/raid1/www/Hosts/bankrupt/CAR_Public/000801.MBX               C L A S S   A C T I O N   R E P O R T E R

               Tuesday, August 1, 2000, Vol. 2, No. 148


AF 4590: Lawyers Advise Families of Victims to Get Together
AVISTA CORPORATION: Milberg Weiss Files Securities Suit in Washington
BANKAMERICA CORP: Shareholders Suing in CA Appeal against Fd Injunction
BLUE WATER: Hedge Fund Investors Seek $100M for 'Illiquid' Investments
BMC SOFTWARE: Announces Dismissal of Securities Lawsuit in Texas

CHICAGO HEIGHTS: 13-Year-Old Voting Rights Case Sent Back to Judge
CITIBANK: Delays Deadline for Credit Card Payments As Part of Settlement
CROSSROADS SYSTEMS: Kirby McInerney Files Securities Suit in Texas
DAIMLERCHRYSLER: Accuses of Frivolity; Law Firm Counterclaim to Proceed
DRKOOP.COM: Web Co. MillenniumHealth Communications Calls off Merger

FHP INTERNATIONAL: Shareholders Drop Effort to Revive Securities Suit
IBM, NATIONAL SEMICONDUCTOR: Lawsuits Complain of Lab Environments
MANUGISTICS GROUP: Settlement Reached for Securities Suit Remanded to MD
MCGRATH RENTCORP: Defends Charges on Failure To Warn Indoor Air Quality
NBTY, INC: Cauley & Geller Seeks Damages in NY on Behalf of Shareholders

NBTY, INC: Milberg Weiss Files Securities Lawsuit in New York
NSW GOVT: Aussi Families Sue for Nervous Shock from Thredbo Disaster
OMEGA HEALTHCARE: Wechsler Harwood Files Securities Lawsuit in New York
PERVASIVE SOFTWARE: Announces Dismissal of Shareholder Lawsuit in Texas
PROFIT RECOVERY: Chitwood & Harley to Expand Securities Suit in Georgia

SONUS PHARMACEUTICALS: Reaches Agreement to Settle Securities Lawsuit
STAGE STORES: Former Employees Sue in TX Alleging RICO Act Violation
STAGE STORES: Stockholder Appeals against Dismissal of Lawsuit in Texas
TOBACCO LITIGATION: Monroe County, N.Y. 4th to Securitize Settlement
TOBACCO LITIGATION: Smokers Reject Industry Move As Judge-Shopping

UNCOVER: Freelance Authors Regain Copyright Control Through Settlement

* PricewaterhouseCoopers Study Shows Fd Securities Actions Fall By 14%


AF 4590: Lawyers Advise Families of Victims to Get Together
French accident investigators said they had found part of the fuel tank
from flight AF4590 on the runway at Charles de Gaulle airport. The
discovery adds considerable credence to the theory that the disaster was
caused by a massive fuel leak rather than engine problems. According to the
French Accident Investigation Bureau (BEA) this would mean that the flames
seen coming from the plane were caused by leaking fuel and not a damaged

French officials believe last Tuesday's crash was caused by a burst tyre
damaging the aircraft's structure, setting off a fire and causing engine
failure. Air France has said bursting tyres have previously damaged
Concorde fuel tanks and engines. Yesterday the BEA said: "The flames seen
after take-off do not originate from an engine but, most likely, from an
important fuel leak."

The bureau revealed the find as British and French safety officials
prepared to meet on July 31 to discuss safety measures for Concorde
flights. Representatives from the Civil Aviation Authority will join
officials from Air France and the French transport ministry to try to agree
new safety checks to allow the airline to resume Concorde flights.

BA is continuing to resist pressure to ground its aircraft despite Air
France's decision to halt all supersonic services until the exact cause of
the tragedy is known.

Air France and the tour operator that booked German tourists on the flight
are facingwhat may be the largest compensation suit in aviation history.
The multi-million damages claim by the relatives of the German victims -
with some claiming up to pounds 3m - could set a new precedent in air
accident compensation.

Lawyers said they were advising families of the victims to file a class
action suit and present their interests collectively. "It's important that
they get together and that not each individual struggle alone," said
Burkhard Kotke, of the Leistikow law practice, which is representing a
number of relatives of crash victims.

Sven Leistikow said contracts signed by the victims would have to be
examined to determine whether the "contractual" carrier, the tour operator
Peter Deilmann, or the "actual carrier", Air France, is to be held liable.

Normally the Deilmann company would be responsible if it offered a full
tour, including a charter flight and a luxury cruise. But if victims booked
the Concorde flight themselves, Air France would be liable.

A second question of liability concerns the exact cause of the crash. Mr
Leistikow said he believed the case would be settled out of court, as is
typical in damages claims. "We are looking at an amount, which I wouldn't
want to name, but it starts with pounds 83,000 and upwards," he said.

Under the Warsaw Convention, the limit to liability claims is about pounds
18,000 in cases where no gross negligence can be proved. But EU guidelines
on air accidents introduced in October 1998 have lifted that ceiling. Now
relatives of victims can demand up to pounds 77,000 without having to show
any blame on the part of the airline. (The Independent (London), July 31,

AVISTA CORPORATION: Milberg Weiss Files Securities Suit in Washington
Milberg Weiss (http://www.milberg.com/avista/)announced that a class
action has been commenced in the United States District Court for the
Eastern District of Washington on behalf of purchasers of Avista
Corporation (NYSE:AVA) common stock during the period between April 7, 2000
and June 21, 2000 (the "Class Period").

The complaint charges Avista and certain of its officers and directors with
violations of the Securities Exchange Act of 1934. The complaint alleges
that during the Class Period, despite assurances from Avista that it would
only enter into derivative contracts as a means to "limit the exposure to
market risk," the Company covertly entered into massive amounts of Forward
Contracts in an undisclosed gamble that electricity prices would decrease
in the future. Unfortunately for Avista's shareholders, the price of
electricity skyrocketed, causing massive losses on these derivative Forward
Contracts. Avista's share price declined dramatically when the news about
these losses was finally disclosed on June 21, 2000.

On the day prior to the Class Period, Avista shares closed trading at $
37-11/16 per share. After Avista was finally forced to publicly acknowledge
the extent of the losses related to this improper speculation on June 21,
2000, Avista's shares closed trading at $19.00 per share.

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

BANKAMERICA CORP: Shareholders Suing in CA Appeal against Fd Injunction
The shareholder plaintiffs suing BankAmerica Corp. for securities fraud in
California state court are appealing a St. Louis federal court order
enjoining their suit from proceeding due to the parallel federal suit. They
assert that U.S. District Judge John F. Nangle violated the Anti-Injunction
Act, which prohib its the federal government from staying state court
proceedings, except for a few narrowly defined exceptions. In re
BankAmerica Corp. Securities Litigation, No. 00-2255, appellants' opening
brief filed (8th Cir., July 3, 2000).

The central question is whether the district court violated this important
tenet of federalism by holding that Congress, when it enacted the Private
Securities Litigation Reform Act in 1995, "expressly authorized" federal
stays of state-court proceedings with its new provisions regarding the
appointment of lead plaintiffs in certain federal class actions, assert the

In late 1998, the shareholders of San Francisco-based BankAmerica Corp.
(Old BankAmerica) and NationsBank Corp., approved a merger of the two banks
to form BankAmerica Corp. Two weeks after the merger was consummated, the
new entity announced a massive loss and many shareholders sued, asserting
that the financial institutions hid a $372 million loan to a hedge fund
managed by D. E. Shaw & Co.

Investors sued in California state court and federal district courts around
the country. The California state-court actions, consolidated under Desmond
v. BankAmerica Corp., No. 00-0169 (N.D. Cal., 2000), seek recovery under
California Corp. Code @ @ 25400 and 25500. The federal actions were
consolidated by the Judicial Panel for Multidistrict Litigation and
subsequently assigned to the Eastern District of Missouri.

Approximately 18 months later, Judge Nangle enjoined the California
Superior Court from certifying a class in the Desmond action, and revoked
an order directing the parties to enter mediation (see Securities
Litigation & Regulation LR June 7, 2000, P. 5).

In their appeal of the order, the shareholders assert the federal
government cannot preclude their related action because Congress envisioned
concurrent state and federal proceedings in its legislation.

Suing in state court offers class members several advantages, argue the
shareholders, and they have the choice of their forum. The state court
advantages include:

    -- The estimated recoverable damages under state law are almost $6.5
        billion as compared to below $1 billion in federal court. This
        difference is due to an Exchange Act provision that limits
        damages to the difference between a plaintiff's purchase price
        and the 90-day post class-period median trading price;

    -- The applicable California Corp. Code section does not require
        investors to plead and prove the same reliance as federal claims;

    -- The scienter standard for California claims is less demanding
        than for federal fraud claims, and negligence is enough to
        establish state law violations if a defendant either "knew or had
        reasonable ground to believe" his or her statements were false;

    -- Federal law precludes aiding-and-abetting liability;

    -- Federal law has more potential defenses to liability, including
        the safe harbor for forward-looking statements;

    -- Although federal law has effectively abolished joint and several
        liability for reckless violations of securities laws, California
        does not have such limitations; and

    -- Federal law requires a unanimous jury verdict while a plaintiff
        in California may prevail on a 9--3 jury verdict.

The appellants also contend that the class notice ordered by Judge Nangle
does not provide investors with enough information on state/federal
differences for them to decide on whether to opt out of the suit at the
federal level.

The appellants argue that the district court erred by enjoining its action
under the Anti-Injunction Act's provision , which says, "A court of the
United States may not grant an injunction to stay proceedings in a State
court except as expressly authorized by Act of Congress, or where necessary
in aid of its jurisdiction, or to protect or effectuate its judgment."

Contrary to the court's ruling, Congress has not "expressly authorized" the
enjoining of state proceedings under the Private Securities Litigation
Reform Act, assert the appellants.

According to the opening brief, Judge Nagle "jumped to the conclusion" that
passage of the PSLRA created new federal rights for certain plaintiffs in
securities class actions suit. The "new" right was based (in part) on the
PSLRA's lead-plaintiff provisions, which gives certain investors, such as
institutional investors, a right to control federal litigation.

Judge Nangle concluded, "This federal right cannot be given its intended
scope if competing state court plaintiffs, representing a significantly
smaller number of shares, can institute premature settlement negotiations
which threaten the orderly conduct of the federal case and which could
result in the releases of the federal claims."

The shareholders argue the lead plaintiff provisions only govern the
selection of lead plaintiff for a federal action -- and are of a procedural
rather than substantive nature.

The appellants also disagree with the court's interpretation of the
Securities Litigation Uniform Standards Act, passed after their class
action was filed. While Judge Nangle wrote that the SLUSA bars securities
suits filed in state court, the appellants argue the stay of related
state-court proceedings is quite narrow and only applies to discovery

Congress has always contemplated the possibility of dual litigation in
state and federal court, insist the shareholders. They argue the district
court's order improperly interferes with California state interests and is
contrary to the principles of equity, comity and federalism.

The Desmond plaintiffs are represented by William S. Lerach, Leonard B.
Simon and Eric A. Isaacson of Milberg Weiss Bershad Hynes & Lerach in San
Diego; Reed R. Kathrein, John K. Grant and Christopher P. Seefer of Milberg
Weiss' San Francisco office; Arthur R. Miller of Harvard University in
Cambridge (of counsel); Paul F. Bennett and Steven O. Sidener of Gold
Bennett Cera & Sidener in San Francisco; Jeffrey H. Squire, and Ira M.
Press of Kirby, McInerney & Squire in New York; Robert J. Dyer III of Dyer
& Shuman in Denver; Stephen R. Basser of Barrack, Rodos & Bacine in San
Diego; David R. Scott of Scott & Scott in Colchester, Conn.; and Natalie A.
Finkelman of Liebenberg & White in Jenkintown, Pa. (Securities Litigation &
Regulation Reporter, July 19, 2000)

BLUE WATER: Hedge Fund Investors Seek $100M for 'Illiquid' Investments
A group of corporate investors, including a Bermudan insurer, have sued two
New York hedge funds for $100 million, alleging that investment manager
Jonathan D. Iseson damaged the funds' value with allegedly imprudent and
illiquid investments. Tremont International Insurance Ltd. et al. v. Blue
Water Fund Ltd. et al., No. 00-CV-3768, complaint filed (S.D.N.Y., June 26,

The plaintiffs, headed by Tremont International Insurance Ltd. in Hamilton,
Bermuda, allege in their Manhattan federal court proposed class action that
the Locust Valley, N.Y.-based Blue Water hedge funds fraudulently induced
investment by concealing allegedly reckless holdings in the "thinly-traded"
stock of NetSol International Inc.

The Blue Water Fund is a non-U.S. hedge fund and Blue Water L.P. is a U.S.
hedge fund; both invested heavily in NetSol.

California-based NetSol is an international information technology company
and the parent of Network Solutions Group Ltd., NetSol U.K. and NetSol USA
Inc. The company develops financial industry software systems.

The Southern District of New York complaint alleges that Iseson, a Blue
Water funds' principal and portfolio manager for the funds' investment
manager, Blue Water Partners, artificially inflated the hedge funds' value
by purchasing millions of dollars worth of NetSol stock. The purchases
caused NetSol's stock to rise significantly and allowed Blue Water Partners
to collect a $14 million investment manager fee.

Tremont and the other plaintiffs -- Royalton Principal Protected Fund, ZCM
Asset Holdings Co. Bermuda and Community Partners L.P. -- allege in their
suit that the Blue Water funds' offering materials clearly stated the funds
would hold no more than 10 percent of their portfolio in any one company's
stock. The materials further stated the funds would not purchase over 10
percent of any one company's outstanding securities, according to the suit.

The plaintiffs say they would not have invested had the Blue Water funds
revealed NetSol stock comprised over 78 percent of the funds' assets or
that the funds' NetSol holdings constituted 35 percent of the software
developer's outstanding shares.

According to the suit, the large block of NetSol triggered the short-swing
profit rule under Section 16(b) of the Securities Exchange Act. The
short-swing rule requires investors, who purchase more than 10 percent of a
company's stock, to disgorge profits from sale of that stock if it is sold
within six months of the purchase date. The plaintiffs say the Blue Water
funds now hold 2.1 million NetSol shares, which cannot be sold for a profit
until November 2000.

"The disastrous consequences of such a strategy have been fully realized by
Blue Water L.P. and Blue Water Fund since, by virtue of the size of their
holdings of NetSol, they are not able to sell the stock, and even if they
were permitted to do so, the investment manger of the Fund would not be
able to recoup what they had paid for the stock because the stock is so
thinly traded and sales of any volume would drive down the market price of
the stock.

"Consequently, the defendants' fraudulent conduct has caused direct and
immediate losses to the plaintiffs and the Fund," the complaint asserts.

The suit makes 26 claims for relief, including, alleged fraud violations of
the Securities Exchange Act, the Investment Advisers Act, and for breach of
fiduciary duty, breach of contract , and unjust enrichment. The complaint
asks the court to appoint a receiver for the funds and to award the
plaintiffs $80 million in compensatory damages and $20 million in punitive
damages. (Derivatives Litigation Reporter, July 17, 2000)

BMC SOFTWARE: Announces Dismissal of Securities Lawsuit in Texas
BMC Software, Inc. (Nasdaq:BMCS), announced that on July 27, 2000 the
United States District Court for the Southern District of Texas entered a
Final Judgement dismissing a class action securities case styled, In re BMC
Software, Inc. Securities Litigation., Civil Action No. H-99-0715. The case
named the Company and certain of its current and former officers as
defendants. This Final Judgement terminates the action and BMC has been
informed by plaintiffs' counsel that the judgement will not be appealed.

This case was filed on March 9, 1999. The case alleged improprieties with
BMC's accounting treatment in connection with BMC's acquisition of BGS,
Inc. The complaint alleged a class of BMC stock purchasers between April
16, 1998 through February 25, 1999. A United States Magistrate Judge had
previously recommended that the complaint be dismissed.

CHICAGO HEIGHTS: 13-Year-Old Voting Rights Case Sent Back to Judge
While acknowledging a judge's understandable desire" to resolve a
long-running voting rights case, a federal appeals court has rejected the
system the judge established for electing members of the Chicago Heights
City Council.

A panel of the 7th U.S. Circuit Court of Appeals last Thursday July 27 held
that the judge should have given more weight to Chicago Heights' wishes
when crafting a way for choosing the city's aldermen.

The panel did affirm the judge's finding that a system approved in a
referendum -- the election of six aldermen from single-member districts --
would discriminate against minority voters.

The panel said the system the judge ordered the city to establish -- the
at-large election of alderman through cumulative voting -- would be
permitted by Illinois law under certain circumstances.

But the judge failed to either submit his plan to Chicago Heights voters
for their approval or explain why the plan was needed in order to comply
with federal law, the panel said.

The panel said the judge failed to respect Chicago Heights' desire to elect
its City Council from single-member districts.

In the absence of a finding that cumulative voting is the only legally
viable remedy, the city should have an opportunity to consider the merits
and deficiencies of cumulative voting before that system is imposed upon
it," Judge Diane P. Wood wrote for the panel.

The panel sent the case back to U.S. District Judge David H. Coar to work
out another system of electing Chicago Heights aldermen.

The panel issued its opinion in a legal battle that began in 1987 when four
men -- Ron Harper, Kevin Perkins, William Elliot and Robert McCoy -- filed
a class-action lawsuit against the city.

The suit alleged that the at-large method then used to elect the City
Council diluted the voting strength of blacks in violation of Section 2 of
the Voting Rights Act of 1965, 42 U.S.C. sec1971.

In 1988, the four men filed an almost identical suit against the Chicago
Heights Park District that later was consolidated with the action against
the city.

The suits claimed that the non-partisan, at-large, district-wide elections
for members of the City Council and the park district unlawfully reduced
the opportunities for blacks to elect representatives of their choice.

The parties ultimately negotiated a new election plan that called for the
mayor and park board president to be elected at large and for the mayor to
appoint the city clerk and treasurer.

The new plan also called for one alderman and one park board commissioner
to be elected from each of six single-member districts. Whites would be the
majority in three of the districts, blacks in two and blacks and Hispanics
of voting age in one.

The system was based on the strong mayor" form of government authorized by
the Illinois Municipal Code. But some of the system's provisions --
including the number of aldermen and the appointment rather than the
election of certain officials -- departed from the code's requirements.

The late U.S. District Judge Hubert L. Will approved the plan in a consent
degree that was opposed by Perkins and McCoy.

The 7th Circuit sided with Perkins and McCoy and vacated the decree in
February 1995.

The appeals court held that Will should not have approved a consent decree
that overrode the Illinois Municipal Code without finding that the decree's
provisions were required to remedy a violation of federal law.

Without such a finding, a municipality was allowed to modify a statutorily
prescribed form of government only through a referendum, according to the

Perkins v. City of Chicago Heights, 47 F.3d 212 (1995).

After the case was sent back to him, Will ordered that the consent decree
be submitted to voters in a referendum.

Voters approved the new form of city government in a November 1995
referendum, while the park district earlier had passed a resolution
adopting the new method of electing its commissioners.

Will died a short time later and the cases were reassigned to Coar.

Coar reiterated that the at-large election method previously used in
Chicago Heights violated Section 2, a finding that neither the city nor the
park district challenged on appeal.

Coar also found that the single-member district system approved in the
referendum would not remedy the Section 2 violations created by the
at-large system.

But Coar rejected a plan proposed by Perkins and McCoy in which aldermen
would be elected from seven single-member districts and the mayor, city
clerk and treasurer would be elected at large.

Instead, Coar ordered the city to establish an at-large election system in
which cumulative voting would be used to elect seven aldermen -- a
structure that none of the parties in the case had proposed.

The 7th Circuit panel affirmed Coar's decision to reject the system
approved in the referendum.

But the panel reversed the judge's determination that the referendum plan
would not remedy the Section 2 violations when it came to the park

The panel also reversed Coar's order that Chicago Heights establish the
cumulative voting system.

The panel noted that while Coar found that the single-member district plan
adopted in the referendum was inadequate, he did not find that any use of
single-member districts violates federal law."

And Chicago Heights has demonstrated a clear preference for single-member
districts," the panel said.

It proposed a remedial plan that relies on single-member districts and, in
doing so, made a policy judgment about which electoral schemes are best
suited for the locality," the panel said. We should defer to the city's
plan to the extent possible as long as it does not violate federal law."

Joining in the opinion written by Wood were Judges Michael S. Kanne and
Terence T. Evans.

Ron Harper, et al. v. City of Chicago Heights, et al., Nos. 98-2785,
98-2811, 98-2899, 98-3004, 98-3051, 98-3075, 99-2007, 99-2008, 00-1503 and
00-1515. (Chicago Daily Law Bulletin, July 28, 2000)

CITIBANK: Delays Deadline for Credit Card Payments As Part of Settlement
As part of a class-action settlement, Citibank has agreed to delay its
deadline for receiving credit card payments from 10 a.m. on the day a bill
is due to 1 p.m.

These crazy, early morning deadlines have been a money maker for credit
card issuers who were eager to charge more interest and slap on late fees.
A 10 a.m. deadline? As if someone at Citibank could open all the mail by 10
a.m. in the first place. And what customer would even imagine that the
check had to arrive before 10 a.m.?

As part of its settlement, Citibank also agreed to offer additional
disclosure. For the next two years, Citibank will print the 1 p.m. deadline
on the front and back of its payment coupons.

Even so, Citibank isn't printing the deadline everywhere. Maria Mendler, a
spokeswoman for Citibank, said the 1 p.m. deadline will be made known to
consumers when they're most likely to pay attention to it -- when they are
paying their bills. "It's right in front of them as they're making a
payment," she said.

Citibank customers are being notified of the settlement agreement and the
new 1 p.m. deadline in their July statements. The settlement also covers
the AT&T Universal Card, now owned by Citibank.

Citibank, the nation's largest credit card issuer with 42 million accounts,
admitted no wrongdoing as part of its class-action settlement. Citibank
said it will refrain from charging consumers late fees for payments
received before midnight on the payment due date.

Mendler said typically Citibank gave its consumers a one-day grace period
before a late fee was charged. In the past, though, the extra interest
began building if the payment wasn't received by the 10 a.m. deadline.

Citibank will create a settlement fund of $ 18 million to pay certain
cardholders. Cardholders can obtain a claim form by calling toll-free

First USA has since changed its deadline from 8 a.m. to 10 a.m. (Detroit
Free Press, July 31, 2000)

CROSSROADS SYSTEMS: Kirby McInerney Files Securities Suit in Texas
A class action lawsuit has been commenced in the United States District
Court for the Western District of Texas on behalf of all purchasers of
Crossroads Systems, Inc. (NASDAQ: CRDS) common stock between July 13, 2000
and July 26, 2000 (the "Class Period").

The complaint alleges that Crossroads and its CEO issued materially false
and misleading statements - in violation of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 - regarding Crossroads' operations and
financial results for its fiscal third quarter (ending July 31, 2000).
Specifically, the complaint alleges that Crossroads and its CEO knew by
July 13, 2000 - but did not disclose to investors until July 27, 2000 -
that certain of its products were experiencing interoperability problems
with network software. These problems were so severe that the company, by
mid-July, had stopped shipping the products and has not yet resumed
shipment of corrected devices. On July 27, 2000, the company disclosed that
its revenues would decline from the previous quarter's revenues by a
shocking 66% due to the product shipment halt as well as a cancellation of
an order at the end of the quarter. When the truth about the company's
operations and financial results was finally revealed to investors on July
27, 2000, investors saw their shares lose more than 50% of their value in
one day, from $13 7/16 to $6 3/8 per share. Thus, as result of Crossroads'
misrepresentations and omissions, the complaint alleges, the price of
Crossroads' stock was artificially inflated during the class period, and
investors who bought these securities were damaged thereby.

Contact: Kirby McInerney & Squire, LLP Ira Press, Esq. Gretchen Becht,
Paralegal 830 Third Avenue, 10th Floor New York, New York 10022 Telephone:
(212) 317-2300 or Toll Free (888) 529-4787 E-Mail: gbecht@kmslaw.com

DAIMLERCHRYSLER: Accuses of Frivolity; Law Firm Counterclaim to Proceed
U.S. District Judge William S. Yohn of the Eastern District of Pennsylvania
has denied the motion of DaimlerChrysler Corp. associate general counsel
Lewis H. Goldfarb to dismiss counterclaims for defamation and interference
with prospective contractual relationships filed by the Philadelphia law
firm Greitzer & Locks. DaimlerChrysler Corp. v. Askinazi et al., No.
99-CV-5581 (E.D. Pa., June 26, 2000); see Automotive LR, Feb. 15, 2000, P.
5; see also DaimlerChrysler Corp. v. Askinazi, P. 4.).

Chrysler filed the original action charging that Greitzer & Locks violated
state law by filing "frivolous" class actions on allegedly unsafe car
seats. In addition to G&L, Chrysler sued attorney William Askinazi of
Maryland and Brian Lipscomb, the named plaintiff in a 1999 class action
against the automaker.

G&L fired back with a counterclaim, maintaining that the Chrysler and
Goldfarb's statements demonstrated their intention of preventing
prospective litigants from signing on with the firm.

G&L noted a Nov. 11, 1999, article in The Wall Street Journal , in which
Goldfarb was quoted on his hopes that the Chrysler suit would "discourage
prospective litigants from signing on" to the pending class actions.

The firm also contends that Chrysler and Goldfarb's published statements
were "defamatory in character" in that they disparaged the manner in which
the firm conducts its practice of law. These statements referred to
"unwarranted and baseless cases," "legalized blackmail" and class actions
as a "rigged lottery."

                          The Motion to Dismiss

Goldfarb said G&L's counterclaims against him should be dismissed for lack
of personal jurisdiction and improper venue. Judge Yohn ruled that
Goldfarb's contacts with Pennsylvania were sufficient to give the court
constitutionally proper, specific personal jurisdiction over him, and that
a substantial part of the events giving rise to G&L's claims occurred in
the district.

The judge noted that the "corporate shield doctrine" protects officers and
directors by limiting the extent to which their corporate actions may be
used to exercise jurisdiction over them individually. However, courts in
the Eastern District of Pennsylvania have held that the protections of the
doctrine are not absolute, Judge Yohn observed.

"Goldfarb should have been aware that his actions would be felt in
Pennsylvania, and there is evidence suggesting that this was his intent,"
the opinion states. The nature and quality of Goldfarb's forum contacts and
personal involvement in the allegedly tortious conduct, the judge held,
weighed in favor of considering his corporate contacts with Pennsylvania.

"Goldfarb should have known that his statements would both be reported in
Pennsylvania and damage Greitzer & Locks' reputation there," Judge Yohn
wrote. "There is evidence to suggest that Goldfarb directed his remarks to
Pennsylvania. Therefore, the court concludes that it was reasonably
foreseeable that Goldfarb would be haled into court in Pennsylvania a s a
result of his conduct. Thus, Goldfarb had sufficient minimum contacts with
Pennsylvania to allow the court to exercise specific personal

Requiring Goldfarb to defend himself in the district would not offend
traditional notions of fair play and substantial justice, Judge Yohn ruled,
and also held that "Venue is proper in a district in which the allegedly
defamatory statement was published, particularly if injury was suffered in
the same district."

DaimlerChrysler is represented by Charles A. Newman, Kathy A. Wisniewski,
Jerome H. Block and R. Jeffrey Harris of Bryan Cave in St. Louis, and
Abraham C. Reich and Theodore H. Jobes of Fox, Rothschild, O'Brien &
Frankel in Philadelphia.

G&L is represented by John H. Lewis Jr. and David D. Langfitt of
Montgomery, McCracken, Walker & Rhoads in Philadelphia. Askinazi is
represented by Kristine M. Maciolek and H. Robert Fiebach of Cozen &
O'Connor in Philadelphia. Lipscomb is represented by Peter F. Vaira of
Vaira, Backstrom, Riley & Smith in Philadelphia. (Automotive Litigation
Reporter, July 18, 2000)

DRKOOP.COM: Web Co. MillenniumHealth Communications Calls off Merger
A Virginia-based Internet company called off its merger talks with ailing
online health information provider drkoop.com.

MillenniumHealth Communications Inc., of Reston, Va., released a statement
early Monday that said negotiations between the two companies have ended.
''We regret to announce that after several serious discussions with
drkoop.com's senior management, our companies did not agree on our proposal
to merge,'' the statement said.

The statement offered no further details and messages left Monday with both
MillenniumHealth and Austin-based drkoop.com were not immediately returned.

MillenniumHealth, which sells medical equipment and provides online news,
announced two weeks ago that it wanted to merge drkoop.com. Drkoop
officials said they would consider the offer, details of which were not

Undertherapy.com, a Beverly Hills Internet company that offers medical
information for health care service providers, also offered publicly to buy
drkoop.com, a proposal Koop officials reluctantly said they would consider.

Drkoop.com, which provides online health information, has been in poor
financial health for some time.

The company has been seeking new financing since April, when it announced
it only had enough cash to survive until August. The announcement came
after the company disclosed in March that its auditors had cast doubt on
its ability to remain in business.

And several shareholders are seeking class-action status in a lawsuit
claiming the company made false promises when it went public last July.
Co-founded in 1997 by former Surgeon General C. Everett Koop, the stock
sold as high as $45 shortly after the initial public offering. It's
lingered in the $1 range for several months.

In early trading Monday on the Nasdaq Stock Market, drkoop.com shares fell
16 percent, or 21.9 cents, to $1.156. (AP Online, July 31, 2000)

FHP INTERNATIONAL: Shareholders Drop Effort to Revive Securities Suit
Disgruntled shareholders of FHP International Corp. first told a federal
appeals court in San Francisco that the company's officers and directors
sidestepped the arguments in the plaintiffs petition to revive their
securities fraud suit; then, after briefing was complete, the plaintiffs
dropped the appeal. Brady et al. v. Anderson et al., No. 98-56217,
voluntary dismissal (9th Cir., June 6, 2000); see Corporate Officers &
Directors LR, May 1, 2000, P. 12.

The defendant officers and directors had asked the appellate panel to find
that a federal judge was correct in dismissing charges that they
undervalued a spin-off, so they could personally reap $35 million in
profits from a subsequent sale of the HMO. However, the plaintiffs
responded that that the opposition to their petition mischaracterized every
argument they made and did a revisionist history treatment on the case.

The central question was whether the investors met the heightened pleading
standards under the Private Securities Litigation Reform Act of 1995 by
alleging facts giving rise to a strong inference of scienter.

In 1995, the defendants restructured FHP, and its physicians' practice
management operation became a wholly owned subsidiary known as Talbert.
They later sold FHP to HMO giant PacifiCare but did not include Talbert in
the sale. Under the terms of the joint merger proxy statement, FHP
shareholders received cash and PacifiCare stock worth $35 per share plus
the right (in a post-merger offering) to acquire shares in Talbert for
$21.50 each.

According to the investors, the FHP defendants portrayed Talbert as a
loss-riddled company worth only about $60 million and dissuaded
shareholders from exercising their rights to purchase its stock. Due to
FHP's warnings about the value of Talbert, many shareholders let their
rights expire or sold them at a depressed price, the investors assert,
while the defendants snapped up the unsubscribed shares for themselves.

Three months after the Talbert offering, the FHP defendants announced they
were selling Talbert to MedPartners Inc. for approximately $200 million.
The plaintiffs assert the FHP defendants, along with investment banking
firm Merrill Lynch Pierce, Fenner & Smith, knew Talbert was worth more than
they had portrayed and intentionally misled investors.

The FHP defendants counter that even if the allegations are true, the
shareholders benefited from the sale to PacifiCare. If the joint proxy
describing the proposed acquisition understated Talbert's value and
overstated FHP's, argue the defendants, then the price PacifiCare paid to
acquire FHP was more advantageous to the shareholders. PacifiCare has also
been named as a defendant in the suit.

The defendants also contended that the complaint failed to allege any facts
showing how any particular officer or director knew Talbert was
undervalued. The allegations are conclusionary , say the FHP defendants,
and the district court was correct in dismissing the action with prejudice.

In response, plaintiffs charged that in three long, overlapping briefs, the
defendants never confronted their arguments and instead presented a warped,
out-of-sequence version of the history of the case -- and the caselaw on
this issue -- that supported their position. For instance, they said: --

Defendants claimed the U.S. Supreme Court has ruled that the requited
mental state under Section 14 of the Securities Exchange Act of 1933 is
"actual knowledge" when in fact, the high court has explicitly reserved
that issue; --

The disclosure that defendants claim made the transaction's value clear was
not made until after the original complaint was filed; and --

The proxy statement that is a the core of the fraud complaint occurred
before the complaint was filed, not after the amended complaint.

However, on June 6, the plaintiffs voluntarily dismissed the appeal with
the agreement of each of the defendants. The U.S. Court of Appeals for the
Ninth Circuit panel approved the dismissal the next day.

The plaintiff-appellants are represented by Leonard B. Simon, Blake M.
Harper, Eric A. Isaacson, Laura M. Andracchio and Joseph D. Daley of
Milberg Weiss Bershad Hynes & Lerach in San Diego, and by Clifford W.
Roberts Jr. of Roberts & Associates in Tustin, Calif.

The FHP defendants-appellees are represented by John W. Spiegel, Kristin
Linsley Myles and Robert L. Dell Angelo of Munger, Tolles & Olson in Los

Merrill Lynch is represented by Phillip L. Bosl and William E. Thomson of
Gibson, Dunn & Crutcher in Los Angeles. (Corporate Officers and Directors
Liability Litigation Reporter, July 17, 2000)

IBM, NATIONAL SEMICONDUCTOR: Lawsuits Complain of Lab Environments
Over the past decade, periodic reports of health problems in semiconductor
manufacturing plants have tarred the high-tech industry's image.

There are two ongoing class-action lawsuits against IBM and National
Semiconductor alleging the lab environments were responsible for birth
defects and cancer among workers. Most semiconductor companies say they
have eliminated from use chemicals that have caused health problems in the

But Dr. Joseph LaDou, an occupational health specialist with the University
of California at San Francisco, has called for a comprehensive study of the
effects of semiconductor manufacturing environment on worker health for the
past two years.

The industry has refused so far.

"In California, the semiconductor industry has two times [higher] illness
incidence rate than the national average," LaDou said. "The problem is in
semiconductor manufacturing facilities, they recycle the air and filter out
the dust and other particles, not the chemical fumes and vapor ... those
chemicals react with one another to create new compounds. We have no way of
knowing what the health impacts are."

Strenuous efforts are taken to protect workers in the Cronos clean room,
said Steven Brooks, operations manager for Cronos. Workers typically go
through 80 to 100 hours of safety and operations training, take tests to
make sure they know the safety requirements and must recertify their safety
status annually, he said. That instruction includes proper handling of
chemicals to prevent violent reactions, safe operation of the tools in the
clean room, drilling with evacuations, and knowing how to rinse off
chemicals if they get splashed.

Exposure to the mixture of fumes that LaDou warns against is a moot point,
he said, because the air in the Cronos clean room is completely cycled
through 400 times each hour, diluting the fumes that escape. (The News and
Observer (Raleigh, NC), July 31, 2000)

MANUGISTICS GROUP: Settlement Reached for Securities Suit Remanded to MD
Manugistics Group Inc. reached an agreement for the settlement of the class
action federal securities litigation in which the Company, the Company's
Chairman of the Board of Directors and former Chief Financial Officer were

The United States District Court for the District of Maryland had issued an
order dismissing the consolidated class action complaint against the
Defendants. The plaintiffs then filed an appeal of the ruling. During the
pendency of the appeal, the parties reached a settlement in principle to
resolve the matter. By Order dated June 1, 2000, the Fourth Circuit
remanded the action to the District Court for settlement proceedings. The
parties subsequently entered into a definitive settlement agreement subject
to the approval of the Distrcit Court. A hearing date for the District
Court's consideration of settlement approval has not yet been set. The
amounts to be paid by Defendants pursuant to the settlement are being
funded by Manugistics' insurer.

MCGRATH RENTCORP: Defends Charges on Failure To Warn Indoor Air Quality
McGrath RentCorp has been named along with a number of other companies as a
defendant in a lawsuit alleging a failure to warn about certain chemicals
associated with building materials used in portable classrooms in

The lawsuit was filed by As You Sow, a corporation that has served as a
plaintiff in numerous lawsuits alleging similar failures to warn. The
Company and its subsidiary Enviroplex, Inc. are two of nineteen named
defendants, all of whom are involved in the portable classroom industry in
the State of California. While the plaintiff alleges that materials used to
construct portable classrooms require certain warnings, there is no
allegation that any individual has suffered any injury or harm. The
plaintiff does not allege that any particular classroom leased, sold or
manufactured by the Company or Enviroplex has exposed anyone to any such
chemicals; and the Company believes that in fact none of the portable
classrooms it leases or sells and none of the portable classrooms
manufactured by Enviroplex pose any health risk. The Company believes the
lawsuit is without merit and it intends to defend against the suit

The lawsuit was filed in the Superior Court of the State of California for
the County of San Francisco on July 7, 2000. The complaint seeks a court
injunction ordering the defendants to post warning signs in portable
classrooms, recovery of a fine of $2,500 for each failure to post a warning
sign where required, and recovery of monies the defendants may have made by
selling or leasing classrooms without appropriate warnings. Plaintiff also
asks for payment of attorneys' fees.

NBTY, INC: Cauley & Geller Seeks Damages in NY on Behalf of Shareholders
The Law Firm of Cauley & Geller, LLP has filed a class action in the United
States District Court for the Eastern District of New York on behalf of all
individuals and institutional investors that purchased the securities of
NBTY, Inc. (Nasdaq: NBTY) between January 27, 2000 and June 15, 2000,

The complaint charges that the Company and certain of its officers and
directors violated the federal securities laws by providing materially
false and misleading information about the Company's financial condition
and future growth potential. Specifically, the complaint alleges that the
defendants failed to disclose several adverse factors which signaled a
dramatic slowing of its growth and, as a result, a decline in its same
store sales. According to the complaint, the defendants failed to disclose
(1) that sales at the Company's Vitamin World stores were declining as
demand for nutritional supplements was weakening; (2) that the Company's
financial results were being negatively impacted by fluctuations in the
value of the British Pound -- as a result of the Company's Holland &
Barrett stores which operate primarily in the U.K.; and (3) that the
Company did not derive any meaningful benefit from its "vertical
integration" efforts -- acquisitions of nutritional supplement companies in
different segments of the supplemental business. As a result of these false
and misleading statements the Company's stock traded at artificially
inflated prices during the class period. Prior to the disclosure of the
above mentioned adverse facts, certain insiders took advantage of the
inflated stock price by selling millions of dollars worth of their stock to
the investing public, reaping enormous insider profits. When the truth
about the Company was revealed, the price of the stock dropped

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

NBTY, INC: Milberg Weiss Files Securities Lawsuit in New York
A class action lawsuit was filed on July 28, 2000, on behalf of purchasers
of the securities of NBTY, Inc. (NASDAQ:NBTY) between January 27, 2000, and
June 15, 2000, inclusive. A copy of the complaint filed in this action is
available from the Court, or can be viewed on Milberg Weiss' website at:

The action, numbered 00-CIV-4402, is pending in the United States District
Court for the Eastern District of New York, located at Two Uniondale
Avenue, Uniondale, NY 11553, against defendants NBTY, Scott A. Rudolph
(Chairman, President and Chief Executive Officer), William Shanahan (Vice
President), Glenn Cohen (Director), Harvey Kamil (Executive Vice President,
Chief Financial Officer and Secretary) and Arthur Rudolph (Director). The
Honorable Arthur D. Spatt is the Judge presiding over the case.

The complaint charges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by failing to disclose certain known adverse factors to the market between
January 27, 2000 and June 15, 2000. For example, as alleged in the
complaint, by the start of the Class Period, NBTY was being adversely
affected by several undisclosed adverse factors including: (i) that sales
at the Company's Vitamin World stores were declining as demand for
nutritional supplements was weakening. Contrary to defendants' Class Period
representations, the Company was not immune to negative industry- wide
trends; (ii) that the Company's financial results were being negatively
impacted by fluctuations in the value of the British Pound as a result of
the Company's Holland & Barrett stores which operate primarily in the
United Kingdom; and (iii) that the Company did not derive any meaningful
benefit from its "vertical integration" efforts - acquisitions of
nutritional supplement companies in different segments of the supplement
business. On June 15, 2000, the Company announced that while it was too
early to assess total sales for its Vitamin World operations for the full
third quarter of June 30, 2000, same-store sales for the two months of
April and May were up 2% - as compared to 11% for the same period in the
prior year. The Company also noted that "the weakness in the pound sterling
is currently expected to have a negative impact upon (its) financial
statement arising out of the operation of its Holland & Barrett stores in
the United Kingdom." In response to these announcement, the price of NBTY
common stock declined, precipitously falling 36% from $11.06125 per share
to $7.06125 per share.

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

NSW GOVT: Aussi Families Sue for Nervous Shock from Thredbo Disaster
News from Sydney says that compensation claims launched in the wake of the
1997 Thredbo disaster had the potential to change Australia's legal
culture, a lawyer for families of the victims said on July 31.
Canberra-based lawyer Bernard Collaery said the shocking nature of the
tragedy could turn around Australia's traditional reluctance to award
damages for emotional injury. "If ever there was a case that would bring
about reform in this area, this is it," Mr Collaery said.

Legal sources confirmed Stuart Diver, the sole survivor of the deadly July
landslide, was suing the New South Wales Government for its role in the
tragedy. At least 23 parties, mainly families of the 18 people who died in
the landslide, were already participating in a class action led by Mr
Collaery. It is understood separate claims had been filed with other
lawyers. The original class action, presently before the New South Wales
Supreme Court, centres around the relatives' nervous shock resulting from
the tragedy.

Mr Collaery said the action against the NSW Government, representing the
National Parks and Wildlife Service and Roads and Traffic Authority, and
Lend Lease and Kosciuszko Thredbo Pty Ltd, could change Australia's legal
culture. "Nervous shock laws in this country are not generous," Mr Collaery
said. "There is a reluctance to award full compensation for purely mental
injuries. "But we're hoping the shocking background to this will assist the
courts to give greater recognition to the long-term disabling impact of
psychological injuries."

Mr Collaery said last month's coronial report confirmed what the families
had always known - that the tragedy was preventable. He said the case
centred on his argument that the cause of the disaster was a burst pipe
under the road.

The case is back in court for directions. The deadline for joining the
legal action ended this afternoon. (AAP Newsfeed, July 31, 2000)

OMEGA HEALTHCARE: Wechsler Harwood Files Securities Lawsuit in New York
----------------------------------------------------------------------- A
class action against Omega Healthcare Investors, Inc. (NYSE: OHI) and
certain of its officers and directors has been commenced in the United
States District Court For The Southern District Of New York by Wechsler
Harwood Halebian & Feffer LLP www.whhf.com. The suit is on behalf of
shareholders who purchased the common stock of Omega between April 13, 1999
and May 11, 2000 (the "Class Period").

The complaint alleges that Omega and certain of its directors and executive
officers violated 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 financial statements
contained in filings with the Securities and Exchange Commission (the
"SEC") and press releases, that, inter alia, overstated the Company's
assets, revenues, income and earnings per share during the Class Period and
further misrepresented the likelihood of continuing the payment of its
existing dividend.

On May 11, 2000, the Company finally announced that it had negotiated a
cash infusion to stave off bankruptcy and would nonetheless cut its
dividend. On this news, Omega's stock fell to between $4.00 and $5.00 per
share. The Company's common stock had traded as high as $26.00 per share on
the NYSE during the Class Period.

However, the individual defendants and certain insiders fared better.
During the Class Period, and shortly before, the individual defendants sold
over thousands of shares of the Company's common stock at a price almost
four times higher that Omega's stock was worth at the end of the Class

Contact: Wechsler Harwood Halebian & Feffer LLP, New York Telephone:
877-935-7400 (toll free) Ramon Pinon, IV, Shareholder Relations Department:

PERVASIVE SOFTWARE: Announces Dismissal of Shareholder Lawsuit in Texas
Pervasive Software Inc. (Nasdaq:PVSW) on July 31 announced that the
shareholder lawsuit filed against the Company last November was dismissed
on July 20 by the United States District Court, Western District of Texas,
Austin Division. The lawsuit was a class action that had been filed under
federal securities law following a decline in the Company's stock price.

Based in Austin, Texas, Pervasive has offices in Canada, Europe, Japan, and
Asia, as well as 70 distributors covering 80 countries.

PROFIT RECOVERY: Chitwood & Harley to Expand Securities Suit in Georgia
Chitwood & Harley plans to expand the class period in the class action
lawsuit that is pending in the United States District Court for the
Northern District of Georgia against Profit Recovery Group International,
Inc. (NASDAQ: "PRGX") and certain officers and directors. The expanded
class period will include those who purchased shares of PRGX between
February 16, 2000 and July 26, 2000 (the "Class Period").

The complaint charges PRGX and certain of its officers and directors 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
defendants issued a series of materially false and misleading statements
concerning the Company's publicly-reported revenues and earnings that
artificially inflated PRGX's stock price throughout the Class Period. A
recent press release by the Company revealed that PRGX had continued the
course of conduct challenged in the complaint until July 26, 2000.

Contact: Chitwood & Harley Martin D. Chitwood or David Bain 888/873-3999 or
404/873-3900 dab@classlaw.com

SONUS PHARMACEUTICALS: Reaches Agreement to Settle Securities Lawsuit
Pharmaceuticals, Inc. (Nasdaq: SNUS) announced on July 31 that the Company
entered into a Memorandum of Understanding with plaintiffs to settle all
claims in the securities class action lawsuit pending against SONUS in
federal court in Seattle. The settlement, which will be funded by the
Company's insurance carrier, is subject to court approval after notice and
an opportunity to object is provided to the shareholder class.

SONUS Pharmaceuticals, Inc., located in Bothell, Washington, is a developer
of proprietary ultrasound contrast agents and drug delivery systems for the
diagnosis and treatment of heart disease, cancer and other debilitating
conditions. The Company is also engaged in the research and development of
oxygen delivery products.

STAGE STORES: Former Employees Sue in TX Alleging RICO Act Violation
In March 2000, eleven former employees of SRI d/b/a Palais Royal, filed two
separate suits in the United States District Court for the Southern
District of Texas against the Company, SRI and Mary Elizabeth Pena, arising
out of alleged conduct occurring over an unspecified time while the
plaintiffs were working at one or more Palais Royal stores in the Houston,
Texas area.  The plaintiffs allege that on separate occasions they were
falsely accused of stealing merchandise and other company property and
giving discounts for purchases against company policy. The suits accuse
the  defendants of defamation, false  imprisonment, intentional infliction
of mental distress, assault and violation of the Racketeer Influenced and
Corrupt Organizations (RICO) Act. The claims seek unspecified damages for
mental anguish, lost earnings, exemplary damages, treble damages, interest,
attorneys' fees and costs. The Company denies the allegations and intends
to vigorously defend against the claims.

STAGE STORES: Stockholder Appeals against Dismissal of Lawsuit in Texas
On March 30, 1999, a class action lawsuit was filed against the  Company
and certain of its officers, directors  and stockholders in the United
States District Court for the Southern District of Texas by John C. Weld,
Jr., a stockholder who purchased 125 shares of the Company's common stock
on August 3, 1998, alleging violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder (the
"Weld Suit"). The Company believed that the allegations of the Weld Suit
are without merit, and on July 23, 1999, the Company filed a motion to
dismiss.  United States District Judge Kenneth Hoyt entered an order on
December 8, 1999 dismissing the Weld Suit. The order has been appealed by
Mr. Weld.

TOBACCO LITIGATION: Monroe County, N.Y. 4th to Securitize Settlement
Monroe County, N.Y. will become the fourth municipality in the nation to
securitize its share of the national tobacco settlement, in a deal that
will represent the first time the rating agencies have assigned the same
rating to all maturities of an issue.

The $160 million deal will be sold by the Monroe Tobacco Securitization
Corp., a separate, bankruptcy-remote entity established expressly for this
purpose. In the three earlier deals, Moody s Investors Service and Standard
& Poor s assigned as many as three different ratings to different
maturities, reflecting the fact that the risk that the settlement payment
stream funded by the major tobacco companies could be disrupted by a
greater than expected decline in cigarette consumption, adverse legal
developments, or even bankruptcy grows with time.

This time around, the terms of the deal include a clause requiring that, in
the event of a default, any available cash will be divided among holders of
all of the outstanding maturities, rather than exclusively being applied to
repay holders of the earliest maturity. This provides all maturities with
equal access to any available assets, allowing for a uniform credit rating
across the entire scale of due dates.

Moody’s said that it plans to rate the entire Monroe deal A1, and Standard
& Poor s expects to rate it A. Fitch, which assigned a single rating to the
previous issues, said that it expects to continue that practice and rate
the new deal A-plus. In accordance with structured finance market
practices, the ratings will not be formally assigned until the deal prices.

While all of the tobacco securitizations rest on structured finance
techniques and practices, all of the deals issued thus far -- and
everything still on the drawing board -- have been sold on a tax-exempt
basis, making their target market traditional municipal bond investors.

Ned Flynn, a senior vice president at First Albany Corp., the deal s senior
manager, said the deal, which is scheduled to price, owes a large debt to
the pioneering work done by the three earlier issuers and their
underwriter, Salomon Smith Barney Inc.

However, he said he is hopeful that some of the structural innovations the
Monroe deal will include will help expand the market for the bonds.

                        Drawing Investors Eyes

Underwriters of this second wave of tobacco securitizations being led by
Monroe and expected to include deals from Erie County, N.Y., and the Alaska
Housing Finance Corp. have said they are seeking ways to broaden the sector
s appeal to those investors, in part by adjusting the deals structures to
make them more like traditional public finance issues.

In that vein, possibly the most dramatic departure in the Monroe issue
compared to the earlier deals sold for New York City and Nassau County,
N.Y., and Westchester County, N.Y., is the decision by the issuer to use
traditional fixed amortization maturities in the early part of the loan.

That approach, which covers the 2002 through 2015 serial maturities and the
2019 term bond -- about 13% of the deal s total par value, is the municipal
market standard.

On the later maturities, the Monroe deal will use a flexible amortization
schedule, in which the issuer will publicize both the planned maturity --
which represents when it expects to repay the bonds if its expectations
about settlement cash flows are satisfied -- and a longer, rated maturity,
when the bonds will be repaid if settlement payments come in more slowly. A
default will only occur if the issuer fails to redeem the bonds on the
rated maturity date.

However, while providing more certainty about repayment schedules could
help the deal, especially among the retail investors who are more likely to
buy the early maturities, rating agency analysts said that from their
perspective, the most important structural development relates to the
default clause requiring that any available cash be divided among holders
of all of the outstanding maturities.

Analysts said the Monroe deal s structure is common in the nonmunicipal
securitization markets. However, the three previous tobacco securitizations
used the alternative sequential subordination structure.

Since all of the bonds will have an equal shot at any money available to
repay investors after a default, there was less reason for higher ratings
on the short-term maturities, as took place in the earlier deals.

                            Still Familiar

Paul Brennan, who manages a total of nine New York municipal bond funds
with about $3 billion in assets for Nuveen Investments, said that despite
the structural tweaks, from his perspective the Monroe deal looks much like
the earlier issues, and that his decision on whether to buy the issue will
depend mainly on the yields it carries.

Brennan said he is comfortable with the expected debt service coverage
ratios Monroe expects to post even though they are lower than those
included in the documents for New York City s securitization. He noted that
Monroe s projections of cigarette consumption -- and thus the payments it
will receive under the settlement -- are smaller than New York s, so it
will be easier for the deal to meet, or exceed its targets.

First Albany s Flynn said it was important to note the factors at work
behind both the coverage levels and the consumption estimates. He said the
WEFA Group which provided the consumption projections for both the earlier
deals and the Monroe deal -- has cut its estimate for cigarette consumption
over the short term due to the larger than expected jump in per-pack
prices. But over the long term, the group has actually raised its
estimates, citing stronger than expected growth in personal income, which
it believes is closely correlated with smoking rates.

The more money people have, the more able they are to spend it on
cigarettes, Flynn said.

On the coverage side, Flynn pointed out that the lower ratios were largely
due to the faster amortization of the bonds.Two concerns that do factor
into Brennan s thinking are the relative lack of secondary market liquidity
for tobacco securitizations thus far, and the risk that supply will soar as
scores of other governments around the nation seek to roll out similar
deals in the future.

Since all tobacco securitizations are backed by the same settlement,
analysts generally consider them to be the same credit, and so portfolio
managers will be limited in how much they can buy from the sector, raising
the risk that a flood of deals could quickly outstrip demand, and yields
could soar.

At that point, market participants and issuers would likely structure new
deals on taxable basis to attract new investors, but the owners of existing
tobacco bonds could still see their secondary market value plunge.

Flynn said Monroe hopes to answer those concerns by stressing its efforts
to broaden the base of buyers, improving both secondary market liquidity
and debt capacity.

                            Outside Issues

One challenge the underwriters acknowledge they will face is overcoming the
blizzard of negative publicity regarding the tobacco industry s long-term
viability that was unleashed in the wake of the $145 billion punitive
damage award granted in the so-called Engle class action case in Florida
last month.

That award, if upheld, could result in a slew of similar cases that would
likely force the entire industry into bankruptcy. Company officials said
they are confident that the judgment will be overturned. And the rating
agencies and market participants generally agree that even if a tobacco
company declared bankruptcy, other competitors would step forward to meet
smokers demand and continue to make their settlement payments.

The impact of a reduction in payments caused by a rejection of the Master
Settlement Agreement by one of the participating manufacturers may be
limited by the reduction in market share a manufacturer would likely
experience as it approaches bankruptcy, Moody s wrote in its report.

Standard & Poor’s affirmed its ratings on all of the outstanding tobacco
settlement bonds in the wake of the Engle decision. Bern Fischer, an
analyst in the structured finance group at Standard & Poor s, said that
since the case was already well-known to the industry at the time of the
original deals, the possibility of a mammoth judgment was already accounted
for in their ratings.

Another issue hanging over the sector is the fact that the Internal Revenue
Service has said it is studying the deals. However, officials representing
the issuers who have been in contact with the federal agency said they have
been told the audits are for informational purposes, and market
participants said they are confident that there is nothing inherently
taxable about the use of tobacco settlement proceeds to back bonds. They
said they believe issuers have complied with all of the limitations on the
use of tax-exempt bond proceeds.

Monroe County, which encompasses Rochester, decided to pursue the
transaction last spring to help shore up its finances by reducing the need
for other general obligation borrowing and to refund $83 million of
outstanding GOs -- a recognized public purpose. (The Bond Buyer, July 31,

TOBACCO LITIGATION: Smokers Reject Industry Move As Judge-Shopping
Attorneys for sick Florida smokers scorned a move by the tobacco industry
putting the case in federal court as a desperate attempt to find a friendly
judge after losing a record $145 billion verdict.

In their first formal response to the industry's notice shifting the case
to federal court, smokers' attorneys asked the judge to send it back to
state court without any discussion.

The move by tobacco "is a final desperate attempt by defendants to forum
shop after seven years of litigation, a two-year trial, three jury verdicts
and multiple state court appellate opinions and decisions" against the
industry, smokers' attorney said in a court filing.

They called the industry's tactic unorthodox and based on a "frivolous" and
"tenuous" motion by a union to intervene in the case moments before the
verdict was read July 14.

By filing a notice of removal, the industry automatically moved the case to
federal court. Smokers must file a motion to send the case back to the
trial judge in state court.

To get there, about 300,000 to 700,000 sick Florida smokers covered by the
lawsuit must persuade U.S. District Judge Ursula Ungaro-Benages to discard
the case. She has set her first hearing Aug. 8.

The jury in the first smokers' class-action to go to trial decided the
nation's five biggest cigarette makers made deadly, defective products,
awarded $12.7 million in compensatory damages to three representative
smokers and set a U.S. record for punitive damages.

The defendants are Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown &
Williamson Tobacco Corp., Lorillard Tobacco Co., Liggett Group Inc. and the
industry's defunct Council for Tobacco Research and Tobacco Institute. (The
Associated Press State & Local Wire, July 31, 2000)

UNCOVER: Freelance Authors Regain Copyright Control Through Settlement
The settlement, believed to be the first class action lawsuit of its kind
in the nation, instructs commercial document delivery services to obtain
permission from authors before their creative works can be sold
electronically via the Internet. The case involved a group of individual
authors who challenged UnCover, an online document delivery service that
sold copyrighted magazine and journal articles over the Internet without
the author's permission.

UnCover pursued royalty contracts with many periodical publishers and paid
copyright fees to publishers, but not to individual authors.

The $7.25 million settlement, preliminarily approved by the federal court
in Oakland, California, requires UnCover to expand its copyright permission
and royalty payment system to include individual authors as well as
publishers, and to obtain certain specified forms of permission before
delivery of such articles. UnCover will now also offer a  icensing
agreement with any author who requests it, paying royalties semi-annually.
The settlement fund will come from other settling parties.

The settlement also uniquely initiates a search for thousands of authors,
poets and other academic and creative writers who may have had their works
sold by UnCover in the past. Any authors who retained their copyright in
any article delivered by UnCover between October 22,
1994 and July 12, 2000 may be eligible to participate in the settlement.
Anyone whose written work has been published in a magazine or periodical is
strongly encouraged to visit the special Web site (
http://www.uncoversettlement.com) where a potential class member can get
complete information and submit their claim for a share of the settlement
via the Internet. The Web site will be launched on Monday, July 31, 2000.

"Selling individual articles electronically without author permission has
been an industry-wide practice. We believe the law does not allow the
practice, and this settlement should go a long way to changing it," said
the authors' attorney John Shuff of the national law firm of Robins,
Kaplan, Miller & Ciresi L.L.P. ( http://www.rkmc.com), known for its broad
experience in complex litigation. "We hope the industry will take notice
and adopt the same permission procedures as UnCover."

The representative plaintiffs, a group of freelance and academic writers,
and poets, were Joan Ryan, Jim Tunney, Arlie Russell Hochschild, Lyn
Hejinian and Ronald Silliman.

"The intellectual property owned by authors is no different than music
owned by songwriters or images owned by photographers," said copyright
attorney Dan Reidy of the Law Offices of Daniel A. Reidy of Sausalito,
California, co-counsel with Robins, Kaplan, Miller & Ciresi L.L.P.,
referring to recent legal challenges to the electronic downloading and
distribution of music and photos on CDs or via the Internet. "Authors have
not only regained control of their work, but perhaps more importantly, they
have regained control of their value," said Reidy.

UnCover's founder, Ward Shaw, said that UnCover has long worked with
publishers and rights organizations such as the Copyright Clearance Center
and the National Writers Union's Publication Rights Clearinghouse to pay
copyright for delivery of the articles researchers and others need. "We are
happy to work with individual authors directly as well," said Shaw.

UnCover ( http://www.uncweb.carl.org) maintains a database of
approximately eight million articles -- increasing by approximately 5,000
per day -- from more than 17,000 periodicals, and specializes in supplying
copies of articles from often hard-to-find scientific, medical and
technical journals and other publications.

Contact: Daniel A. Reidy of the Law Offices of Daniel A. Reidy,
415-331-7500, Janette L. Ferguson of Robins, Kaplan, Miller & Ciresi
L.L.P., 415-235-6649, cell 650-579-2709, or Michael Traynor, 415-693-2110,
or Robert L. Eisenbach, 415-693-2094, both of Cooley Godward LLP.

* PricewaterhouseCoopers Study Shows Fd Securities Actions Fall By 14%
Federal securities fraud class action filings fell by 14 percent, to 205,
reversing a three year trend of annual increases, according to the
PricewaterhouseCoopers 1999 Securities Litigation Study. This drop occurred
despite the 1998 enactment of the Securities Litigation Uniform Standards
Act which made federal court the exclusive jurisdiction for most
significant securities class action litigation. The legislation was
intended to eliminate frivolous securities class actions brought in state

The PricewaterhouseCoopers study also shows that for the first time since
the enactment of the 1995 Private Securities Litigation Reform Act the
number of cases filed alleging violations of Generally Accepted Accounting
Principles ("GAAP") exceeded the number of those that did not. Prior to the
PSLRA, accounting cases comprised about 25 percent of all cases filed in
1995 while in 1999 the number of such cases amounted to 53 percent of
federal securities class action lawsuits.

"The tactic by class action plaintiffs and their counsel to allege GAAP
violations has clearly become an established and pronounced trend," says
Harvey Kelly, New York-based partner within PricewaterhouseCoopers'
Securities Litigation practice.

See the PricewaterhouseCoopers 1999 Securities Litigation Study on our
website at www.10b5.com. Other significant findings include:

Finding: In 1999, the high technology sector continued to experience the
most securities litigation. The computer services, computer
hardware/electronics and telecommunications industries accounted for a
combined 37 percent of new cases filed.

Finding: The banking and brokerage industries experienced a decline in
securities litigation down to less than 10 percent in 1999 from nearly 25
percent in 1998.

Finding: Of new securities litigation cases involving accounting issues, 55
percent alleged that companies employed improper revenue recognition
techniques, down from 73 percent in 1998. Of the cases filed in 1999, 40
percent asserted asset overstatements.

PricewaterhouseCoopers Securities Litigation website (www.10b5.com) also
includes information about litigants, date and court of filing, class
period, and industry and SIC Code of the company sued.

With a worldwide network of 7000 professionals, PricewaterhouseCoopers'
Financial Advisory Services ("FAS") practice provides creative solutions
and ideas that increase value to clients during critical periods and when
they are making important decisions that define their future. The FAS
business is organized along five product lines. The Business Recovery
Services, Dispute Analysis & Investigations, and Corporate Value Consulting
product lines are the largest in the world. Our Dispute Analysis &
Investigations product line was ranked number one in the US by readers of
Euromoney's International Commercial Litigation. The Project Finance &
Privatization product line rated second in Privatisation International's
global league table by number of privatization financial advisory
assignments and number one in Project Finance International's global
ranking by number of project finance advisory mandates. The Mergers &
Acquisitions product line was second in the world in number of deals
completed, according to Securities Data Company.


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
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Information contained herein is obtained from sources believed to be
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