/raid1/www/Hosts/bankrupt/CAR_Public/000717.MBX                C L A S S   A C T I O N   R E P O R T E R

                Monday, July 17, 2000, Vol. 2, No. 137


AMERICAN NATIONAL: Judge Says Written Word Rules in PA Plant ERISA Plan
BRANCH DAVIDIAN: Closing Arguments Include Former AGs Impassioned Plea
ECO SOIL: CA Court Dismisses Shareholder Lawsuit
ELKHART: May Have to Give $1 Mil in Back Pay; Fire-Fighters Sue
ENTRUST TECHNOLOGIES: Kirby, McInerney Files Securities Suit in Texas

ENTRUST TECHNOLOGIES: Weiss & Yourman Files Securities Suit in Texas
FEN-PHEN: AHP Cannot Bring Interlocutory Appeal Over Venue Issue
FIRSTWORLD COMMUNICATIONS: Weiss & Yourman Files Securities Suit in CO
FULTON, ATLANTA: Lawyers File Suit to Stop License Fee
HARMONIC INC: Spector, Roseman Files Securities Suit in California

HMOs: Settlement Reached for Antitrust Suit in New York
INDIANA: Disabled Residents Sue for Options to Live More Independently
INMATES LITIGATION: Giuliani Intends to Appeal on Care For Mentally Ill
MAX INTERNET: The Desmond Law Firm Investigates Decline in Stock Price
MORGAN STANLEY: Ap Ct Says Fd Law Does Not Preempt Trading Ahead Case

PAINEWEBBER, INC: Klayman & Lazarus Notifies UBS AG of Lawsuit on Fraud
PEAK INT'L: Parties in TrENDs Suit Stipulate to Dismiss Some Claims
RACING CHAMPIONS: Cauley & Geller Files Securities Suit in Illinois
RELIANCE GROUP: Rabin & Peckel Files Securities Suit in New York
RELIANCE GROUP: Spector, Roseman Files Securities Suit in New York

TOBACCO LITIGATION: FL Jury Begins Deliberations in 3rd and Final Phase
TOBACCO LITIGATION: Judge Reminds Jurors Damages Can't Bankrupt Industry
TOBACCO LITIGATION: U.K. Group Actions Don't Pay Like U.S. Counterparts
VISUAL NETWORKS: Barrack Rodos Files Securities Suit in Maryland
VISUAL NETWORKS: Cohen, Milstein Files Securities Fraud Suit in MD

VISUAL NETWORKS: Spector, Roseman Files Securities Suit in Maryland

* Groups Urge U.N. Meeting On Reparations For Slaves' Kin


AMERICAN NATIONAL: Judge Says Written Word Rules in PA Plant ERISA Plan
In a class action ERISA suit, a federal judge has ruled that workers cannot
point to alleged oral assurances that they would be entitled to full early
retirement benefits despite their decision to turn down "suitable long-term
employment" because the ERISA plan is a written document that expresses the
"entire agreement" between the company and its workers.

In his 14-page opinion in Murren v. American National Can Co., et al.,
Senior U.S. District Judge James McGirr Kelly entered summary judgment in
favor of all of the defendants ANC; the pension plan between American
National Can Co. and the United Steelworkers of America; and the pension
plan between American National Can Company and the International
Association of Machinists and Aerospace Workers.

The plaintiffs in the suit were employed by the National Can Company, now
known as American National Can Co., at its Hanover, Pa., plant from 1964
until the plant closed in November 1987. The workers were members of the
Steelworkers union and accordingly were covered under the ANC/Steelworkers
Pension Plan. At the time the Hanover plant closed, they fell into a
special category of employees under the ANC/Steelworkers Pension Plan who
were, or could become, eligible for Rule-of-65 retirement. Rule-of-65
retirement permits an employee to retire with an unreduced pension before
the normal retirement age when the sum of his age and at least 20 years of
employment equals 65, so long as the employee has been on layoff or absent
with a physical disability for two years and has not refused an offer by
the employer for "suitable long-term employment" or SLTE at another of its
plants where employees are represented by the Steelworkers.

In July 1989, within two years of the Hanover plant's closing, ANC offered
the workers what it considered to be SLTE at a Lehigh, Pa., Steelworkers
plant. At the time of the offer, the workers had been working for nine
months at one of ANC's non-Steelworkers plants in LeMoyne, Pa., where they
were represented by the Machinists union.

Lawyers for the workers argued that upon their transfer to the LeMoyne
plant, the workers ceased to be "employees" under the terms of the
ANC/Steelworkers pension plan and, therefore, were no longer covered by its
provisions. Instead, they said, the workers became covered under the ANC
Machinists Pension Plan, under which all of their years of service with ANC
carried over, and that they became fully vested on the first of the month
following their date of transfer to the LeMoyne plant. Based on assurances
by ANC that they would not lose previously earned pension benefits, and
despite the fact that the SLTE offer letter stated that "refusal by an
employee who is otherwise eligible ... for a Rule of 65 Retirement to
accept an offer of SLTE will result in his ineligibility for Rule of 65
Retirement" benefits, the workers refused the SLTE offer.ANC then sent the
workers a letter confirming that they had rejected the SLTE offer and
informed them that their refusal made them ineligible for a Rule-of-65
pension. The workers remained employed at the LeMoyne plant until December
1990, when they were laid off a status that lasted until January 1993 when
they retired from ANC. Prior to their retirement, each worker sought
special early retirement, but disputes arose over the amounts of benefits
owed due to the differing interpretations of how to calculate the workers'
years of service.In their suit, the workers said they were wrongfully
denied the full extent of their early retirement benefits in violation of
ERISA Section 1132(a)(1)(B).

Judge Kelly found that Section 1132 calls for a de novo review in which the
court makes its own independent judgment as to whether the denial of
benefits was proper. The question, Kelly said, is whether, under the terms
of the plan, the workers are entitled to early retirement benefits for
their years of service at the Hanover plant.

ANC's lawyers, Jacqueline M. Woolley and Marvin L. Weinberg of Fox
Rothschild O'Brien & Frankel, argued that the workers are receiving the
full amount of benefits to which they are entitled under the ANC Machinists
Pension Plan and that they forfeited their rights to early retirement
benefits under the ANC/Steelworkers Pension Plan for their years at Hanover
by refusing the offer of SLTE.

The plaintiffs' lawyer, Gerald S. Berkowitz, argued that the workers are
owed early retirement benefits for the entire 28 years they were employed
by ANC. When they became Machinists, Berkowitz said, they were barred from
participating in the ANC/Steelworkers Pension Plan, and, therefore, their
entitlement to benefits, as well as the amount thereof, can only be
determined in accordance with the ANC Machinists Pension Plan.

Kelly disagreed, saying that both plans appeared to be triggered and that
the workers must accept the consequences under the Steelworkers plan of
refusing the SLTE offer."The court finds that ANC offered the plaintiffs
SLTE. Thus, the plaintiffs' subsequent rejection of that offer made them
ineligible for Rule-of-65 retirement under the ANC/Steelworkers Pension
Plan," Kelly wrote.

Berkowitz argued that ANC made oral representations effectively
guaranteeing the workers full early retirement pension benefits despite
their refusal of the SLTE offer.Specifically, he said, when the offer of
SLTE was made, several ANC personnel representatives assured them that they
would be given credit for their years of service at Hanover in determining
their pension, despite a refusal of the SLTE. As a result, Berkowitz said,
their understanding was that, as an incentive for them to work at LeMoyne,
ANC would consider both pension plans in determining their benefits an
assurance that he said was interpreted by the workers to mean that they
would be entitled to early retirement benefits for their entire tenure at

But Kelly found that under ERISA, every employee  benefit plan "shall be
established and maintained pursuant to a written instrument."The 3rd U.S.
Circuit Court of Appeals, Kelly said, "has consistently held that this
provision acts 'as a strong integration clause, statutorily inserted in
every plan document covered by the fiduciary duty provisions.'"The clause
essentially "makes the plan document the entire agreement of the parties
and bars the introduction of parol evidence to vary or contradict the
written terms," Kelly wrote. Since the written terms of the plan document
control, Kelly found that "regardless of the nature or content of ANC's
oral statements to the plaintiffs they cannot form the basis for a claim
under ERISA." (The Legal Intelligencer, July 13, 2000)

BRANCH DAVIDIAN: Closing Arguments Include Former AGs Impassioned Plea
Closing arguments last Friday July 14 in a $675 million wrongful death
lawsuit against the government included an impassioned plea from former
Attorney General Ramsey Clark, who told jurors that the Branch Davidian
siege never should have happened. "You've been reviewing an enormous amount
of evidence concerning the greatest domestic law enforcement tragedy in the
history of the United States. It didn't have to happen, and it must never
happen again," said Clark, one of three attorneys in the case.

His comments came as the government faced a verdict in its handling of the
raid and siege of the Mount Carmel compound, six years after the government
prosecuted Branch Davidians over the events near Waco.

The lawsuit was filed by family members and survivors who blame federal
agents for the deaths of some 80 sect members.

"This case is about the children at Mount Carmel, but it's too late to save
those children," lead plaintiffs' attorney Michael Caddell said in his
closing statements. "This case is also about those other children ... the
children that will be there with the next David Koresh. What you do will
help determine what happens to those children."

Caddell represents roughly 50 estates in the suit and Clark represents
several survivors. A third attorney, Jim Brannon, represents several of
Koresh's surviving children.

The trial has centered on events that began on Feb. 28, 1993, when Bureau
of Alcohol, Tobacco and Firearms agents tried to search the complex and
arrest Koresh on illegal weapons charges.

When gunfire erupted, six Davidians and four ATF agents were killed.

A 51-day standoff ensued, ending on April 19, 1993, with the deaths of sect
men, women and children from either gunshots or fire as the compound burned
to the ground.

Government lawyers ended their defense with autopsy findings on 21 adults,
children and one infant who died in the complex. Twenty died of gunshot
wounds and a toddler died of a stab wound to the chest - proof, they said,
that Davidians were suicidal and started the fires.

Plaintiffs said FBI tanks engaged in a tear-gassing operation may have
contributed to or caused the three fires by knocking over kerosene lanterns
inside the complex. A government fire expert said the fires were probably
set by cult members.

The plaintiffs were left to claim that agents used excessive force during
the initial raid; the government said the agents were under fire and were
only defending themselves.

"If the conduct of the ATF and the FBI was performed without excessive
force and without negligence, then how in the world did it end up with such
unmitigated, disastrous effects?" Clark asked.

The plaintiffs also said the FBI was negligent when they used the tanks to
prematurely demolish the building, violating a plan approved by Attorney
General Janet Reno.

The government insisted the demolition was only a result of trying to
create paths so tanks could inject tear gas into hard-to-reach parts of the

Government attorneys have an hour and a half to present their closing
statements before U.S. District Judge Walter Smith Jr., the same federal
judge who presided over the Branch Davidians' criminal trial, gives the
case to the advisory jury panel.

In the 1994 criminal trial, jurors acquitted 11 sect members of conspiring
to murder federal agents and found five guilty of voluntary manslaughter

Smith decided an advisory jury would hear the latest case even though one
is not required under federal law. Smith said he will take the jury's
decision under advisement and issue his final ruling later.

"He has a great deal of latitude. He can either rule for or against us,
regardless of what this advisory jury has to say," government attorney
Michael Bradford said.

Before the trial, Smith ruled that the jury would not consider perhaps the
most contentious issue - whether federal agents shot at the Davidians at
the end of the siege. The judge said he will take up the issue later.

"This case is not finished," Smith said. "Once the jury is retired, I need
to talk to lawyers about when we're going to continue this trial and
consider the issue. Then the court will render a decision."

Caddell blasted Smith's jury charge and accused him of trying to "engineer
a verdict."

Caddell said it did not differentiate between men, women and children who
lived at the compound, and meant those considered minors under Texas law
would be treated the same as adults like Koresh.

Before reading the charge, Smith said he had seen Caddell's comments in
media reports and said he seemed to "have no understanding of the process."

"I have tried to simplify the jury charge in order to get to the bottom
line. That's all I've done," said Smith. (The Associated Press State &
Local Wire, July 14, 2000)

ECO SOIL: CA Court Dismisses Shareholder Lawsuit
Eco Soil Systems, Inc. (NASDAQ: ESSI - news) announced on July 13 that the
District Court for the Southern District of California has dismissed
without prejudice the purported securities class action filed last November
against Eco Soil and three of its officers by Edward Wissinger. The Court
found that the plaintiff had failed to allege sufficient facts to state a
claim in light of the heightened pleading standards applicable to the
allegations made in his complaint. Under the Court's order, the plaintiff
may amend his complaint at any time within 30 days of the Court's order to
attempt to state a cognizable claim.

Eco Soil develops, markets and sells proprietary biological and traditional
chemical products that provide solutions for a wide variety of turf and
crop maintenance problems in the golf and agricultural industries.

ELKHART: May Have to Give $1 Mil in Back Pay; Fire-Fighters Sue
City officials may have to pay up to $1 million to firefighters, police and
other employees who were shortchanged by a mistake in calculating salaries.

The city agreed to pay firefighters almost $300,000 for the error that
affected paychecks back to 1993. That agreement will likely affect
settlements paid to a host of other employees and former employees of

"Settlement negotiations are focusing on two years, but there is a ripple
effect which would affect base salaries all the way through that
(eight-year) period," said Deputy City Attorney Nelson Chipman. "Our
directive from Mayor (Dave) Miller was to be fair and to do what's right,"
he said.

The problem began in 1992, when the city adjusted its pay schedule. Money
from some paychecks was mistakenly not included in the amounts used to
calculate raises given the following year and in some subsequent years.

The city council must approve a special ordinance to release the money,
which is expected to come from a one-time $2 million payment made to
Elkhart from a state surplus fund. City Controller Ed Milas said spending
figures could reach $1 million if three other unions covering about 250
employees accept the offer.

The firefighters' union filed a class-action lawsuit over the error last
year, but both sides reached a settlement before a trial. Representatives
of the employee unions said they wanted to avoid a court battle that could
sour relations between the city and its workers. "One way the taxpayers can
look at it is whatever money is paid is money that should have been paid -
and it's less than it could have been paid," Chipman said. (The Associated
Press State & Local Wire, July 13, 2000)

ENTRUST TECHNOLOGIES: Kirby, McInerney Files Securities Suit in Texas
A class action lawsuit has been commenced in the United States District
Court for the Eastern District of Texas on behalf of all purchasers of
securities of Entrust Technologies, Inc. (NASDAQ:ENTU) between April 19,
2000 and July 3, 2000 (the "Class Period").

The complaint alleges that, during the Class Period, Entrust securities
traded at artificially inflated prices because Entrust knew, but did not
publicly disclose, that its business was performing significantly worse
than the company had led analysts and the public to believe; which
non-disclosure was motivated by Entrust's pending acquisition of enCommerce
using $700 million of its stock. Just days after the enCommerce acquisition
had been completed, Entrust revealed that its second quarter revenues would
fall $4 million short of the$33 million the market had been led to expect,
and that rather than earning $ 0.08 per share in the second quarter of 2000
(as the market had been led to expect), Entrust would in fact earn $0.02
per share. When the truth about the company reached the market on July 5,
shares of Entrust, which had traded as high as $81.68 on July 3, plummeted
more than $40 per share to close at $36.625, a loss of more than 50% in one

The lawsuit asserts claims against Entrust and certain of its officers for
violation of sections 10(b) and 20(a) of the Securities and Exchange Act of
1934, and seeks to recover losses suffered by investors who purchased
Entrust securities during the class period, excluding the defendants and
their affiliates. Plaintiffs are represented by the firm of Kirby McInerney
& Squire, LLP, which specializes in complex litigation, including
securities class actions. Kirby McInerney & Squire has repeatedly
demonstrated expertise in the field, and has been recognized by various
courts which have appointed the firm to major positions in consolidated and
multi-district litigation. The firm's efforts on behalf of shareholders in
securities litigation have resulted in recoveries totaling hundreds of
millions of dollars, and its achievements and quality of service have been
chronicled in published decisions.

Contact: Ira M. Press, Esq. Shan Anwar KIRBY McINERNEY & SQUIRE, LLP, New
York Telephone: (212) 317-2300 or Toll Free (888) 529-4787 E-Mail:

ENTRUST TECHNOLOGIES: Weiss & Yourman Files Securities Suit in Texas
A class action lawsuit against Entrust Technologies, Inc. (NASDAQ:ENTU) and
its senior executives was commenced in the United States District for the
Eastern District of Texas seeking to recover damages on behalf of defrauded
investors who purchased Entrust securities or exchanged shares of
Encommerce for shares of Entrust, between April 19, 2000 and July 3, 2000.

The complaint charges defendants with violations of the antifraud
provisions of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder by the SEC. The complaint alleges that defendants
deceived the investing public by issuing a series of false and misleading
statements concerning the Company's financial condition. These
misrepresentations misled analysts and the investing public and caused
plaintiff and other members of the class to purchase or acquire Entrust at
artificially inflated prices.

Contact: Weiss & Yourman Richard A. Acocelli James E. Tullman David C. Katz
888/593-4771 212/682-3025 via Internet electronic mail at wynyc@aol.com

FEN-PHEN: AHP Cannot Bring Interlocutory Appeal Over Venue Issue
A Texas appeals court has denied an interlocutory appeal by American Home
Products Corp. after the trial court refused to grant it a change of venue
for a diet drug lawsuit involving 38 plaintiffs and 14 defendants. The
appellate court found it had no jurisdiction to consider the appeal under
Section 15.003(3) of the Texas Civil Practice and Remedies Code, because
the trial court had based its ruling on two other sections of the code.
American Home Products Corp. et al. v. Adams et al., No. 2-00-076-CV (Tex.
App., 2d Dist., June 15, 2000).

The 38 plaintiffs had sued the defendants in Tarrant County, Texas, a
suburb of Dallas, alleging injuries caused by fenfluramine, dexfenfluramine
and phentermine. American Home Products Corp., A.H. Robins Co. Inc. and
Wyeth-Ayerst Laboratories (collectively, AHP) moved for change of venue to
Dallas County, contending that venue was improper for 28 of the plaintiffs
under Section 15.002 or Section 15.003(a) of the civil practice and
remedies code. The plaintiffs argued that venue was proper under Sections
15.002 and 15.005 of the code.

The trial court agreed and rejected AHP's motion for a change of venue.
Ruling that each plaintiff had independently established venue under
Sections 15.002 and 15.005, the trial court did not address AHP's theory of
improper venue under Section 15.003(c).

AHP brought this interlocutory appeal to the Texas Court of Appeals, Second
District, Fort Worth. Because an interlocutory appeal is not ordinarily
available from a venue determination, the court asked the parties to brief
it. AHP argued in its brief that the court had jurisdiction because a trial
court's ruling in a multiplaintiff case is subject to interlocutory appeal
under Section 15.003(3) regardless of the trial court's stated basis for
its ruling on the venue issue.

The plaintiffs maintained that the appellate court lacks jurisdiction
because a venue ruling based on Section 15.002, as here, is not subject to
interlocutory review under Section 15.003(c).

The three-judge appellate panel unanimously agreed with the plaintiffs. In
Bristol-Myers Squibb Co. v. Goldston, 983 S.W.2d 369, 374, pet. dism'd by
agr. (Tex. App., Fort Worth, 1998), the court held that Section 15.003(c)
only provides appeal from joinder rulings from plaintiffs unable to
independently establish proper venue apart from the requirements of Section
15.003. In this case, all of the plaintiffs did establish proper venue
independently and therefore Section 15.003 does not apply, the appeals
court held.

AHP's contention that interlocutory review is available for all venue
rulings involving multiplaintiff cases, regardless of the basis for the
judgment, "would create an absurd result by defeating the Legislature's
express provision that venue determinations ordinarily are not appealable,"
the panel said. " T he construction AHP urges would allow for interlocutory
appellate review of any multiplaintiff venue determination, including a
simple car wreck in which two members of a single family were injured and
sued o r a case in which multiple plaintiffs injured in a single county
sued multiple defendants who all resided in the county of the suit," the
court said. (Diet Drugs Litigation Reporter, July 2000)

FIRSTWORLD COMMUNICATIONS: Weiss & Yourman Files Securities Suit in CO
A class action lawsuit was filed in the U.S. District Court of Colorado by
the firm of Weiss & Yourman on behalf of the class of purchasers of
FirstWorld Communications, Inc. (Nasdaq: FWIS) stock pursuant to
FirstWorld's March 8, 2000 Initial Public Offering (the "Class Period").

FirstWorld is a network-based provider of Internet, data, and
communications services. The Company's service offerings include high-speed
Internet access, dial-up Internet access, Web hosting and design, data
center services, e-commerce solutions, and Web integration and consulting

The defendants include FirstWorld, Donald L. Sturm, Sheldon S. Ohringer,
Paul C. Adams, Kevin Garland, Stephen R. Horn, James O. Spitzenberger, John
C. Stiska, Melanie L. Sturm, Lehman Brothers, Inc., Bear Stearns & Co.,
Inc., Deutsche Bank Securities, Inc., and PaineWebber, Inc. The complaint
charges defendants with issuing a false and misleading Registration
Statement and Prospectus for the IPO of FirstWorld common stock. The
complaint alleges that, as a direct result of the falsity of the
Registration Statement and the Prospectus, FirstWorld's IPO was sold at a
price far exceeding the true value of the stock at that time.

Contact: Weiss & Yourman, 800-437-7918, info@wyca.com

FULTON, ATLANTA: Lawyers File Suit to Stop License Fee
Attorneys shouldn't have to buy a license to practice law in the city of
Atlanta or Fulton County, Ga., say two Atlanta lawyers. They've filed a
suit to stop collection of the $ 400 license fee by the city and county.

Irwin W. Stolz Jr., of Gambrell & Stolz, and Robert D. Feagin, of Decker &
Hallman, have filed suit in Superior Court against Fulton County and the
city of Atlanta, charging that their ordinances threatening lawyers with
fines if they refuse to pay the fee are unconstitutional. Barnes v.
Atlanta, No. 2000CV24809; Bobo v. Fulton, No. 200CV24810. They are asking
for class action status.

Their complaints refer to secs. 30-51 through 30-63 of the Atlanta
ordinance and Sec. 18-39 in the Fulton County ordinance, which require
lawyers who keep offices in Atlanta or Fulton County to pay a yearly
occupation tax. Failure to pay can result in fines.

"The foregoing ordinance, although denominated as an occupational tax, is
in effect, a precondition for a license to engage in the practice of law,
rendering it a regulatory fee which is improper and illegal," the complaint

The plaintiffs, including 24 lawyers at Gambrell & Stolz and three at
Decker & Hallman, seek a ruling that the ordinances violate due process and
equal protection. They also seek an injunction against collecting the tax
during the litigation, a refund of the taxes back to 1996 (some $ 1,200 per
lawyer), and attorney fees and litigation costs.

Fulton County Attorney O. V. Brantley said that she has not seen the
complaint and declined to comment. Atlanta City Attorney Susan P. Langford
was unavailable for comment.

Messrs. Stolz and Feagin have sued on behalf of all members of the bar
subject to the fees since 1996. They have set up two classes of plaintiffs:
those who have paid the tax and have no means of collecting a refund, and
the named plaintiffs, who unsuccessfully asked for a refund in 1999.

Messrs. Stolz and Feagin are basing their suit on Sexton v. City of
Jonesboro, 267 Ga. 571, 481 S.E. 2d 818 (1997). In that decision, the state
Supreme Court held that the city may not prohibit the practice of law under
threat of criminal penalties. (The National Law Journal, July 10, 2000)

HARMONIC INC: Spector, Roseman Files Securities Suit in California
Spector, Roseman & Kodroff, P.C. announced on July 13 that a class action
has been commenced in the United States District Court for the Northern
District of California on behalf of purchasers of Harmonic Inc.
(NASDAQ:HLIT - news) common stock during the period between March 27, 2000
and June 26, 2000 (the "Class Period").

The complaint charges Harmonic and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. Harmonic designs,
manufactures and markets digital and fiber optic systems for delivering
video, voice and data services over cable, satellite, telephone and
wireless networks. The company's solutions enable cable television and
other network operators to provide a range of broadcast and interactive
broadband services that include high-speed Internet access, telephony and
video on demand.

The complaint alleges that defendants' false and misleading statements
concerning the revenues to be derived from Harmonic's largest customer,
AT&T, and from its newly acquired C-Cube division (DiviCom), which would
result in 2000 EPS of $1.19+, artificially inflated the price of Harmonic
stock to a Class Period high of $ 102. This upsurge in Harmonic's stock
caused by defendants' false and misleading statements enabled Harmonic to
complete the $1.7 billion acquisition of the C-Cube's DiviCom business.
After the acquisition was completed, on 6/26/00, Harmonic revealed that it
was in fact suffering a huge drop in revenues and exposed the problems
Harmonic had been experiencing during the Class Period in attempting to
grow its business. This announcement caused its stock price to drop to as
low as $22-11/16 on record volume of 21.9 million shares on 6/27/00 causing
hundreds of millions of dollars in damages to members of the Class.

Contact: Spector, Roseman & Kodroff, P.C. Robert M. Roseman, 888/844-5862
classaction@spectorandroseman.com http://www.spectorandroseman.com

HMOs: Settlement Reached for Antitrust Suit in New York
The parties in a Southern District of New York antitrust class action filed
against nine mental health managed care companies have agreed that the suit
will be dismissed. The action alleged that the companies conspired to lower
and fix professional fees to the detriment of thousands of mental health
care providers and their patients. Holstein et al. v. Green Spring Health
Services Inc. et al., No. 98-CV-9201 (LAK), settlement approved (S.D.N.Y.,
May 19, 2000).

This litigation began when 11 mental health care providers and provider
associations filed a purported class action suit against a number of mental
health managed care organizations. The purported class was composed of
psychiatrists, psychologists and social workers who attempted to become
participating providers in the defendants' mental health care plans. The
lawsuit, which was originally filed in U.S. District Court for the District
of New Jersey and transferred to the U.S. District Court for the Southern
District of New York in December 1998, alleged that the defendant companies
violated antitrust laws by acting in concert to lower prices paid to class
members and to enforce policies that excluded class members from

The following companies were named as defendants: Green Spring Health
Services Inc. of Columbia, Md.; Human Affairs International Inc. of Sandy
City, Utah; Merit Behavioral Care Corp. of Park Ridge, N.J.; CMG Health
Inc. of Owings Mills, M d.; Options Healthcare Inc. of Norfolk, Va.; Value
Behavioral Health Inc. of Falls Church, Va.; United Behavioral Health Inc.
of Minnetonka, Minn.; Foundation Health System Inc. of Woodlands, Calif.;
and MCC Behavioral Care of Eden Prairie, Minn.

The suit claimed that the defendants conducted annual surveys of fees paid
to class members so that high-end defendants would lower their prices,
shared hiring criteria in order to standardize provider credentialing and
created profiles to identify "managed care friendly" providers. The
defendants engaged in these acts to further their alleged agreement to
restrain trade, the plaintiffs asserted.

The complaint also accused the defendants of acting jointly to develop
policies that negatively impacted patient treatment and competition. The
plaintiffs claimed that the companies inappropriately used short-term
therapy and medication as cost-cutting measures. The defendants were also
alleged to have imposed gag orders and to have refused to share information
with providers. Class members who did not accept these policies were
refused referrals or excluded or terminated as participating providers, the
lawsuit charged.

The defendants moved to dismiss the suit for failure to state a claim, but
their request was denied by U.S. District Judge Lewis A. Kaplan on June 16,
The judge rejected the argument that the plaintiffs had not suffered injury
and ruled that the plaintiffs had adequately alleged all elements of their

Before a decision could be rendered on class certification the parties
reached an agreement to settle the matter in February 2000. The agreement
was approved by Judge Kaplan on May 19, 2000, and the case was dismissed
with prejudice.

Under the terms of the settlement the parties agreed that neither the
plaintiffs nor their counsel would receive any funds. The defendants, who
did not admit liability, consented to meet with persons designated by the
plaintiffs in order to discuss the administrative process for the payment
of claims and suggestions for changes in the provider credentialing

The settlement also provides that the defendants will not terminate any
provider from their network during the term of the provider's contract for
advocating on behalf of a plan member, filing a complaint, appealing a
decision, or requesting a review of a termination decision. Although the
defendants agreed to this provision, they specifically state that it is not
their policy to terminate providers for any of the enumerated grounds. The
defendants also agree that they will not refuse to renew contracts with any
of the named plaintiffs based on their participation in the suit. (Managed
Care Litigation Reporter, July 3, 2000)

INDIANA: Disabled Residents Sue for Options to Live More Independently
Disabled residents are suing Indiana, claiming state agencies are not doing
enough to keep them out of nursing homes so they can live more
independently. Four disabled Lake County residents and an advocacy group
are demanding that more disabled people have the option of living in
apartments or homes with help from Medicaid.

If the lawsuit is successful, more than 7,000 disabled people who are now
on waiting lists to live in neighborhoods may benefit. Attorneys are asking
that the case be certified as class-action, so residents of other states
could be affected as well.

"We're trying to afford people with disabilities access to their right to
live lives like the rest of us," said Teresa Torres, executive director of
Everybody Counts, in Merrillville. Torres said disabled residents shouldn't
be "warehoused off in a corner in a nursing home." "We're trying to get the
state to recognize that as a priority. Indiana needs to catch up with the
rest of the world," she said.

The lawsuit alleges that plaintiffs such as Karen Adams have "no realistic
hope of living in the community, despite their wishes." Adams has lived in
a nursing home for five years, since her mother died. The 40-year-old woman
has cerebral palsy and epilepsy and uses a wheelchair. She has never been
offered the choice of living anywhere else.

The lawsuit was filed last Wednesday July 12 in Marion County against the
state's Family and Social Services Administration. It also alleges that
Indiana's Medicaid spending for community care ranks low in comparison to
other states'.

State officials admit there are waiting lists. Andrew Stoner, a social
services spokesman, said 1,800 people are on a waiting list for one
Medicaid-funded community care program that serves the elderly and
disabled. More than 5,000 are on another waiting list for people with
mental disabilities.

Advocacy groups are using a recent presidential directive and a 1999
Supreme Court decision to back similar complaints nationwide.

In a 6-3 decision last June, the court said states are required to provide
community-based treatment. Two Georgia women sued because they had been
confined to a state institution for years, even though doctors said they
could be treated in other residential settings.

The Clinton administration followed with a directive ordering states to
evaluate hundreds of thousands of people in nursing homes and mental
hospitals to see if they can receive care in their own homes or elsewhere.

"States have to have a reasonable plan to serve people in a timely way.
Endless waiting lists are not acceptable," said John Dickerson, executive
director of a statewide advocacy group for the mentally disabled and their
families. (The Associated Press State & Local Wire, July 14, 2000)

INMATES LITIGATION: Giuliani Intends to Appeal on Care For Mentally Ill
A city lawyer said on July 13 that the Giuliani administration would appeal
a state judge's ruling that continuing mental health care must be arranged
for inmates before they are released from Rikers Island and other jails.
The lawyer, Leonard Koerner, said the city did not have a plan in place for
complying with the judge's ruling. "The judge hasn't refined what it would
take," he said. "It's one thing for the city to formulate a plan without
court compulsion, and it's another thing to be compelled to do it."

The judge, Justice Richard F. Braun of State Supreme Court in Manhattan,
will not file an order giving details on how the city could comply with his
ruling until after a courtroom conference scheduled for July 25. Mr.
Koerner, who is the city's chief assistant corporation counsel, said the
administration would be entitled to an automatic suspension of that order
as soon as it appealed.

Plaintiffs in the class-action lawsuit include inmates with extensive
histories of serious mental illness and criminal arrests who received
mental treatment and medication behind bars but were repeatedly released to
the streets without any planning for how to continue treatment or find
supportive housing.

Up to 25,000 inmates receive mental health treatment annually in city
jails. The judge's ruling directed lawyers for the seven named plaintiffs
to exclude from the class those who have no continuing need for mental
health treatment.

"Who does the city benefit by appealing?" asked John A. Gresham, a lawyer
with New York Lawyers for the Public Interest, one of three groups
representing the plaintiffs. "The only realistic shot at getting them out
of this cycle is to deal with the root causes of their behavior, and for a
mentally ill person that means you have to treat the mental illness."

The city could take immediate steps to help these inmates, Mr. Gresham
said. For example, he said, it could give inmates a supply of their
medication on release. The state prison system does so now, and the State
Legislature recently appropriated about $15 million to cover the cost of
such medication when a Medicaid application has been filed a week before or
a week after an inmate's release from jail.

Filing applications for Medicaid and other public benefits while inmates
are incarcerated is another key to solving the problem, Mr. Gresham said,
because indigent, mentally ill people otherwise have no way to pay for
treatment and little chance of finding supportive housing when they get

"We're all practical," said Christopher K. Tahbaz, a lawyer with Debevoise
& Plimpton, which is representing the plaintiffs without charge. "To do
what needs to be done takes a significant effort. But there are some things
the city could do today that would not take much effort at all."

The city already has a small program to link mentally ill inmates to
community placements and treatment before their release, run jointly by the
city's Department of Mental Health, Mental Retardation and Alcoholism
Services and the Health and Hospitals Corporation.

Heather Barr, a lawyer with the Urban Justice Center and the author of a
study on the mentally ill in prisons and jails, said the program served
only about 7 percent of the inmates who needed such help and had been
hampered by city welfare policies that made it hard for the mentally ill to
obtain and keep Medicaid. The State Legislature recently appropriated
enough money to expand these programs threefold, but the city has not yet
applied, she added.

Sandra Mullin, a spokeswoman for the mental health department, said the
city was reviewing the judge's decision. "At this point, I'm not able to
provide specific details on the plans being developed for services," she

Mayor Rudolph W. Giuliani, citing his own experience with cancer, has
announced plans to seek out and sign up people who now have no health
insurance but are eligible for Medicaid. "What fundamentally has to
change," Mr. Gresham said, "is that the city has to go from its former
position of keeping as many people as possible off benefits to aggressively
trying to get people on benefits. They'll have to take the mayor's idea of
going house to house to look for the eligibles, and go cell to cell to look
for the eligibles." (The New York Times, July 14, 2000)

MAX INTERNET: The Desmond Law Firm Investigates Decline in Stock Price
The Desmond Law Firm is investigating the events surrounding the decrease
in Max Internet Communications, Inc. (Nasdaq:MXIP) stock price. Previously
the Company announced that it restated its revenues and income. Such a
restatement was necessary to comply with Federal Securities Laws and to
comply with Generally Accepted Accounting Principles.

The firm calls on purchasers of Max Internet Communications, Inc. between
November 15, 1999 and May 12, 2000 to respond.

Contact: The Desmond Law Firm, West Palm Beach Leo W. Desmond, Esq.
Telephone: 888/337-6663, 561/712-8000 E-Mail: Info@SecuritiesAttorney.com
Internet Site: http://www.SecuritiesAttorney.com

MORGAN STANLEY: Ap Ct Says Fd Law Does Not Preempt Trading Ahead Case
Did federal law preempt a state court action seeking damages for "trading
ahead" by a stockbroker?

James Roskind owned a large block of Netscape stock. He instructed his
broker, Morgan Stanley Dean Witter & Co., to sell the stock, which was then
trading at $68 per share. Morgan waited 77 minutes before selling Roskind's
stock, which by then had dropped to a price of $65.25 to $65.75 per share.
During the interim period, Morgan allegedly "traded ahead" and sold its own
large block of the stock, at a higher price than it later realized for
Roskind's shares.

Roskind discovered the alleged misconduct and brought a class action
lawsuit against Morgan, seeking damages under California's unfair
competition law (UCL) on behalf of himself and all similarly situated
Morgan customers.

The trial court sustained Morgan's demurrer to the action without leave to
amend, on the grounds of federal preemption. The court of appeal reversed,
holding that federal law did not preempt Morgan's lawsuit. The court found
that if federal law legalized the practice of trading ahead, then such law
would preempt California law outlawing the practice. The court found,
however, no such federal law. To the contrary, the court found that in
criminal prosecutions the federal courts treated trading ahead as mail or
wire fraud. Thus, the only applicable federal law supplemented, but did not
preempt, the UCL. The court concluded that the trial court's ruling to the
contrary was error.

Counsel for petitioner Morgan Stanley Dean Witter & Co.: Jonathan Dickey,
Gibson, Dunn & Crutcher, 1530 Page Mill Rd., Palo Alto, CA 94304,

Counsel for respondent James Roskind: Joseph Tabacco, Berman, DeValerio,
Pease & Tabacco, 425 California St., Ste. 2025, San Francisco, CA 94104

Procedure: petition for review after reversal of judgment. (California
Supreme Court Service, June 16, 2000)

PAINEWEBBER, INC: Klayman & Lazarus Notifies UBS AG of Lawsuit on Fraud
The law firm of Klayman & Lazarus LLP notified Marcel Ospel, chief
executive officer of UBS AG (NYSE:UBS) of the claim filed against
PaineWebber, Inc., a subsidiary of PaineWebber Group, Inc. (NYSE:PWJ)
before the National Association of Securities Dealers, Inc. ("NASD") for
alleged unlawful conduct at its Mitchell Field, New York branch office. The
Mitchell Field office is part of PaineWebber's Garden City retail complex
of three top producing branch offices.

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

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

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

PEAK INT'L: Parties in TrENDs Suit Stipulate to Dismiss Some Claims
The parties in a Southern District of New York dispute over disclosure
issues in a Trust Enhanced Dividend Securities offering by Donaldson,
Lufkin & Jenrette Securities Corp. have agreed to dismiss claims against
two defendants. Dorchester Investors v. Peak International Ltd. et al., No.
99-CV-4696, stipulation, agreement and order filed (S.D.N.Y., June 6,
2000); see Bank & Lender Liability LR, March 15, 2000, P. 10.

TrENDS are debt securities linked to non-dividend-paying company stock.
They are created through closed-end trusts. Proceeds from TrENDs offerings
are used to purchase treasuries, which are placed in the trust and used to
make quarterly interest payments to TrENDs investors.

At maturity, TrENDS are exchanged for shares of the company's
non-dividend-paying stock based on the performance of that stock over a set
period of time. Thus, the stock performance serves as a derivative factor.

Plaintiff Dorchester Investors filed a proposed class action suit in U.S.
District Court for the Southern District of New York against Donaldson
Lufkin & Jenrette Securities, Peak International Limited (Peak) and its
chief financial officer Jerry Mo, Peak TrENDS Trust, T.L. Li, a principal
stockholder of the British Virgin Islands-based Peak, and Luckygold 18A
Limited, a large Peak shareholder controlled by Li. The suit alleges
violations of the disclosure provisions contained in Sections 11 and 12 of
the Securities Act, the control person liability provisions under Section
15 of the act, and the disclosure provisions under Section 34(b) of the
Investment Company Act.

Dorchester alleges in its suit that the TrENDS were created by Donaldson as
a way of getting back $55 million that the brokerage loaned to defendant
Li. The TrENDS were created by Donaldson through Peak TrENDS and were based
on the performance of Peak stock.

The complaint alleges that neither the defendants nor Donaldson disclosed
that the TrENDS were offered to Donaldson's hedge fund customers, which had
the resources to arbitrage by buying the TrENDS and short selling the
underlying Peak stock.

Dorchester alleges that the purportedly undisclosed hedgefund activity
drove the price of the TrENDS down from $15.75 a share to under $4 a share,
and the price of Peak stock down to less than $2 a share from a high of $25
a share.

                        The Motions to Dismiss

In a brief supporting their motion to dismiss the complaint, defen dants
Peak TrENDS, Li, Luckygold and Mo (the Peak TrENDS defendants) asserted
that they cannot be held liable under Sections 11 and 12 of the Securities
Act because neither Li nor Mo signed the TrENDS registration statement nor
served on the Peak TrENDS board of directors.

The brief further claimed that the Securities Act allegations fail because
Dorchester has not alleged any actionable omissions or misrepresentations.

"Plaintiff devotes the great bulk of its Amended Complaint to allegations
of the harm it purports to have suffered as a result of an allegedly
undisclosed plan by Li and Luckygold to lend Peak common shares to
Donaldson , who would then loan the shares to its customers so that those
customers could simultaneously buy TrENDS and sell Peak common stock short,
hedging their position. The glaring weakness in Plaintiff's position is
that all relevant facts were disclosed in the TrENDS offering materials,"
the brief asserted. The defendants further argued for dismissal based on
their allegation that the Sections 11 and 12 claims were filed after
expiration of the one-year statute of limitations. The Section 15
allegation, they said, also fails because Dorchester was unable to show
that either Li or Mo controlled management of the TrENDS.

Finally, the defendants asserted that the Investment Company Act Section
34(b) claim should be dismissed because Section 34(b) does not allow for a
private right of action.

Peak and Donaldson both filed briefs supporting the motion to dismiss the
complaint. Their briefs rely on the reasoning advanced by the Peak TrENDS

In its brief opposing the motion to dismiss, Dorchester said the suit
should go forward on the following grounds:

-- The complaint states an actionable claim for violation of the
    Securities Act;

-- The defendants have acknowledged that undisclosed facts were omitted
    from the TrENDS prospectus;

-- Purported cautionary language in the TrENDS prospectus is not grounds
    for dismissal;

-- The action was filed within the statute of limitations; and --

False information in the Peak prospectus was incorporated into the TrENDS
prospectus. "The complaint properly alleges that the TrENDS Prospectus
contained numerous materially false and misleading statements and thus
states claims under the Securities Act and the Investment Company Act," the
brief asserts. "The action was timely filed. Defendants' motions to dismiss
should be denied."

                          The Dismissal

The claims against defendants Peak and Mo were subsequently dismissed
without prejudice as part of a stipulation, agreement and order signed by
all the parties and approved by U.S. District Judge Lawrence M. McKenna on
June 5, 2000. The order was filed with the district court the following

The order leaves the remaining defendants in place: Peak TrENDS; Luckygold;
Li; and Donaldson.

The parties further agree in the order that the plaintiffs purchased the
Peak TrENDS directly from Donaldson on or about June 3, 1998, and have
standing to bring claims against the defendants under the disclosure
provisions contained in Sections 11 and 12 of the Securities Act.

Finally, the defendants agreed to withdraw their motions to dismiss the
amended complaint based on allegations that the plaintiffs lacked standing
because they failed to buy theTrENDS in the initial public offering. (Bank
& Lender Liability Litigation Reporter, June 29, 2000)

RACING CHAMPIONS: Cauley & Geller Files Securities Suit in Illinois
The Law Firm of Cauley & Geller LLP announced on July 13 that it has filed
a class action in the United States District Court for the Northern
District of Illinois, Eastern Division on behalf of all individuals and
institutional investors that purchased the common stock of Racing Champions
Corp. ("Racing Champion" or the "company") (Nasdaq:RACN) between Feb. 1,
1999 and June 23, 1999, inclusive (the "Class Period").

The complaint charges that the company and certain of its officers and
directors violated the federal securities laws by providing materially
false and misleading statements regarding the company's financial condition
and growth potential. Specifically, as alleged in the complaint, on Feb.
23, 1999, the company reported seemingly record earnings for its 1998
fiscal year, and represented that the company would continue to experience
growth in 1999.

These statements were materially false and misleading when made because
defendants did not disclose, and knew or recklessly disregarded, that the
company's sales were then being negatively impacted by the competition from
Star Wars related merchandise and as a result, sales of the company's
products were declining significantly.

When Racing Champions revealed, on June 23, 1999, that it was expecting a
per share loss of $0.30 to $0.35 for its second fiscal quarter of 1999,
Racing Champions common stock dropped by 60%. Defendants attributed the
loss to poor sales, and the taking of a $6.4 million restructuring charge
in connection with a corporate acquisition.

Contact: Cauley & Geller, LLP Sue Null, Jackie Addison or Sharon Jackson
888/551-9944 Cauleypa@aol.com

RELIANCE GROUP: Rabin & Peckel Files Securities Suit in New York
A class action complaint has been filed in the United States District Court
for the Southern District of New York on behalf of all persons or entities
who purchased or otherwise acquired the securities of Reliance Group
Holdings, Inc. (NYSE: REL) between February 8, 1999 and May 10, 2000,
inclusive (the "Class Period").

The Complaint alleges that Reliance and certain of its officers and/or
directors violated the Securities Exchange Act of 1934 by making a series
of materially false and misleading statements regarding the financial
success and record growth of Reliance during the Class Period. The
Complaint alleges that as a result of these false and misleading statements
the price of Reliance securities were artificially inflated throughout the
Class Period causing plaintiff and the other members of the Class to suffer

Contact: Rabin & Peckel LLP Elana M. Bourkoff Joseph V. McBride
800/497-8076 212/682-1818 email@rabinlaw.com www.rabinlaw.com

RELIANCE GROUP: Spector, Roseman Files Securities Suit in New York
A class action lawsuit was filed in the United States District Court for
the Southern District of New York on behalf of all persons who purchased
the common stock of Reliance Group Holdings Inc. (NYSE: REL) between
February 8, 1999 and May 10, 2000, inclusive (the "Class Period").

The complaint charges defendants with violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The complaint alleges that the defendants issued materially
false and misleading information concerning, among other things, the
Company's expectations of recovery on its reinsurance contracts. As a
result of the Company's false and misleading statements, it is alleged that
the price of Reliance stock was artificially inflated during the Class
Period. When the truth was finally disclosed on May 10, 2000, the price of
Reliance stock collapsed.

Contact: Spector, Roseman & Kodroff, P.C. Robert M. Roseman or Joshua H.
Grabar 888/844-5862 classaction@spectorandroseman.com

TOBACCO LITIGATION: FL Jury Begins Deliberations in 3rd and Final Phase
A jury of six people including a smoker and a former smoker began
deliberations in the third and final phase of the first class-action
tobacco case to go to trial.

Attorneys for the sick smokers have called for a damage award between $118
and $196 billion, but tobacco industry lawyers said the numbers are
outrageous and would bankrupt the five companies, costing thousands of
people their jobs.

The jury got the case for the third and final time in the two-year trial at
9:55 a.m. after instructions from Circuit Judge Robert P. Kaye that took
only 10 minutes. It was considered anybody's guess on how long the
deliberations would take.

Closing arguments in the final phase of the two-year trial ended with a
rebuttal argument by Stanley Rosenblatt, the attorney for an estimated
300,000 to 700,000 sick smokers believed to be a party to the suit.
Rosenblatt called it a "day of reckoning" for the tobacco industry. "These
companies have been responsible for the destruction of lives, families,
careers and dreams," Rosenblatt said.

Brown & Williamson attorney Anthony Upshaw joined other attorneys in the
case insisting the industry has changed and is trying to discourage teens
from smoking. He said the point of the industry's ads are to try to get
smokers to change brands, not to lure new smokers.

The penalty phase of the trial began May 22 and except for appeals the
verdict will mark the end the proceeding that began in July 1998. Last
July, the same jurors found the industry guilty of misleading the public
about the dangers of smoking, resulting in serious illnesses and death. In
April, they awarded the three primary defendants in the case $12.7 million
in damages. Two of the plaintiffs are seriously ill and a third died of the
disease. Her husband will get the money. If the award is unfavorable to the
industry as expected, an appeal is certain and that could last another two
or three years.

The defendants include Phillip Morris, R.J. Reynolds, Brown & Williamson,
Lorrillard and Liggett and Meyers. (United Press International, July 14,

TOBACCO LITIGATION: Judge Reminds Jurors Damages Can't Bankrupt Industry
on the Cable News Network on July 14, 2000)

(Highlight: A jury in Miami is deliberating punitive damages in a landmark
lawsuit against big tobacco. This is the first class-action lawsuit by
smokers that has gone to trial, and potentially billions of dollars are at

    JUDY WOODRUFF, CNN ANCHOR: But we begin in Miami, where a jury is
deliberating punitive damages in a landmark lawsuit against big tobacco.
This is the first class-action lawsuit by smokers that has gone to trial,
and potentially billions of dollars are at stake.

    CNN's Susan Candiotti joins us now with more.

Hello, Susan.


In the two hours since this jury began deliberating, they have asked for
only one thing, the notes that they've been taking since -- during the
course of this two-month penalty phase of trial. During course of the two
year trial, the court has tallied more than 58,000 pages of testimony and
this jury has heard from about 160 witnesses.

Now before the four-man, two-woman jury began its work behind closed doors,
the judge gave them instructions about the verdict form, it's really very
simple. It names the defendants and how much, if any, they should be paid
in punitive damages. The judge reminded them the law forbids them from
awarding an amount of money that would put a company out of business.


particular defendant must be such that it could be paid by that defendant
without financially destroying or bankrupting that defendant. This should
be determined by evaluating each defendant's financial condition and
resources at the time your verdict is rendered. It is only a defendant's
current ability to pay a punitive damage award that is relevant and not
whether a defendant can pay using a payout or an installment plan.


    CANDIOTTI: Here are the defendants, five of America's biggest tobacco
companies: Philip Morris, makers of Marlboro; R.J. Reynolds Tobacco
Company, they make Winston cigarettes; Brown and Williamson, they make
Kool; and there's Lorillard Tobacco, the Liggett Group; as well as the
Council for Tobacco Research; and the Tobacco Institute, two tobacco
organizations that are now defunct. Now in 1999, just last year, in the
first part of this trial, or the second part, the jury rendered a verdict
that smoking causes disease and cancer. That cigarettes are addictive, that
they are defective and dangerous, and that the tobacco companies conspired
to commit fraud by concealment.

Now whatever the penalty is, big tobacco has said, it does intend to appeal
if they feel the amount is excessive. And that process could take at least
two years.

Susan Candiotti, CNN, reporting live in Miami.

    WOODRUFF: Susan, refresh our memories, how long has this trial gone on?

    CANDIOTTI: This trial, Judy, has been going on for two long years. So
imagine what kind of stress and sacrifice these jurors have been under and
the sacrifice they've been making during that time.

    WOODRUFF: Susan, I'm going to interrupt, thanks very much.  . . .

    KAGAN: Another big story we're following this morning, the final phase
of a landmark tobacco trial in Florida. The class action case by hundreds
of thousands of sick Florida smokers has spent two years in court. Today,
the fate of the entire tobacco industry could hang in the balance as the
jury begins deliberating punitive damage against five major cigarette

CNN's Allan Dodds Frank is in Miami covering the trial, and he joins us now
with an update.

Allan, good morning.


For a trial that's taken nearly two years, the judge's instructions to the
jury were remarkably brief -- only about 15 minutes. I think we should
listen to how he told the jury they should think about how big an award
they can give.


award of punitive damages, if any, you may consider each defendant's
current financial condition and resources. Your award against a particular
defendant must be such that it could be paid by that defendant without
financially destroying our bankrupting that defendant. This should be
determined by evaluating each defendant's financial condition and resources
at the time your verdict is rendered.


    FRANK: Six of the people who know this case best left the courthouse
after two years. They are the alternate jurors. And as they left, one of
them said, it'll be nice to get my life back. They've been on standby all
this time because the case was so long and they might have been needed for
this final phase.

Now, during the case, the tobacco lawyers made a case that they didn't --
shouldn't have to pay much, but the plaintiffs' lawyers asked for a big
number. In fact, it was $123 billion to $196 billion they want from the
tobacco industry. And the tobacco industry lawyers countered by saying,
gee, we can't really afford much. A billion dollars might put us all out of
business. And they gave their suggested punitive damages if the jury
decided it had to award something, and they amounted to less than $200
million -- obviously a huge gap here.

This jury has twice found against the tobacco industry, so many of the
courthouse observers are thinking this could be a punitive damage award
that breaks the records, meaning more than $5 billion against corporations
-- Daryn.

    KAGAN: Allan Dodds Frank in Miami, thank you very much.

When the jury is ready with their decision, you will see that announcement
live here on CNN.   . . .

    KEENAN: And hello, again, from Daryn Kagan and me as well, I'm Terry

Jurors in a landmark class action lawsuit against the tobacco industry has
begun their deliberations. They must decide whether to punish the five
American tobacco companies involved in the suit by imposing punitive
damages against them.

Prosecutors have ask the jurors to award the more than 500,000 smokers
involved in case a total of $154 billion. Defense attorneys say their
clients should not have to pay anything. Jurors have already found the
companies guilty of producing a lethal product that harmed smokers.

TOBACCO LITIGATION: U.K. Group Actions Don't Pay Like U.S. Counterparts
In the latest round of U.S. tobacco litigation, the chief executives of the
nation's biggest tobacco companies have been forced to take the stand to
try to persuade a Florida jury not to bring a multibillion-dollar verdict
in favor of more than 300,000 sick smokers.

But their counterparts in the United Kingdom can rest easy because any
hopes of bringing a similar action there are practically dead. In February
last year, just as tobacco companies were signing the first huge checks for
damages won against them in U.S. courts, a case brought by 53 lung cancer
sufferers against Imperial Tobacco and Gallaher collapsed at the High Court
in London -- an intermediate appellate court where the most high-value
complex civil actions are heard -- a year before it was due to come to
trial. To save their clients from paying the tobacco companies' huge costs,
the claimants' lawyers agreed not to sue the tobacco companies again and
not to reveal any of the evidence they had uncovered.

The scope for multiparty actions in England is far more limited than it is
in the United States. For a start, class actions are not allowed. Whereas
in the United States, lawyers can apply to the court for a class action
that will cover all those who fall into the category covered by the case,
in England only the plaintiffs themselves are covered by what is called a
group action.

"I think people in this country, whatever side they are on, probably
believe it is over-optimistic to think that issues in complex product
liability can be dealt with in isolation from cases. The group structure
tends to underplay the critical differences between cases," says Mark
Tyler, a partner in the health care team at CMS Cameron McKenna.

The Lord Chancellor, the cabinet minister who heads the judiciary, is
introducing new guidelines for judges in organizing multiparty actions, but
judges will still be left with a great deal of discretion. This, says Mr.
Tyler, is because England has no written constitution. "Here, being much
more common-law [oriented], we rely on custom and practice, but group
actions grew up quicker than the rules to deal with them."

Mr. Tyler's firm is a major law firm in the City, London's financial
district. It therefore acts for the defendants, rather than the plaintiffs,
in class actions to ensure against conflicts of interest with its corporate
and financial client base. Multiparty claims are usually handled by
specialist litigation firms.

                     The Role of Barristers

A key difference between England and Wales (Scotland and Northern Ireland
have their own systems) and the United States is that the profession is
split between the bar -- whose members, called barristers, have almost sole
rights of advocacy in the higher courts -- and solicitors at law firms, who
commission barristers to do work. Roger Merry-Price, senior clerk at 3
Verulam Buildings, a barristers' chambers whose tenants (members)
specialize in multiparty actions, says that the bar's independence can be
helpful in such cases -- as well as in providing expert advocacy skills.

"One of the key advantages of the bar is that you are not so close to the
client as perhaps the law firm is and you are able to give advice to the
client that he ought to hear rather than wants to hear," says Mr.
Merry-Price. Barristers can also calm troubled waters between the two
sides, caused by heated exchanges of letters between fiery litigators, and
can provide specialist knowledge in certain areas in which a solicitor may
not have detailed knowledge. The bar can also provide efficient short-term
help in examining documents in group actions, which tend to fluctuate
between bursts of activity and lulls when a full team of lawyers is not

Group actions in England generally are confined to products liability and
personal injury cases. There is little incentive for lawyers to sue on
behalf of shareholders when share prices at troubled companies drop;
securities fraud cases, such as those often initiated by William S. Lerach,
of Milberg Weiss Bershad Hynes & Lerach L.L.P., are virtually unheard of in
the United Kingdom.

Roger Baggallay, a partner in Clifford Chance's London banking and
securities litigation group, says, "Over here, shareholders can in some
circumstances bring claims against a company, but it's extremely rare to
get a group coming together that has sufficient financial interest [that
will be served by] getting together to go after a company in which they
have an interest." This, he says, is because England's securities
legislation, and its enforcement, is not as robust as in the United States.
In addition, contingency fees are allowed only in employment tribunal
cases, which don't take place in court. Conditional fees are on a no-win,
no-fee basis and can include an "uplift fee," but this is based on the
claimants' legal costs rather than on the settlement sum. These
limitations, and the absence of multiple-damages provisions and jury trials
in such cases, are disincentives for lawyers to put together multiparty
securities claims.

Even in the more common products liability claims, the differences between
the two countries run deep. The main disparity is "the amount [U.S. class
action lawyers] get paid," John Pickering, head of the personal injury
department at Irwin Mitchell, remarks grimly. This envy is not purely based
on personal greed. U.K. group action lawyers say that the way cases are
funded severely handicaps them compared with their U.S. brethren.

                          Sources of Funding

There are four possible funding sources for a U.K. multiparty liability
claim: the plaintiffs' private funds, a conditional fee arrangement, legal
aid and insurance against loss of the case.

Legal aid is a government fund to ensure access to legal advice for those
who otherwise could not afford it. The Legal Services Commission, a
government agency, decides whether to fund a case by weighing its costs
against the possible damages that might be won and the likelihood of
success. As part of the government's attack on inefficiency in the justice
system, since April most personal injury cases are excluded from legal aid
funding. But aid may still be awarded to cases with a wider public
interest, and multiparty actions may fall into this category.

The government wants cases that do not qualify for legal aid to be financed
by conditional fee arrangements. Leigh Day & Co. and Irwin Mitchell, the
law firms in the tobacco case, switched to a conditional fee arrangement
after legal aid was withdrawn. Leigh Day & Co. was involved much earlier
than Irwin Mitchell and had to forgo L 2.5 million ($ 4 million) in lost
fees and payments to experts.

The difficulties of bringing a large multiparty action under legal aid were
illustrated in another failed products liability case. In January 1999,
legal aid was withdrawn from an action brought by 250 women against the
distributors of the contraceptive implant Norplant. The women claimed ill
effects including suicidal depression, hair loss and nonstop bleeding. Yet
four months after the case collapsed, the product was withdrawn. Paul
Balen, head of personal litigation at Freeth Cartwright Hunt Dickins, who
represented the women, said that legal aid was withdrawn because the
potential damages were too low compared with costs. "In a sense we were a
victim of the product's own disaster because, had it been more successful,
more people would have used it and the claim would have been higher value,"
he remarks.

Irwin Mitchell's Mr. Pickering says, "If you succeed on a multiparty action
in the States and recover substantial damages, that allows you to build up
a war chest . . . to reinvest on investigation on another case. [In the
tobacco case] we were constantly under financial pressure, which won out
because the clients weren't able to fund the case themselves, and we
weren't able to pay for it. A lot of these cases require very significant
up-front investigation costs. You have often got to go through hundreds of
documents and consult experts."

One of the chief financial pressures in the tobacco litigation was that,
unlike in the United States, if the plaintiffs lose they are liable for the
defendant's costs. Martyn Day, senior partner at Leigh Day, says, "The
defendants had spent about L 15 million [$ 24 million] in costs. I don't
see any firm in this country being prepared to take that kind of risk."

Mr. Pickering says that the lack of parity between litigants is a major
problem when a multinational company can "burn off" its opponent by
spending on legal fees that -- though potentially ruinous to its opponent
-- are "peanuts compared with what they would lose if the case was lost."

This was the reason both firms decided not to bring further actions against
the tobacco companies, having sought the advice of ethics advisers at the
Law Society -- which regulates and represents solicitors in England and
Wales -- and the judge in the case. "We were unhappy about it, but we had
to make sure our clients would be protected because of the real risk that
they would be taken to the cleaners by the other side on costs," says Mr.

Another huge disadvantage in England, says Mr. Day, is that a judge rather
than a jury hears cases. The tobacco case collapsed when the judge would
not use his discretion to allow claims to be brought by plaintiffs whose
cancer was diagnosed more than three years before. "He made it clear that .
. . he didn't like the case at all, which forced us to drop the actions as
he would try the case. . . . In this country, we have very few examples of
success in front of a judge in our group actions. . . . A jury will always
tend to be more sympathetic to individual claimants whereas a judge will
tend to be more conservative, especially when a case is at the cutting edge
of society."

He adds that the judiciary's conservatism means that even when judges do
find for the plaintiffs, they do not award punitive damages, making the
award "minuscule" compared with the sums awarded by juries in the United

These constraints draw sympathy from powerful U.S. class action lawyers.
"They are surprised that we have to deal with it in the way we do," says
Mr. Pickering plaintively. "They regard us as the poorer cousins."

                                      TOP 10

Law firms with the largest number of attorneys in London as of 1999 1.
     Clifford Chance           932 2.     Linklaters            721 3.
     Allen & Overy             614 4.     Freshfields           577 5.
     Lovell White Durrant     473 6.     Herbert Smith        456 7.
     CMS Cameron McKenna      432 8.     Simmons & Simmons    404 9.
     Slaghter and May         400 10.     Norton Rose           380

Source: Chambers and Partners: The Legal Profession 1999-2000,
www.chambersandpartners.com (The National Law Journal, July 10, 2000)

VISUAL NETWORKS: Barrack Rodos Files Securities Suit in Maryland
A notice issued by Barrack, Rodos & Bacine on July 13 says that a class
action has been commenced in the United States District Court for the
District of Maryland on behalf of all persons who purchased the common
stock of Visual Networks, Inc. (Nasdaq: VNWK) between February 7, 2000 and
July 5, 2000, inclusive (the "Class Period").

The complaint alleges that, during the Class Period, defendants issued to
the investing public false and misleading statements concerning Visual
Networks' acquisition of Avesta Technologies Inc. ("Avesta"), especially by
failing to disclose problems related to integrating Avesta into the
Company, and concerning the sale of the Company's core products. The
complaint further alleges that, following disclosure of the true state of
the Company's affairs about the Avesta integration problems and weakening
revenues, its common stock plummeted more than $14.00, about 54%.

Contact: Counsel for Class Plaintiffs, Barrack, Rodos & Bacine, Shareholder
Relations Manager, 800-417-7305, or 215-963-0600, or fax, 888-417-7306, or
215-963-0838, or e-mail, msgoldman@barrack.com

VISUAL NETWORKS: Cohen, Milstein Files Securities Fraud Suit in MD
The law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C., has announced
that, on behalf of certain plaintiffs, it has filed a class action lawsuit
on behalf of all persons who purchased the common stock of Visual Networks,
Inc. (Nasdaq: VNWK) between February 7, 2000 through July 5, 2000
inclusive. The suit, filed in the United States District Court for the
District of Maryland, seeks to recover under the federal securities laws
for damages sustained by members of the proposed Class. Visual Networks and
its CEO/Chairman of the Board are named as Defendants in the suit, which
alleges they issued false and misleading statements and made material
omissions concerning, among other things, Visual Networks' acquisition and
integration of Avesta Technologies Inc. and the effects thereof on Visual
Networks' operating results, including but not limited to its revenues,
sales and earnings.

Specifically, the Complaint alleges that the defendants misrepresented that
the integration of Avesta would be completed within three to four months,
would create synergies of $5-12 million and lead to 50% increases in
revenues for 2000 and 2001. Moreover, when the purported benefits of the
acquisition failed to materialize during the initial phases after the
transaction closed, the defendants failed to inform the investing public as
such. In fact, when information relating to the adverse effects of the
transaction started to emerge, the defendants made a series of affirmative
misrepresentations to allay these concerns. Shortly thereafter however, the
market's concerns proved accurate and the defendants were forced to
disclose revenue and earnings shortfalls which they explained were the
result of difficulties encountered in integrating Avesta. Persons who are
members of the Class described above have sixty days from July 7, 2000 to
move the Court if they desire to serve as lead plaintiffs in the case. In
order to serve as a lead plaintiff, you must meet certain legal

Plaintiffs' counsel is the law firm of Cohen, Milstein, Hausfeld & Toll,
P.L.L.C. (www.cmht.com).

Contact: Ari Karen, email: akaren@cmht.com; Lisa Polk, email:
lpolk@cmht.com; or Lisa M. Mezzetti; all of Cohen, Milstein, Hausfield &
Toll, P.L.L.C, 888-240-0775, or 202-408-4600

VISUAL NETWORKS: Spector, Roseman Files Securities Suit in Maryland
Spector, Roseman & Kodroff, P.C. announce that a class action was commenced
in the United States District Court for the District of Maryland on behalf
of purchasers of the common stock of Visual Networks, Inc. (NASDAQ: VNWK)
during the period between February 7, 2000 and July 5, 2000 inclusive, (the
"Class Period"), who suffered damages caused by defendants' violation of
the federal securities laws.

The Complaint alleges that during the Class Period, defendants issued to
the investing public false and misleading statements concerning the
Company's prospects for the growth of its revenues going forward, prospects
in connection with its acquisition of Avesta Technologies Inc. ("Avesta")
and with respect to the sale of the Company's core products. Moreover, the
Company omitted to state material information concerning integration
related problems being experienced following the Avesta transaction
necessary to be issued in order to make prior statements not misleading.
Once the Company disclosed the true state of its affairs with respect to
the Avesta integration problems and weakening revenues, its common stock
plummeted nearly 54% or $14.50 points.

Contact: Spector, Roseman & Kodroff, P.C. Robert M. Roseman, 888/844-5862
E-mail: classaction@spectorandroseman.com http://www.spectorandroseman.com

* Groups Urge U.N. Meeting On Reparations For Slaves' Kin
An Atlanta-based religious group is lobbying for a special United Nations
meeting on reparations for African-Americans.

The Lost-Found Nation of Islam says the meeting would give blacks in the
Americas and the Caribbean a chance to voice their complaints about U.S.
human rights violations from slavery to the present. "This is the first
time the world has been willing or wants to hear what's happened to you,"
Dhoruba Asadi, minister of the group's Atlanta mosque, said during a recent
town hall meeting.

The Lost-Found Nation urged the nearly 100 attendees to show their written
support for the regional meeting proposed in May by the United Nations'
Working Group on Minorities. A larger U.N. subcommittee is expected to
decide on the meeting by the end of August.

African-Americans for decades have been seeking payment from the U.S.
government for the enslavement of their ancestors and the lingering effects
of discrimination without success.

So far, Japanese-Americans interred during World War II and Native
Americans are among the few groups to receive a government apology and
payments for past wrongs.

Last year, the Lost-Found Nation took depositions from African-Americans in
Atlanta and other cities on the effects of slavery and discrimination. The
testimonies were part of documentation presented to the United Nations.

Now the group is conducting an online reparations survey on whether the
descendants of African-American slaves deserve to be paid reparations.

The Lost-Found Nation isn't the only one at work on the issue. The Atlanta
chapter of the National Coalition of Blacks for Reparations in America,
which has been around since 1996, is planning a series of public hearings
beginning in September to collect testimony for a planned national class
action lawsuit. The coalition also holds meetings twice a month on the

Also this fall, the coalition and the Georgia State University Black Law
Student Association are helping sponsor a conference on reparations that is
expected to draw students from throughout the South.

"We feel like this is a critical time and issue," said Mawuli Mel Davis,
president. "Getting this resolved probably is one of the most important
issues we'll face as a generation." (The Atlanta Journal and Constitution,
July 13, 2000)


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

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

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to be
reliable, but is not guaranteed.

The CAR subscription rate is $575 for six months delivered via e-mail.
Additional e-mail subscriptions for members of the same firm for the
term of the initial subscription or balance thereof are $25 each.  For
subscription information, contact Christopher Beard at 301/951-6400.

                    * * *  End of Transmission  * * *