptions for members of the same firm for the
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