CAR_Public/000727.MBX               C L A S S   A C T I O N   R E P O R T E R

               Thursday, July 27, 2000, Vol. 2, No. 145

                              Headlines

AMERICAN FEDERATION: Ap Ct Upholds Dismissal of Artists’ ERISA Suit
CAPROCK COMMUNICATIONS: Milberg Weiss Files Securities Suit in Texas
CINAR CORP: Ernst & Young named in suit by U.S. holders: Audits cited
CONSECO FINANCE: Arbitrator Awards SC Home Loan Customers $20 Mil
DR.KOOP.COM INC: Milberg Weiss Announces Securities Suit in Texas

ELBIT MEDICAL: Settlement for Claim over Elscint Sale Okayed in Tel Aviv
FOOD FIRMS: Freeman, Freeman Files Sorbate Price-Fixing Suit
HONEYWELL INTERNATIONAL: Kirby, McInerney Retained for Securities Suit
HONEYWELL INTERNATIONAL: Milberg Weiss Files Securities Suit in NJ
LABOR READY: Construction Unions Query Former CEO's Role in CDM Machines

MCI/WORLDCOM: Girard & Green Files Suit over Billing after Disconnection
MICROSOFT CORP: Asks Supreme Ct to Send Antitrust Case to Appeals Court
MICROSOFT CORP: KY Judge Tosses out Monopoly Suit over Window 98
TAINTED BLOOD: Govts Appeal against Attorney Fees in Canadian Hep C Case
TOBACCO LITIGATION: About 300 More Flight Attendants’ Suits Before Sept

TOBACCO LITIGATION: Survey in CA Shows Smoking among Teens Has Declined
TOTAL RENAL: Announces Settlement of Securities Lawsuit
UNPLANNED EMISSIONS: Contribute to TX Pollution; Subject of Valero Suit
WAR VICTIMS: Ethiopian Jews Seek Compensation from Italy
WHITE HOUSE: Court Orders ARMS Search in Employees’ Suit over Privacy

* SEC Rules Aim to Keep Brokerages on the Level

                                 *********

AMERICAN FEDERATION: Ap Ct Upholds Dismissal of Artists’ ERISA Suit
-------------------------------------------------------------------
A district court properly dismissed artists' claims under the Employee
Retriement Income Security Act for derivative delinquent contribution
because only fiduciaries have standing under ERISA to sue on behalf of
the plan for delinquent contributions, the U.S. Court of Appeals for the
11th Circuit held on June 29, in a matter of first impression. Moore v.
American Federation of Television and Radio Artists, nos. 98-8895 and
98-9263.

The district court did not abuse its discretion in denying the recording
artists' motion for class certification in their claims for breach of
fiduciary duty against union pension fund trustees and racketeering
claims against record companies because each case of the named plaintiffs
and putative class members differed and because there were no common
questions of fact in the racketeering claims. (The National Law Journal,
July 17, 2000)


CAPROCK COMMUNICATIONS: Milberg Weiss Files Securities Suit in Texas
--------------------------------------------------------------------
Milberg Weiss (http://www.milberg.com/caprock/)announced on July 26 that
a class action has been commenced in the United States District Court for
the Northern District of Texas on behalf of purchasers of CapRock
Communications Corp. ("CapRock") (Nasdaq:CPRK) common stock during the
period between April 28, 2000 and July 6, 2000 (the "Class Period"),
including those who purchased shares in CapRock's June 16, 2000 Secondary
Offering.

The complaint charges CapRock and its President and Chief Operating
Officer, its Chairman and Chief Executive Officer and its Chief Financial
Officer with violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934. CapRock owns and operates a scalable long-haul
fiber network. The complaint alleges that defendants' false and
misleading statements concerning the revenues to be derived from its dark
fiber segment, which would result in a second quarter 2000 loss per share
only of $0.08 and revenue of $70 million, artificially inflated the price
of CapRock stock to a Class Period high of $36. CapRock's top officers
knew but concealed that some $30 million of its projected $70 million in
second quarter 2000 revenues was to be derived from a contract which,
despite months of efforts, CapRock had been unable to have signed. The
upsurge in CapRock's stock price caused by defendants' false and
misleading statements allowed CapRock to sell 4.5 million shares of
CapRock stock for proceeds of$83 million and enabled defendants to infuse
CapRock with desperately needed capital to fund its operations. On July
6, 2000, days after CapRock's Secondary Offering was completed, CapRock
revealed that it was in fact suffering a huge drop in revenues, and that
its losses would be 800% greater than defendants had stated in the prior
weeks, and exposed the problems CapRock had been experiencing during the
Class Period with its dark fiber business. This announcement caused its
stock price to drop to as low as $12 from its Class Period high of$36 on
record volume of over 4 million shares on July 6, 2000, causing tens of
millions of dollars in damages to members of the Class.

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


CINAR CORP: Ernst & Young named in suit by U.S. holders: Audits cited
---------------------------------------------------------------------
The failure of Ernst & Young LLP to adequately plan, staff, and execute
audits of embattled Cinar Corp. makes it partially to blame for investor
losses, according to a class-action suit filed against the Montreal-based
animation company.

Ernst & Young was named as a defendant in an amended class-action suit
against Cinar that was filed last Friday with the U.S. District Court of
the Eastern District of New York.

According to court documents, the auditors did not design the audit in a
manner likely to detect financial irregularities, and they failed to
confirm the existence of Cinar's reported investments. The suit also
maintains Ernst & Young did not verify Cinar's eligibility for government
subsidies and tax credits.

A Toronto-based spokeswoman for Ernst & Young declined to comment on the
individual allegations, but maintained 'the case against us is totally
without merit, and we will be defending ourselves strongly.'

The nature of the claim against Ernst & Young centres on a secondary
share offering made by Cinar in 1999, which includes financial statements
on which the auditor issued 'unqualified opinions,' said Neil Selinger, a
partner at Lowey Dannenberg Bemporad & Selinger, P.C., the lead counsel
for the consolidated class action suit.

Cinar has said it will have to restate its financial statements for 1997
and 1998, as well as for the first three quarters of 1999, owing to
tax-fraud allegations, undisclosed related party transactions and
unauthorized investments.

'Under [U.S. securities laws] an accountant is liable for any errors in
the financial statements on which he's issued an opinion that is
contained in a registration statement, unless the accountant firm can
demonstrate that they could not have known of the misstatements,'
explained Mr. Selinger.

Cinar's well-publicized troubles began last fall, when it was accused of
falsely attributing U.S. scripts to Canadian authors, in order to grab
government subsidies and tax-credits. The company became further
embroiled in scandal in March, when an internal audit committee
discovered that US$ 122-million worth of company money was improperly
invested with a trio of Bahamian financial firms.

But while the U.S. suit alleges that Ernst & Young is at least partially
liable for the financial misstatements arising from these events, the
auditors will not be included in class action proceedings filed against
Cinar in Quebec, said Paul Unterberg, lead counsel for the Quebec suit.

'We mulled over the idea of including the accountants, and we said to
ourselves, 'Does an accountant's duty go to the extent of verifying the
passport of the people for whom they're getting deductions as
scriptwriters?' I don't think a Superior Court judge is going to say that
Ernst & Young are supposed to check into the citizenship of the people
for whom they're getting tax deductions,' said Mr. Unterberg, adding that
the Canadian system differs substantially from the United States, where
civil juries hear class action cases.

Mr. Unterberg, along with lawyers representing Cinar, will meet in a
Quebec court today to set a schedule for examinations relating to the
class action. The two sides are currently trying to agree on a time for
examining Barrie Usher, Cinar's recently appointed chief executive.

Ernst & Young, meanwhile, is still scrambling to complete its audit of
Cinar's books, in hopes the company will avoid being delisted by Nasdaq
and the Toronto Stock Exchange, where its shares have been halted since
the investment imbroglio was unleashed in March. Company officials met
with Nasdaq in Washington on July 13 to discuss their status, and wrote
last week to further clarify their financial position with respect to the
audit.

Cinar had originally targeted June 30 for the completion of its
restatements, but that timeline has been pushed back while the company
haggles with the federal and provincial governments over a settlement on
the tax-credit issue. Sources close to the company said the federal deal
will likely be in the neighbourhood of $15-million.

Meanwhile, the company is hoping to receive a US$20-million payment on
July 30 from Globe-X Management Ltd., one of the three Bahamian financial
firms. Cinar has already collected US$62-million of the original
US$122-million sum. (National Post (formerly The Financial Post), July
26, 2000)


CONSECO FINANCE: Arbitrator Awards SC Home Loan Customers $20 Mil
-----------------------------------------------------------------
Conseco Finance Inc. should pay $20.1 million to South Carolina customers
for not telling them they could choose their own lawyers and insurance
companies when getting loans, an arbitrator says.

The case affects 3,739 South Carolina customers with home improvement or
mobile home loans from what was then Green Tree Financial Corp. beginning
in May 1993, Brad Simpson, one of the lawyers representing those who
sued, said Tuesday.

In addition to the $20.1 million, arbitrator Tom J. Ervin awarded nine
law firms almost $7 million in fees and expenses, said Simpson and Steve
Hamm, another lawyer.

Hamm who is South Carolina's former consumer advocate, said it was the
largest damage award ever under the state's consumer protection law.

Conseco lawyer Herb Hamilton said the company would ask a judge not to
approve the amount and, if not successful there, likely would appeal.
Among other things, the company contends Ervin did not have jurisdiction
to consider the class action, Hamilton said.

Minnesota-based Green Tree, which was bought for $6 billion in 1998 by
Indiana-base Conseco Inc., specializes in making high-risk loans that
generally carry higher interest rates.

South Carolina has no interest rate cap, but borrowers must be able to
have their own lawyers review loan documents, Hamm said. That is so a
borrower realizes he or she can lose the property if payments become
overdue, he said.

''We had a bunch of people who didn't know they were giving a mortgage on
their property,'' Hamm said.

In many cases, there was no evidence a lawyer was ever used to close the
loan, Simpson said.

However, Hamilton said the law was ''very complex and to some extent
confusing'' and that the company ''is only one of several consumer
lenders who have had this same accusation made against them.''

In a 1995 case, customers of Jim Walter Homes were awarded $16 million.

The latest arbitration cases alleged Green Tree never told customers of
their rights and the company continued that even after an employee warned
in September 1995 that it broke the law.

Ervin, a former Circuit Court judge, awarded $5,000 each to the 3,163
people who took out mobile home or home improvement loans from May 28,
1993, to Sept. 25, 1995.

Because the company failed to notify home improvement loan borrowers even
after the internal warning, Ervin awarded the maximum $7,500 to 576
people who got those loans after Sept. 25, 1995, the lawyers said.

Hamilton declined additional comment, saying he had not had time to read
the two rulings. (AP Online, July 26, 2000)


DR.KOOP.COM INC: Milberg Weiss Announces Securities Suit in Texas
-----------------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on July 20, 2000, on behalf of purchasers
of the securities of Dr.koop.com Inc. (NASDAQ: KOOP) between June 8,
1999, and March 30, 2000, including all persons who purchased the common
stock of Dr.koop.com pursuant to or traceable to the Company's initial
public offering on June 8, 1999, or subsequently in the open market.

A copy of the complaint filed in this action is available from the Court,
or can be viewed on Milberg Weiss' website at:
http://www.milberg.com/drkoop/

The action, numbered 100CA439-JN, is pending in the United States
District Court for the Western District of Texas, Austin Division,
located at 655 E. Durango Blvd., San Antonio, TX, 78206, against
defendants Dr.koop.com, Susan Georgen-Saad (Chief Financial Officer),
Donald Hackett (Chief Executive Officer and President), John F. Zaccaro
(Vice Chairman of the Board), and Nancy Snyderman (Director). The
Honorable James Nowlin is the Judge presiding over the case.

The complaint charges that defendants violated Sections 11, 12(a)(2) and
15 of the Securities Act of 1933, and Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
The complaint alleges that the prospectus (the "Prospectus") issued in
connection with the IPO was materially false and misleading for several
reasons. For example, the complaint alleges that the Prospectus
highlighted the purported benefits the Company would derive from its
relationship with HealthMagic Inc., a provider of Internet technology to
health related businesses and that HealthMagic would continue to develop
the Company's Personal Medical Records ("PMR") product, among other
technologies. This statement was materially false and misleading, as
alleged in the complaint, because it failed to disclose that the PMR
product was in early stages of development and required extensive
reworking before it could be commercially deployed. On March 30, 2000,
the Company filed its Form 10-K for fiscal 1999 which revealed that the
Company's relationship with HealthMagic was unsatisfactory and would be
terminated, and that the Company's independent auditors raised
substantial doubt about Dr.koop.com's ability to continue as a going
concern. In response to these revelations, the price of Dr.koop.com
common stock plunged by 41%, falling from $6 1/4 per share to 3 11/16 per
share.

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


ELBIT MEDICAL: Settlement for Claim over Elscint Sale Okayed in Tel Aviv
------------------------------------------------------------------------
Elbit Medical Imaging Ltd. (Nasdaq: EMITF) (EMI) announced on July 26
that on July 12, 2000, the District Court in Tel Aviv (Court) approved a
Settlement Agreement with respect to a claim which was filed against EMI,
Elscint Ltd. (NYSE: ELT), a subsidiary of EMI, and others on November 16,
1998, together with an application for the recognition of this claim as a
class action.

The Plaintiff's main allegations were that the respondents withheld
information regarding negotiations allegedly conducted by Elscint for the
sale of Elscint's principal businesses to third parties and had the
plaintiff known of such transaction, the plaintiff would have exercised
options of EMI which they held on September 1, 1998 (which have expired
in the interim).

On April 16, 2000, the parties signed a settlement agreement which
provides that EMI will pay US$ 1,104,200 and that the claim will be
recognized as a class action. However, it is anticipated that EMI will be
required to pay approximately US$ 0.55 million only to the plaintiffs
(other than to Elron Electronic Industry Ltd., which is expected to
decline to be joined as a plaintiff to the claim). The settlement payment
is covered by EMI's insurance policy.

This settlement agreement was subject to the Court's approval, which was
given on July 12, 2000. However, the court did not approve the amount of
the expenses requested by plaintiffs, and this issue may be appealed by
plaintiffs.


FOOD FIRMS: Freeman, Freeman Files Sorbate Price-Fixing Suit
------------------------------------------------------------
CHICAGO'S Freeman, Freeman & Salzman P.C. has filed a price-fixing suit
against Eastman Chemical Co., Hoechst A. G. and 21 other makers of the
food preservative sorbates.

The complaint was filed in federal court in Chicago on behalf of Dean
Foods Co. and Ralston Purina Co. It comes on the heels of a settlement in
a similar class action, filed last year in California, which three of the
defendants, including the German company Hoechst, settled for $ 60
million. Dale Kleber, general counsel at Dean Foods, told the Chicago
Tribune that Dean chose not to be a part of that class, saying. "We
believe we can do better."

In October 1998, Eastman pleaded guilty to fixing the price of sorbates
and was fined $ 11 million by the Justice Department. The company, which
has since halted its sorbate production, did not return phone calls. (The
National Law Journal, July 17, 2000)


HONEYWELL INTERNATIONAL: Kirby, McInerney Retained for Securities Suit
----------------------------------------------------------------------
The law firm of Kirby McInerney & Squire, LLP has been retained to bring
a class action lawsuit on behalf of all purchasers of Honeywell
International Inc. (NYSE: HON) common stock between December 20, 1999 and
June 19, 2000. The action will charge Honeywell and certain of its
officers with violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 by reason of material misrepresentations and
omissions.

The complaint will allege that, during the Class Period, Honeywell
securities traded at artificially inflated prices because Honeywell knew,
but did not publicly disclose, that its business was performing
significantly worse than the company had led analysts and the public to
believe. Throughout the class period, as the complaint alleges, Honeywell
repeatedly assured analysts and investors that (i) its recent merger with
Allied Signal was proceeding smoothly in operational terms and producing
benefits in financial terms; and (ii) that Honeywell would meet the
well-publicized quarterly earnings targets that it had set for itself. On
June 19, however, Honeywell was forced by a massive and mysterious fall
in its stock price into admitting what the complaint alleges it knew, or
was reckless in not knowing, all along - that its true earnings and
growth rate were not as high as the company had led investors to believe,
and that significant stumbling blocks existed in operations. As a result
of this revelation of Honeywell's true operational and financial state,
shocked investors saw Honeywell's share price plummet more than 25% (more
than $14 per share) during July 19 and July 20, 2000, from$48.50 to
$34.25.

Contact: KIRBY McINERNEY & SQUIRE, LLP Ira M. Press, Esq. Shan Anwar 830
Third Avenue 10th Floor New York, New York 10022 Telephone: (212)
317-2300 or Toll Free (888) 529-4787 E-Mail: sanwar@kmslaw.com


HONEYWELL INTERNATIONAL: Milberg Weiss Files Securities Suit in NJ
------------------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP
(http://www.milberg.com/honeywell/)announces that a class action lawsuit
was filed on July 25, 2000, on behalf of purchasers of the stock of
Honeywell International Inc. ("Honeywell" or the "Company") (NYSE:HON)
between December 20, 1999 and June 19, 2000 (the "Class Period"). A copy
of the complaint filed in this action is available from the Court in the
office of the Clerk of the Court, Room 4015, or can be viewed on Milberg
Weiss' website at: http://www.milberg.com/honeywell.

The case is pending in the United States District Court for the District
of New Jersey, and has not yet been assigned to a judge. The address of
the Courthouse is Martin Luther King, Jr. Federal Building and U.S.
Courthouse, 50 Walnut Street, Newark, New Jersey 07101.

The action seeks damages for violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The defendants are Honeywell International Inc., Michael R.
Bonsignore, Chief Executive Officer, Giannantonio Ferrari, President and
Chief Operating Officer, Donald J. Redlinger, Senior Vice President-Human
Resources, Robert D. Johnson, Executive Vice President, Chief Operating
Officer-Aerospace Business, Richard F. Wallman, Senior Vice President and
Chief Financial Officer, Peter M. Kreindler, Senior Vice President and
General Counsel, James T. Porter, Senior Vice President-Information and
Business Services.

Plaintiff alleges that defendants knowingly or recklessly disseminated
materially false and misleading statements and omissions that
misrepresented the success of the merger of Honeywell and Allied Signal,
Inc. Plaintiff alleges that the Allied/Honeywell merger was
problem-ridden and not yielding operational synergies and millions in
cost savings, and that the "new" Honeywell's business was not nearly as
strong as represented and did not have nearly as strong prospects as
forecast by defendants. Plaintiff further alleges that the
misrepresentations and omissions by defendants influenced the views of
securities analysts and fostered an unrealistically positive assessment
of Honeywell and its business, prospects and operations. Plaintiff
alleges that, as a result of such misinformation, Honeywell's stock
traded at artificially inflated prices throughout the proposed Class
Period.

Plaintiff alleges that defendants' materially false and misleading
statements, included, among others:

On April 13, 2000 defendants represented that, "Honeywell is well-poised
to meet its earnings and revenue commitments for 2000 and beyond," and
"(w)e are clearly seeing the benefits of the Merger flowing through (to
Honeywell)."

On May 1, 2000 defendants represented that Honeywell would achieve EPS
growth of at least 20% in 2000.

On May 9, 2000 defendants represented that the Merger synergies and
savings and Honeywell's EPS growth would accelerate as 2000 unfolded.

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

Each plaintiff seeking to serve as a representative party on behalf of a
class shall provide a sworn certification, which shall be personally
signed by such plaintiff and filed with the complaint, that:

(1) states that the plaintiff has reviewed the complaint and authorized
its filing;

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

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

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

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

(6) states that the plaintiff will not accept any payment for serving as
a representative party on behalf of a class beyond the plaintiff's pro
rata share of any recovery, except as ordered or approved by the court in
accordance with paragraph (4). 15 U.S.C. Section 78u-4(a)(2)(A)(i)-(iv).

In addition, the PSLRA provides that the Court shall appoint as Lead
Plaintiff the member or members of the class that the Court determines to
be most capable of adequately representing the interests of class
members. In determining the "most adequate plaintiff," the PSLRA provides
that the Court shall adopt a rebuttable presumption that the most
adequate plaintiff is the person or group that has either filed a
complaint or made a motion for appointment as Lead Plaintiff, has the
largest financial interest in the relief sought by the class, and
otherwise satisfies the requirements of Rule 23 of the Federal Rules of
Civil Procedure. 15 U.S.C. Section 78 u-4(a)(3)(iii). At the Lead
Plaintiff selection stage, this latter requirement involves a preliminary
showing that the proposed Lead Plaintiff's claims are typical of claims
of the class members, and that the Lead Plaintiff will be an adequate
representative of the class. Any member of the alleged class may seek to
be appointed as Lead Plaintiff, even if that person has not filed a
complaint.

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


LABOR READY: Construction Unions Query Former CEO's Role in CDM Machines
------------------------------------------------------------------------
The Building and Construction Trades Department, AFL-CIO sent a letter
to Richard L. King, CEO and President of Labor Ready, Inc. (NYSE: LRW),
one of the nation's largest temporary employment agencies, demanding an
explanation about its arrangement for the use of the patent on the
company's "Cash Dispensing Machines."

As a shareholder, the Building and Construction Trades Department wants
to know why there has been no disclosure of payment or obligation to
former CEO Glenn Welstad, his son Todd Welstad, and Keith Gilbert who
invented the machine and assigned the patent to Labor Ready.

The letter states, "Given Glenn Welstad's readiness to use the assets of
the corporation for his personal benefit, several questions are raised by
his role with respect to the CDM machines in the absence of any
information about the transaction between the Welstads, Gilbert and Labor
Ready in any of the company's disclosures."

The cash machines were installed by Labor Ready to pay workers in cash at
the end of each workday. The machines and the company's slogan, "Work
Today, Paid Today" play a significant role in the company's recruitment
of potential employees.

This inquiry comes on the heels of a class-action lawsuit filed against
Labor Ready in Georgia for allegedly illegally charging its employees for
the use of its cash dispensing machines. Labor Ready charges workers a
fee of $1.00 plus the change in their daily earnings to withdraw their
pay -- the fees nationwide in 1999 generated $7.7 million in revenue for
the company. Labor Ready is one of the largest and fastest growing
temporary employment agencies in the country. It operates 839 offices in
49 states, Puerto Rico, Canada, and the United Kingdom. Labor Ready is a
leader in the national trend away from full-time, permanent jobs towards
part-time, temporary, and contract staffing strategies. Today nearly
three in ten working Americans are employed in contingent or non-standard
employment.

The Building and Construction Trades Department is the umbrella
organization for the 15 international building and construction trades
unions in the United States and Canada, representing a total of 3 million
members in construction and related industries. In April the unions
launched the "Temp Workers Deserve a Permanent Voice @ Work" campaign to
shed light on the abuse of temporary agency workers in the construction
industry.


MCI/WORLDCOM: Girard & Green Files Suit over Billing after Disconnection
------------------------------------------------------------------------
A class action lawsuit has been filed in California Superior Court in San
Diego, on behalf of all customers billed by MCI/Worldcom for disconnected
or transferred phone service. The class action alleges that
MCI/Worldcom's practice of billing customers after they disconnected
phone service violates the California Business and Professions Code. A
similar, subsequent case has also been filed by the Attorney Generals for
several states, including California, against MCI/Worldcom and other
major long distance companies.

The plaintiff in the class action is the non-profit consumer advocacy
group Utility Consumers' Action Network (UCAN) that represents nearly
40,000 residential consumers in California on telephone issues. Like
countless other small businesses in California, UCAN was improperly
billed by MCI/Worldcom for local telephone service for months after UCAN
transferred its phone lines to another telephone company.

According to attorneys for UCAN, MCI/Worldcom's mis-billing scam is
indicative of an on-going trend at MCI/Worldcom to overcharge and
under-serve its customers. "MCI/Worldcom is an industry leader in massive
billing fraud, illegal rate increases and shoddy customer service," says
Charles Carbone, attorney for UCAN. UCAN is represented by the San
Francisco law firm of Girard & Green, LLP, which has extensive experience
in prosecuting consumer class actions and complex telecommunications
litigation.

Contact: Girard & Green, LLP Leslie R. Cuesta, 415/981-4800
lrc@classcounsel.com


MICROSOFT CORP: Asks Supreme Ct to Send Antitrust Case to Appeals Court
-----------------------------------------------------------------------
Microsoft Corp. asked the Supreme Court on Wednesday to let a federal
appeals court take the next crack at a titanic antitrust fight that
threatens to break the computer software giant in two. "The importance of
these cases will not lie in how quickly they are resolved but in their
long-term effects on consumers and this nation's economy," Microsoft's
lawyers told the justices in an appeal.

The 30-page appeal, filed Wednesday with a 312-page appendix, urged the
court to avoid "the onerous task of sifting through a large and complex
record and forgoing the many benefits of intermediate appellate review."
"Indeed, the number of and nature of the errors below militate strongly
in favor of review by the court of appeals," the appeal said.

Microsoft contends in the appeal that U.S. District Judge Thomas Penfield
Jackson wrongly concluded that it engaged in illegally anticompetitive
conduct. The company also complains about Jackson's contacts with
reporters, saying he should be disqualified if the case ever returned to
the trial court level.

The Justice Department, under an expediting agreement with Microsoft, has
until Aug. 15 to respond to the company's Supreme Court appeal.
Government lawyers want the nation's highest court to tackle the case
directly, without first sending it to the U.S. Circuit Court of Appeals
for the District of Columbia.

The nine justices are not expected to say until September at the earliest
whether they will grant direct review or send the case to the appeals
court. The highest court's 2000-2001 term will not begin until Oct. 2.

A federal law allows major antitrust disputes to skip the appeals court
step and move from a trial court to the Supreme Court, but the justices
make the decision.

If the court chooses to grant direct review, Microsoft's lawyers said, it
should consider eight separate questions. Among them is whether
Microsoft's design of its Windows 95 and Windows 98 operating systems to
include Web browsing functions constituted a tie-in violation of federal
and state antitrust laws.

The appeal also attacked Jackson's breakup remedy and his "extrajudicial
communications with members of the press." His many interviews with
reporters during and after the 78-day trial "raise serious questions
about ... impartiality" and require that his ruling be reversed,
Microsoft's lawyers said.

Microsoft spokesman Jim Cullinan would not comment on that aspect of the
appeal. "All of the issues and specifics will, of course, be raised at
the appropriate time, in whatever court this case ends up in," he said.

Jackson delayed the implementation of the various conduct restrictions he
had imposed in his June 7 decision requiring Microsoft's breakup.

Among those restrictions, Jackson ordered Microsoft to divulge to outside
developers technical information about how its operating systems interact
with its software. Those developers would be able to pick apart the
computer code without cost to improve their understanding of it and make
their own products.

Microsoft also would no longer control what icons are on the Windows
operating screen when a user buys a computer. A person buying a computer
from a distributor such as Dell or Gateway would see a desktop that
looked nothing like the usual Windows desktop.

Those restrictions no longer loom in the company's immediate future.

Under Jackson's breakup plan, Microsoft would be split into two
companies. One would sell Windows, the operating system that runs most of
the world's personal computers. The other would sell everything else the
company produces, such as its Internet services and its lucrative Office
software suite, which includes popular word processing and spreadsheet
programs.

Microsoft was sued by the Justice Department and 19 states.

Also on Wednesday, a state judge in Kentucky dismissed a class-action
lawsuit against Microsoft brought by consumers that alleged the company
used its monopoly power to overcharge consumers for its Windows 98
operating system. The Kentucky court cited a law that only those consumer
who purchase a product directly from the company can sue to recover
antitrust damages.

Microsoft sells the vast majority of its software through computer makers
and retail stores. The case is Microsoft v. U.S., 00-139. (The Associated
Press, July 26, 2000)


MICROSOFT CORP: KY Judge Tosses out Monopoly Suit over Window 98
----------------------------------------------------------------
A Jefferson Circuit judge, like state judges in four other states, has
dismissed a class-action lawsuit alleging Microsoft used its monopoly
power to overcharge consumers for its Windows 98 operating system. Judge
Judith McDonald-Burkman ruled Tuesday that the plaintiffs did not
purchase the product directly from Microsoft and therefore had no
standing to sue the company. There have been similar decisions in Hawaii,
Iowa, Nevada and Oregon.

In granting Microsoft's motion to dismiss, McDonald-Burkman didn't
formally address its fundamental contention: that the company overcharged
for its product, thus injuring consumers. However, in a judicial aside,
she said the argument didn't hold water. "Plaintiffs may feel that
Microsoft's behavior has inhibited others from entering the market," she
wrote. "Maybe so. The essence of that behavior has been predatory pricing
to keep potential rivals out. Plaintiffs are the beneficiaries, not the
victims."

McDonald-Burkman also said, "Microsoft may have engaged in illegal
monopolistic activity. But such findings are not an elixir of liability
from whose cup all can drink."

The Louisville suit was filed by Carey M. Arnold and Thomas C. Hectus,
who said they were in effect overcharged when they bought a Microsoft
operating system and a computer equipped with Microsoft's Windows 98 from
third-party vendors.

More than 140 class-action suits have been filed against the Redmond,
Wash., company, most in the wake of a federal judge's finding last
November that Microsoft violated antitrust regulations. While a number of
the class-action suits have been dismissed, more than 130 remain,
Microsoft spokesman Jim Cullinan said. Sixty are consolidated in a
multi-district litigation process being coordinated in a federal court in
Baltimore, and more than 30 California cases have been consolidated in
San Francisco.

"We think this Kentucky case and many of the others are important because
they're building momentum, showing why these cases do not have any merit
and why they're simply an effort by plaintiff attorneys to go after a
successful company," Cullinan said.

Microsoft was sued by the Justice Department and 19 states' attorneys
general in 1995. Last month, U.S. District Judge Thomas Penfield Jackson
ordered the company broken up, ruling that it had used illegal and unfair
tactics against business rivals to sustain monopoly power for its
operating system. That decision is being appealed.

Microsoft filed a brief last Wednesday with the Supreme Court asking it
to allow a lower court to hear its appeal of Jackson's ruling, rather
than sending the case directly to the high court as the government has
asked. (The Associated Press State & Local Wire, July 26, 2000)


TAINTED BLOOD: Govts Appeal against Attorney Fees in Canadian Hep C Case
------------------------------------------------------------------------
Governments' appeals of a ruling setting lawyers'fees in a tainted-blood
class action suit are motivated by "politics,"says the lead counsel for
the plaintiffs.

The federal and Ontario governments are appealing the decision of
Superior Court Justice Warren Winkler, who last month approved $20
million in fees for a team of lawyers working for some of the 10,000
people who contracted Hepatitis C after receiving blood between 1986 and
1990. The federal and B.C. governments are appealing the judgment of B.C.
Supreme Court Justice Kenneth Smith okaying $ 15 million for lawyers
there.

"People say it's a lot of money and yes, it is a lot of money," said
Harvey Strosberg of Windsor, Ont. "But if you put the same amount of time
into four different cases, you'd come up with the amount." The fees
reflect the time lawyers spent winning the "best result" for the victims,
said Strosberg, adding lawyers took the "highest risk" doing so. "All
this does is make it more painful for the lawyers,"he said.

Strosberg raised the possibility that the appeals were launched to throw
roadblocks in the lawyers'way. "I think you have to ask the question of
whether or not the government is trying to make it so difficult that
nobody will ever want to sue them. I ask that question; I don't give an
answer." Strosberg said that since the battle is strictly over costs, the
governments have no automatic right of appeal and should have to file for
leave to do so.

If the government bids fail, B.C.'s Camp Church and Sutts Strosberg of
Windsor will each get $15 million, with $5.5 million going to a group
headed by Bonnie Tough of Blake Cassels in Ontario. Dozens of lawyers
from other firms will share the pot. Strosberg's legal team included
lawyers from Nova Scotia, Alberta and Saskatchewan.

"We felt that the fee request was reasonable,"said Tough. "Justice
Winkler approved the fee agreement."

The fees include a $3-million advance approved in December. The payment
stirred controversy because it came before any victims had been paid. The
victims'compensation fund is now paying out. Each will get up to
$159,000.

The governments argued the victims were promised money in 1998, and that
the lawyers played little role in securing the fund.

But Strosberg noted the lawyers negotiated a $520-million increase in the
money payable to the victims. Lawyers also convinced the governments to
forgo the tax on the compensation, boosting the fund's value to $1.5
billion.

In approving the lawyers'fees, both judges noted the lawyers took great
risks by taking on the case. They noted the fees were small compared to
most class action arrangements, in which lawyers typically take between
20 and 33 per cent of the settlement. In this case, lawyers'fees were
between 2 and 4.2 per cent.

The government refused Strosberg's request to give to the victims the 7
per cent GST it will collect on the $20 million in fees, he said,
predicting that about $10 million will flow back to the governments as
income tax. "I don't know what they've got on their minds but it isn't
the interests of the class members, that's for sure,"he said. "There's no
largesse when it comes out of their pocket."

Currently only Ontario, Quebec and British Columbia have legislation
permitting class action suits.

Doug Mitchell, a Montreal lawyer whose practice includes defence of class
action suits, said a growing number of large class action suits are being
filed. He said calculating lawyers'fees in such cases is "tough."

"There has to be some reward for the risk," he said. But he doesn't agree
with applying a multiplier to the fee to reflect the risk involved. "The
approach of using a multiplier of the hourly rate seems to me like the
wrong approach,"he said. "If it's not based on the award and it's based
on an hourly rate there's an incentive to just pad the hours at the end."

Ontario courts are increasingly certifying classes of plaintiffs from
across Canada, he said. This amounted to interference with the public
policy of the provinces in which such suits are barred. "I don't think
it's right, but that's the current state of the law."

He said the tainted-blood award was larger than most class actions, but
"by no means obscene"when compared with claims against tobacco companies
in the U.S., where lawyers take a far larger chunk of settlements.

Ontario Attorney General Jim Flaherty said lawyers "are entitled to
reasonable legal fees for their work in this case, but our view is that
$20 million is unwarranted."

Ontario and Ottawa filed both a notice of appeal and a notice motion for
leave to appeal. "It's our position that we have it as of right,"said
federal Justice lawyer Michel Lapierre, who argued the fees issue before
Justice Winkler. (THE LAWYERS WEEKLY, July 21, 2000)


TOBACCO LITIGATION: About 300 More Flight Attendants’ Suits Before Sept
-----------------------------------------------------------------------For
46 years Bland Lane traveled the world as a flight attendant with United
Airlines, seeing more countries than most people dream about. But her
passion for flying came with a price. Today, the 71-year-old Sonoma,
Calif., woman suffers from chronic pulmonary problems. She has trouble
breathing without medication, her voice always slightly hoarse. Lane is
among hundreds of current and former flight attendants who are suing the
tobacco industry in Miami-Dade Circuit Court, claiming the smoke she
inhaled during flights caused her ailments. Her case is expected to be
the first to go trial later this year.

About 800 attendants have already filed suit; their lawyers anticipate
filing another 300 or so before the September cutoff date.

I am the point man, said Lane, who retired from her job with United
Airlines on May 1, days before her 71st birthday. Lane had flown
international routes since signing on with Pan Am in 1954, often spending
10, 12, even 14 hours in the air at a time. For more than 20 of those
years the airlines allowed passengers to smoke. Lane, a non-smoker, says
she suffered the consequences.

It got to the point where after every trip I would come home with a
terrible cough, said Lane. At first, after a day or two it would go away.
But after a few years, it didnt go away any more. Eventually, she said,
doctors put a name to what she had -- RADS, or Reactive Airway Disease
Syndrome.

Lanes age put her on lawyers radar screen for an expedited trial, said
Miles McGrane of McGrane & Nosich, who along with Steven Hunter of
Angones Hunter McClure Lynch & Williams, hope to try her case as early as
October. Another attorney, Bill Hoppe of Hoppe & Stokes, also has moved
for an expedited trial because his client is dying of cancer.

The trials come on the heels of this months record $ 145 billion jury
award to Florida smokers in their unrelated class-action suit against Big
Tobacco.

The flight attendants cases are the next chapter in a different battle
over the effects of secondhand smoke, a fight that produced a $ 300
million settlement in 1997. That money was to be used strictly to fund
research, however, and the flight attendants got no money. But under the
settlement -- reached by attorneys Stanley and Susan Rosenblatt, who
recently won the record verdict in the Florida smokers trial -- the
flight attendants retained the right to sue individually for compensatory
damages. The trials that will begin this fall are the first of those
suits.

McGrane, Hunter and Hoppe are among six lawyers who have sued on behalf
of the flight attendants. Others are Abbey Kaplan of Kluger Peretz Kaplan
& Berlin, Marvin Weinstein of Grover Weinstein & Trop and Joel Wolpe of
Wolpe & Leibowitz.

So far, about 30 suits have been scheduled for trial before different
judges. Common issues and motions related to the interpretation of the
settlement agreement will be handled by Judge Robert Kaye.

Kaye presided over the original class-action suit filed by the flight
attendants, and spent the past two years overseeing the class action
filed by Florida smokers, known as the Engle case, which won a record $
145 billion judgment. How that verdict might impact pending litigation is
up for interpretation.

Whatever sympathy the huge jury award might have produced for cigarette
makers isn’t likely to help them with secondhand smoke cases, said Clark
Freshman, a University of Miami law professor. That wont apply to cases
involving passive smokers, said Freshman, because the backlash for
smokers doesnt hold true for victims of passive smoking.

Indeed, if a jury imposed a giant verdict in a case where the plaintiffs
intentionally smoked, what might they do in cases where the plaintiffs
blame other peoples smoke? In those cases, the person who is allegedly
injured made no choice to expose themselves to a carcinogen, unlike the
smoker who derived pleasure, said David Adelman, a tobacco industry
analyst with Morgan Stanley in New York. It wasnt pleasurable to be
exposed, there was no choice, there was no warning label. And until
recently, there wasnt a lot of public awareness.

On the other hand, said Adelman, There really is no authoritative
scientific study that establishes secondhand smoke causes disease.

Anthony Upshaw, of Adorno & Zeder in Miami, who represents defendant
Brown and Williamson, concurs. You are talking about an entirely
different science. Its apples and oranges, said Upshaw. If there is
science that proves there is some effect from environmental tobacco smoke
on a persons health, then Brown & Williamson will re-evaluate their
position and take a hard look at it, just as they have in the past.

Plaintiffs lawyer Hunter said the science is there and that the tobacco
industry has gone into overdrive to prove that secondhand smoke doesnt
cause health problems. They dispute it, deny it, complicate it and create
doubt about it, Hunter said.

And now it appears that the tobacco industry is trying to shift the
blame, he said.

In their answers to the plaintiffs interrogatories, Brown & Williamson,
Lorillard Tobacco and Philip Morris, among others, suggest that the
flight attendants knew secondhand smoke was harmful, but continued to
expose themselves to it by continuing to work on smoking flights.

But Hunter noted that Lane had more than 20 years invested in her career
before anybody began linking secondhand smoke to flying. What right do
they have to say, We want to sell cigarettes so our desire to profit by
the sale of these is paramount to your desire to have a job? he asked.

Said Lane: I loved flying. It was my life. It was my identity. I dont
know what else I would do if I didnt fly. It never occurred to me to
quit. (Miami Daily Business Review, July 25, 2000)


TOBACCO LITIGATION: Survey in CA Shows Smoking among Teens Has Declined
-----------------------------------------------------------------------
Is California's decade-long crusade against tobacco paying off? A state
survey released earlier this month finds that smoking among California
teenagers, whose moth-to-flame smoking habits have long troubled public
health officials, has declined by more than one-third.

Data from the state Department of Health Services shows that 6.9% of
California youths ages 12 to 17 smoked in 1999, down from 10.7% in 1998.
That's very good news since many kids who take up smoking to be cool
later realize they are hooked and can't shake a habit that can prove to
be lifelong and deadly.

This kind of success has a million fathers. California's multi-pronged
effort to cut smoking can rightfully claim some credit. Voter approval of
Proposition 99 added a 25-cent-per-pack tax on cigarettes, generating
millions annually for anti-tobacco efforts, including hard-hitting
television ads. A tough state law now bars smoking in most public
settings, and political jawboning, as well as litigation against the
cigarette makers, including this month's $ 145-billion verdict in a
Florida class-action case, has further damaged cigarettes' image. Another
tax hike last year, 50 cents a pack imposed by Proposition 10, may have
put the cost of cigarettes beyond the reach of many teenagers.

Smoking among California adults too is less, falling just slightly in the
past year from 18.4% to 18% but down significantly since the 1980s.
Nationally, a fourth of adults smoke.

Alas, the news is not all good. The health department survey found that
while smoking is down among teens, it's up slightly among young adults,
18 to 24. This is the generation that grew up with Joe Camel cartoons and
is now the focus of tobacco industry marketing, factors that may explain
the rise. Also, these smokers might be thumbing their noses at those who
have hectored them on the dangers of tobacco.

In any event, the state's latest more-good-news-than-bad survey should at
least prompt Gov. Gray Davis to continue funding the thoughtful, targeted
efforts begun a decade ago to keep kids from smoking in the first place
and to help those who want to quit. (Los Angeles Times, July 26, 2000)


TOTAL RENAL: Announces Settlement of Securities Lawsuit
-------------------------------------------------------
DaVita (Total Renal Care Holdings, Inc.) (NYSE: TRL) announced on July 25
that it has signed a Stipulation of Settlement with the plaintiffs in the
consolidated securities class actions that were filed against Total Renal
Care Holdings and several of its former officers in February 1999. Under
the terms of this agreement, a total settlement fund of $25 million has
been established. The Company has contributed $10.8 million and our
insurance carriers have contributed the balance of the settlement fund.
In addition, DaVita has agreed to implement corporate governance
principles and procedures to ensure the accountability of DaVita's Board
and management to its shareholders. The settlement is subject to
preliminary approval by the United States District Court, notice to the
members of the class, which consists of purchasers of the Company's
common stock between March 11, 1997 and July 18, 1999, and final approval
of the settlement by the Court at a hearing. Final approval is
anticipated to take place in the fourth quarter of 2000.

DaVita's General Counsel, Steve Udicious, stated that "while the
defendants continue to deny any wrongdoing or liability in the securities
class actions, we believe that the settlement is in the best interests of
the Company and its stakeholders and represents yet another step in our
efforts to put past issues behind us and to solidify our financial
position going forward."

The company will record a pre-tax charge of $10.8 million in its second
quarter results related to this settlement. DaVita (Total Renal Care
Holdings, Inc), based in Torrance, California, is the nation's
second-largest provider of dialysis services for patients suffering from
chronic kidney failure. The Company owns and operates kidney dialysis
centers and home peritoneal dialysis programs domestically in 32 states,
as well as Washington, D.C. It also provides acute hemodialysis services
to inpatients at approximately 320 hospitals. As of April 30, 2000,
DaVita operated 484 outpatient dialysis facilities serving over 40,000
patients, including 4,300 patients in 52 centers under management.


UNPLANNED EMISSIONS: Contribute to TX Pollution; Subject of Valero Suit
-----------------------------------------------------------------------
Unplanned emissions that exceed state permits for factories and
refineries are contributing to Texas' pollution woes, according to a new
report.

Such excessive emissions, or "upsets," are the subject of a state
district court lawsuit in Corpus Christi against Valero Energy Corp.

And environmentalists are calling such emergency discharges a huge
loophole. "The public thinks you get a permit and you shall not emit
pollution beyond a certain amount, that it's a hard-and-fast amount," Jim
Marston, director of the Austin office of the advocacy group
Environmental Defense, told the Texas Journal of The Wall Street Journal
in Wednesday's editions. Marston said many plant operators use regular
emergency discharges to exceed their permitted emissions.

The unplanned emissions or "upsets" sent at least 240 million pounds of
pollutants into the air from plants and refineries in 1998, the last year
for which a rough estimate based on state data can be made, according to
the Journal. That amounted to about four percent of the total harmful
pollutants, as classified by the state, allowed by regular permits. But
environmental groups and the Texas Natural Resource Conservation
Commission say figures of "off-the-books" pollution could be badly
understated.

Vice President Al Gore contends that Texas ranks No. 1 in industrial
pollution. Texas Gov. George W. Bush, presumptive GOP presidential
nominee, has been campaigning on his environmental record.

Upset pollutants, unlike emissions normally released, are in an untreated
form that poses a greater health threat than day-to-day emissions that
undergo extensive filtering.

Pam Giblin, an Austin lawyer, said some upset emissions should be
considered when the state issues pollution permits.

Not all upsets are unforeseen since plant equipment is often designed to
burn off emissions when a certain pressure or capacity is reached, said
Ms. Giblin, who represents a group of 50 companies including chemical
plants, refineries and utilities.

Executives of Valero and other companies say they have a financial
incentive to minimize unplanned emissions, since they're linked with
costly shutdowns.

The TNRCC rarely punishes companies for abusing upset rules, and the
agency says it has never adjusted an emissions permit because of excess
unplanned pollution. It has been criticized for its emergency-discharge
policies. The TNRCC is up for legislative review in January under the
state's Sunset Act, a forum for lawmakers to reform state agencies.

Neighbors who live about a mile from the Valero refinery are suing the
company in a Corpus Christi court for health-and-property damage claims
stemming from emissions, including sulfur oxide and other contaminants
released in raw form through upsets.

Plaintiffs' lawyers have asked a state district judge to certify the
lawsuit as a class action for property owners and residents of about 400
homes near the plant who contend they have suffered respiratory and other
health problems as well as property damage. (The Associated Press State &
Local Wire, July 26, 2000)


WAR VICTIMS: Ethiopian Jews Seek Compensation from Italy
--------------------------------------------------------
A group of Ethiopian Jews will demonstrate outside the Italian Embassy in
Tel Aviv in hopes of convincing Italian officials to admit to and
compensate them for brutalities committed against their ancestors during
the 1936-1941 Italian occupation of Ethiopia. Over 60 years later,
descendants of the 34 Jewish men killed by Italian fascists on February
20, 1937 in the village of Gunda Merava are asking for $ 100 million in
compensation from the Italian government.

According to Michael Corinaldi, legal representative of the Ethiopian
group, it has taken too long for Italian officials to recognize and
respond to the concerns and demands of the group. "Our demonstration
shows that this group is deserving of receiving a sincere answer from the
embassy," Corinaldi said. "Until now, they have not related to this
situation in a serious manner."

The group collectively decided that a demonstration was the best way to
attract the attention they want from Italian officials.

Elimelech Teruneh, spokesman of the group, was two when his father and
his brothers were murdered in Ethiopia. He has lived in Israel for over
27 years and says that he desperately wants a "direct answer" from the
embassy.

The group's first contact with Italian officials was not until 1988, as
they originally thought too much time had passed for them to pursue the
issue. In 1998, they presented officials with a detailed list of those
murdered and their descendants, all of whom are now living here. From
September 1998 until now, however, Italy has failed to respond
conclusively. "Their answers are not good enough," said Corinaldi.

If the demonstration fails to procure any positive development for the
group, Corinaldi said the group will file a class action suit against
Italy in either Israel or America. The Israeli government has not gotten
involved in this issue, and the embassy would not comment on the
demonstration. (The Jerusalem Post, July 26, 2000)


WHITE HOUSE: Court Orders ARMS Search in Employees’ Suit over Privacy
---------------------------------------------------------------------
U.S. District Judge Royce C. Lamberth in early June ordered the White
House to conduct a keyword search for 33 individuals and 20 search terms
for e-mail messages stored on the Automated Records Management System.
The messages could become evidence in a lawsuit. The court ordered the
White House to deliver the records within 20 days.

The Executive Office of the President can limit the scope of the search
to the White House Office portion of ARMS, which has 19 segments, the
court order states.

The White House has used ARMS, a keyword-searchable archive, since 1994,
officials said.

The U.S. District Court for the District of Columbia issued the
preliminary search of e-mails in a ruling for Cara Alexander, et al. vs.
FBI and John Michael Grimley, et al. vs. FBI--also known as Filegate.

Judicial Watch, a conservative public interest law firm, is representing
the plaintiffs in a class-action lawsuit filed by White House employees
of the Bush and Reagan administrations who allege that their FBI files
were wrongly accessed by the Clinton administration.

The White House and FBI are being sued under the federal Privacy Act, and
individual defendants Bernard Nussbaum, a former White House counsel, and
former aids Craig Livingstone and Anthony Marceca are being sued for
common-law tort of invasion of privacy, according to Judicial Watch.

The court also ordered a search for messages about former White House
employee Linda Tripp and former White House aide Kathleen Willey. EOP is
not required to search accounts established for the receipt of citizen
e-mail for the president and first lady via the Internet. The ruling only
refers to searches for e-mail archived on ARMS. The court noted, "E-mails
available on backup tapes and what search should be performed regarding
the hard drives will be addressed later."

                             Lost letters

Two computer code errors caused ARMS' failure to archive some incoming
e-mail messages. ARMS conducted a periodic scan of White House servers to
create backup tapes meant for use in catastrophic system failure not for
archival purposes, officials said [GCN, April 3, Page 1].

The White House awarded contracts to ECS Technology of Baltimore and SRA
International Inc. of Arlington, Va., to reconstruct the e-mails from
about 5,000 backup tapes, officials said.

The contractors began work April 1; the process is to be completed in six
to nine months, said Renato DiPentima, president of SRA's
government-sector group. "We are on the job as a subcontractor to do work
related to inventory of the tapes, converting tapes to magnetic media and
developing software so a query can be done in a database," DiPentima
said. Inventory of the backup tapes is almost complete, he said.

The next step will be to create two duplicates of the original backup
tapes--a working copy and a control copy, DiPentima said. The original
computer tapes will be stored in the custody of Charles Easley, EOP
security officer, according to court documents.

Following the duplication process, which will take 180 days, the backup
tapes will be converted to magnetic media to enable a search of the
e-mails, DiPentima said. "We will take the records from the tape to disks
and set up keys to search the information later. We will build a
standalone database," he said. IAC-ACC-NO: 63296414 (Government Computer
News, June 12, 2000)


* SEC Rules Aim to Keep Brokerages on the Level
-----------------------------------------------
Regulators are taking aim at sloppy or greedy stock brokerages that don't
always try to get the best prices for investors who want to buy or sell
stock.

The Securities and Exchange Commission proposed a two-part rule Tuesday
that would require:

     Brokers to reveal which market makers they use to execute trades and
whether those market makers pay the brokerages for placing the orders.

     Market makers to post monthly reports on their Web sites that detail
the quality of their trade execution -- that is, whether they are buying
at the lowest available price and selling at the highest.

Regulators are concerned that some brokers may be giving orders to market
makers that pay them for orders, instead of routing the trades to the
market centers that execute trades at the best price. The SEC says that
85% of the time investors don't get the best price on stocks traded on
the Nasdaq stock market. That means, for example, if the investor misses
a trade by the smallest increment of 6.25 cents, it costs the investor $
62.50 on a 1,000-share order, which dwarfs the commissions most Internet
brokers charge.

The announcement of the proposed rules follows a $ 20 million settlement
announced between discount brokerage Charles Schwab and a group of
investors.

Charles Schwab, the largest online brokerage, agreed to spend the money
to educate investors and improve the way it processes buy and sell
orders. In exchange, the investors agreed to drop the class-action
lawsuit that accused the brokerage of not always routing buy and sell
orders to market makers with the best prices and failing to disclose
payments it received for the order flow.

In a separate action, the SEC approved a plan to link the options markets
of the American Stock Exchange, the Chicago Board Options Exchange and
the International Securities Exchange. An option is the right to buy or
sell a certain number of shares of a stock at a preset price. (USA TODAY,
July 26, 2000)


                              *********


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