CAR_Public/000907.MBX               C L A S S   A C T I O N   R E P O R T E R

             Thursday, September 7, 2000, Vol. 2, No. 174

                              Headlines

ACE CASH: To Refund Customers for Alleged Usury Law Violation
AUTO INSURANCE: TX to Seek Refunds for Thousands Overcharged
BANK OF BERMUDA: Miami Lawsuit Accuses of Role in Pyramid Scheme
BRIDGESTONE/FIRESTONE: Congress Is Planning Hearings Wednesday
CREDIT STORE: Contests Debt Collection Suit Filed in IL in February

CREDIT STORE: Defends 1999 Debt Collection Cases in Florida and Arizona
CREDIT STORE: May Settle for Debt Collection Suit in NY Filed in Feb.
CREDIT STORE: Settlement for 1996, 1998 Debt Collection Cases Proposed
E. COLI: In Canada, Members of Lawsuit Vying to Speak in Inquiry
EAST BATON: Citizens Committee Works on 44-Year-Old Desegregation Case

FORD MOTOR: Illinois Federal Judge Remands Paint Defect Case to State
GENERAL MOTORS: Attorney for Pickup Truck Defect Case Disqualified
GENERAL MOTORS: CT Judge OKs Trade Practice Claim in Brake Failure Case
GLIATECH, INC: Milberg Weiss Files Securities Lawsuit in Ohio
HMOs: Bush Unveils $158B Medicare Reform Plan Prescription Drug Included

I-STAT CORP: NJ High Court Bars Fraud-on-Market Claims in State
KEYSTONE FINANCIAL: Stockholders Approve $ 1 Bil Merger with M&T Bank
LAND REFORMS: Zimbabwe's White Farmers to Resume Legal Action
MEMBERWORKS INC: Emerges from Privacy Suit in CA; Defends Suit in MN
MTBE CONTAMINATION: Lieberman & Blecher Files Suit in NJ Superior Court

NETWORK SOLUTIONS: D.C. Lawyer Takes Third Shot at Web Site Overcharges
POSTAL SERVICE: NY Times Depicts Grievance of Workplace Racism
RIO TINTO: Oceanic Islanders Use Federal Law to Sue British Mining Giant
TOBACCO LITIGATION: Hillsborough Trial against R.J. Reynolds Begins

                            *********

ACE CASH: To Refund Customers for Alleged Usury Law Violation
-------------------------------------------------------------
A judge signed off Tuesday on a settlement of a lawsuit against a company
that was accused of violating the state usury law.

Ace Cash Express Inc., which has offices in North Little Rock, West Memphis
and Pine Bluff, is to refund fees to more than 5,000 customers in Arkansas,
according to the judgment signed by Pulaski County Circuit Judge David
Bogard.

Angie Gwatney of Faulkner County filed a class action suit against the
Irving, Texas-based check-cashing company. She argued that Ace's loan
practices violated a state constitutional provision that limits interest
rates. The lawsuit claimed that the interest on payday advances given by
Ace could reach to more than 700 percent. Those who paid fees to Ace's
Arkansas locations from Feb. 9, 1996, through June 15, 1999, are to be
refunded 75 percent of those fees in long-distance phone cards, according
to the settlement agreement. The value of the settlement could reach $1.6
million. A claims administrator is to contact people in the class so they
can get their portions of the settlement.

The company admitted no wrongdoing and said it settled to avoid costs of
further litigation. Ace contends its transactions are not loans and its
fees do not meet limits set by the state constitution.

Bogard also ordered Ace to pay $325,000 in legal fees to the plaintiffs.
The Associated Press, September 6, 2000)


AUTO INSURANCE: TX to Seek Refunds for Thousands Overcharged
------------------------------------------------------------
State regulators are investigating on the top auto insurers in Texas for
overcharging thousands of drivers who watched their premiums go up after
they were involved in accidents. The estimated overcharges by the Farmers
Insurance Group could amount to several million dollars, according to the
Texas Department of Insurance.

The agency said Tuesday it will seek refunds for all affected Farmers
Insurance policyholders and consider fines against the company. "This will
surely involve restitution and could involve some sort of punitive action,
including fines," Jim Davis, of the Department of Insurance, told
Wednesday's edition of The Dallas Morning News.

A spokesman for Farmers declined to estimate the total amount of
overcharges. When asked how many Farmers policyholders were affected, Bob
Huxel told the newspaper, "We hope to have those numbers firmed up by next
week."

The Texas Department of Insurance began looking at the allegations after
they were reported by Farmers. The company - the second largest auto
insurer in Texas with more than $1 billion in premiums - acknowledged that
a class-action lawsuit by a group of policyholders was being prepared when
they approached state regulators. That lawsuit has been abandoned now that
insurance regulators are looking into the overcharges, The News reported.
The excessive charges involved drivers who were in accidents in which they
were at fault. Farmers reportedly levied surcharges against these at-fault
policyholders for longer than state regulations allow.

Also on Tuesday, Insurance Commissioner Jose Montemayor announced a new
toll-free hotline for reporting possible insurance fraud. Montemayor said
the state loses at least $2 billion a year to insurance scams. He outlined
the state's top 10 insurance fraud cases, which range from a Bowie County
man who beat his knee with a ball peen hammer as he tried to fake injuries
after falling in a fast-food restaurant to the "kingpin" of a
multimillion-dollar life insurance and viatical settlement swindle in the
Dallas area. "These cases illustrate the many ways people try to cheat
insurance companies and individual insurance consumers," Montemayor said.

Studies show that insurance claim fraud can add from $200 to $1,000 a year
to the average cost of insurance for policyholders nationwide. Montemayor
said the department estimates that about $2 billion goes by the wayside in
Texas because of fraud.

The department says about 10 percent of claims are fraudulent in the state.
"Insurance fraud is an increasingly expensive 'hidden tax' to Texas
consumers and one of the most costly problems for insurance companies who
are trying to serve millions of honest policyholders," said the
Southwestern Insurance Information Service's Sandra Ray, who praised
Montemayor's efforts.

Last year, the insurance department handled more than 2,000 complaints that
led to 74 convictions. About 200 cases are under investigation now. (The
Associated Press State & Local Wire, September 6, 2000)


BANK OF BERMUDA: Miami Lawsuit Accuses of Role in Pyramid Scheme
----------------------------------------------------------------
More than 1,000 victims of an alleged $300 million pyramid scheme have
named the Bank of Bermuda (Cayman) Ltd. as a defendant in a class-action
lawsuit filed in Miami.

The recently filed lawsuit alleges that the bank played a primary role in
the scheme carried out by a business called Cash 4 Titles. The lawsuit said
the defendants violated the Racketeering Influence and Corrupt
Organizations Act, which allows a court to award triple damages.

The bank solicited money for Cash 4 Titles from U.S. citizens, especially
Florida residents, with knowledge of an illegal scheme, the lawsuit said.
It also wired money and sent checks to financial institutions in the United
States to perpetuate the business and traveled to the United States to
further the enterprise, the lawsuit alleged.

"Senior officers of the bank played an active role in the scheme and
facilitated its continued existence even as the United States federal
authorities began investigating Richard Homa and Michael Gause, the
founders of the Cash 4 Titles business, all the while knowing about and
benefiting from the illegitimate scheme," the lawsuit stated.

The lawsuit alleged that the Bank of Bermuda added an air of legitimacy to
the Cash 4 Titles operation by making payments to early lenders under the
pretext that the payments were from Cash 4 profits. The bank continued to
help the enterprise even after senior officials knew the fraudulent nature
of the scheme, the lawsuit claimed.

"It would be inappropriate for the bank to comment on litigation pending
before the court," Bank of Bermuda managing director Allen Bernardo said
recently. "But, the Bank of Bermuda denies any wrongdoing on its part in
respect of the Cash 4 Titles scheme or the fraud associated with it and
intends to defend its position vigorously."

No Bank of Bermuda officers are named in the lawsuit, although three
officers were fired in December following an internal investigation into
the bank's involvement with Cash 4 Titles.

The Bank of Bermuda was founded in 1889 and has offices in 14 countries. It
is generally considered to be the largest offshore bank in the British
Caribbean territory and one of the most conservative. It has assets of $8.4
billion as of June 30.

The lawsuit was filed under the name of plaintiff Edward Waller of Orlando,
Florida. In the documents, Waller said he traveled to the Cayman Islands
and met with a bank director, who was not named, and was assured that Cash
4 Titles "checked out fine." (The Associated Press State & Local Wire,
September 6, 2000)


BRIDGESTONE/FIRESTONE: Congress Is Planning Hearings Wednesday
--------------------------------------------------------------
Congress is planning hearings Wednesday on the Firestone tire controversy,
with company officials and federal safety regulators as witnesses, and
committees in the House and Senate appear ready to roast everyone connected
to the scandal over a bed of slow-burning coals.

While that may make for some interesting sound bites - committee members
are already making dark references to "Tiregate" -- and may or may not
result in useful future legislation, the real action should occur when a
wave of lawsuits hits the courts later this year.

Tires manufactured by Tennessee-based Bridgestone/Firestone are allegedly
suspect in accidents resulting in at least 88 deaths nationally and scores
more overseas. Most of the U.S. tires were on Ford vehicles, primarily a
sport utility vehicle called the Explorer. Some of the more violent
accidents reportedly involved tread separation at high speeds.

Members of congressional committees say they want to know why it took
Firestone executives so long to issue a recall of the affected models, an
estimated 6.5 million tires last month, when similar recalls were carried
out earlier in 16 foreign countries. They also want to know whether
executives at Firestone or Ford engaged in a cover-up while drivers and
passengers continued at risk over most of the past decade, when the tires
were in use.

A deliberate cover-up could provoke a Justice Department investigation.
Such probes rarely result in prosecutions, however -- witness the lengthy
but ultimately fruitless investigation of tobacco company executives who
told a congressional committee they did not believe cigarettes were
addictive, despite internal documents acknowledging addiction.

In the current controversy, consumer safety advocates also point the finger
at the National Highway Traffic Safety Administration, which over the
course of a decade has received more than a thousand complaints about
defects on Firestone tires but apparently saw no pattern and issued no
consumer alert.

While watching company executives and federal safety officials sweat under
congressional questioning on C-SPAN Wednesday may provide a certain
psychological satisfaction, only the courts can offer real redress.

But getting redress in the courts, especially for alleged defects in a
federally regulated industry such as tire manufacturing, can be
problematic.

The state courts are generally friendly to plaintiffs in liability suits;
federal courts are less so.

A class-action suit was filed last month in state court in Miami on behalf
of those who, while not injured in an accident, were forced to drive on the
recalled tires while waiting for replacements. More such state suits, with
slight variations, are sure to follow. Meanwhile, and more seriously, suits
allegedly involving the affected tires and fatal accidents have been
ongoing for several years in courts in at least four states.

However, the Supreme Court has a long history of "pre-empting" state
liability law with federal regulation -- trumping plaintiff-friendly state
"tort" law with the supremacy of federal regulations -- and a 5-4 majority
as late as last May used the Federal Motor Vehicle Safety Standards, or
FMVSS, to rule for an auto manufacturer in a liability suit.

In Geier et al vs. American Honda et al, the 5-4 Supreme Court majority
said that the FMVSS pre-empted District of Columbia tort law -- D.C. law is
analogous to state law -- in a case involving the lack of airbags in a 1987
car. Since the FMVSS as they existed at the time did not require the car to
have airbags and the company had met the requirements as spelled out in the
federal regulations, American Honda could not be held liable for a young
woman's head injury in the car in 1992, the Supreme Court said.

The FMVSS apply to almost all vehicle parts, including tires, and any
company on the defense end of a liability suit will attempt to show that
its product met minimum federal standards, despite the rigors of state law.
Federal regulations also provide a window for a company to move that any
liability suit be moved to federal court from state court.

Such a strategy may leave plaintiffs with the sole option of trying to
prove that the tires were deliberately manufactured with a significant
defect -- something Firestone has vehemently denied. How the company will
explain the lack of a domestic recall in the face of earlier foreign
recalls might prove stickier.

Automaker Ford could also find itself a target of lawsuits. The company
recommended that consumers inflate the tires on the low end of a
recommended scale to give SUVs, which have rollover problems, more
stability. However, reports say that drivers in some of the accidents may
have inflated their tires at considerably less pressure than that
recommended by Ford.

In related action, the non-profit Center for Auto Safety has filed suit in
Washington to force Ford and Bridgestone/Firestone to replace all ATX, ATX
II and Wilderness tires regardless of size and the plant where made. The
number of tires targeted by the complaint is at least twice as large as the
6.5 million tires that Firestone has already agreed to recall. (United
Press International, September 6, 2000)


CREDIT STORE: Contests Debt Collection Suit Filed in IL in February
-------------------------------------------------------------------
In February 2000, the Company and certain officers and directors were sued
in United States District Court for the Northern District of Illinois in an
action entitled Greene v. Burke, et al., No. 000 1039 (N.D. IL.). The suit
was brought on behalf of a class of certain Illinois debtors alleging
violations of the Fair Debt Collection Practices Act, the Federal Credit
Repair Organization Act, and the Illinois Credit Services Organization Act
arising out of the Company's attempts to collect out-of-statute debts. The
complaint seeks actual, statutory and punitive damages on behalf of the
class. The Company is defending itself vigorously.


CREDIT STORE: Defends 1999 Debt Collection Cases in Florida and Arizona
-----------------------------------------------------------------------
On May 27, 1999, the Company was sued on behalf of a class of Florida
debtors in the United States District Court for the District of Florida in
an action entitled McIntyre v. Credit Store Inc. On May 21, 1999, the
Company was sued on behalf of a class of Arizona debtors in the United
States District Court for the District of Arizona in an action entitled
Bingham v. The Credit Store, Inc. Both actions allege that communications
sent by the Company to class members violate the Fair Debt Collection
Practices Act and similar state laws in connection with attempts to collect
out of statute debt. Both complaints seek monetary damages and declaratory
judgments that the Company's mailers violate statutory provisions.


CREDIT STORE: May Settle for Debt Collection Suit in NY Filed in Feb.
---------------------------------------------------------------------
In February 2000, the Company was sued in United States District Court for
the District of New York in an action entitled Sturm v. Bank of New York.
The suit alleges that communications sent by the Company to class members
violate the Fair Debt Collection Practices Act. The complaint seeks
monetary damages for the alleged violations as well as for restitution and
unjust enrichment. While the Company has admitted no liability or
wrongdoing, the parties have negotiated and are in the process of executing
a settlement agreement. The settlement agreement will be subject to court
approval.


CREDIT STORE: Settlement for 1996, 1998 Debt Collection Cases Proposed
----------------------------------------------------------------------
During 1996 and 1998, Credit Store Inc., and certain former officers and
directors were sued in three class actions. These class actions generally
allege that the persons in the class were purportedly solicited to
voluntarily repay debt that had been discharged in bankruptcy, and that the
Company had violated other provisions of federal or state law, including
violations of the Bankruptcy Code, the Fair Debt Collection Practices Act,
the Truth in Lending Act, various state consumer protection laws and, in
one case, RICO.

The Company was sued (i) in 1996 in the United States District Court for
the Northern District of Illinois in an action entitled Louis G. Apostol,
as Administrator for the Estate of Curtis Kim v. M. Reza Fayazi, et al.;
(ii) in 1998 in the United States District Court for the District of Rhode
Island in an action entitled McGlynn v. The Credit Store, Inc., et al.; and
(iii) in the United States District Court for the Northern District of
Illinois in an action entitled Le v. The Credit Store, Inc., et al. The
complaints in these actions seek monetary damages, declaratory judgments
that the agreements reached with plaintiffs have no legal effect,
injunctive relief to prohibit defendants from purchasing or selling debts
that have been discharged in bankruptcy and to rescind any such agreements,
and to require cessation of collection efforts and the removal of debts
from credit reports, and in one case criminal contempt. While the Company
has admitted no liability or wrongdoing, the parties have executed a
settlement agreement, which also consolidated these three cases for
settlement purposes. The settlement agreement will be subject to court
approval.


E. COLI: In Canada, Members of Lawsuit Vying to Speak in Inquiry
----------------------------------------------------------------
The New Democratic Party should be able to participate in an inquiry into
Walkerton's contaminated water because of allegations made by Premier Mike
Harris, Mr. Justice Dennis O'Connor was told. "Our clients have been blamed
for the crisis by the current Premier of Ontario," lawyer David Jacobs said
in arguing that the party, former environment minister Bud Wildman and
former natural resources minister Howard Hampton, who is now party leader,
should be given standing at the public inquiry.

When he visited Walkerton on May 26, the day after the public first learned
of the E. coli bacteria that left six dead and 2,000 sick, Harris said it
was an NDP government that had made municipalities responsible for paying
for water testing.

Jacobs said that, normally, the lawyers for the Ontario government would
also represent previous governments, "but we can't expect that to happen
here in view of the Premier's remarks." O'Connor, who's heading the
inquiry, conceded that it's not unprecedented for political parties to be
given status, citing as an example the provincial Liberal party at the 1989
inquiry headed by Mr. Justice Lloyd Houlden into a fundraising scandal
involving Patti Starr, Tridel Corp. and some provincial Liberals. But he
suggested the proper time for a political party to be involved is after
recommendations are made. "My clients don't intend to make this a forum for
political debate," Jacobs responded. "We're here as part of the
fact-finding process."

Toronto lawyer Frank Marrocco, who will act for the province, said in an
interview he understands the NDP's concern. "I guess if that's the way they
feel, it's wise of them to seek separate representation." 'My clients don't
intend to make this a forum for political debate.'

                    NDP lawyer David Jacobs

The NDP is among about 40 groups and individuals seeking standing - a
status that will give them the right to question witnesses and help shape
the inquiry's direction.

O'Connor, who will be living in a rented Walkerton house during the
inquiry, has set three days aside to hear their arguments and will release
his decision early next week.

Four groups are vying for the right to speak for the people of Walkerton:
Concerned Walkerton Citizens; the Walkerton Community Foundation; the local
chamber of commerce; and members of a proposed class-action lawsuit.

Meanwhile, water from Well 7 flowed through the town's pipes again on
September 5 after being turned off on Monday as part of a hydrogeological
study. (The Toronto Star, September 6, 2000)


EAST BATON: Citizens Committee Works on 44-Year-Old Desegregation Case
----------------------------------------------------------------------
Best of luck to the citizens committee that wants "an end" to the
44-year-old desegregation case that is hobbling the East Baton Rouge public
schools.

However, untangling the legal situation takes far more than good
intentions. Nor can any self-appointed panel speak for the elected members
of the School Board, who have ultimate responsibility for carrying out any
new version of a desegregation plan.

There is little new in what the committee, headed by attorney Brace
Godfrey, is proposing to the plaintiffs in the case in U.S. District Court.
An outline of the Godfrey committee proposals is intended as the beginning
of negotiations among the parties in the case.

The outline would require continuing and substantial financial investment
in inner-city schools, but Superintendent Gary Mathews and board members
have been doing that, and they have been willing to do that all along with
continued judicial supervision, in exchange for release from other, more
controversial aspects of the case.

The citizens committee proposal would create some sort of committee of
overseers of the desegregation plan, which presumably would give the
plaintiffs the U.S. Justice Department, the NAACP and survivors of the
original case - a place at the table in terms of carrying out a settlement.
However, they already have enormous influence in the case in U.S. District
Court - too much influence, in our view, given their record of
intransigence in the case. We doubt they will be willing to give up today's
judicial oversight for tomorrow's citizen oversight.

U.S. District Judge John V. Parker told the committee to hold its
discussions, giving them 100 days to work with the other parties in the
case.

In an order last week, Parker said that the goal of the discussions is "to
reach an amicable resolution on how defendants can desegregate the East
Baton Rouge Parish school system consistent with the 1996 consent decree,
the Constitution and applicable federal law." The judge is apparently far
from changing his view that the School Board has failed to live up to the
1996 plan that was intended to be a path toward resolution of the case.

The judge also patronizingly refers to the citizen committee as
representing "a renewed interest and attitude on the part of the people of
East Baton Rouge Parish in assuming the responsibility for the education of
children that can lead to an environment in which this community can once
again assume control of its own public school system consistent with the
consent decree."The judge is apparently unpersuaded that the community -
which raised taxes for the support of the schools in 1998, for the first
time in 30 years - has had an appropriate "interest and attitude" in public
education.

Such an Olympian disdain for the day-to-day struggles of the community to
improve public education does not bode well for a settlement.

The Godfrey committee's proposal was supported by Gov. Mike Foster,
doubtless in his capacity as community leader rather than defendant in the
case. That distinction may be lost on the plaintiffs.

We favor some sort of agreement that will end, at the least, the
pupil-assignment portion of the case. The proposals by the Godfrey
committee are not bad ones, at least judging from the outline.

Further, the Justice Department and plaintiffs in the case should recognize
that the School Board has a stick in that it has declared its willingness
to appeal any significant conflicts about the 1996 consent decree to the
U.S. 5th Circuit Court of Appeals. Depending on whether there are, indeed,
avenues of appeal, the 5th Circuit - a generally conservative court - might
be willing to reverse rulings by Parker that support the Justice Department
and the plaintiffs.

It is not a part of the formal court record, but it is well-known by now
that this case has outlived its usefulness in the lives of students in the
East Baton Rouge Parish schools. The plaintiffs and the Justice Department
blame the School Board, and the School Board blames the plaintiffs as
millions of dollars are spent on legal wrangling. The money could be better
spent on education.

There is also a great deal of merit in the argument that, contrary to the
1996 consent decree, a number of temporary classroom buildings are needed
on a large number of campuses. The plaintiffs and the Justice Department
have tried to force the board to eliminate most of those, and the board
agreed four years ago.

That is a promise that was broken by the School Board. It has never
acknowledged any fault on the issue - board members never acknowledge any
fault at all, preferring to kick around the judge, the NAACP and the
Justice Department - and that doubtless rankles the plaintiffs. But on the
educational merits of the case - the need for more classrooms for computer
labs and dance classes, and myriad purposes - the consent decree should be
changed. The Godfrey committee proposals are a basis for doing that while
retaining the obligations in the consent decree for extensive repairs and
placement of new buildings over time in inner-city schools.

That is something the School Board's opponents want, and they should
consider carefully the dangers of a course of intransigence, and endless
litigation in a fading cause. (The Advocate (Baton Rouge, LA.), September
5, 2000)


FORD MOTOR: Illinois Federal Judge Remands Paint Defect Case to State
---------------------------------------------------------------------
U.S. District Judge David R. Herndon has granted the motion of plaintiff
Joyce Phillips to remand a paint-defect class action against Ford Motor Co.
to Illinois state court. The judge ruled that the $75,000
amount-in-controversy threshold would not be met. Phillips et al. v. Ford
Motor Co., No. 99-CV-0964-DRH (S.D. Ill., July 7, 2000).

Phillips filed the suit in Madison County Circuit Court, alleging that Ford
sold vehicles with a known latent defect that first appeared in the
mid-1980s after the auto maker altered its painting process. The new
process resulted in paint adhesion loss or "delamination," she claimed, and
Ford concealed the defect rather than recall the vehicles or disclose the
problem to consumers.

Phillips seeks to represent a class of persons who currently own 1988--1997
Ford vehicles that were painted without the proper primer-surfacer and thus
are subject to delamination. The class excluded residents of Louisiana and
Texas.

The two counts of the complaint allege violations of the Illinois Consumer
Fraud Act and common-law fraud, and ask the court to order Ford to repair
the vehicles or pay for such repair. The complaint explicitly states that
Phillips' individual claim is "worth less than $75,000, inclusive of all
damages and fees."

Ford removed the action to U.S. District Court for the Southern District of
Illinois; Phillips moved for remand.

Judge Herndon rejected the company's contention that the claims would meet
the $75,000 federal jurisdictional minimum. "Ford attempts to paint a
frightening picture of the administrative headaches and financial costs
involved in a complex process of owner identification, owner notification
and vehicle inspection. But the complaint does not ask that this process be
implemented, and many of the costs listed by Ford would be incurred as part
of a normal class action suit."

Moreover, the judge said, Ford has not offered evidence suggesting that the
cost of repainting a used car or truck, whether at a Ford dealership or
independent shop, exceeds the $75,000 jurisdictional hurdle. "Stated
simply," Judge Herndon ruled, "subject matter jurisdiction does not lie
here." (Automotive Litigation Reporter, August 15, 2000)


GENERAL MOTORS: Attorney for Pickup Truck Defect Case Disqualified
------------------------------------------------------------------
9th Cir. Affirms Disqualification, Citing 'Presumed Disclosure'The Ninth
Circuit has affirmed the disqualification of plaintiff's attorney Joe R.
McCray from a pickup truck defect case against General Motors Corp. because
of McCray's prior representation of former GM engineer Ronald Elwell in an
unrelated action. Elwell has testified as an expert witness for plaintiffs
in a number of defect lawsuits. Godby v. Arizona Dist. Ct. (Automotive
Litigation Reporter, August 15, 2000)


GENERAL MOTORS: CT Judge OKs Trade Practice Claim in Brake Failure Case
-----------------------------------------------------------------------
A state court judge has ruled that a claim under the Connecticut Unfair
Trade Practices Act may go forward along with a defect claim, despite an
exclusivity provision in the Connecticut Product Liability Act. Kristofak
v. General Motors Corp. (Automotive Litigation Reporter, August 15, 2000)


GLIATECH, INC: Milberg Weiss Files Securities Lawsuit in Ohio
-------------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on Sept. 5, 2000, on behalf of purchasers of
the securities of Gliatech, Inc. (NASDAQ: GLIA) between April 9, 1998 and
August 29, 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:
http://www.milberg.com/gliatech/

The action, numbered 1:00 CV 2236, is pending in the United States District
Court, for the Northern District of Ohio, Eastern Division, located at 201
Superior Ave. N.E., Cleveland, Ohio 44114 against defendants Gliatech,
Thomas O. Oesterling (Chairman (until September 1, 2000), President and
Chief Executive Officer) and Rodney E. Dausch (Executive Vice President -
Finance), Secretary and Chief Financial Officer). The Honorable Paul R.
Matia is the Judge presiding over the case.

The complaint alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder,
by issuing a series of material misrepresentations to the market between
April 9, 1998 and August 29, 2000, thereby artificially inflating the price
of Gliatech common stock. Specifically, the Company failed to disclose that
it had provided inaccurate data to the U.S. Food & Drug Administration in
order to gain approval to market its leading product, ADCON(R)-L. When this
disclosure become publicly known, Gliatech was forced to terminate a
previously announced merger with Guilford Pharmaceuticals and the price of
Gliatech's stock plummeted 65%.

Requests for appointment as lead plaintiff can be made to the Court no
later than November 6, 2000.

Contact: Steven G. Schulman or Samuel H. Rudman One Pennsylvania Plaza,
49th fl. New York, NY, 10119-0165 or Phone number: (800) 320-5081 Email:
gliatechcase@milbergNY.com Website: http://www.milberg.com


HMOs: Bush Unveils $158B Medicare Reform Plan Prescription Drug Included
------------------------------------------------------------------------
The Allentown Morning Call (9/6, McDermott) reported, "George W. Bush,
surrounded by two dozen residents of an Allentown senior citizens
high-rise, proposed a $158 billion Medicare makeover that local elder
advocates worry is too complicated for many and too undependable for most."
Bush "called for $110 billion to modernize the program created in 1965 and
$48 billion for a prescription drug plan that would cover the first four
years of a transition to a better Medicare program."

The Morning Call continued, "Hammered in recent weeks by opponent Vice
President Al Gore for a lack of specifics on his Medicare and prescription
drug plans," Bush "accused the Clinton administration of squandering
chances to revive an ailing program over the past eight years," saying, "At
first, the Clinton-Gore administration proposed an ill- advised government
takeover of American medicine that was wisely rejected by Republicans,
Democrats and the American people." Since then, "the administration has
been too partisan -- playing politics at the expense of reform."

Bush's "visit was brief. He was accompanied by his wife, Laura, and running
mate Dick Cheney." Bush "entered, shook a few hands, made his 30-minute
speech and left without answering questions." Yet "his address was
well-received by the small group of tenants invited to the crowded
community room, where they were almost outnumbered by Republican leaders
who included Gov. Tom Ridge; US Rep. Pat Toomey, R-15th District; Allentown
Mayor William L. Heydt; and state Sen. Charles Dent, R- Lehigh." Bush
"would have been hard pressed to find a better backdrop for his
announcement.

Only Florida has a higher concentration of elderly people than
Pennsylvania, where 16 of every 100 people are 65 and older. Had Bush gone
to Florida, however, it might have signaled a weakness in holding a state
where his brother Jeb is governor."

The Philadelphia Inquirer (9/6, Wilson) reported, "Bush unveiled a plan on
Tuesday to spend almost $200 billion on reforming Medicare and providing
immediate prescription drug benefits to end the elderly's 'cruel choice'
between food and medicine." Bush "promised not to raise taxes or the
eligibility age for Medicare and said a bill proposing drug benefits would
be the second he sent to Congress after education reform if he won the Nov.
7 election." He "proposed to provide $48 billion immediately in direct
support to states over four years to cover the full costs of a prescription
drug program for seniors with incomes below $11,300 for individuals and
$15,200 for a couple." That money "also would cover part of the costs of
medicines for individual seniors with incomes up to $14,600 and couples
earning up to $19,700."

ABC News (9/5, Jennings) reported last night, "Today Mr. Bush made public
his plan for reforming Medicare, helping senior citizens cope with the
ever-increasing price of prescription drugs."  ABC (Reynolds) added, "There
were perhaps 40 senior citizens in the room this morning, surrounded by
twice as many reporters, when Bush unveiled his Medicare plan and coupled
it with a dig at his opponent." Bush was shown saying, "Vice President Gore
talks about the people versus the powerful. For eight years, he has been
the powerful. And on health care, he has little to show for it." ABC added,
"By contrast, the Governor today proposed to send $48 billion to the
states, starting next January, to help them make prescription drugs
affordable for senior citizens. Bush would then follow that with a $110
billion outlay, allowing the poorest seniors to get their prescription
drugs for free. And for those with higher incomes, he would pay 25% of
those health insurance premiums. Bush would also spend $40 billion on
Medicare to restore cuts made to the program to balance the Federal budget
in previous years." Bush was shown saying, "Keeping the promise of Medicare
and expanding it to include prescription drug coverage will be a priority
of my administration." ABC added, "Under the Bush plan every senior would
be entitled to the current set of Medicare benefits. No one, regardless of
income, will have to pay more than $6,000 a year for prescription drugs.
And eventually for any Medicare benefit. And he would let seniors choose
among private plans outside Medicare that may better fit their health
needs."

CNN (9/5, Inside Politics, Woodruff) reported "some of the political
motivation behind" Bush's drug prescription plan "was evident today, when
Bush spent nearly half of his speech criticizing Al Gore's rival plan and
the Administration's record." CNN (Crowley) added that in Pennsylvania, "a
battleground state where 16 percent of the population is 65 and older and
at a time when Al Gore has been hammering him for failing to address the
problem of senior health, George Bush is trying to turn it around." Bush
was shown saying, "Vice President Gore talks about the people versus the
powerful. For eight years, he has been the powerful, and on health care, he
has little to show for it."

CNN added Bush "unveiled a nearly $200 billion Medicare plan. It includes $
40 billion for Medicare providers, money cut during the Clinton
Administration, and $110 billion for reform. Bush's aim is to provide
seniors with a choice of public and private insurance plans." When
implemented, Bush "says his Medicare program would fully pay for Medicare
premiums, including prescription drugs, for senior couples making $15,200
or less, provide subsidies on a sliding scale for those above that income
level, and pay for at least a quarter of the cost of every senior's
prescription drug coverage." Because it "will take a while to put some of
this in place," Bush "also proposes sending $48 billion to states
immediately to help pay the drug costs for low-income seniors, money that
Bush says could be there as early as 2001." Bush was shown saying, "Even if
the Gore plan passes, no one will get full drug benefit for eight years.
That's a detail you don't hear much in his speeches."  (The Bulletin's
Frontrunner, September 6, 2000)


I-STAT CORP: NJ High Court Bars Fraud-on-Market Claims in State
---------------------------------------------------------------
In a decision on an issue of first impression, a 4--3 majority of the New
Jersey Supreme Court said if plaintiff class action attorneys want to use
state courts to avoid the toughened federal securities fraud pleading
standards in the post-Reform Act world, they cannot base their common-law
fraud charges on a fraud-on-the-market theory. Kaufman v. i-Stat Corp. et
al., No. A-49-99 (N.J., July 27, 2000); see Corporate Officers & Directors
Liability LR , July 13, 1998, P. 12.

The majority endorsed the trial court's refusal to expand New Jersey's
securities fraud laws to allow shareholders to sue i-Stat Corp. officers
and directors unless they were directly deceived by information from the
company, i.e., they cannot claim they were fooled by the allegedly inflated
stock price. A three-justice minority voted to affirm an appellate court's
decision to reinstate the suit on grounds that the reliance element in
federal securities laws and state common-law fraud is the same.

Defense attorney Larry Rolnick of Lowenstein Sandler in Roseland, N.J.,
said this is the first New Jersey Supreme Court decision on the
applicability of the fraud-on-the-market theory to New Jersey common-law
fraud claims and the first state supreme court to comprehensively
re-examine the fraud-on-the-market theory. He said the majority's
disparaging view of that theory -- and the "efficient market" concept that
underlies it -- certainly makes the state court route less appealing to
class action attorneys. Additionally, its reasoning may influence federal
judges who are examining the reliance element to calculate damages in
securities fraud actions, Rolnick predicted.

"This should help stem the tide of state court cases against directors and
officers not just in securities matters, but in other areas such as
consumer product actions," Rolnick said. He noted that after the appellate
court in this case allowed plaintiffs to proceed with the common-law fraud
charge without showing reliance, another New Jersey appellate court used
the same reasoning in refusing to dismiss a consumer product case based on
common-law fraud.

Rolnick said had the decision gone the other way, it could have triggered a
future wave of insurance coverage litigation because most director and
officer insurance policies do not cover judgments or settlements for
fraudulent acts.

Plaintiff Susan Kaufman charged that four of the company's officers
portrayed Stat products as achieving a greater market share and acceptance
in the medical community than was actually the case. She charged both
common-law fraud and negligent misrepresentation.

She admitted that she bought her 100 shares of i-Stat from a broker and did
not see any of the alleged misinformation that purportedly inflated the
stock price. Consequently, she had to rely on the fraud-on-the-market
theory, i.e., she assumed that the high stock price indicated the company's
worth. The theory is common in securities fraud suits based on Section
10(b)5 of the Securities and Exchange Act of 1933 but not in state court
actions that are based on common-law fraud.

Defendants moved for summary judgment for failure to show reliance.

Plaintiffs cited to Rosenblum v. Adler, 93 N.J. Sup. 324 (1983), in which
the state high court held that an accounting firm may be liable for
negligence to all reasonably foreseeable recipients of its statement for a
proper business purpose. Plaintiffs argued that the common thread in both
federal and state securities cases is the element of foreseeability -- a
different type of reliance from the receipt of direct information from an
officer or director.

Defendants countered that New Jersey courts have never accepted
fraud-on-the-market theory in any form.

The trial court judge agreed. A state appeals court affirmed the dismissal
of the negligent misrepresentation claims, but reinstated that part of the
suit that was based on common-law fraud because it found that plaintiff's
belief in the market price as an indicator of the company's worth was
sufficient to satisfy the reliance requirement for that section of state
law.

On appeal to the state high court, Justice Jaynee LaVecchia, writing for
Chief Justice Deborah T. Poritz and Justices James H. Coleman Jr. and Peter
G. Verniero, said that under state law, neither negligent misrepresentation
non common-law fraud can rest on a fraud-on-the-market theory. The justice
noted that no other state appellate court -- or any federal court in New
Jersey -- had permitted fraud-on-the-market to satisfy the reliance element
of common-law fraud.

"Since the common law of fraud covers areas other than securities, then the
plaintiffs in this case are asking this court to expand the common law,
potentially beyond the arena of securities, in an action of a sort that
Congress substantially has barred our courts from hearing in the future,"
the majority said, referring to the Uniform Securities Litigation Act of
1998. The USLA, in an attempt to plug what some saw as a loophole in the
Private Securities Reform Act of 1995, forced most class action securities
cases into federal court. However, the i-Stat case predated the USLA.

The majority also noted that since the U.S. Supreme Court decided the
landmark Basic v. Levinson, 465 U.S. 224 (1988) (see Corporate Officers &
Directors Liability LR, March 9, 1998, P. 4,708), "no state court with the
authority to consider whether Basic is persuasive has chosen to apply it to
claims arising under its own state's laws." The majority went on to examine
the underlying principle of the "efficient market" and found it nebulous.

Justice LaVecchia noted that the plaintiff could have used the
fraud-on-the-market theory to support standard securities fraud claims in
the federal courts but chose not to do so.

Justice Gary Stein, writing for Justices Virginia Long and Danie l O'Hern,
lined up with the appellate court's reasoning. He said the majority focused
on process rather than result, but "proof that a party deliberately made
false representations with the intent that they be communicated to others
for the purpose of inducing others to rely upon them may satisfy the
reliance element of common law fraud."

Besides, the minority added, fraud-on-the-market is a refutable presumption
of reliance, i.e., the defendants have the opportunity to show that the
alleged misrepresentation did not lead to the distortion of the stock price
or that an individual plaintiff would have traded -- or not traded --
despite the information. The fact that the plaintiffs passed over the
available federal remedy should not hinder them in state court because the
federal securities laws were adopted as a supplement, not a replacement to
state law, the minority wrote.

Plaintiffs are represented by William Fredericks and Miles Tepper of New
York.

Defendants are represented by Lawrence Rolnick and Edward Dartley of
Lowenstein Sanders in Roseland, N.J. (Corporate Officers and Directors
Liability Litigation Reporter, August 14, 2000)


KEYSTONE FINANCIAL: Stockholders Approve $ 1 Bil Merger with M&T Bank
---------------------------------------------------------------------
Keystone Financial Inc. stockholders on Tuesday approved a merger with M&T
Bank Corp. but didn't get an opportunity to publicly comment on the $ 1
billion deal. In May, the CAR reported on M&T's announcement of its
intention to buy Keystone Financial. At that time, Keystone's stock price
had plunged 47 percent following a $30 million settlement for a class
action on alleged mishandling of investments.

Executives of Harrisburg-based Keystone said 91.4 percent of shareholders
who cast ballots voted for the merger. Keystone's 177 banking offices in
Pennsylvania, Maryland and West Virginia will become M&T banks on Oct. 6 if
M&T stockholders approve the acquisition.

Results of the M&T vote will be announced Sept. 19 during a shareholders'
meeting at M&T's headquarters in Buffalo, N.Y. "The vote is running 99
percent in favor" of the merger, Robert G. Wilmers, president and chief
executive officer of M&T, said after the meeting of Keystone shareholders
at the Hilton Harrisburg & Towers.

Several Keystone shareholders among the 75 people who attended the meeting
were disappointed that a question-and-answer session was not held after the
vote was announced. "I assumed they were going to have a public comment
period," said Larry Wittig, who said he owns 31,175 shares of Keystone
stock.

Wittig said he would have told Keystone executives: "This deal stinks.
Three years ago they should have changed management." Wittig said he will
receive $ 20,538 less in annual dividends as a result of the merger. "I'm
disappointed with the fiduciary responsibility of the Keystone board," he
said.

Keystone stockholders will receive annual dividends of 50 cents a share
when the deal closes. They now receive $ 1.16 a share. "Keystone paid a
very generous dividend," said Carl L. Campbell, Keystone chairman and chief
executive officer.

John Fecko, who said he holds 7,000 Keystone shares, said the 15-minute
meeting wasn't worth the inconvenience of taking off from work and finding
a parking space. When asked if he favors the merger, he said, "Not
particularly. The only good thing that's come out of it is the [Keystone]
stock's appreciated" 46.4 percent since the day before the deal was
announced on May 17.

Keystone shares, which were trading at $ 15.75 on May 16, rose 6 cents on
Tuesday, to $ 23.06. M&T shares rose $ 1, to $ 487.25.

Campbell said there was "no need to" open the floor to questions because
"shareholders overwhelmingly voted in favor of this" merger. Before
adjourning the meeting, Campbell said shareholders with questions or
comments about the merger could meet privately with Keystone executives in
front of the podium after the session. "I invited them up to talk, so they
had the opportunity," Campbell said.

Campbell will remain with M&T as a vice chairman and become chairman of the
bank's Pennsylvania operations. Keystone's other two top executives, Mark
L. Pulaski and Ben G. Rooke, will step down after the merger. Pulaski is
president of Keystone's wealth-management division, and Rooke is vice
chairman, general counsel and secretary.

After recounting the 16-year history of Keystone Financial, including last
year's settlement in a financial scandal involving a Keystone subsidiary,
Campbell said, "The time is now to pass the torch to someone better to run
with it."

M&T, he said, "has a proven track record of creating exceptional value for
its shareholders, a dedication to customer service and a commitment to the
communities it serves."

Keystone earlier this year agreed to pay $ 50 million to 45 school
districts and five municipalities in Pennsylvania to settle a class-action
lawsuit filed against one of its subsidiaries, Mid-State Bank.

John Gardner Black, an investment adviser used by the local governments and
school districts, including Northern Lebanon School District, pleaded
guilty to mishandling investments, resulting in $ 71 million in losses
between 1994 and 1997. Mid-State Bank provided custodial services for
Black's business, Devon Capital Management.

M&T, which plans to buy Keystone for $ 650 million in stock and $ 350
million cash, will split its stock 10-for-1 once the deal closes. Keystone
stockholders will receive a half-share of M&T stock for every Keystone
share. (The Patriot-News, September 6, 2000)


LAND REFORMS: Zimbabwe's White Farmers to Resume Legal Action
-------------------------------------------------------------
Zimbabwe's embattled white farmers decided Wednesday to resume their legal
battle against the government's controversial land reforms, their union
leader Tim Henwood said. "This class action will specifically challenge the
power to take land from an individual without compensation," Henwood told
an opening session of the Commercial Farmers Union (CFU) congress
Wednesday. "The CFU does not wish to delay the implementation of a planned
and orderly land reform program which we support," he said.

The new law suit will attack the validity and constitutionality of the land
reform law and the recently-launched "fast-track" program, under which the
government seeks to take white farms to give to blacks without paying
compensation, CFU director David Hasluck said.

The CFU last month withdrew its law suits against the government over its
handling of the land reforms, which are taking place against a background
of often-violent farm invasions led by liberation war veterans. The CFU had
said it had hoped its differences with the government could be resolved
through dialogue, but not much dialogue has taken place, which has led to
to renewed pressure within the union to relaunch a legal battle.

The new case will challenge the planned acquisition of the nearly 2,000
farms identified by the government so far, and seek to force the government
to enforce a High Court ruling ordering squatters off the farms. The
earlier cases had argued that the government's program amounted to racial
discrimination and challenged the constitutionality of the land reform
program.

The white farmers had last month dropped a constitutional challenge they
had launched in the Supreme Court, arguing that the government's plans to
take their farms was racially discriminatory. But CFU director David
Hasluck said since withdrawing the suits, "We have not seen any improvement
in the dialogue." The stalemate with government led to renewed pressure
within the union to relaunch a legal battle.

Hasluck said the new case was a broader attack on the program. The new case
should be formally filed by the end of the week, he added. They also sought
a High Court order for the government to remove the war veterans and
landless villagers who have invaded more than 1,600 of their farms since
February. (Agence France Presse, September 6, 2000)


MEMBERWORKS INC: Emerges from Privacy Suit in CA; Defends Suit in MN
--------------------------------------------------------------------
On July 2, 1999, a purported class action was filed by Consumer Cause Inc.
against the Company and other defendants in the California Superior Court,
San Francisco County. The suit alleged that the Company and the other
defendants violated their customers' right of privacy and the Fair Credit
Reporting Act and sought unspecified monetary damages. The Company filed a
demurrer and the action was dismissed.

On July 7, 1999, a purported class action was instituted by plaintiffs
Kathryn Rosebear and Anne Bergman against the Company and other defendants
in the United States District Court, District of Minnesota. The suit, which
seeks unspecified monetary damages, alleges that the Company and the other
defendants violated their privacy policies and Minnesota consumer law. The
Company believes that the allegations made in this lawsuit are unfounded
and the Company will vigorously defend its interests against this suit.


MTBE CONTAMINATION: Lieberman & Blecher Files Suit in NJ Superior Court
-----------------------------------------------------------------------
Following California and New York's lead, a Princeton, N.J. law firm has
filed a lawsuit against the owners and operators of a gasoline station,
alleging MTBE contamination in the state. The lawsuit, filed in New Jersey
Superior Court Aug. 24, is on behalf of the nearly 100 current or former
residents of Bayville, who lived near a Cumberland Farms market and gas
station, and used private wells. The suit alleges that a gasoline tank at
the station had a hole in it and MTBE seeped into the drinking wells.

"This case is about the reckless contamination and poisoning of numerous
individual drinking wells," according to the allegations filed by Lieberman
& Blecher. To aide with the numerous plaintiffs, they have hired as
co-counsel the California law firm Masry & Vititoe, a firm that has
represented groups in MTBE lawsuits in other states and gained notoriety by
being featured in the film "Erin Brockovich."

According to the suit, records from the state Department of Environmental
Protection (DEP) indicate that a former retail gasoline service station
owned and operated by Gulf Oil Corp., now Chevron USA, and Cumberland Farms
to be the exclusive or primary source of the drinking water contamination
in the community.

"The defendants in this action destroyed and contaminated the community's
drinking water supply by placing gasoline containing MTBE and [Benxene
Toulene Ethylbenzene and Xylene or BTEX into the community. They also]
negligently and intentionally plac[ed] MTBE into the stream of commerce
without taking proper precautions and without warning of MTBE's propensity
to contaminate drinking water," the suit alleges.

This case has not been long in the making, according to the suit. In May, a
plaintiff had his water professionally sampled and learned it was
contaminated with MTBE. Not long after, the state DEP determined
community-wide sampling was required and, under the DEP's direction,
Cumberland began testing private wells in Bayville. In June, Cumberland
took several other groundwater samples taken in Bayville which revealed
that MTBE and/or BTEX contamination was present at levels well above the
New Jersey health advisory level for both chemicals. "Many plaintiffs'
private wells contained MTBE above New Jersey's maximum level and at least
five plaintiffs' well contained MTBE at 300 ppb," the suit added. Out of
200 wells tested, Cumberland found eight with levels of 70 ppb or higher,
which is the legal limit, according to DEP spokesman Rob Schmitt. But the
Bayville area is still contaminated by MTBE and BTEX, the suit alleges.
Schmitt had no comment specifically on the lawsuit, but said that under the
direction of the DEP, Cumberland Farms removed the leaking tank and 366
tons of contaminated soil in July.

For anyone's well that was over or near the limit, Cumberland offered to
hook them into the municipal water supply, Schmitt said. But that's not
true, Shari Blecher of Lieberman & Blecher told Oxy-Fuel News. Cumberland
"only helped a handful of people" she said. They didn't help residents with
levels below 70 ppb or those that had no detection on that day. The suit is
charging Cumberland with negligence, strict products liability, negligent
inflictions of emotional distress and fear of future injury and quality of
life damage. Cumberland Farms could not be reached for comment and Chevron
spokesman Dave Sander said Chevron had not seen the lawsuit and said it was
inappropriate to comment. -Rachel Gantz (OXY-FUEL NEWS, September 4, 2000)


NETWORK SOLUTIONS: D.C. Lawyer Takes Third Shot at Web Site Overcharges
-----------------------------------------------------------------------
William Bode hopes the old adage "three times is a charm" holds true. The
co-founder of D.C.'s Bode & Beckman has gone to the Eastern District to
file his third class action alleging that Herndon-based Network Solutions
Inc. , empowered by the federal government, swindled everyone who
registered an Internet domain name between September 1995 and November 1999
out of some $ 800 million.

Bode hasn't fared too well in his first two challenges to what was then a $
100 charge NSI and federal authorities levied on individuals and companies
that sought to register domain names. One case was dismissed by a federal
judge in the District. However, the judge in that case ruled that $ 30 of
the fee was an unconstitutional tax, and several weeks later the government
did away with the fee. Bode voluntarily pulled a second case.

But now, he's back for the remaining $ 70.

On Aug. 4, a group led by Middleburg winery the Chrysalis Vineyards Co.,
filed a class action seeking $ 1.7 billion from the Commerce Department,
the National Science Foundation, and Network Solutions. Bode says an
agreement between the government and NSI to allow the company to start
charging Web site operators was unauthorized under federal law, and that
NSI has been enriching itself as the ranks of domain name registrants has
swelled from 100, 000 in 1995 to more than seven million.

"This is an example of gross governmental misfeasance to the detriment of
the public," Bode says. "It will be a horrible precedent if the government
is allowed to offer a private company a monopoly just because the
technology is new."

In his complaint, Bode says NSI is only authorized to charge its costs for
the service. While NSI currently asks $ 70 to register for two years a dot-
com, dot-org, or dot-net, the complaint alleges it actually costs the
company about $ 1 to do the work.

Finally, the case alleges that a policy shift in 1997 that opened up dot-
net and dot-org names to commercial enterprises-rather than just ISPs and
nonprofits, respectively-has forced the named plaintiffs and others to pay
to secure as many as three Web sites when they otherwise would only have
needed one.

As the Wilmer, Cutler & Pickering attorneys representing NSI in the case
are quick to point out, much of what Bode alleges is not new. In 1997, he
filed a similar suit in U.S. District Court for the District of Columbia.
In that case, Thomas v. Network Solutions Inc., all the counts were either
dropped or dismissed-except one. U.S. District Judge Thomas Hogan initially
upheld the claim that a $ 30 portion of the fee to control a domain name
for two years-money that went to an Internet infrastructure tax controlled
by the National Science Foundation-was unconstitutional.

Around the same time, Congress retroactively authorized the $ 30 tax, but
eliminated it from future use. At the government's request, Hogan then
dismissed the last vestiges of Bode's case.

Some of the strands still linger. Although Bode did not prevail before
Judge Hogan, the government altered its policy.

Try, Try Again

Bode attempted again in July to bring the suit in the Northern District of
California, but NSI got the case transferred back to the District, where
the U.S. Court of Appeals for the D.C. Circuit had upheld Hogan's decision
in the earlier case. Bode dropped the case and filed a new one in the
Eastern District of Virginia.

"Plaintiffs counsel brought the case in California in an obvious effort to
shop for a forum as far away as possible from the District of Columbia,"
Wilmer, Cutler partner Michael Burack, one of the attorneys representing
NSI, says in court papers. "Three days later, they crossed the Potomac to
file the instant case-his third one-in this court."

Network Solutions is asking that Bode's case be dismissed.

If Bode gets his day in court, the case will turn on the curious
relationship NSI has had with the government since 1992.

That was the year NSI was selected by the National Science Foundation to
provide domain name registration services over a five-year period until the
the services could be privatized.

Under the the contract, the National Science Foundation would pay NSI $ 1
million annually to register Internet domain names to the public without
charge.

But in May 1995, NSI asked for the National Science Foundation's permission
to impose a revenue sharing arrangement in which Network Solutions would
collect a $ 100 registration fee and split it 70-30 with the government.
According to NSI's counsel, the $ 1 million per year did not cover the
growing expense of registering the domain names.

As part of that deal, the National Science Foundation and NSI eliminated a
clause in their contract that prohibited charging citizens more than the
costs of registration. As a result, alleges Bode, Netizens have been
fleeced for about $ 800 million through November 1999, when NSI lost
monopoly control of the registration process. The Department of Commerce
took over supervision of the registration process from the National Science
Foundation in 1997 to oversee opening up domain name registrations to other
companies.

"The fees were picked arbitrarily by Network Solutions, which were then
approved by the National Science Foundation, without a public hearing on
reasonableness or any internal review," Bode says.

"We raised these issues in the Thomas case, but we were concentrating on
the $ 30 fee more than anything," Bode says. "We've resolved that, and now
we are focusing on this."

Bode also claims an antitrust violation stemming from NSI's 1997 decision
to allow commercial enterprises to register as .org or .net, as well as
.com. In court papers, he says that policy forces companies like Chrysalis
to snap up-and pay for-more domain names.

Burack's response is that Bode has his argument "exactly backwards." He
says that NSI is actually opening the market, not undermining it, with that
policy.

He writes: "The idea that a seller-even a monopolist-violates the antitrust
laws by offering to sell its services to anyone who wants to buy them is
just plain silly." (Legal Times, September 4, 2000)


POSTAL SERVICE: NY Times Depicts Grievance of Workplace Racism
--------------------------------------------------------------
In the early 1990's, the United States Postal Service had an employee
crisis on its hands. Not the workplace shootings that made headlines and
added the phrase "going postal" to the American vocabulary of violence.
Those incidents, while often deadly, were isolated.

What really threatened the agency's productivity and morale was an
avalanche of complaints by angry, frustrated employees to the federal Equal
Employment Opportunity Commission. For years, charges of racial
discrimination, sexual harassment and other management abuses poured into
the watchdog agency from the Postal Service, and the volume of informal
complaints had built up to an incredible 30,000 filings a year, more than
from any other single employer. Some of the complaints escalated into
costly litigation, while others festered.

But in 1994 as part of a settlement of a class-action lawsuit, lawyers at
the Postal Service, one of the nation's largest employers, started one of
the most ambitious experiments in dispute resolution in American corporate
history. They created a program called Redress to settle disputes using
neutral outside mediators, and tested it in a few cities before rolling it
out nationally in 1997.

The results were spectacular: in the first 22 months of full operation,
from September 1998 through June of this year, 17,645 informal disputes
were mediated under Redress and of those, 80 percent were resolved.

During the same period, formal complaints, which peaked at 14,000 by 1997,
dropped 30 percent. The lawyers estimate that the program has saved the
agency millions of dollars in legal costs and improved productivity, to say
nothing of the gains in intangibles like job satisfaction.

Now, two of the Postal Service's lawyers, Cynthia J. Hallberlin, former
chief counsel, and Mary S. Elcano, former general counsel, have left for
private practice at the Brown & Wood law firm in Washington, and are taking
a similar program, which they have named Wins, on a road show. They are
convinced that if mediation worked wonders for the Postal Service, it could
do so at any company or organization.

Already, the World Bank has signed on for a review of its mediation
program, and others, including investment banks, dot-coms and recognized
brand-name manufacturers, are interested, the lawyers say. What is selling
them, they say, is Redress's record.

Corporate America certainly needs the help. High-profile racial
discrimination and sexual-harassment class-action lawsuits filed in recent
years against industry giants like Texaco and Coca-Cola are only the tip of
the litigation iceberg. Employment discrimination cases nearly tripled
between 1990 and 1998, to 23,735 filings in federal district courts,
according to the Justice Department.

To be sure, companies are not sitting on their hands. A survey of Fortune
1,000 companies in 1997 by the Cornell Institute on Conflict Resolution
found that the majority were doing some form of what is known as
alternative dispute resolution to avoid litigation.

But Ms. Elcano and Ms. Hallberlin say they possess one thing that no one
else can offer, a huge database of statistics and exit surveys, which they
say proves how valuable their form of mediation, called transformative
mediation, was to postal workers.

In it, the parties involved control the process and the outcome.

"We have found that companies are very interested in transformative
mediation," Ms. Hallberlin said, "because of its promise to not just solve
the problem at hand, but to help the parties communicate more effectively
in the future."

Before Redress was created, Postal Service employees embroiled in disputes
with their bosses followed procedures that could drag on for years.
Generally, they would begin by filing an informal E.E.O.C. complaint. They
then had the choice of dropping the matter or going down the bureaucratic
path of filing a formal grievance, starting an official investigation with
all its affidavits and hearings. Ultimately, they might file a lawsuit.

The Redress program aimed to short-circuit that process by offering
disgruntled workers mediation. If a person who filed an informal complaint
agreed, a meeting would be set up, a mediator would hear both sides of the
dispute and, in most instances, help propose a solution within a day.

Sometimes, all the worker wanted was for his boss to say he was sorry. "The
power of an apology became very significant," Ms. Elcano said. "People
would walk away from litigation with that because they felt it was an
honest give and take."

For example, one supervisor called all of his mail carriers by a number,
Ms. Hallberlin said. One carrier thought it was demeaning and filed a
complaint. When confronted about it in mediation, the supervisor said he
had had no idea that some people found the practice offensive and said he
would stop it immediately. Case closed. "You're never going to get rid of
conflict," Ms. Hallberlin said, "you just want to handle it better."

Robert A. Baruch Bush, a law professor at Hofstra University who helped
design a training program for the 3,000 outside mediators in Redress, said
the goal was to shift conversations between employees and their supervisors
from destructive to constructive. "If that happens," he said, "it becomes a
more open corporation, and then the parties themselves in most cases will
be able to define what's bothering them and how to fix it." Resolution is a
byproduct, he added.

Redress is intended to make mediation available at any stage of the
grievance process, not just at the beginning. In one class-action
racial-discrimination lawsuit that had originated in an E.E.O.C. complaint,
black postal workers in Florida accused a white postmaster of making racist
remarks about their work habits. They sought his dismissal, Ms. Hallberlin
said.

It never came to that or to a dollar settlement, she said, because both
parties agreed to bring in an outside mediator. In the end, the postmaster
apologized, wrote a check to the N.A.A.C.P. and joined the Postal Service's
diversity committee. "In future dealings, he had a more harmonious post
office," Ms. Hallberlin said.

Elaine Kirsch, an outside mediator working in New York, recalled a case
involving a postal supervisor and an employee, both women, one white and
one black, neither willing to back down. The dispute was over the
employee's repeated lateness, Ms. Kirsch said, but really it was about a
lack of communication. After yelling at each other for one and a half
hours, she said, the two became quiet.

Ms. Kirsch said she took the opportunity to point out that the two had more
in common than they had thought. Sometime after that, she said, the
supervisor and employee returned to hammering out particular issues and
rehashing events. Finally, one said words to this effect: "You never lied.
You always say what you mean." The ice was broken, Ms. Kirsch said, "and
from then on it was easy as pie." It turned out that the employee was often
late because she had trouble finding care for her asthmatic child. She
agreed to call her supervisor when this happened and her supervisor agreed
to be more understanding.

To keep tabs on Redress's progress, the Postal Service hired Lisa Bingham,
director of the Conflict Resolution Center at Indiana University.
"Quantifying has been one of the problems with the field of dispute
resolution for some time," Ms. Bingham said. Her exit-survey research
showed that postal employees and their union representatives and
supervisors were highly satisfied with the process and the mediators. And,
to a lesser degree, the parties were satisfied with the outcome.

Mary P. Rowe, an adjunct professor at the Sloan School of Management at
M.I.T., said Redress "was large, elaborate and better evaluated than
virtually any other component or system like it." And, said Professor Rowe,
a longtime ombudsperson at M.I.T., there was no reason that programs like
Redress should not thrive in the private sector. "Conflict management
programs should function in every milieu," she said.

Not everyone is a big fan of mediation, of course, least of all the
plaintiffs' bar. "Damages are often the best way to make up for how someone
has been harmed," said Pamela Coukos, a lawyer for Mehri, Malkin & Ross,
the Washington firm handling the class-action lawsuit against Coca-Cola.
"Money can be a measure of how much respect you are given by a company." At
the very least, Ms. Coukos said, workers with grievances should have a
choice between litigation or some type of nonjudicial dispute resolution.

And in fact, such dispute resolution is widespread. Of the 606 companies
surveyed by Cornell, for example, 88 percent reported using mediation at
least once in the preceding three years and 79 percent reported using
arbitration, which like mediation employs outside neutral parties, but
unlike mediation, reaches a binding solution.

Today, said David B. Lipsky, the Cornell professor who conducted the 1997
survey with Ronald L. Seeber, companies are moving from a piecemeal
approach to unified programs.

A little more than a year ago, for example, the Prudential Insurance
Company of America in Newark, started its own program called Roads to
Resolution. Oliver B. Quinn, the program director, said Prudential took the
step to develop a system that offered mediation and arbitration in light of
the litigation erupting elsewhere.

And as part of its settlement of a multimillion-dollar racial
discrimination case, Texaco created an Ombuds Program in February 1998.
Later that year, the company folded it and other programs like mediation
and arbitration into a problem-resolution system. As a result, Carole A.
Young, director of the Ombuds program, said a court-appointed task force
had determined that litigation had been reduced by nearly half in the first
year.

In the meantime, the good news continues for the Postal Service. Karen
Intrater, one of the lawyers who came up with the idea of Redress, said the
program had been so successful it was catching on among government
agencies. "It's not a magic pill, but you can see the difference," Ms.
Intrater said. "I've never seen anything that has such a potential for
change as this." (The New York Times, September 6, 2000)


RIO TINTO: Oceanic Islanders Use Federal Law to Sue British Mining Giant
------------------------------------------------------------------------
In an era where political leaders, corporations and consumers are debating
the environmental costs of doing business globally, a new lawsuit by a
group of landowners is challenging the role and liability of corporations
in developing countries.

Using a Federal law that allows such civil actions, residents of
Bougainville Island in Papua New Guinea (PNG) on September 6 filed a
class-action lawsuit in the United States against London-based Rio Tinto,
one of the world's largest mining companies. The suit claims the company
engaged in a joint venture with the PNG government to maintain a copper
mine on the island, which resulted in international environmental
violations and crimes against humanity stemming from a military blockade
motivated by civilian resistance to the mine.

The Rio Tinto lawsuit could have broad implications for other groups
seeking redress from crimes committed during wartime by private companies
acting in concert with local governments.

The lawsuit was filed in the United States District Court in San Francisco.
The suit seeks to represent Bougainvilleans who continue to be exposed to
toxins resulting from the Panguna mine, individuals who lost property due
to ongoing environmental contamination, and people injured or killed during
the Bougainville conflict between 1989 and 1999.

Under the Alien Tort Claims Act, foreign nationals can bring suit in the
United States against companies that violate international law. Rio Tinto
is the parent company of subsidiary U.S. Borax Inc., headquartered in Los
Angeles. The plaintiffs are seeking damages for massive environmental
destruction, human rights violation and for discrimination against the
islanders.

            Environmental Events Leading to the Lawsuit

At the core of the lawsuit is the Panguna copper mine and the political
events that erupted since the mine was established. Bougainville Island,
located northeast of Australia, is part of the Independent State of Papua
New Guinea. The people of Bougainville had lived on their rain-forested
land continuously for thousands of years.

Between 1969 and 1972, the Australian Colonial Administration leased land
on the island to Bougainville Copper Limited (BCL), a mining subsidiary of
Rio Tinto. The suit claims that landowners unsuccessfully resisted
intrusion onto their land, and many Bougainvilleans were forced to relocate
or flee the island. Three principal villages were relocated.

According to the suit, Rio Tinto then destroyed entire villages, razed the
rain forest, sluiced off a hillside and established the world's largest
open-cut mine, two kilometers across and half a kilometer deep. The mine
excavated 300,000 tons of ore and water every day during its operation
between 1972 and 1988.

The suit alleges that Rio Tinto laid the groundwork for environmental
disaster by improperly dumping waste rock and tailings and emitting
chemical and air pollutants without regard for the villagers. The tailings
turned the fertile Jaba and Kawerong river valleys into wasteland,
according to the suit. Fish and whole forests died and water became
non-potable, turning 30 kilometers of the river system into a moonscape. As
tailings made their way down the Jaba River to drain into Empress Augusta
Bay, the Bougainvilleans major food source of fish was also destroyed in
the bay.

According to the suit, Rio Tinto's mine operators also dumped chemicals
directly into the Kawerong River, leaving the river alkaline and copper
green. The mine also emitted dust clouds that created upper respiratory
infections and asthma in villagers.

The suit charges, that environmental damage destroyed the villagers' food
production and cash cropping systems. The Bougainville people began dying
more frequently from upper respiratory infections, asthma and tuberculosis
(TB). Coughs, colds and chronic ear infections became more common in
children.

               Political Events Leading Up to Lawsuit

When Panguna Mine originated in the late 1960s, Bougainville was an
Australian colony. Australia granted independence to Papua New Guinea in
1975, insisting that Bougainville become part of the nation state.

In March 1988, the Bougainvilleans organized into the Panguna Land Owners
Association and petitioned Rio Tinto for greater control of the land around
the mine. By November 1988, when BCL ignored requests, individual
Bougainville militants engaged in acts of sabotage that forced the mine to
close. According to the suit, Rio Tinto stepped in and assisted PNG's
military actions that were designed to stop the rebels.

According to the suit, PNG coordinated with Rio Tinto to bring in troops to
Bougainville, allegedly providing helicopters for troop transport, to crush
the resistance. By April 1990, the PNG army imposed a military blockade of
Bougainville.

"The men and women of Bougainville stood up for themselves and forced the
open-pit mine that was ravaging their environment to close, but they paid a
terrible price at the hands of the PNG army which was encouraged by Rio
Tinto," said Steve Berman, lead attorney for the plaintiffs. "The complaint
alleges that Rio Tinto used their huge economic influence to effectively
turn the PNG army into their private police force in the attempt to break
the will and spirit of the Bougainvilleans, They didn't, and the villagers
want justice for the horrible pain and suffering they were forced to
endure."

PNG's blockade of Bougainville cut off medical supplies to pressure the
people to submit to PNG control and reopen the mine, the suit claims. The
siege resulted in deaths from preventable diseases such as TB and whooping
cough, in more than 2,000 children in the first two years. Between 1990 and
1997, approximately 10,000 Bougainvilleans died as a result of the siege,
the suit claims.

"We intend to prove that Rio Tinto treated Bougainvilleans with no respect
and thought of them as inferior in every way: socially, economically,
racially and politically. This lack of basic human compassion is one of the
many reasons that Bougainvilleans are demanding justice," said Steve
Berman.

The suit also claims that approximately 15,000 civilians died as a result
of armed acts by PNG troops. PNG military actions included aerial bombings,
burning of houses and villages, wanton killing and acts of cruelty, rape
and degrading treatment, alleges the suit.

"By exerting financial pressure, Rio Tinto played an active role in the
demise of the Bougainville's environment and people, as surely as if they'd
pulled the trigger themselves," said Paul Luvera, co-counsel for the
plaintiffs. "This case seeks justice for those who are still struggling to
recover a life for themselves on their own land."

Headquartered in London, Rio Tinto operates more than 60 mines and
processing plans in 40 countries. Claiming consolidated assets of US$12.8
billion in 1999, the company employs more than 34,000 workers worldwide.

Steve Berman is managing partner of Hagens Berman in Seattle. Recently
cited as one of the nation's top litigation attorneys by The National Law
Journal, Berman is a nationally recognized expert in class action
litigation. Berman represented 13 states in lawsuits against the tobacco
industry. He was the prime architect of the groundbreaking Liggett Tobacco
settlement, which resulted in the release of thousands of previously
privileged tobacco industry documents. Berman also served as lead or
co-lead counsel in several other high-profile cases including the
Washington Public Power Supply litigation, which resulted in a settlement
exceeding $850 million. Other cases include litigation involving the Exxon
Valdez oil spill; Louisiana Pacific Siding; The Boeing Company; Morrison
Knudsen; Piper Jaffray; Nordstrom; Boston Chicken; and Noah's Bagels.

Paul N. Luvera, partner at Luvera, Barnett, Brindley, Beninger and
Cunningham in Seattle, is a leading trial lawyer in the United States.
Luvera served as co-trial counsel in the State of Washington's trial
against the tobacco industry. Luvera is a member of the International
Academy of Trial Lawyers.

Peter Gordon, managing partner of Slater & Gordon in Australia, is also
working on the case. Gordon is one of Australia's leading litigation
lawyers. Gordon has conducted major class actions both within Australia and
oversees on behalf of Australian consumers.

Contact:  Hagens Berman Steve Berman, 206/623-7292 steve@hagens-berman.com
or Media Inquiries Only Mark Firmani, 206/443-9357 mark@firmani.com


TOBACCO LITIGATION: Hillsborough Trial against R.J. Reynolds Begins
-------------------------------------------------------------------
Trial is under way against cigarette maker R.J. Reynolds Tobacco Co.,
accused in the lung cancer death of a woman who smoked for more than 40
years.

Suzanne Jones, who started smoking in her teens, died in 1995 at age 62.
Her husband, Bob Jones, filed a lawsuit two years later against four
tobacco companies, contending his wife's habit of smoking a pack a day
killed her.

The suit claims the companies negligently designed cigarettes, failed to
warn consumers about the health risks related to smoking and conspired to
defraud smokers. However, all but one of the four defendants remained as
trial began Tuesday in a Hillsborough County courtroom. Jones earlier
dismissed Brown & Williamson Tobacco Corp., American Tobacco and Philip
Morris Inc. from the suit.

Howard M. Acosta, Bob Jones' attorney, said in opening statements that
Suzanne Jones was addicted to cigarettes, even continuing to smoke after
being diagnosed with lung cancer. "Perhaps Suzanne Jones should have tried
harder to quit, but once you're addicted the choice changes," he said.
"It's no longer completely voluntary. You have an unconscious craving for
nicotine once you're addicted."

Acosta, a St. Petersburg lawyer, asked jurors to hold R.J. Reynolds
accountable for hiding evidence of the link between smoking and lung
cancer.

But attorneys for the Winston-Salem, N.C.-based cigarette maker argued that
it was colon cancer rather than lung cancer that killed Jones. Paul G.
Crist, a Cleveland attorney, told jurors that a tumor in Jones' abdomen was
the size of a softball but the one in her lung was only the size of a
marble.

Crist told the jury that Jones knew about the health risks associated with
smoking but continued to do so anyway. "As she told her friends, 'You do
your thing and I'll do mine,"' he said. Jones is seeking unspecified
compensatory and punitive damages.

The trial comes on the heels of a record-setting $145 billion verdict for
sick Florida smokers. The case against the nation's five biggest cigarette
makers, including Reynolds, was the first smokers' class-action lawsuit to
go to trial. Big Tobacco is appealing the July 14 award. (The Associated
Press State & Local Wire, September 6, 2000)


                              *********


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