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                C L A S S   A C T I O N   R E P O R T E R

                 Thursday, June 22, 2000, Vol. 2, No. 121

                                Headlines

AMERICAN AIRLINES: Plans to Settle Frequent-Flier Suits with More Miles
AMERICAN GENERAL: To Pay for Race Bias in Insurance Fees, FL announces
AURA SYSTEMS: Mediation for '99 CA Securities Suit Set for June
AURA SYSTEMS: Settlement for '95 Securities Suit in CA Finally Approved
AUTO FINANCING: The Fincance's hidden finance charges Not Class Issue

BOSTON SCHOOL: Parents' Suit against Race-Based Assignment Plan is Moot
ENCORE MORTGAGE: NJ Prohibition on Prepayment Fees Preempted
JACKSON NATIONAL: Thwarts Class Certification The Third Time in 2 Years
JDN DEVELOPMENT: GA Homeowners Sue over Development of Shopping Center
JDN REALTY: Reporst on Pending Securities Lawsuits

LUCENT TECHNOLOGIES: NJ Ct Finds Lack of Objection to Lead Role Aloof
MAJOR LEAGUE: Ma Judge Deflates Soccer Players' Antitrust Suit
PREMCOR REFINERY: Dust Released Can Cause Minor Health Problems
PROFIT RECOVERY: Milberg Weiss Announces Securities Lawsuit in Georgia
PROVIDIAN FINANCIAL: May Pay $300 Mil in Regulators' Predator Probe

REED: Indiana Court OKs ADA Suit in Graduation Qualifying Exam Case
SOTHEBY'S: Baron Capital Concerned Board Nominees Too Close to Taubman
SYSTEM SOFTWARE: Continues to Defend Securities Suit in Fed Ct, IL
SYSTEM SOFTWARE: Under SEC Investigation over Revenue and Ch 11 Relief
TOBACCO LITIGATION: Australian High Court Rejects Appeal against BAT

TOTAL RENAL: Securities Suit Pending; Announces Operations Deivestiture

                                 *********

AMERICAN AIRLINES: Plans to Settle Frequent-Flier Suits with More Miles
-----------------------------------------------------------------------
American Airlines has agreed to settle two long-running class-action
lawsuits over its frequent-flier plan, which would result in extra miles or
discounts for more than 4 million travelers.

Fort Worth, Texas-based American, the nation's second-largest carrier, had
been accused of changing the terms of its AAdvantage frequent-flier program
without prior notification and thus lowering the value of miles earned.

In one lawsuit, filed in 1988, travelers said American made it more
difficult to book flights using mileage awards. The other lawsuit, filed in
1995, challenged American's move to increase from 20,000 to 25,000 the
number of miles needed to earn a free domestic coach ticket.

American spokesman Al Becker said the cost of the settlement can't be
calculated yet because it's unknown how many people will seek discounts.
But, he said, ''Clearly it will be tens of millions of dollars.'' Under
terms of the settlement, American did not admit liability, and Becker said
the company still believes it can make changes in the frequent-flier
program. ''But litigation is protracted, it's expensive and there are
uncertainties,'' he said. ''The time had come to settle the case once and
for all.''

Becker said the airline reached the settlement late last year and a judge
gave it preliminary approval in May and is expected to grant final approval
in September. The airline began mailing letters this week to the 4 million
AAdvantage members who may be eligible for the discounts or free miles.

To be eligible for the settlement, travelers must have accumulated 35,000
or more unredeemed miles before 1989 or earned miles in 1992 and 1993.
Eligible travelers would get certificates for up to 5,000 frequent-flier
miles or discounts of dlrs 25 to dlrs 75 on American flights. Gilbert W.
Gordon, lead lawyer for the plaintiffs, said an eligible passenger buying a
dlrs 250 ticket would get an average discount of dlrs 50.

American was the first major airline to offer a frequent-flier program,
beginning in 1981. Its success prompted rivals to offer similar plans. By
1988, demand for tickets and upgrades was so strong that American began to
limit the number of free seats available to frequent fliers on popular
flights. American said the settlement affects only a small share of its 35
million frequent-flier members. (AP Worldstream, June 21, 2000)


AMERICAN GENERAL: To Pay for Race Bias in Insurance Fees, FL announces
----------------------------------------------------------------------
American General Corp., one of the nation's largest life insurance
companies, has agreed to pay $206 million in restitution to settle claims
it charged blacks more for insurance than whites, Florida officials
announced Wednesday.

Florida Insurance Commissioner Bill Nelson said American General Corp.
would reduce premiums, pay cash refunds, and increase benefits to 9.1
million policyholders and beneficiaries under the terms of a 120-page
regulatory agreement. "It's tragic that this kind of discrimination and
exploitation occurred in the first place," Nelson said at a news
conference. "It's incomprehensible that this practice continued up until
recent days."

Florida officials had charged that American General sold industrial life
insurance on a discriminatory basis during the 1950s and 1960s. They said
the policies were never adjusted to end the discrimination.

Earlier this month, the National Association of Insurance Commissioners
agreed to let Nelson seek a settlement with American General on their
behalf. Officials from several other states joined Nelson for the
announcement.

Under terms of the agreement, the Nashville-based company also said it
would pay $7.5 million to regulators in states where it does business. It
also agreed to contribute $2 million to the National Association for the
Advancement of Colored People. In the settlement, American General neither
admits nor denies that it violated state insurance laws. The company said
it would contact policyholders about the agreement.

Nelson praised American General for complying with an April order to stop
discriminatory premium collections. He urged four other industrial life
insurance companies that his office has been investigating to make
restitution to policyholders. "If they delay and obfuscate, it will only
cost them," Nelson said.

Earlier Wednesday, American General reached a settlement in a class-action
lawsuit that alleged discrimination and other abuses in the sale of
small-value life insurance. (United Press International, June 21, 2000)


AURA SYSTEMS: Mediation for '99 CA Securities Suit Set for June
---------------------------------------------------------------
On November 12, 1999, a lawsuit was filed by three investors against Aura
and Zvi Kurtzman, Aura's Chief Executive Officer, in Los Angeles Superior
Court entitled Excalibur Limited Partnership v. Aura Systems, Inc. (Case
No. BC220054) arising out of two NewCom, Inc. financings consummated in
December 1998.

The NewCom financings comprised (1) a $3 million investment into NewCom in
exchange for NewCom Common Stock, Warrants for NewCom Common Stock, and
certain "Repricing Rights" which entitled the investors to receive
additional shares of NewCom Common Stock in the event the price of NewCom
Common Stock fell below a specified level, and (2) a loan to NewCom of $1
million in exchange for a Promissory Note and Warrants to purchase NewCom
Common Stock. As part of these financings Aura agreed with the investors to
allow their Repricing Rights with respect to NewCom Stock to be exercised
for Aura Common Stock, at the investors' option. Aura also agreed to
register Aura Common Stock relating to these Repricing Rights.

The Plaintiffs allege in their complaint that Aura breached its agreements
with the Plaintiffs by, among other things, failing to register the Aura
Common Stock relating to the Repricing Rights. The Plaintiffs further
allege that Aura misrepresented its intention to register the Aura shares
in order to induce the Plaintiffs to loan $1.0 million to NewCom. The
Complaint seeks damages of not less than $4.5 million. In January 2000 Aura
filed counterclaims against the Plaintiffs, including claims that the
Plaintiffs made false representations to Aura in order to induce Aura to
agree to issue its Common Stock pursuant to the Repricing Rights. The
parties have agreed to submit this matter to mediation on June 28, 2000.
The Company believes that it has meritorious defenses and counterclaims to
the Plaintiffs' allegations. However, no assurances can be given as to the
ultimate outcome of this proceeding.


AURA SYSTEMS: Settlement for '95 Securities Suit in CA Finally Approved
-----------------------------------------------------------------------
In May, 1995 two lawsuits naming Aura, certain of it directors and
executive officers and a former officer as defendants, were filed in the
United States District Court for the Central District of California,
Barovich v. Aura Systems, Inc. et. al. (Case No. CV 95-3295) and Chiau v.
Aura Systems, Inc. et. al. (Case No. CV 95-3296), before the Honorable
Manuel Real. The complaints purported to be securities class actions on
behalf of all persons who purchased common stock of Aura during the period
from May 28, 1993 through January 17, 1995, inclusive. The complaints
alleged that as a result of false and misleading information disseminated
by the defendants, the market price of Aura's common stock was artificially
inflated during the class period. The complaints were consolidated as
Barovich v. Aura Systems, Inc., et. al.

A settlement agreement for this proceeding was submitted to the Court on
July 20, 1998, for preliminary approval, at which time the Court denied the
plaintiffs' motion for approval of the settlement. On September 22, 1998,
the Company and certain of its officers and directors renoticed their
motion for summary judgment. Thereafter, on January 8, 1999, the plaintiffs
and the defendants in the Barovich action executed a Stipulation of
Settlement pursuant to which the Barovich action would be settled in return
for payments by Aura and its insurer to the plaintiff's settlement class
and plaintiff's attorneys in the amount of $2.8 million in cash (with
$800,000 to be contributed by Aura and $2 million to be contributed by
Aura's insurer, subject to a reservation of rights by the insurer against
the insureds) and $1.2 million in cash or common stock, at the Company's
option, to be paid by Aura. Subsequently the parties and the insurer
entered into an amended settlement agreement. As amended the settlement
calls for the total settlement amount of $4 million to remain the same,
with the insurer contributing $1.8 million, and the remaining $2.2 million
to be paid by Aura in cash over a period of three years, with accrued
interest at the rate of 8% per annum. The settlement was preliminarily
approved by the Court on December 6, 1999, and finally approved in or about
April, 2000.

                           Morganstein v. Aura

On April 28, 1997, a lawsuit naming Aura, certain of its directors and
officers, and the Company's independent accounting firm was filed in the
United States District Court for the Central District of California,
Morganstein v. Aura Systems, Inc., et. al. (Case No. CV 97-3103), before
the Honorable Steven Wilson. A follow-on complaint, Ratner v. Aura Systems,
Inc., et. al. (Case No. CV 97-3944), was also filed and later consolidated
with the Morganstein complaint. The consolidated amended complaint purports
to be a securities class action on behalf of all persons who purchased
common stock of Aura during the period from January 18, 1995 to April 25,
1997, inclusive. The complaint alleges that as a result of false and
misleading information disseminated by the defendants, the market price of
Aura's common stock was artificially inflated during the Class Period. The
complaint contains allegations which assert that the company violated
federal securities laws by selling Aura Common stock at discounts to the
prevailing U.S. market price under Regulation S without informing Aura's
shareholders or the public at large.

In June, 1998, the Court entered an order staying further discovery in
order to facilitate completion of settlement discussions between the
parties. On October 12, 1998, the parties entered into a stipulation for
settlement of all claims, subject to approval by the Court. Under the
stipulation for settlement Aura agreed to pay $4.5 million in cash or
stock, at Aura's option, plus 3.5 million warrants at an exercise price of
$2.25. In addition, Aura's insurance carrier agreed to pay $10.5 million.
The settlement was finally approved by the Court in October 1999 and was
thereafter amended in December 1999 to allow Aura to defer payment of the
settlement amount until April 2000 in exchange for an additional 2 million
shares of Aura Common Stock,  subject to certain adjustments.The deferral
resulted from the limitation on the number of shares authorized. The final
distribution of stock and warrants to class members occured in April and
May 2000.


AUTO FINANCING: The Fincance's hidden finance charges Not Class Issue
---------------------------------------------------------------------
Claims that a finance company differentiated between cash and credit
customers in automobile sales throughout the state of Ohio could not be
brought as a class action because questions common to the members of the
class did not predominate over questions affecting only individual members.
(Hinkston v. The Finance Co., No. C-980972 (Ohio Ct. App. 5/12/00).)

Karen Hinkston purchased an automobile from Mills Used Cars Inc. Although
the price on the windshield was 5,900, the salesman told Hinkston that she
would have to pay more because she "had bad credit." Hinkston agreed to buy
the car for 7,995. At the time of the purchase, Mills and The Finance Co.
had a "Master Deal Agreement" where Finance Co. agreed to purchase retail
installment contracts entered into between Mills and its customers. Under
the agreement, Finance Co. would pre-approve the terms of sales contracts
and, after the sale, purchase the contract from Mills at a discounted
price.

Alleging that Ohio used car purchasers who received financing through
Finance Co. paid higher prices than they would have if the cars had been
sold for cash, Hinkston sued Finance Co. in state court for violations of
Ohio's Retail Installment Sales Act. According to Hinkston's class action
complaint, the price increases for credit purchasers were actually finance
charges that were not disclosed in the sales contract, as required by the
act.

Stating that she failed to satisfy almost all of the prerequisites to
maintaining a class action under Ohio law, the trial court denied
Hinkston's motion for class certification. Although the Ohio Court of
Appeals disagreed with the trial court regarding some of the class action
prerequisites, the Court of Appeals affirmed the trial court's judgment
because it found that Hinkston failed to demonstrate the elements of
predominance and superiority.

                              Prerequisites

The Court of Appeals began its analysis by identifying the requirements
under Ohio law for maintaining a class action: "(1) an identifiable class
must exist and the definition of the class must be unambiguous; (2) the
named representatives must be members of the class; (3) the class must be
so numerous that joinder of all members is impracticable; (4) there must be
questions of law or fact common to the class; (5) the claims or defenses of
the representative parties must be typical of the claims or defenses of the
class; (6) the representative parties must fairly and adequately protect
the interests of the class; and (7) one of the three [Ohio] Civ. R. 23(B)
requirements must be met."

Examining each requirement individually, the Court of Appeals held that
Hinkston satisfied all but the last. Although the trial court ruled that
Hinkston failed to prove an identifiable class, the Court of Appeals
observed, "A proposed class consisting of purchasers of used cars in Ohio
that were financed by [Finance Co.] during a specific period is readily
identifiable from business records." The Court of Appeals also held that
Hinkston proved she was a member of the class she sought to represent.

Noting that records produced by Finance Co. revealed at least 623 possible
class members, the Court of Appeals stated that such a number "alone" was
sufficient to establish that the class was so numerous that joinder of all
members was impracticable. The court also found that Hinkston identified a
common nucleus of facts and a common liability issue. Explaining that
"[t]he requirement for typicality is met where there is no express conflict
between the class representatives and the class," the court found no
apparent conflict between Hinkston's claim and the claims of those she
sought to represent. The court also found Hinkston to be an adequate
representative of the class.

                       Predominance and Superiority

Ohio Civ. R. 23(B) describes three types of class actions. Hinkston argued
that this action qualified under the category "which requires findings that
'the questions of law or fact common to the members of the class
predominate over any questions affecting only individual members, and that
a class action is superior to other available methods for the fair and
efficient adjudication of the controversy.'" The Court of Appeals
disagreed.

First, the court rejected Hinkston's "economic theory" designed to simplify
the case for purposes of presenting it as a class action. According to the
court, the definition of "cash price" in Hinkston's theory conflicted with
the definition found in the Retail Installment Sales Act. Further, because
the trial court would have to consider varying facts and circumstances,
such as the negotiating skills of the customer and the business practices
of the dealer, to determine whether the purchaser in any given transaction
actually paid a higher price than she would have if the car had been sold
for cash, the Court of Appeals held that questions common to the members of
the class did not predominate over questions affecting only individual
members.

"The claims are better suited for individual actions in the counties in
which the dealers do business," the court concluded.

Stephen Felson of Felson & Felson in Cincinnati, represented Hinkston.
Grant S. Cowan and Frederick J. McGavran of Frost & Jacobs L.L.P. in
Cincinnati, represented Finance Co. (Consumer Financial Services Law
Report, June 12, 2000)


BOSTON SCHOOL: Parents' Suit against Race-Based Assignment Plan is Moot
-----------------------------------------------------------------------
US District Court Judge Nancy Gertner indicated on June 20 that a lawsuit
filed by parents of white students who want the Boston school system's
race-based assignment plan abolished is moot, since the school system has
abandoned the plan.

Speaking from the bench during a scheduling conference, Gertner told
attorneys for Boston's Children First that a school assignment plan used
this April eliminated race as a consideration, which means that the
constitutional rights of the white children are not being flouted. "I don't
see the law there now," Gertner said. "And I don't see the case there now."

She told attorneys Chester Darling and Michael Williams that lacking
evidence that individual white students are being harmed, there is no legal
basis for the litigation. At the conference, School Committee lawyer
Frances Cohen agreed to hand over records on the individual plaintiffs.

Simply making the sweeping claim that white children were denied their
constitutional rights during years of race-based school assignments is not
enough to win, she said. "[You] are pushing the envelope on the law here,"
she told Williams and Darling of the non-profit group Citizens for the
Preservation of Constitutional Rights, Inc. "I can't do anything unless you
have people in front of me who are, in fact, harmed."

In court, Williams told Gertner that five clients continue to suffer the
loss of their constitutional rights because the school department illegally
relied on race when drawing up its school assignments for the
just-completed school year.

Those children will have to wait several years before they get another
chance at the schools they wanted to attend, he said.

Williams and Darling said Gertner should have ruled by now on whether the
case could continue as a class action suit. Such a suit would let them
represent plaintiffs who have been hurt by the 25-year policy. But Gertner
told the lawyers they would have to file a new motion on the class-action
request. "It's a travesty," said Darling. "We have a constitutional injury
against a very large group of children because of their color, and that is
not what was being addressed in court."

Gertner did not dismiss the case, however, but instead scheduled further
hearings for July 6. (The Boston Globe, June 21, 2000)


ENCORE MORTGAGE: NJ Prohibition on Prepayment Fees Preempted
------------------------------------------------------------
The U.S. District Court for the District of New Jersey held in Shinn, et
al. v. Encore Mortgage Services Inc., et al., No. 99-5773 (JEI) (D. N.J.
5/8/00), that the Alternative Mortgage Transaction Parity Act preempts a
New Jersey law which prohibits prepayment fees on adjustable rate loans.

Stanley and Catherine Shinn borrowed 74,900 from Encore Mortgage Services
Inc. to buy their home. They executed an adjustable rate note with a
prepayment penalty addendum. The prepayment penalty addendum provided that
in the event the mortgage was prepaid in full during the first 36 months of
the loan, the Shinns agreed to pay a prepayment fee.

Encore assigned the mortgage and note to Sterling Home Mortgage Co.
However, 45 days after their loan closing with Encore, the Shinns
refinanced with Champion Mortgage. The Shinns paid off their Sterling
mortgage and paid a penalty.

Subsequently, the Shinns sued Encore and Sterling under New Jersey's
prepayment law, N.J.S.A. 46:10B-1 et seq., the New Jersey Consumer Fraud
Act and the Truth in Lending Act.

In their class action complaint, the Shinns alleged that state law
prohibits residential mortgage lenders from charging prepayment fees.

Sterling moved to dismiss. Sterling asserted that its contractual right to
collect a prepayment fee was not affected by the Prepayment Law because:
(1) the law is preempted by the Parity Act; (2) both New Jersey's usury law
and the federal Depository Institutions Deregulation and Monetary Control
Act of 1980 authorize interest charges in excess of 6 percent per year; and
(3) the Prepayment Act permits lenders to charge a prepayment fee on loans
that are repaid in full within the first 18 months of the loan term.

In support of its motion, Sterling relied on the portion of the Prepayment
Law which states, "This Act shall not apply to loans secured by a mortgage
on real property the prepayment of which is governed by another statute of
this state or of the United States, nor shall it apply to any loans secured
by mortgage on real property, made pursuant to any statute of this State or
the United States expressly authorizing interest charges in excess of 6
[percent] per annum." According to Sterling, both the DIDA and New Jersey's
usury statute authorize interest charges in excess of 6 percent.

The District Court disagreed with Sterling's interpretation of the
prepayment law. The court explained that Section 10B-2 of the act states
that "[p]repayment of a mortgage loan may be made by or on behalf of a
mortgagor at any time without penalty." If the court accepted Sterling's
argument it reasoned that Section 10B-2 would have no effect. Thus, the
court interpreted the phrase "secured by a mortgage on real property" in
Section 10B-9 to encompass only loans secured by an interest in real
property, which does not contain a structure containing between one and six
units.

                              Preemption

After finding that the Prepayment Act applied to the Shinns' loan, the
District Court nonetheless ruled that the Parity Act preempted the
prepayment law. The Parity Act authorizes all housing lenders to make,
purchase, and enforce alternative mortgage transactions so long as the
transactions are in conformity with federal regulations. It preempts any
state law that prohibits alternative mortgage transactions.

In opposition to Sterling's motion, the Shinns argued that the Office of
Thrift Supervision regulations, that housing creditors are required to
comply with under the Parity Act, were improperly promulgated. They
contended that the OTS director's authority to issue regulations with
respect to state housing lenders was limited to a 60-day period immediately
following the passage of the Parity Act. Because New Jersey did not opt-out
of the Parity Act "to allow the OTS to amend those regulations applicable
to state housing creditors after the opt-out period had expired would
'sandbag' New Jersey into accepting the Parity Act without realizing its
true effects."

                              Opt-out period

The District Court sided with Sterling and held that the statute contains
no "temporal limit" on the OTS's rulemaking authority. The OTS regulations
clearly preempt state prepayment fee laws for adjustable rate mortgage and
other loans made by housing lenders covered by the Parity Act, said the
court. Judge Joseph Irenas noted, "In failing to opt-out of the Parity Act,
New Jersey chose to accept the federal 'regime.' It cannot now rescind its
decision to accept the Act's preemption merely because it disagrees with
the OTS's current regulations."

Lewis Adler of Woodbury, N.J., represented the plaintiffs. Michael D. Sinko
of Sinko & Eisner in Haddonfield, N.J., represented Encore. George E.
McDavid, Dan Mateo and Robert Jaworski of Reed, Smith, & Shaw & McClay LLP
in Princeton, N.J., represented Sterling. (Consumer Financial Services Law
Report, June 12, 2000)


JACKSON NATIONAL: Thwarts Class Certification The Third Time in 2 Years
-----------------------------------------------------------------------For
For the third time in two years, attorneys for Jackson National Life
Insurance Co. have thwarted efforts to certify a federal class action
against the company.

At the heart of the case are allegations that sales materials produced by
Jackson National misled consumers into thinking they would only have to pay
life insurance premiums for a set number of years.

Plaintiffs' attorneys allege that agents for Jackson National highlighted
optimistic projections, convincing consumers that returns on invested
premiums eventually would be sufficient to cover premiums. The optimistic
assumptions did not bear out, and consumers sued, claiming they had been
misled.

U.S. District Judge David W. McKeague, of the Western District of Michigan
(Southern Division), recently ruled that the plaintiffs in the case did not
meet the criteria for class certification. Spragins v. Jackson National
Life Insurance Co., No. 5:99-CV-30 (W.D. Mich.).

                           Millions at Stake

Jackson National's lead counsel, Joel Feldman, of Chicago's Sachnoff &
Weaver Ltd., noted that other leading life insurance companies have paid up
to $ 1 billion to settle similar cases in recent years. "We decided not to
settle because we investigated and knew we didn't do anything wrong at a
corporate level," Mr. Feldman said. "We also knew that these cases did not
qualify for class certification at the federal level."

Bill Holmes, senior litigation partner at Warner, Norcross and Judd in
Grand Rapids, Mich., argued the case for Jackson National. Every case is
different, but there are probably a lot of companies that settled similar
cases that didn't need to," he said.

Plaintiffs' attorney Stephen Hubbard, of the Dallas firm of Hubbard and
Biederman, said that no decision has been made whether to appeal the case
-- but he strongly disagreed with the ruling. "We think the judge was wrong
when millions of policyholders have been certified for class action in
other cases with very similar facts," he said. (The National Law Journal,
June 19, 2000)


JDN DEVELOPMENT: GA Homeowners Sue over Development of Shopping Center
----------------------------------------------------------------------
On April 28, 2000, Lake Lucerne Estates Civic Club, Inc., a nonprofit
homeowners association located in Gwinnett County, Georgia, and a number of
individual plaintiffs, filed suit against JDN Development, Lowe's
Companies, Inc., and Haygood Contracting, Inc. The suit was filed in the
Superior Court of Fulton County, Georgia. The complaint asserts trespass,
nuisance and negligence against JDN Development in connection with the
development of a shopping center anchored by Lowe's. JDN Development
believes that it has meritorious defenses to the claims and intends to
vigorously defend the suit.


JDN REALTY: Reporst on Pending Securities Lawsuits
--------------------------------------------------
JDN Realty Corp., which is facing a number of securities lawsuits as
previously reported in the CAR, gives a review of the litigation that the
company is facing in its report to the SEC.

The report says that on February 14, 2000, the Company announced that it
had discovered certain undisclosed compensation arrangements and related
party transactions, which were not accurately recorded in the accounting
records of JDN Development and the Company and were not accurately recorded
or disclosed in the audited financial statements of the Company as of and
for the years ended December 31, 1994 through 1998. For a more complete
discussion of these matters, please see the discussion under the caption
"Executive Compensation" in Item 11 of this report and "Certain
Relationships and Related Transactions" in Item 13 of this report.

Since the Company's announcement on February 14, 2000, a number of class
action lawsuits have been filed against the Company in federal and state
court. One or more of these suits also names as defendants JDN Development
and certain current and former officers and directors of JDN Development
and/or the Company, including Jeb L. Hughes, C. Sheldon Whittelsey, IV, J.
Donald Nichols, Elizabeth L. Nichols, William J. Kerley, Leilani L. Jones,
Craig Macnab, and Haywood D. Cochrane, Jr.

The class actions filed in federal court allege violations of the federal
securities laws and allege that, by failing to report the undisclosed
compensation, unauthorized benefits and related party transactions to the
public in the Company's financial statements, public filings, and
otherwise, the defendants made or participated in making material
misstatements or omissions which caused the plaintiffs to purchase the
Company's stock at an artificially inflated price. The plaintiffs seek
compensatory damages of an indeterminate amount, interest, attorneys' fees,
experts' fees and other costs and disbursements. The federal class actions
are pending in the United States District Court for the Northern District
of Georgia and are expected to be consolidated.

A class action lawsuit has also been filed by the Company's shareholders
against the Company, JDN Development and four former officers and directors
of these companies (Jeb L. Hughes, C. Sheldon Whittelsey, IV, J. Donald
Nichols and William J. Kerley) in the Superior Court of Fulton County,
Georgia. The complaint contains substantially the same factual allegations
asserted in the federal class actions, but purports to seek relief under
state law. The complaint contains claims of common law fraud, conversion
and purported violations of Georgia's Racketeer Influenced and Corrupt
Organizations Act. In the state court class action, the plaintiffs seek
compensatory and punitive damages, attorneys' fees and expenses, interest
and equitable relief.

Another class action lawsuit has been filed by several individual holders
of the Company's preferred stock against J. Donald Nichols and Elizabeth L.
Nichols, alleging violations of the federal securities laws. The Company
and JDN Development have not been named as defendants in this lawsuit,
which is pending in the United States District Court for the Middle
District of Tennessee.

The Company says the timing of the final resolution of these proceedings is
uncertain.

The SEC has contacted the Company and has requested the voluntary
production of certain documents and other information regarding the
compensation arrangements, unauthorized benefits and related party
transactions discussed in Item 7 of this report, and the Company is
cooperating with the SEC in responding to this request. Regulatory agencies
and self- regulatory organizations such as the SEC, the New York Stock
Exchange, the Internal Revenue Service and state tax authorities may seek
to impose fines, penalties or other remedies against the Company. The
imposition of any such fines, penalties or other remedies could have a
material adverse impact on the Company.


LUCENT TECHNOLOGIES: NJ Ct Finds Lack of Objection to Lead Role Aloof
---------------------------------------------------------------------
In re Lucent Technologies, Inc. Securities Litigation, No. 00-621; United
States District Court (DNJ); opinion by Lechner, U.S.D.J.; filed April 26,
2000. DDS No. 50-7-3792

The intent of the notice requirement of 15 U.S.C. * 78u- 4(a)(3)(A) is to
fairly explain the subject matter of the class action so as to inform all
members of the class of their opportunity to be heard with regard to
serving as lead plaintiff, and neither meaningless language nor attorney
advertisement is appropriate for such a notice; in addition to providing
information concerning the pendency of the class action, the claims of the
action should be described, the class period should be set out, alleged
misstatements or omissions should be described together with release dates
of such disclosure, and the possibility of intra-class conflicts among
potential class members should be described; here, because notice is
inadequate, a new notification must be given via publication in The Wall
Street Journal, together with a direct mailing to all known members of the
proposed class.

Additionally, with respect to class representation, the only common point
among the proposed lead plaintiffs here appears to be proposed lead
counsel, which is insufficient; the court is under no obligation to accept
the individual shareholders as proposed lead plaintiffs along with the
pension trust fund merely because there is no opposition by other members
of the proposed class to this group representation; the provisional
appointment of the pension trust fund meets the important goal of having an
institutional investor to serve as lead plaintiff in securities class
actions.

This is an action for securities fraud brought on behalf of purchasers of
Lucent Technologies, Inc. common stock seeking damages for violations of
Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended,
15 U.S.C. ** 78j(b) and 78t(a), and Rule 10-b, promulgated thereunder, 17
C.F.R. * 240.10b-5. Damages are sought from Lucent, Richard A. McGinn and
Donald Peterson.

Presently pending are motions for the appointment of lead plaintiffs and
approval of the selection of lead counsel, pursuant to * 21D(a)(3)(B) of
the Exchange Act, as amended, 15 U.S.C. * 78u-4(a)(3)(B). The Lead
Plaintiffs Motion and the Lead Counsel Motion were filed on behalf of
Employer- Teamsters Locals 175 & 505 Pension Trust Fund, Huisuk Clevenger,
and Marc Altman (the Proposed Lead Plaintiffs) by both the Proposed Lead
Plaintiffs and certain other class members representing the purchase of
more than 700,000 shares of Lucent Stock.

McGinn is the President, Chief Executive Officer and Chairman of the Board
of Directors of Lucent. Peterson is the Chief Financial Officer and
Executive Vice President. Because of their positions with Lucent, they are
alleged to have been involved in drafting, producing, reviewing and, or,
disseminating the false and misleading statements and information alleged
in the Kaufman Complaint. They are also alleged to have approved or
ratified the false and misleading statements which were issued regarding
Lucent in violation of Federal securities law.

The Proposed Lead Plaintiffs are offered as a group consisting of the
Pension Trust Fund, Clevenger and Altman. The individual Proposed Lead
Plaintiffs have expressed a willingness to serve as lead plaintiffs in the
instant action. As required by 15 U.S.C. * 78u-4(a)(2)(A), each Proposed
Lead Plaintiff executed a certification attesting to its or his willingness
to serve as a representative party in the matter. Each of the Proposed Lead
Plaintiffs certified that it or he had reviewed the complaint and
authorized its filing, had not purchased shares of Lucent Stock at the
direction of counsel or in order to participate in the litigation, was
willing to be a representative and if necessary testify at deposition and
trial, had not served or sought to serve as a representative party for a
class in an action filed under the Federal securities laws within the last
three years, and would not accept any payment for serving as a
representative party.

The instant action is a consolidation of several cases filed against
Lucent, McGinn and Peterson seeking to recover for alleged violations of
the Exchange Act. Proposed Lead Plaintiffs filed the Lead Plaintiffs Motion
and Lead Counsel Motion on 7 March 2000. No other party filed a motion for
appointment of lead plaintiffs or selection of lead counsel.

It is alleged Defendants disseminated materially false and misleading
information concerning the financial condition of Lucent in order to
artificially inflate the price of Lucent Stock. It is further alleged that
a plan for reorganization was implemented by Defendants to mask internal
problems, including declining demand and margins and escalating costs.

On 6 January 2000, Lucent announced that results for the first fiscal
quarter of 2000 would fall materially short of analysts expectations. In
composite after-hours trading on 6 January 2000, the price of Lucent shares
fell as much as 27.89% to close at $52.19 per share. The trading volume on
Lucent Stock was overmore than 2121 million shares.

Congress, through the the Private Securities Litigation Reform Act of 1995
(PSLRA), sought to ensure more effective representation of investor
interest in private securities class actions by transferring control of
such lawsuits from the class action attorneys to the investors. Simply
stated, the purpose behind the PSLRA is to "'empower investors so that
they, not their lawyers, control private securities litigation' by allowing
the Court to ensure the transfer of 'primary control of private securities
litigation from lawyers to investors.'"

The PSLRA provides a method for identifying the plaintiff, or plaintiffs,
who is, or are, the most strongly aligned with the class of shareholders,
and most capable of controlling the selection, and actions, of counsel. In
so providing, the PSLRA replaced the outdated practice of selecting
representative plaintiffs by a "race to the courthouse," with a selection
system which focuses on the adequacy of the representative.

The Kaufman Action was the initial actionfirst case filed. Pursuant to
Section 21D(a)(3)(A)(i), the plaintiff in the Kaufman Action published the
notice of pendency of the instant action (the "Notice of Pendency") in a
widely-circulated national business-oriented wire service, the Business
Wire. The Proposed Lead Plaintiffs filed the pending Lead Plaintiffs
Motion, as required under Section 21D(a)(3)(B)(II)(aa), on 7 March 2000.
Accordingly,t

It is difficult to understand how a member of the class could determine
from the Notice of Pendency its, his or her interest in the case and how
such a class member could decide whether it would be appropriate, or
necessary, to move the court to act as lead plaintiff.

Viewed in the best light this four paragraph, six sentence Notice of
Pendency is a bare bones notification. It advises investors only of the
facts that a class action lawsuit against Lucent has been filed and that
the lawsuit is on behalf of a class of persons who purchased the common
stock of the company between 27 October 1999, and 6 January 2000. The
third, two sentence paragraph states only that the complaint alleges
violations of Section 10(b) and Section 20(a) of the Exchange Act and Rule
10(b) promulgated under the Exchange Act. Moreover, it only generally
refers to "a series of materially false and misleading statements" without
detailing either the content or dates of such statements.

In the last paragraph, the Notice of Pendency merely advises that a member
of the class can move the court to serve as lead plaintiff if certain legal
requirements are met. It does not even summarily describe the legal
requirements.

It appears the Notice of Pendency was published with such haste that the
notice provides neither the caption of the case, nor the name of the
plaintiffs, nor the name of the judge to whom the case was assigned, nor
the address of the court, nor even a mention of the vicinage within the
District where the suit was venued. The Notice of Pendency failed to
include, and describe, the important aspects of the case.

A studied review of the Notice of Pendency would leave an interested class
member wondering about not only the details of the complaint but where it,
he or she could file the mentioned motion to seek appointment as lead
plaintiff. It appears this was the design of the Notice of Pendency. It
does not appear the purpose of the notification was to actually inform
class members but rather to accumulate class members. This conclusion is
evident from the other detailed language in the notice.

The second paragraph of the Notice of Pendency solicits communication from
a class member concerning the action, questions about the notice or
questions about a class member's rights or interests concerning the action.
Any interested class member could not help but have a series of questions
upon reading such a vague, inadequate document.

The firm effecting publication of the Notice of Pendency, Milberg Weiss
Bershad Hynes & Lerach ("Milberg Weiss") went to significant effort to
provide the names of three Milberg Weiss attorneys, the street address of
Milberg Weiss, a toll free, 800 telephone number, e-mail address and a web
site. Apparently, in an effort not to lose a marketing opportunity, the
e-mail address is crafted to itself catch the eye of a potential class
member: "endfraud@_ _ _ _ _ _ _.com."

Not content with the vague content of a notification apparently designed
primarily to accumulate members of the class rather than to inform, class
members are also directed to the "Shareholder Relations Dept." at Milberg
Weiss. The Notice of Pendency is an effort at marketing; the focus should
be on drafting an early, adequate, informative notification to class
members so that a class member could decide whether to move the court to
serve as lead plaintiff.

The intent of the * 78u-4(a)(3)(A) notice requirement is to fairly explain
the subject matter of the class action so as to inform all members of the
class of their opportunity to be heard, in this instance with regard to
serving as lead plaintiff. Neither meaningless language nor attorney
advertisement is appropriate for such a notice.

In addition to providing information concerning the pendency of the class
action, the claims of the action should be described, the class period
should be set out, the misstatements or omissions alleged should be
described together with release dates of such disclosure and, as well, the
possibility of intra-class conflicts among potential class members who
purchased the stock of the company at various intervals throughout the
proposed period should be described. This information should be in detail
sufficient to permit an interested class member to decide whether to seek
appointment as lead plaintiff. If there are several misstatements or
omissions which the complaint allege affected the trading price of the
security at issue, the differing effect of each such misstatement or
omission should also be described in detail.

Held: Accordingly, because the Notice of Pendency in this case is
inadequate, new notification will be given via publication in The Wall
Street Journal, together with a direct mailing of such notification to all
known members of the Proposed Class. Before such re-notification, counsel
for Kaufman are directed to draft a new notice of pendency ("The Second
Notice of Pendency") and submit same to the court, and counsel for
Defendants for comment.

A presumption of adequacy arises when the "group of persons" having the
largest financial interest among the named plaintiffs in the class action
seeks appointment as lead plaintiff. See 15 U.S.C. *
78u-4(a)(3)(B)(iii)(I)(bb). The PSLRA neither explains the term "largest
financial interest" nor provides guidance as to how such a determination is
made.

Although Proposed Lead Plaintiffs do not have the largest financial
interest in the Proposed Class, Proposed Lead Plaintiffs do have a
significant financial interest and their application is unopposed.

During the Proposed Class Period, the Proposed Lead Plaintiffs purchased
18,000 shares of Lucent Stock. Collectively, the Proposed Lead Plaintiffs
estimate their losses as a result of the securities violations alleged in
the instant action as $256,203.40. Pursuant to the PSLRA, a District Court
has a duty to determine whether a lead plaintiff or a group of such
plaintiffs can actually oversee the conduct of the litigation and, as well,
monitor the effectiveness and efficiency of counsel.

The PSLRA requires that the Proposed Lead Plaintiffs demonstrate they
"otherwise satisf(y) the requirements of Rule 23 of the Federal Rules of
Civil Procedure (("Rule 23"))."

The Proposed Lead Plaintiffs have demonstrated, at this preliminary stage,
typicality.

The Proposed Lead Plaintiffs argue the typicality requirement has been met
because the Proposed Lead Plaintiffs and the other members of the Proposed
Class purchased Lucent Stock on the open market during the Proposed Class
Period at prices allegedly artificially inflated by the false and
misleading statements issued by Defendants and suffered damages thereby.

The Kaufman Complaint contains allegations and a recitation of facts which
are similar, if not identical, to the other class action complaints filed
against the Defendants before the consolidation of this matter. The legal
claims and legal theories of the Proposed Lead Plaintiffs are not so
"markedly different" from those of other class members, so as to render
them atypical.

The adequacy of the representation requirement presents an inquiry that
reaches beyond the factual allegations and legal theories of a complaint.

Adequacy, for purposes of the lead plaintiff determination, is contingent
upon both the existence of common interests among the proposed lead
plaintiffs and the class, and a willingness on the part of the proposed
lead plaintiff to vigorously prosecute the action. The adequacy of
representation inquiry serves to uncover conflicts of interest between
named parties and the class they seek to represent.

In order to assist the court in determining whether several proposed lead
plaintiffs are in fact capable of performing as a group, such proposed
group should provide the court with information pertaining to its members,
its structure and how it will function. More precisely, the information
should encompass, at minimum, a description of the members, an explanation
of how the group was formed, whether there was a pre-existing relationship
among any of the members and how the group intends to handle communications
among its members and with lead counsel.

In the instant matter, no such information has been offered by the Proposed
Lead Plaintiffs, either individually or collectively. It is not clear
whether the Pension Trust Fund, Clevenger and Altman even know that they
have been offered as a group. The only inference that can be drawn from the
submissions is that each of the Proposed Lead Plaintiffs has a connection
to the Proposed Lead Counsel. Presently, the only common point among the
Proposed Lead Plaintiffs appears to be Proposed Lead Counsel, and that is
not sufficient. This situation raises the question: who has the greater
interest in this lawsuit Proposed Lead Plaintiffs or Proposed Lead Counsel?

Congress intended the creation of the lead plaintiff provision to encourage
institutional investors to seek out a more active role in securities action
lawsuits. Congress determined that increasing the role of institutional
investors in such actions would improve the quality of representation, thus
benefitting shareholders and assisting courts. Congress 'intended that the
lead plaintiff provision (would) encourage institutional investors to take
a more active role in securities action lawsuits .... (because) Congress
'believed that increasing the role of institutional investors in class
actions will ultimately benefit shareholders and assist courts by improving
the quality of representation in securities class actions.' In re Baan, 186
F.R.D. 214, 221 (D.D.C. 1999)(citing

The court is under no obligation to accept Altman or Clevenger as a
proposed lead plaintiff merely because their proposed appointment is
unopposed by other members of the Proposed Class.

Finally, the Proposed Lead Plaintiffs have failed to demonstrate how they
would cooperate efficiently or how the leadership issue would be handled so
that control of counsel would be maximized despite the existence of several
lead plaintiffs.

The Pension Trust Fundthe purchased during the Proposed Class Period, and
apparently retains, 11,500 shares of Lucent Stock. Appointing the Pension
Trust Fund as the sole lead plaintiff would certainly be is consistent with
one reading of the PSLRA.

Accordingly, based upon the submissions, it appears the member of the
Proposed Class "most capable of adequately representing the interests of
the class members," is the Pension Trust Fund which will be provisionally
approved as lead plaintiff. 15 U.S.C. * 78a-4(a)(3)(B)(C). Further, it
appears the interests of the Pension Trust Fund and the Pension Trust
Fundare sufficiently-aligned with the other members of the Proposed Class
to allow it to adequately and vigorously prosecute the instant action.

Neither Altman nor Clevenger are approved as a lead plaintiff in the
instant action. As discussed above, neither Clevenger nor Altman has
established any unique skills or experience in handling a matter such as
this. Further, the financial interest of either Clevenger or Altman is
substantially less than the interest of the Pension Trust Fund.
Additionally, the Pension Trust Fund is a Retention plaintiff and Altman is
not. This could lead to conflicting litigation strategies, which is not
consistent with the goals of the PSLRA.

The presumption of adequacy may be overcome by showing the Proposed Lead
Plaintiff will not "fairly and adequately protect the interest of the
(C)lass," or is "subject to unique defenses that render (the Proposed Lead
Plaintiff) incapable of adequately representing the (Proposed) Class." 15
U.S.C. * 78u-4(a)(3)(B)(iii)(II). The adequacy of the Pension Trust Fund
has not been challenged by any member of the Proposed Class.

The fact that a group, as opposed to a single individual plaintiff, is
proposed as lead plaintiff does not necessarily render such a group
inadequate. See 15 U.S.C. * 78u-4(a)(3)(B)(iii)(I). It has also been held
that tThe appointment of more than one lead plaintiff does not violate the
PSLRA.

When the interests of proposed lead plaintiffs are aligned, concerns
regarding the division of authority and dilution of control are not
paramount. The provisional appointment of the Pension Trust Fund as lead
plaintiff, and the exclusion of Clevenger and Altman, should provide the
desired alignment of interests. In the instant caseFurther, it appears the
Pension Trust Fund will be able to serve the statutory purpose of the
PSLRA. Nevertheless, this appointment will not be final until the Second
Notice of Pendency is published and the members of the Proposed Class have
the opportunity to make an informal decision whether to seek appointment as
lead plaintiff.

The Pension Trust Fund should be able to withstand any possible usurpation
of effectively control bycounsel. The provisional appointment of the
Pension Trust Fund appears to meet one of the most important goals of the
PSLRA the appointment of an institutional investor to serve as lead
plaintiff in securities class actions.

The approval of lead counsel pursuant to Section 21D(a)(3)(B)(v) is not
governed by the same statutory guidelines which control the lead plaintiff
determination. The decision to approve counsel selected by the lead
plaintiff is a matter within the discretion of the District Court. Proposed
lead counsel is simply that -- proposed.

The legislative history of the PSLRA reveals that Congress wished to
encourage the exercise of discretion in approving the selection of lead
counsel. The nature and extent of such inquiry may vary from case to case.

The selection of counsel by a lead plaintiff must be the product of
deliberate and in depth evaluation, as well as of independent, arms length
negotiations. the

In the instant case, Proposed Lead Plaintiffs seek approval of their
selection of Milberg Weiss to serve as lead counsel. Based solely on a
review of the Moving Brief and the accompanying submissions, it is not
impossible to determine whether the Proposed Lead Plaintiffs actively
sought out and made an informed decision regarding the choice of lead
counsel.

It is interesting that in a matter consolidated from eighteen separate
complaints and involving thousands of plaintiffs, not a single party has
opposed either the Motion for Lead Plaintiff or the Motion for Lead Counsel
or proposed other counsel. This apparent apathy suggests possible collusion
or a "too comfortable" arrangement among counsel who appear to be directing
this litigation. Or as likely, from the failure of the Notice of Pendency
to adequately inform the proposed class of the right to move the court to
serve as lead plaintiff. It seems unlikely that there has been a great deal
of (if any) independent, arms-length negotiating between Lead Plaintiff and
the proposed lead counsel.

Proposed Lead Plaintiffs have provided no evidence or indication whatsoever
of the proposed fee arrangement, its terms, or discussions or proposals
leading up to it with Proposed Lead Counsel. They have provided noevidence
indication as to how the selection of Proposed Lead Counsel was arrived at
nor what considerations went into the decision. Significantly, there is no
indication of whether other counsel were interviewed or even considered.

In an effort to keep this matter moving and in recognition of the
possibility that the Pension Trust Fund may decline to continue as lead
plaintiff or may be replaced following receipt of a motion from other
members of the class, a determination of lead counsel will be made through
a competitive sealed-bid process.

Lead Plaintiffs Motion is granted in part and denied in part; the Lead
Counsel Motion is denied.

For plaintiffs -- Robert A. Hoffman and Samuel R. Simon and Daniel E.
Bacine, of the Pa. (Barrack, Rodos & Bacine), David Bershad, Steven G.
Shulman and Samuel H. Rudman (Milberg Weiss Bershad Hynes & Lerach, of the
NY bar), Sandy Liebhard, of the NY bar, Robert Berg, Mel E. Lifshitz
(Bernstein, Liebhard & Lifshitz), Stuart Wechsler and Samuel K. Rosen
(Wechsler, Harwood, Halebian & Feffer, of the NY bar), Fred T. Isquith and
Michael Jaffe (Wolf, Haldenstein, Adler, Freeman & Herz, of the NY bar)
Andrew M. Schatz and Jeffrey S. Nobel (of the Conn. bar), Jack G. Fruchter
(Fruchter & Twersky, of the NY bar), Paul Geller and Jonathan M. Stein
(Shepherd & Geller, of the Fla bar), Marc Henzel, of the Pa bar, James V.
Bashian, of the NY bar, Mark Topaz (Schiffrin & Barroway, of the Pa bar)
Frederic S. Fox (Kaplan, Kilsheimer & Fox, of the NY bar), William J.
Pinilis (Kaplan, Kilsheimer & Fox), David B. Kahn, of the Ill. bar, Marvin
L. Frank (Rabin & Peckel, of the NY bar), Barbara A. Podell (Savett,
Frutkin, Podell & Ryan, of the Pa bar), Curtis V. Trinko, of the NY bar,
Robert Susser, of the NY bar, Brian Barry, of the Ca bar, Jules Brody
(Stull, Stull & Brody, of the NY bar, Peter D. Bull and Joshua M. Lifshitz
(Bull & Lifshitz, of the NY bar), Robert N. Cappucci (Entwistle & Cappucci,
of the NY bar) Brian Felgoise, of the Pa bar, Peter Fishbein, Gary S.
Graifman (Kantrowitz, Goldhamer & Graifman), Harvey Greenfield, of the NY
bar, Andrew R. Jacobs (Fitzsimmons, Ringle & Jacobs), Allyn Z. Lite and
Joseph J. DePalma (Lite, DePalma, Greenberg & Rivas), Charles J. Piven, of
the Maryland bar, Joseph E. Saul (Gellerstein & Saul), Joseph H. Weiss, of
the NY bar (Weiss & Yourman). For defendants - Paul C. Saunders, Robert H.
Baron, and Ilana B. Chill (Cravath, Swaine & Moore), John H. Schmidt, Jr.
(Lindabury, McCormick & Estabrook). (New Jersey Law Journal, June 19, 2000)



MAJOR LEAGUE: Ma Judge Deflates Soccer Players' Antitrust Suit
--------------------------------------------------------------
A Massachusetts federal judge has rejected a class action brought by
professional soccer players who claim that Major League Soccer and its
member teams have unlawfully combined to restrain trade or commerce in
violation of the Sherman Act. Fraser et al. v. Major League Soccer L.L.C.
et al., No. 97-10342-GAO (D. Mass., Apr. 19, 2000).

U.S. District Judge George A. O'Toole found that the players failed to
prove that the operators and investors have divergent economic interests
within the league's structure.

Major League Soccer's mode of operation is governed by a limited liability
company agreement in which several MLS investors have signed contracts
giving them the right to operate specific teams. Operator-investors do not
hire players for their respective teams. Instead, players are hired by the
league as employees and then are assigned to the various teams. Each
employment contract is between the player and MLS, not between the player
and the operator of the team to which he has been assigned.

Under player assignment policies, MLS centrally allocates the top or
"marquee" players among the teams to prevent talent imbalances and assure a
degree of comparability of team strength in order to promote competitive
soccer matches. These assignments are effective unless disapproved by a
two-thirds vote of a management committee consisting of representatives of
each of the league's investors.

The plaintiff class alleges that the league violated the Sherman Act by
contracting for player services centrally through MLS and consequently
eliminating the competition for those services that would take place if
each team were free to bid for and sign players directly. The class also
maintains that MLS and its co-defendant, the United States Soccer
Federation, conspired to impose anti-competitive "transfer fees" on player
relocation that restrict the ability of players to move from one team to
another.

In dismissing the complaint, Judge O'Toole found no "reasonable basis" for
imposing antitrust liability because the players failed to show that MLS is
not a single entity. To the contrary, he said, the league in fact is quite
centralized. The league not only owns the teams themselves, thus preventing
a disgruntled operator from simply withdrawing his or her team and joining
a rival league, but it also owns all intellectual property related to the
teams.

Judge O'Toole also rejected the argument that MLS player assignment
practices violate antitrust laws. "Exciting on-field competition between
teams is what make MLS games worth watching," he wrote. "Game competition,
without doubt, is part of the league's entertainment product, not an
indicator of divergent economic interests among operators."

Judge O'Toole also said that while it is true that the league is run by a
management committee that can be controlled by the operator-investors, that
fact "hardly proves that the investors are pursuing economic interests
separate from the interests of the firm."

The players were represented by Paul B. Galvani and Jane Willis of Ropes &
Gray in Boston; James W. Quinn of Weil, Gotshal & Manges in New York; and
Richard A. Bethelsen of Washington, D.C.

MLS was represented by Daniel S. Savrin and Daniel L. Goldberg of Bingham,
Dana & Gould in Boston, and by Michael A. Cardoza, L. Robert Batterman,
Steven C. Krane and Walter Eliot Bard of Proskauer, Rose Goetz & Mendelsohn
in New York. (Antitrust Litigation Reporter, June 2000)


PREMCOR REFINERY: Dust Released Can Cause Minor Health Problems
---------------------------------------------------------------
Refinery officials said the dust that spewed from their oil refinery Friday
is nontoxic, but state officials said they aren't willing to accept that
without outside confirmation, according to AP News from Illinois.

Premcor officials also said Tuesday that the dust can cause minor health
problems, including upset stomachs and eye and throat irritation.

After meeting with refinery managers Tuesday, state officials said they
will wait for results of their own tests to determine the health risks to
residents in this Chicago suburb. They also plan to confirm exactly what
was released.

Premcor refinery experts described the dust, which settled on everything
from cars to pools across parts of Blue Island, as a sandlike catalyst made
of silica alumina and oxide.

State environmental officials also believe the release may have violated
environmental laws and corrective actions it placed on the plant in 1994.

Clark Oil, the former owner of the refinery, signed a 1994 consent decree
obliging it to correct problems that had caused a series of emissions and
explosions at the site, said Matt Dunn of the Illinois attorney general's
office.Premcor officials said the release occurred after a valve that
collects the dust failed last week. They have launched an investigation
into what caused the valve malfunction. "We apologize to the residents of
Blue Island because this is not the business we want to be in," said Frank
LaPointe, the refinery manager. He said the company would honor damage
claims related to the accident.

Five residents also filed a class action lawsuit against Premcor Tuesday
alleging the company endangered the community. (The Associated Press State
& Local Wire, June 21, 2000)


PROFIT RECOVERY: Milberg Weiss Announces Securities Lawsuit in Georgia
----------------------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on June 16, 2000, on behalf of purchasers of
the securities of Profit Recovery Group International, Inc. (Nasdaq: PRGX),
between February 16, 2000 and March 29, 2000, inclusive. A copy of the
complaint filed in this action is available from the Court, or can be
obtained from Milberg Weiss by calling (800)320-5081.

The action, numbered 1 00-CV-1529, is pending in the United States District
Court for the Northern District of Georgia, located at 75 Spring St. SW,
Atlanta, GA, 30303, against defendants Profit Recovery, John M. Cook
(Chairman and Chief Executive Officer) and Scott L. Colabuono (Executive
Vice President, Treasurer and Chief Financial Officer).

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 materially false and misleading financial statements. For
example, as alleged in the complaint, defendants publicly reported their
fiscal 1999 results in a February 16, 2000, press release, highlighting
that the Company's net earnings for its entire fiscal 1999 increased by
115% over the Company's fiscal 1998 earnings, and that its fourth quarter
1999 earnings increased by 145% over the comparable 1998 period. The
statement was materially false and misleading, and defendants knew or
recklessly disregarded its falsity, because the seemingly spectacular
results were based on improperly recognized earnings. When the Company
announced, on March 29, 2000, that its quarter and year end financial
statement, which it had to file with the SEC, will require a downward
adjustment from the Company's statement of February 16, 2000, Profit
Recovery shares dropped by 30% from the previous day's trading.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York Steven G.
Schulman or Samuel H. Rudman, 800/320-5081 Website: http://www.milberg.com
Email: profitrecoverycase@milbergNY.com


PROVIDIAN FINANCIAL: May Pay $300 Mil in Regulators' Predator Probe
-------------------------------------------------------------------
In what could be one of the largest settlements brokered by a regulatory
agency, the credit card issuer Providian Financial Corp. is expected to pay
up to $300 million to settle claims related to an investigation by the
Office of the Comptroller of the Currency and the San Francisco district
attorney into allegedly unfair business practices.

Such a sum, which is still under negotiation, would be far more than
previously expected and would act as a stern rebuke to financial
institutions that have been under attack by regulators for what they say is
"predatory" behavior.

Providian declined to confirm the settlement figure, which was reported by
the San Francisco Chronicle on Tuesday. The company said Monday that it had
agreed to pay $1.6 million to the Connecticut Attorney General's Office to
settle allegations about its business practices in that state.

On Tuesday, Providian revised estimates for second quarter and yearend 2000
earnings to account for the impact of a potential settlement with
California and the OCC, the impact of the agreement in Connecticut, and a
one-time gain from the sale last week of $1.5 billion in home equity loans.
The company has more than $26 billion of assets under management.

Providian said it expects earnings, excluding the settlement costs, to be
in the range of $5.10 to $5.20 for the year; analysts had forecast earnings
per share of $5.20. Kenneth A. Posner, an analyst at Morgan Stanley Dean
Witter & Co., said that he originally expected any settlement to be around
$50 million. Having seen Tuesday's release, he said he now expects that
total to be around $150 million, or $270 million, before tax.

Customers have charged that Providian engaged in a range of unethical
practices, particularly on the part its Platinum card business. In May
1999, the San Francisco district attorney's office started investigating
consumer complaints that Providian assigned late fees unfairly and charged
for services that had not been requested. The OCC later joined the talks.

Providian should have a good idea of the agency's thinking on these
matters, because two former OCC officials -- Konrad Alt and Christopher
Lewis - now have senior positions at Providian. Mr. Alt is a senior vice
president and head of the company's public policy group and Mr. Lewis heads
up government relations. A spokesman for Providian, however, said that both
are precluded from talking with the OCC directly because of the agency's
ethics clause.

In the statement Tuesday, Providian was vague about the nonmonetary impact
of a potential settlement, simply saying it would have to "modify certain
business practices." In past interviews, executives from the company said
they were making changes to their business, such as extending the
grace-period for late fees and establishing a toll-free number for
disgruntled customers.

Its unclear how, if at all, the Providian settlement might affect lawsuits
pending against First USA Inc., the Wilmington, Del., card unit of
Chicago's Bank One Corp. A spokesman said Bank One does not comment on
pending litigation. Late last month a federal judge in Dallas dismissed a
class action filed by customers against First USA. The Texas judge said the
case should be handled in arbitration. (The American Banker, June 21, 2000)



REED: Indiana Court OKs ADA Suit in Graduation Qualifying Exam Case
-------------------------------------------------------------------
The Indiana Court of Appeals held that the parents of a group of students
with disability could proceed with their class action, which alleged due
process and IDEA violations. The classes satisfied the state class action
statute and they were properly defined. Rene by Rene v. Reed, 32 IDELR 92
(Ind. Ct. App. 04/04/00).

The parents sought to bring a class action, claiming that the state's
requirement that the students take and pass the graduation qualifying
examination to receive a diploma violated their due process and IDEA
rights. The action comprised two classes. Class A was exempted from
standardized testing or not taught the material on the GQE. Class B was
required to take the GQE without their IEP accommodations. The trial court
denied the parents motion to certify class A and narrowed the definition of
class B. The parents appealed.

The Appeals Court reversed and remanded the trial court's decision, and
certified both classes. The alleged classes satisfied the state class
action statute, for they met the requirements of numerosity, commonality,
typicality, and adequacy. Further, the actions of the state, in terms of
the GQE, were similar toward all members of the classes. Additionally, it
would have been futile for class A to exhaust its remedies, as an
administrative agency did not have authority to declare a state statute
unconstitutional. Similarly, class B met the futility requirement with
respect to all of their requested IEP accommodations, not just the reading
accommodation, as the trial court erroneously held. Both classes also had
standing and their claims were ripe. If the alleged violations occurred,
they did so when the classes were required to take the GQE. Thus, the
students were not required to wait until they were denied a diploma to
bring an action.

Finally, class A was not overly broad, as it was specific enough for a
court to determine whether a student was a member. Accordingly, the court
held that both classes were appropriate as originally defined. (School Law
Bulletin, June 13, 2000)


SOTHEBY'S: Baron Capital Concerned Board Nominees Too Close to Taubman
----------------------------------------------------------------------
Sotheby's, the fine art auctioneer under investigation for alleged
price-fixing, faces new controversy over the make-up of its board of
directors.

The company, which is fighting separately class action lawsuits by
collectors, had been forced to delay its annual meeting of shareholders
amid objections from Ron Baron, whose Baron Capital Group holds 55.2 per
cent of Sotheby's Class A shares. Mr Baron had questioned the continuing
influence of Alfred Taubman, who stepped down as Sotheby's chairman in
February, but remained a director. Mr Taubman speaks for 63 per cent of the
Sotheby's voting shares.

Sotheby's has proposed that four new Class A nominees join its board; they
are George Blumenthal, NTL's chairman, Steven Dodge, chairman of American
Tower Corp, Henry Jarecki, a Yale psychiatry professor, and Brian Posner,
co-founder of Hygrove Partners.

Baron Capital Group is concerned that three of the Class B nominees are too
close to Mr Taubman. The three are his son Robert, his lawyer, Jeffrey
Miro, and Max Fisher, a long-time business associate. (The Times (London),
June 21, 2000)


SYSTEM SOFTWARE: Continues to Defend Securities Suit in Fed Ct, IL
------------------------------------------------------------------
In January 1997, class action lawsuits against System Software Associates
Inc. and certain of its officers were filed in state court in Illinois and
in the federal court in Chicago, Illinois. The Company executed a
settlement agreement with the class plaintiffs in the Illinois state court
action. The presiding judge in the Illinois case approved the settlement on
September 30, 1997. Certain individual objectors to the settlement appealed
the fairness of the settlement. On June 18, 1999, the Illinois Appellate
Court affirmed the settlement of the state court class action. Plaintiffs
did not seek leave to appeal to the Illinois Supreme Court. Accordingly,
the state court action has concluded.

The Company filed a motion to dismiss in the federal action, arguing that
the claims in federal court had already been settled in state court and
were barred by the doctrine of res judicata. On March 8, 2000, the federal
court ruled that the claims of a significant portion of the class
plaintiffs were barred by the doctrine of res judicata, but that the claims
of the remaining portion of the class plaintiffs were not barred.  The
Company continues to defend itself  against the claims of the remaining
class plaintiffs.


SYSTEM SOFTWARE: Under SEC Investigation over Revenue and Ch 11 Relief
----------------------------------------------------------------------
The Company has been the subject of an ongoing private investigation being
conducted by the Securities and Exchange Commission. This investigation
began in October 1995, and primarily relates to revenue recognition issues.
The Staff of the Enforcement Division has advised the Company that it has
tentatively concluded that in 1994 through 1997 the Company improperly
recognized revenue on software contracts for UNIX based software products,
and in 1995 and 1996, the Company improperly recognized revenue on software
reseller contracts, and in so doing violated Securities Exchange Act of
1934 Section 10(b), Securities Act of 1933 Section 17(a), and other
provisions of the federal securities laws. The Staff of the Enforcement
Division has also advised the Company that the Commission has authorized
the filing of a civil enforcement action against the Company based on the
grounds discussed above. The Company believes that the Commission will seek
injunctive relief in the civil enforcement action against the Company.

On May 3, 2000, the Company filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware, Case No. 00-1852 (RRM). The
Chapter 11 proceeding is intended to, among other things, allow the Company
to complete the sale of its assets in an expeditious manner pursuant to
Section 363 of the Bankruptcy Code. On May 11, 2000, the Bankruptcy Court
approved, among other things, procedures for the solicitation of bids for
the sale of the Company's assets that provided that all bids must be
submitted by May 31. With the exception of the Gores transaction, no other
qualified bids have been received. A Bankruptcy
Court hearing on the sale of the Company's assets is scheduled for June 16,

2000.


TOBACCO LITIGATION: Australian High Court Rejects Appeal against BAT
--------------------------------------------------------------------
British American Tobacco Australasia welcomed the decision of the High
Court to reject the application for leave to appeal in the Nixon class
action proceedings. "We have consistently maintained that the class action
procedure is inappropriate for the claims that class members sought to
bring. This position has been vindicated by the High Court's decision,"
said Brendan Brady, Corporate and Regulatory Affairs Director, British
American Tobacco Australasia.

The Federal Court previously held that it was impossible that the alleged
conduct of the tobacco companies was a cause of complaint for each member
of the class. The Court also held that, despite the numerous attempts by
the Plaintiffs' Solicitors, the Statement of Claim simply did not plead the
case they intended. "Not only has this action taken up substantial Court
time, but it has also been an expensive exercise for the named class
members who will have to pay costs. Those promoting this kind of
American-style, speculative litigation should bear the costs, and I assume
they will be prepared to do so on behalf of their clients," continued Mr
Brady. The defence of these proceedings has also caused British American
Tobacco Australasia and its shareholders considerable cost, which the
company will look to recover in the future.

The company will continue to defend itself in the courts against such
speculative litigation.

            Director of Anti-Smoking Campaign Disappointed

In Melbourne tonight, executive director of the Victorian Quit anti-smoking
campaign Todd Harper said he was disappointed by the High Court's decision.
However, he said it did not signal the end of legal scrutiny of the actions
of tobacco companies. "The High Court's ruling today is enormously
disappointing for the people involved in mounting the action," Mr Harper
said in a statement. "But while the High Court's decision means this
particular action has come to an end, it's not the death knell for legal
action against tobacco companies. "We look forward to the day when tobacco
companies are forced to account for their actions in a court of law." (AAP
NEWSFEED, June 21, 2000)


TOTAL RENAL: Securities Suit Pending; Announces Operations Deivestiture
-----------------------------------------------------------------------
DaVita (Total Renal Care Holdings, Inc. NYSE: TRL), announced on June 20
that it completed the sale of its businesses in Argentina, Europe and
Hawaii to Fresenius Medical Care AG for approximately $145 million in gross
proceeds. An additional amount was placed in escrow pending completion of
the sale of DaVita's Puerto Rico facilities to Fresenius. The escrow will
be released upon the receipt of required regulatory approvals and third
party consents.

Other anticipated or potential future charges and expenses, also previously
disclosed, include the write-off of deferred financing costs associated
with the restructuring of the company's bank credit facilities, the
write-off of a deferred tax asset associated with previously issued medical
director stock options that are being cancelled, potential charges related
to the unwinding of poor performing contracts, partnerships or investments
in dialysis related companies, any uninsured loss related to the pending
shareholder class action lawsuit, and any unfavorable resolution to the
ongoing payment suspension of Medicare claims for the company's Florida
lab.


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

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
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Copyright 1999.  All rights reserved.  ISSN 1525-2272.

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