CAR_Public/000927.MBX               C L A S S   A C T I O N   R E P O R T E R

            Wednesday, September 27, 2000, Vol. 2, No. 188

                              Headlines

ALABAMA: Supreme Court to hear English-only case
ALLAIRE CORPORATION: Finkelstein & Krinsk Files Securities Suit in MA
ALLAIRE CORPORATION: Milberg Weiss Files Securities Suit in MA
AUTO FINANCE: CA Ct OKs Settlement over Deficiency Balances Collection
BRIDGESTONE/FIRESTONE: NHTSA Investigates on 16-inch Tires

CREDIT CARDS: Judge OKs $36 Mil Settlement by Citibank and Others
H&R BLOCK: Judge OKs Revised Settlement in Refund Anticipation Loan Suit
HOLOCAUST VICTIMS: Catholic Church in Germany to Pay Slave Laborers
KENNAMETAL INC: Lawsuits Seek Injunction on Acquisition of JLK Stock
LAIDLAW INC: Investors Sue in NY Accusing Co. and Underwriters of Fraud

LYCOS INC: Proposed Merge into USA Networks Halted; DE, MA Suits Go on
MARRIOTT INTERNATIONAL: Agrees to Settle Securities Suit; Sweetens Offer
MBNA CORPORATION: Agrees to Settle Consumers' Suit over Credit Card Ad
NORTH DAKOTA: Judge Denies Class Status over Devils Lake Flooding
PAYDAY LENDERS: IL Ct OKs Suit Vs. Illini Cash on Interest Disclosure

SOTHEBY'S, CHRISTIE'S: Detroit Free Press Says Deal Won't Settle Things
SPLASH TECHNOLOGY: CA Suit Seeks to Enjoin Vancouver Acquisition Merger
TERAYON COMMUNICATION: Securities Complaint Amended; Co. Seeks Dismissal
U.S. FRANCHISE: Shareholders Sue in Delaware over Acquisition Agreement
Y2K LITIGATION: Iowa Hospitals Denied Certification against Keane Inc.

* No Election-Year Consensus on Health Care Issues

                          *********

ALABAMA: Supreme Court to hear English-only case
------------------------------------------------
The Supreme Court Tuesday agreed to hear argument later this term on
whether someone has the right to sue a state in federal court over an
English-only regulation. The case involves a woman of Hispanic heritage in
Alabama who sued the state because it only administers drivers' tests in
English.

Like almost all states, Alabama used to administer its written driver's
test in a variety of languages. From the 1970s to 1991, the state did so in
14 languages, "including Spanish, Korean, Farsi, Cambodian, German,
Laotian, Greek, Arabic, French, Japanese, Polish, Thai and Vietnamese,"
according to court records.

But in July 1990, state voters passed Amendment 509 to the state
constitution. The amendment makes English "the official language of the
state of Alabama," and tells the Legislature and officials to take "all
steps necessary to insure that the role of English as the common language
of the state of Alabama is preserved and enhanced." Amendment 509 also
allows individuals living or doing business in Alabama to file private
suits to enforce the use of English.

About a year after the amendment's passage, the state Department of Public
Safety adopted a policy of using English only in all portions of the
driver's exam. "Interpreters, translation, dictionaries and other
interpretive aids were officially forbidden," according to an appeals court
opinion in the case.

Supported by public and religious advocates, immigrant Martha Sandoval of
Mobile, Ala., filed a class action suit against the policy in federal court
in 1996.

Sandoval, a Mexican who moved to Mobile in 1987 and is now a permanent U.S.
resident, speaks very little English, court records said. She did take an
English class at a Baptist church in Mobile, but had to quit because she
worked two jobs - cleaning houses in the morning and working at her family
restaurant in the evening.

A federal judge ruled that Sandoval had the right to sue the state under
U.S. civil rights law, and that the state's policy violated the Civil
Rights Act of 1964. When a federal appeals court affirmed the judge's
ruling, state officials asked the Supreme Court for review of whether
Congress created a private right to sue state agencies receiving federal
grants under the Civil Rights Act.

A score of states have made English their "official" language, but very
few, if any, appear to have applied that policy in the way Alabama has.

Though not yet scheduled, the Supreme Court should hear the Alabama
English-only case in January. The court's term begins next Monday, the
First Monday in October. (No. 99-1908, Director Alexander vs. Sandoval and
all others similarly situated) (United Press International September 26,
2000)


ALLAIRE CORPORATION: Finkelstein & Krinsk Files Securities Suit in MA
---------------------------------------------------------------------
Finkelstein & Krinsk, a prominent San Diego law firm specializing in class
action recoveries for institutional and other investors, has filed a class
action lawsuit in the United States District Court, District of
Massachusetts, on behalf of shareholders against Allaire Corporation
(NASDAQ:ALLR) and certain of its insiders for alleged 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 Allaire and the other defendants engaged in
conduct directed at artificially inflating the price of the Company's
common stock between July 20, 2000, and September 18, 2000 (the "Class
Period").

Allaire represents itself as developing, marketing and supporting Internet
Software products for companies building their businesses on the Web.
Plaintiffs allege that throughout the Class Period, however, defendants
misrepresented the status, operations and prospects of Allaire's business.
Specifically, plaintiffs allege that while defendants were claiming that
the Company was gaining significant momentum in the marketplace, the
undisclosed truth was, inter alia, that sales of the Company core product
was declining, the Company lacked the resources to simultaneously develop
and market its core product while also attempting to develop a market for
its newer products, and that reported revenues were sub-par and the Company
would report a substantial net loss for the third quarter of 2000 of$(0.05)
to $(0.20) per share.

According to Finkelstein & Krinsk, during the Class Period, Company
insiders sold stock for proceeds in excess of $13 million. Yet, according
to Finkelstein & Krinsk, when the true condition of Allaire was reported to
the public by the defendants on September 18, 2000, the price of Allaire
common stock plunged 40 percent from a close of $17.50 per share on
September 15, 2000, to $10.4375 per share on September 18, 2000. The Class
Period high for Allaire stock was in excess of $45 per share.

Contact: Finkelstein & Krinsk Arthur L. Shingler III, Esq., 619/238-1333
fax: 619/238-5425 Toll Free: 877/493-5366 email: als@class-action-law.com
or ashingler@justice.com


ALLAIRE CORPORATION: Milberg Weiss Files Securities Suit in MA
--------------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on September 25, 2000, on behalf of
purchasers of the securities of Allaire Corporation (NASDAQ:ALLR) between
July 20, 2000 and September 18, 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/allaire/

The action is pending in the United States District Court for the District
of Massachusetts against defendants Allaire, Joseph J. Allaire, Jeremy
Allaire, David A. Gerth and David J. Orfao.

Defendant Allaire is a Delaware corporation with its principal executive
offices located at 275 Grove Street, Newton, Massachusetts. The Company
describes itself as a leading provider of Internet software products and
services for companies building their businesses on the Web. ColdFusion,
the Company's flagship product, is a Web application server, i.e. a
software program that functions as an infrastructure to host Web
applications and enables access to these applications through Web browsers,
client hardware and other applications. In December 1999, the Company
announced the general availability of Allaire Spectra, a packaged system
for content management, e-commerce and personalization that sits on top of
the infrastructure and allows companies to build e-commerce Web sites. The
Company also sells and supports Jrun, to meet the needs of more advanced
systems programmers, and Homesite, a Web-editing tool for HTML language.

The complaint alleges that, throughout the Class Period, defendants
portrayed the Company as being "uniquely positioned" as a high volume
seller due to "a pricing model and a distribution model that supported a
volume market", and that defendants claimed that the Company would achieve
a market share leadership position in each market it competed in. The
complaint further alleges that the Company promised "consistent strong
sequential growth" for the "next two or three years." When in early
September 2000 it appeared that third-quarter earnings were not keeping
apace with defendants' projections, defendants claimed this was only
because the quarter was "back end loaded," i.e., because a disproportionate
percentage of sales would occur in the latter part of the quarter and that
the Company was otherwise on track to meet projected earnings and revenues.
In fact, defendants knew or recklessly disregarded that, in its attempt to
capture a broad customer base, the Company had spread itself too thin and
consequently, lacked the resources to develop and market its core
infrastructure product, ColdFusion, while simultaneously developing a
market presence for its newer products, Spectra and Jrun.

Meanwhile, between August 2, 2000 and August 29, 2000, Company insiders
sold 407,000 shares of Allaire stock at artificially inflated prices for
proceeds of $13.3 million. Only after they thus cashed out a substantial
portion of their investment in the Company did defendants reveal, on
September 18, 2000, that they expected Allaire to post a third-quarter net
loss in the range of $(0.05) to $(0.20) per share. This was well below
analysts' third quarter consensus estimate of $0.07 per share, and well
below both the net income of$0.06 per share the Company reported in the
second quarter of 2000 and the $(0.01) net loss it reported in the third
quarter of 1999.

On news of the Company's announcement, the Company's shares plunged to
close at $10.4375 on September 18, 2000, down 40% from the previous close
of $17.50 on September 15, 2000.

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


AUTO FINANCE: CA Ct OKs Settlement over Deficiency Balances Collection
----------------------------------------------------------------------
A California court recently approved a 68 million settlement of a consumer
class action brought on behalf of 16,000 consumers against Nissan Motor
Acceptance Corp. in connection with the lender's attempts to collect
deficiency balances on automobile loans.

Yvonne Moultrie purchased a car financed by NMAC. When she fell behind in
her monthly payments, NMAC repossessed her automobile and sold it. NMAC
then held Moultrie liable for the loan balance and other charges remaining
after the sale.

Moultrie filed a class action against NMAC on May 19, 2000, alleging that
NMAC was not entitled to collect any deficiency amounts because the lender
failed to provide her with the notice required by law prior to disposing of
the financed vehicle. Moultrie further claimed that the notice NMAC did
send failed to disclose the location of the car and the extent of her
potential liability.

                        Settlement Terms

Late last month, NMAC and the class reached a settlement, which was
approved by San Francisco Superior Court Judge David Garcia. The settlement
terms require NMAC to refund all of the amounts collected from class
members whose cars were repossessed and who received the alleged defective
notice. NMAC will also forego collection of any further amounts and take
steps to clear the credit histories of borrowers. Additionally, NMAC agreed
to the terms of an injunction, which will regulate its conduct over the
next seven years and require it to comply with the applicable requirements
for issuing notices to borrowers.

                            Reaction

Lead counsel for the class, Mark A. Chavez of Chavez & Gertler LLP in Mill
Valley, Calif., described the settlement as "an extraordinary result." He
said, "It is difficult to ever obtain full monetary relief in settlement of
any lawsuit and virtually unheard of to be able to do so in a class
action." Chavez added, "the settlement constitutes an unqualified victory,
not some nebulous compromise."

Willard P. Ogburn, executive director of the National Consumer Law Center
in Boston, recently hailed NMAC's settlement as "one of the very best
recoveries for plaintiffs in a multi-million dollar consumer class action."

Chavez & Gertler are currently prosecuting similar class actions against
Chrysler Financial, Ford Motor Credit Co. (see Consumer Financial Services
Law Report, Aug. 4, 2000, p. 14), GMAC and other finance companies.

In addition to Chavez, Jonathan E. Gertler and Kim E. Card of Chavez &
Gertler represented the plaintiff class. Peter S. Hecker, Anna S. McClean
and Taly J. Jolish of Heller, Ehrman, White & McAuliffe represented Nissan.
(Consumer Financial Services Law Report, September 18, 2000)


BRIDGESTONE/FIRESTONE: NHTSA Investigates on 16-inch Tires
----------------------------------------------------------
The National Highway Traffic Safety Administration is investigating at
least 210 complaints about potentially defective 16-inch Firestone tires
that were not part of the 6.5 million tires recalled last month, the
Chicago Tribune reported Tuesday.

The newspaper said an analysis of NHTSA data shows accidents involving
16-inch Firestone tires have resulted in at least two deaths and 14
injuries.

On Aug. 9, Firestone recalled 15-inch P235/75R15 ATX, ATX II and Wilderness
AT tires blamed for more than 100 deaths and 400 injuries. The Center for
Auto Safety last month filed suit to force Firestone to recall all sizes of
the recalled tires, noting that Ford had replaced 16-inch Firestone tires
on sport-utility vehicles outside the United States.

The tires were replaced in South America, the Middle East, North Africa and
Southeast Asia.

Internal Bridgestone/Firestone memos released by House Commerce
subcommittee Chairman Rep. Billy Tauzin, R-La., Monday showed Ford and
Firestone were feuding over faulty tires months ago and that Ford Venezuela
executives in May tried to blame Firestone for rollover accidents involving
Explorer SUVs in Venezuela.

In a memo dated May 9, Bridgestone/Firestone said Ford Venezuela President
Emmanuel Cassingena would never "accept a statement that their Ford
Explorer has suspension problems." Firestone recalled 62,000 tires in
Venezuela Sept. 4 after 47 deaths were linked to Firestone tires on Ford
Explorers.

Ford said Friday it would inform Explorer owners to keep their Firestone
tires inflated at 30 pounds per square inch, the air pressure recommended
by Firestone, rather than the 26 psi recommended by Ford to improve
handling and stability.

At least 16 lawsuits have been filed in the United States alleging tread
separation failures of 16-inch tires, however, Firestone said there was no
widespread problem with those tires and refused to expand the recall.

"We look at adjustment data, testing and field surveys," a Firestone
spokeswoman told the Tribune. "That's the industry standard for fitness of
duty. These tires have had a low incident rate; therefore we have no
indication that there has been a problem."

Ford Motor Co. shareholders filed a lawsuit in Michigan Monday accusing the
automaker of misleading investors by hiding and lying about tire safety
problems with the Explorer sport-utility vehicle. The suit seeks to
represent all investors in a class action who bought Ford stock between
March 12, 1999, and Sept. 6, 2000.

NHTSA began investigating Firestone tire failures involving Ford Explorers
in May.

The investment firm USB Warburg said the tire recall and resulting
litigation could cost Firestone nearly $2.7 billion. Bridgestone Corp., the
parent of Nashville, Tenn.-based Bridgestone/Firestone Tuesday offered free
inspections of some 30,000 American-made Firestone tires that were sold in
Japan before 1997. (United Press International, September 26, 2000)


CREDIT CARDS: Judge OKs $36 Mil Settlement by Citibank and Others
-----------------------------------------------------------------
A federal judge has approved a $36 million class- action settlement of a
suit that alleged Citibank of South Dakota and other institutions made
millions in extra finance charges by late-posting payments. U.S. District
Judge Lourdes G. Baird finalized the settlement she had preliminarily
approved back in May.

The lawsuit alleges that Citibank of South Dakota, Universal Bank and
Universal Financial Corp. failed to post the payments of some credit-card
holders the day they were received. The lawsuit alleged violations of the
federal Truth in Lending Act, the Fair Credit Billing Act, state consumer
protection statutes, laws prohibiting deceptive trade practices and breach
of contract, according to court records.

Citibank and the other defendants continue to deny any wrongdoing, but
agreed to settle the case.

According to a class-action settlement notice filed May 5, the potential
class of millions of plaintiffs can expect average refunds of less than $1.
Baird heard several motions during the 75-minute hearing that centered
mainly around payment of an estimated $9 million in attorneys fees.

Since the lawsuit was filed on Oct. 1, 1999, Citibank has agreed to change
the way it post payments. The judge also ordered Citibank to send written
notices of the changes to 23 million cardholders.

As a result of the settlement, Citibank agreed to:

  * change the cutoff time for crediting payments received on a business
     day from 10 a.m. to 1 p.m.

  * refrain from imposing certain late charges for any credit card
     payments received before noon.

In addition, an $18 million settlement fund has been set up to pay
cardholders, including $5 million in reimbursements, $11.5 million in
finance charge refunds and $500,000 in statutory damages.

The judge will rule later on the issue of legal fees and other motions.

Contact: Brian Strange, the plaintiffs' attorney, is at (310) 207-5055. Jay
Zeigler, Michael Wachtell and Abraham Coleman are at (888) 298-2639. (City
News Service, September 25, 2000)


H&R BLOCK: Judge OKs Revised Settlement in Refund Anticipation Loan Suit
------------------------------------------------------------------------
Federal Judge James B. Zagel has ruled in favor of H&R Block and accepted
the company's proposed settlement to resolve a class action lawsuit filed
against H&R Block's refund anticipation loan (RAL) program. In July, the
judge had expressed concern about one aspect of the original settlement
proposal. H&R Block and Household Bank f.s.b. (formerly Beneficial National
Bank) revised the settlement agreement to address the concern and the judge
issued his ruling on Thursday, Sept 21.

Under terms of the settlement, H&R Block and Household will distribute $25
million to the class. The entire $25 million pool will go to all potential
class participants. This settlement protects the company from similar suits
that may be filed in the future involving the RAL program. The company has
adequate resources to support this settlement and believes no additional
charges are necessary as a result of this ruling. H&R Block Inc. is a
diversified company with subsidiaries providing a wide range of financial
products and services.

This year, H&R Block served 19.2 million taxpayers -- more than any other
company -- through its more than 10,000 offices located primarily in the
United States, Canada, Australia and the United Kingdom. H&R Block served
another 1.8 million tax clients through its award-winning software program,
Kiplinger TaxCut(R), and through its new online tax preparation services.
H&R Block Financial Advisors member NYSE, SIPC, offers investment services
and securities products. H&R Block Mortgage Corporation and Option One
Mortgage Corporation offer a full range of home mortgage products. RSM
McGladrey Inc. is a national accounting, tax and consulting firm with 100
offices nationwide, as well as an affiliation with 550 offices in 75
countries as the U.S. member of RSM International. Quarterly results and
other information are available on the company's Web site at
www.hrblock.com .


HOLOCAUST VICTIMS: Catholic Church in Germany to Pay Slave Laborers
-------------------------------------------------------------------
With a national fund to help surviving Nazi-era slave laborers mired in a
legal dispute, Germany's Roman Catholic Church said Tuesday it will begin
next month its own payments to victims of programs that forced them to work
at its institutions.

Bishops meeting in the western town of Fulda voted to start paying the
first installment of the payments of 5,000 marks (dlrs 2,250) a head in
early October, said the secretary of the German Bishops' Conference, Father
Hans Landendoerfer.

The church estimates about 200 to 350 of those forced to work for it during
the Nazi era, or about 10 percent of the total, are still alive.
Application forms will be available within days and can be submitted until
the end of 2002, Landendoerfer said.

The Catholic Church last month snubbed a 10 billion mark (dlrs 4.5 billion)
national compensation fund backed by Chancellor Gerhard Schroeder and some
of Germany's biggest companies and set aside five million marks (dlrs 2.25
million) for its own scheme.

The government-industry fund recently warned it could miss its goal of
beginning payments by the end of this year because of delays in dismissing
class-action lawsuits in the United States.

Companies also are struggling to raise their half of the funding.

While Germany's Protestant Church has agreed to contribute to the national
fund, the Catholic bishops have rejected the notion of ''collective guilt''
for slave labor, arguing those working for the church were always treated
well.

The national fund is supposed to compensate more than 1 million victims,
mostly non-Jews from Eastern Europe used to keep the Nazis' factories
running in World War II. (AP Worldstream, September 26, 2000)


KENNAMETAL INC: Lawsuits Seek Injunction on Acquisition of JLK Stock
--------------------------------------------------------------------
In July 2000, the company, JLK and the JLK directors (including one former
director) were named as defendants in several putative class action
lawsuits. The lawsuits seek an injunction, rescission, damages, costs and
attorney fees in connection with the company's proposal to acquire the
outstanding stock of JLK not owned by the company. JLK Direct Distribution
Inc. is an 83% owned subsidiary of Kennametal Inc.

The company believes the actions lack merit and will defend them
vigorously. The amount of any ultimate exposure cannot be determined with
certainty at this time. Management believes that any losses derived from
the final outcome of these actions and proceedings will not be material in
the aggregate to the company's financial condition.


LAIDLAW INC: Investors Sue in NY Accusing Co. and Underwriters of Fraud
-----------------------------------------------------------------------
Laidlaw Inc. and underwriters, including Goldman Sachs & Co. and Bear
Stearns & Co., have been accused in a civil suit of deceiving investors
in Laidlaw bonds. The federal fraud suit, filed in New York on September 25
by insurers John Hancock Life Insurance Co. and New York Life Insurance
Co., as well as the Aid Association for Lutherans, seeks class-action
status on behalf of other purchasers of Laidlaw bonds between 1997 and
2000.

The suit claims that Laidlaw, the underwriters, and several company
officers, including former chief executive James Bullock, failed to
disclose to investors that Laidlaw was a debtor or guarantor on a $1.4
billion credit agreement in 1996. Laidlaw did not disclose that it was
obligated under the 1996 credit agreement until May, 2000, the suit says.
"Defendants failed to disclose material information in prospectuses for
debenture offerings" in 1997, 1998, and 1999, the complaint alleges.
Laidlaw had bonds worth at least $1.1 billion (U.S.) outstanding as of
March, the suit says.

Spokespersons for Burlington, Ont.-based Laidlaw and New York-based Bear
Stearns said they had not seen the complaint. (The Toronto Star, September
26, 2000)


LYCOS INC: Proposed Merge into USA Networks Halted; DE, MA Suits Go on
----------------------------------------------------------------------
In February 1999, the Company announced its intention to enter into a
transaction with USA Networks, Inc. and certain affiliated companies
pursuant to which, among other things, Lycos would have been merged into a
subsidiary of USA Networks. In May 1999, the parties to the proposed
transaction terminated the merger by mutual agreement.

Prior to such termination, eight purported class action lawsuits were filed
in the Court of Chancery for the State of Delaware in and for New Castle
County, by shareholders of the Company allegedly on behalf of all common
stockholders of the Company. The complaints request, among other things,
that the proposed transaction be enjoined or that rescissionary damages be
awarded to the purported class and that plaintiffs be awarded all costs and
fees, including attorneys' fees. Although the proposed merger has since
been terminated, the suits have not been dismissed. Lycos believes that the
allegations in the complaints are without merit and intends to contest them
vigorously.

Also prior to the termination of the proposed merger, a series of purported
securities class action lawsuits were filed in the United States District
Court for the District of Massachusetts. The suits, which have since been
consolidated, allege, among other claims, violations of United States
Federal securities law through alleged misrepresentations and omissions
relating to the announced transaction with USA Networks. The consolidated
complaint seeks an unspecified award of damages. Lycos believes that the
allegations in the consolidated complaint are without merit and intends to
contest them vigorously. A motion to dismiss the consolidated complaint is
pending.


MARRIOTT INTERNATIONAL: Agrees to Settle Securities Suit; Sweetens Offer
------------------------------------------------------------------------
Marriott International Inc. sweetened its offer to a group of real estate
investors on Monday in a bid to settle a class-action lawsuit that alleges
the company defrauded buyers of hotel limited partnerships in the late
1980s.

The Bethesda-based hotel chain agreed to pay a portion of the legal fees
and expenses in one of the limited partnerships, known as Courtyard I,
thereby boosting the amount the investors would receive. In February,
Marriott had offered to pay about $ 154 million to take over the 1,150
units. But the company said it agreed to pay almost $ 18 million in legal
fees--raising its total offer to an estimated $ 165 million--under pressure
from a group of limited partners.

The investors would get about $ 134,000 per partnership unit as part of the
agreement. But instead of having to pay legal fees out of that--which would
have left them with about $ 116,000 per unit--they would receive $ 133,500
per unit.

Investors have until Oct. 16 to vote on the offer, which is expected to get
the needed majority. A fairness hearing will be held Oct. 19 on the deal in
the Texas court where the lawsuit was filed.

Marriott had extended the deadline for the vote twice after not getting
enough favorable votes for the Courtyard I deal. Investors in Courtyard II
accepted an estimated $ 200 million from Marriott as part of another
lawsuit settlement earlier this month.

"It was slow going for the votes" in Courtyard I, said David Berg, a Texas
lawyer who represented some of the limited partners. "Something had to be
done. They sweetened the pot substantially."

In the lawsuit, Marriott investors alleged that they were charged in excess
of $ 100 million in unjustified management fees and about $ 200 million
more than they should have been to purchase the Courtyard hotels. Investors
argued that their returns were far below what Marriott projected and that
the company knew that would be the case.

Marriott and its cousin real estate company, HMSHost Marriott, have denied
any wrongdoing.

The revised settlement is an unusual twist in class-action lawsuits, where
individual plaintiffs typically have little sway over settlements,
according to law professors. But the shareholders, many of whom are
sophisticated, wealthy investors, held a powerful position over Marriott
because they were able to vote on the deal--a rarity. Their vote allowed
the investors to squeeze Marriott for more money.

"The limited partners had greater leverage," said John C. Coffee Jr., a
professor at Columbia Law School in New York. "They had a blocking position
that forced Marriott to give them a better deal." (The Washington Post,
September 26, 2000)


MBNA CORPORATION: Agrees to Settle Consumers' Suit over Credit Card Ad
----------------------------------------------------------------------
The MBNA Corporation has agreed to pay as much as $7.8 million to settle a
class-action lawsuit accusing the company, the world's No. 3 credit card
issuer, of luring consumers with misleading advertisements about low-rate
cards. MBNA will pay up to $6.5 million -- plus $1.28 million in lawyers
fees -- to reimburse customers deceived by ads about how much they would
save by transferring their credit card balances to an MBNA account,
consumer lawyers said in federal court.

Andrew Spark, a Florida lawyer, sued MBNA in 1996 saying that the bank's
ads did not disclose that new purchases would not carry the low interest
rate promoted in the ads.

Under the settlement, the 1.8 million people who signed up for the 6.9
percent introductory rate will receive $3.57 to make up for the lost
savings promised. (The New York Times, September 26, 2000)


NORTH DAKOTA: Judge Denies Class Status over Devils Lake Flooding
-----------------------------------------------------------------
A judge has denied a motion to give class-action status to a lawsuit over
Devils Lake flooding. Northeast District Judge Richard Geiger said the
lawsuit did not meet the requirements necessary to declare it a class
action. That designation would expand the list of plaintiffs beyond those
who filed the lawsuit last year.

About 100 plaintiffs in the Devils Lake Basin sued the state of North
Dakota, the State Water Commission, state engineer and nine Devils Lake
area water resource districts. They contend decades of drainage projects
built or permitted by the various agencies have caused the lake to rise
more than 20 feet since 1993, causing millions of dollars in damage and
forcing some people to move. The plaintiffs also allege trespass and
negligence.

The plaintiffs' attorney Gary Leistico of St. Cloud, Minn., said he was
disappointed with Geiger's ruling, but he said it was obvious the judge
considered the request in detail. "It was a very close call," Leistico
said. "We don't think it will hurt our outcome."

Grand Forks attorney Ron Fischer, who represents several of the defendant
water districts, would not comment on the ruling Monday.

Leistico said one reason for requesting class-action designation was that
the case impacts people who have an interest in property around the lake
but live in other parts of the country. eistico has not ruled out an appeal
of Geiger's decision. "We'll march forward, through the discovery process,"
he said. "I'm enthused about the lawsuit. We're going to move forward and
pursue it aggressively." (The Associated Press State & Local Wire,
September 26, 2000)


PAYDAY LENDERS: IL Ct OKs Suit Vs. Illini Cash on Interest Disclosure
---------------------------------------------------------------------
The U.S. District Court for the Northern District of Illinois recently
certified a class alleging that a payday lender violated the Truth in
Lending Act by not disclosing the security interest it took in post-dated
checks. (Donnelly v. Illini Cash Advance Inc., et al., No. 00 C094 (N.D.
Ill. 8/16/00).)

Sandra S. Donnelly obtained payday loans from Illini Cash Advance Inc. For
each loan, Donnelly signed a standard consumer loan agreement and gave
Illini Cash a postdated check to secure the loan. The loans were for two
weeks, at an annual interest rate of 521.4 percent.

Donnelly sued Illini Cash and others in District Court alleging that Illini
Cash's consumer loan agreement violated the TILA, Federal Reserve Board
Regulation Z and state law by failing to disclose the security interest and
affirmatively stating that no security interest was taken. Donnelly moved
for class certification and Illini Cash moved to dismiss.

                             Class Action

Illini Cash argued that the "commonality" requirement of Fed. R. Civ. P.
23(b) was not met because class members would have to establish actual
damages in order to recover. Therefore, Illini claimed individual issues
dominated the case. The court stated, however, that Illini Cash's argument
had been repeatedly rejected by the District Court. As it stated in Pinkett
v. Moolah Loan Corp., No. 99 C 2700 (N.D. Ill. 1999), "[t]he fact that the
defendants engaged in standardized conduct by distributing allegedly
illegal form contracts of documents supports a finding of a common nucleus
of operative fact."

Illini Cash also argued that Donnelly would not fairly represent the
interest of the class because she "has failed to establish that she is or
was a 'necessitous borrower' who has limited access to loans." The court
observed that Illini Cash did not indicate why being a "necessitous
borrower" was "necessary for her to be an adequate representative" and
concluded that Donnelly could represent the class.

                      Disclosure Requirements

Illini Cash moved to dismiss Donnelly's complaint for failure to state a
claim. Illini Cash argued that Donnelly was only a party to the July 26,
1999 loan agreement attached to the complaint. In rejecting this argument,
the court stated that "class members need not have been parties to
Donnelly's loan; they need merely to have entered into loan agreements with
Illini Cash using the same form that Donnelly used."

The District Court noted that the TILA requires a lender to provide "[a]
statement that a security interest has been taken in (A) the property which
is purchased as part of the credit transaction, or (B) property not
purchased as part of the credit transaction identified by item or type" and
Regulation Z provides that the disclosure must include "[t]he fact that the
creditor has or will acquire a security interest in the property purchased
as part of the transaction, or in other property identified by item or
type."

                        Security Interest

Illini Cash argued because it complied with the requirements that the loan
agreement disclose any security interest acquired by the lender, statutory
damages were not available to Donnelly. Illini Cash also maintained that it
disclosed the security interest on the reverse side of the loan.
Furthermore, it asserted that it used Donnelly's check to "secure"
repayment of the loan and not claim a "security interest" in the check.

Judge Joan B. Gottschall rejected Illini Cash's argument and quoting
Pinkett, stated "a post-dated check can constitute a security interest and
must be disclosed under TILA." The District Court concluded that "[b]ecause
Donnelly's allegations, if proven, would establish that Illini Cash failed
to disclose the security interest it took in her post-dated check, thereby
violating 15 USC 1638 (9) and 15 USC 1640(a), Donnelly can recover
statutory damages ... and need not plead actual damages."

The District Court granted Donnelly's motion for class certification and
denied Illini Cash's motion to dismiss. (Consumer Financial Services Law
Report, September 18, 2000)


SOTHEBY'S, CHRISTIE'S: Detroit Free Press Says Deal Won't Settle Things
-----------------------------------------------------------------------
The Sotheby's scandal has reached a climax. Yet it's far from resolved, as
far as the company, its customers and former chairman A. Alfred Taubman are
concerned. By agreeing to a $ 512-million settlement with civil
complainants, who accused Sotheby's Holdings Inc. and privately owned
Christie's of colluding and fixing prices, both auction houses have reduced
their financial uncertainty a great deal.

In response, shares of Sotheby's, which are traded publicly, closed up 15.4
percent to $ 23.44 Monday, up from Friday's close at $ 20.31. Had the firms
fought the lawsuit and lost, they both might have been liable to pay treble
damages under statutes covering antitrust infractions.

With the limit of liabilities now clarified, Sotheby's soon could become an
acquisition target.

Ron Baron, the New Yorker whose mutual funds own 40 percent of the auction
house, has been encouraging talks with companies he believes are interested
buyers. One persistent rumor identifies Louis Vuitton Moet Hennessy, owned
by Frenchman Bernard Arnault, as a possible suitor.

With a big chunk of cash soon available to pay claims, customers of the
auction houses will surely be dusting off their records. Jessie Macri of
Commerce Township is just such a person. In 1997 her late husband consigned
a set of nine lithographs by Maurits Escher to Sotheby's for auction.

The auction yielded $ 28,200 for the Macris, from which Sotheby's deducted
$ 4,230 in commission and another $ 1,000 or so in costs. Now Macri wants
to know if she's entitled to a refund on the commission. She well may be.
Sotheby's said the class of persons eligible for payment are buyers of art
since 1992 and sellers since 1995, both categories limited to transactions
before February 2000.

Customers of Christie's and Sotheby's who think they might be eligible to
share in the settlement can try calling the New Hampshire office of Boies,
Schiller & Flexner, the law firm representing plaintiffs, at 603-643-9090.

Any Sotheby's shareholder or former shareholder who wants to find out about
eligibility for damages in the shareholder class action against the company
can call Sherrie Savett at the law firm of Berger & Montague, at
215-875-3000.

For Taubman, Sotheby's chairman and guiding spirit from 1983 until he
resigned in February, the next few weeks and months will be a tortuous
waiting period. By voluntarily putting up $ 186 million of his own money: $
156 million in the civil antitrust suit, $ 30 million in the shareholder
class action, he's hoping that the U.S. Attorney's Office in New York that
has been investigating antitrust violations in the art world will go easy
on him.

The government could propose that Taubman agree to plead guilty or no
contest to a relatively minor offense, or it could seek a serious criminal
indictment from a grand jury. Quoting an unnamed source, the Wall Street
Journal reported that Diana Brooks, a former Sotheby's chief executive, is
close to agreeing to testify against Taubman in return for lighter
treatment.

In essence, Taubman is trying to show the prosecutor that he's done the
right thing by paying an exorbitant sum to clean up the mess. (Detroit Free
Press, September 26, 2000)


SPLASH TECHNOLOGY: CA Suit Seeks to Enjoin Vancouver Acquisition Merger
-----------------------------------------------------------------------
Splash Technology Holdings, Inc., a Delaware corporation received from
Vancouver Acquisition Corp., a Delaware corporation which is wholly owned
by Electronics For Imaging, Inc., a Delaware corporation ("Parent") an
offer to purchase all outstanding shares of common stock, par value $0.001
of the Company for $10.00 per Share, net to the seller in cash. The Offer
is being made pursuant to an Agreement and Plan of Merger, dated as of
August 30, 2000, by and among Parent, Purchaser, and Company.

In connection with the Agreement and to induce the Parent and Purchaser to
enter into the Agreement, the directors and certain officers of the
Company, concurrently with the execution and delivery of the Agreement,
entered into a Tender and Voting Agreement, dated as August 30, 2000, with
Parent and Purchaser, pursuant to which each of the directors and specified
officers agreed, among other things, to tender the Shares held by such
persons in the Offer and to grant Parent a proxy with respect to the voting
of such Shares, all upon the terms and subject to the conditions set forth
in the Tender and Voting Agreements.

On August 31, 2000, a class action complaint was filed in the Superior
Court of the State of California, in and for the County of Santa Clara, by
Gerald W. Burr against the Company and certain of its current and former
directors. The complaint alleges that defendants breached their fiduciary
duties to the Company's shareholders in connection with the negotiation and
execution of the Agreement. The complaint seeks declaratory and injunctive
relief, including enjoining the merger contemplated by the Agreement,
rescinding the Agreement and related documents, directing the individual
defendants to obtain a transaction in the best interest of the Company's
shareholders until the process for the sale or auction of the Company is
completed, and costs and attorneys' fees.


TERAYON COMMUNICATION: Securities Complaint Amended; Co. Seeks Dismissal
------------------------------------------------------------------------
Terayon Communication Systems, Inc. (Nasdaq: TERN), a leading supplier of
broadband network systems, challenged the amended legal complaint filed on
September 21 against the company.

Terayon received an amended version of a class action complaint originally
filed on April 17, 2000, which was previously reported in the CAR. Terayon
believes that the original complaint was devoid of merit, and it believes
that in its amended form, the complaint is as baseless as it was before.
Terayon will defend itself vigorously and is confident that it will
prevail. Further, Terayon wanted to assure its customers, employees and
investors that it will continue to focus on what it does best: bringing to
market industry-leading broadband access systems. Terayon will not be
distracted in any way from its commitment to enabling a new age of
broadband services for cable operators, telecommunications carriers and
their subscribers.


U.S. FRANCHISE: Shareholders Sue in Delaware over Acquisition Agreement
-----------------------------------------------------------------------
On September 20, 2000, three individual shareholders of the Corporation
each filed a purported class action suit in Delaware Chancery Court, New
Castle County, against Michael A. Leven, Steven Romaniello, Neal K.
Aronson, Dean S. Adler, Irwin Chafetz, Douglas G. Geoga, Richard D.
Goldstein, David T. Hamamoto, Jeffrey A. Sonnenfeld, Barry S. Sternlicht,
and U.S. Franchise Systems Inc. The allegations of the three complaints are
identical in all material respects.

The plaintiffs allege that the Company and its directors breached fiduciary
and other common law duties owed to holders of Class A common stock of the
Corporation by approving the Acquisition Agreement, dated as of September
18, 2000, among the Corporation and Pritzker family business interests (and
the tender offer and merger contemplated under that agreement) and by
terminating the Recapitalization Agreement entered into by the Company and
Pritzker family business interests announced on June 2, 2000. Each
complaint seeks money damages and/or injunctive relief, but no motion for
an injunction or temporary restraining order has been filed. Plaintiffs
also seek an accounting and an award of costs and disbursements. Management
believes that the claims in the lawsuit are totally without merit and the
Corporation intends to defend the suits vigorously.


Y2K LITIGATION: Iowa Hospitals Denied Certification against Keane Inc.
----------------------------------------------------------------------
Ruling that the plaintiffs were attempting to evade the provisions of the
Y2K Act by asserting jurisdiction through another federal statute, Judge
Michael J. Melloy of the U.S. District Court for the Northern District of
Iowa denied class certification to several hospitals in their lawsuit
against software company Keane Inc. Mineral Area Osteopathic Hospital et
al. v. Keane Inc., No. C99-50 MJM (N.D. Iowa, Cedar Rapids Div., May 25,
2000); see Software Law Bulletin, July/August 1999, P. 130.

The plaintiffs -- Mineral Area Osteopathic Hospital Inc. d/b/a Mineral Area
Regional Medical Center, Community Memorial Healthcare Inc. and North
Country Hospital Inc. -- filed a complaint against Keane Inc. in March 1999
and moved for class certification, alleging breach of contract as a result
of Keane's refusal to repair a defect in the MEDNET software sold to the
hospitals by its predecessor, Source Data Systems.

The Y2K Act, 15 U.S.C. @ 6601 et seq., was enacted several months after the
hospitals filed their lawsuit. As Judge Melloy explained, the purpose of
the Y2K Act was to curb insubstantial litigation and encourage parties to
resolve their disputes. He cited an express provision in the act, 15 U.S.C.
@ 6614(c)(2)(D), which requires that not only must parties seeking class
certification comply with the Federal Rules of Civil Procedure, but they
must also be a class of at least 100 members. In the hospitals' putative
class action, the class numbered at most 81, which, in the judge's words,
was a "generous estimate."

The hospitals nonetheless argued that the class action requirement of the
Y2K Act was not applicable to them because it only had to be met when the
act was being used as the means of asserting jurisdiction in federal court.
They were not relying on the Y2K Act, the plaintiffs asserted, but were
claiming diversity jurisdiction pursuant to 28 U.S.C. @ 1332. Judge Melloy
rejected their argument that the purpose of the Y2K Act was to expand
jurisdiction for Y2K actions, reasoning that it would allow many plaintiffs
to circumvent the statute altogether. The hospitals' logic, he said, meant
that if plaintiffs were allowed to establish some other form of federal
jurisdiction, they would not have to respect the requirements of the Y2K
Act, which would be contrary to its stated purposes.

Rejecting the hospitals' legal argument, and finding that they failed to
meet the numerosity requirement of the Y2K Act, Judge Melloy denied their
motion for class certification.

The plaintiffs are represented by Roger T. Stetson and Michael R. Reck of
Belin Lamson McCormick Zumbach Flynn in Des Moines, Iowa. The defendants
are represented by Scott E. McLeod of Lynch, Dallas, Smith & Harman in
Cedar Rapids, Iowa. (Software Law Bulletin, August 2000)


* No Election-Year Consensus on Health Care Issues
--------------------------------------------------
Helping seniors pay for prescription drugs and reining in health
maintenance organizations were President Clinton's two biggest health care
goals when Congress reconvened nine months ago. As lawmakers rush to return
home - to ask voters to let them come back next January - the chances of
either happening are minuscule.

Instead, the only major health care measure likely to be signed into law
before a new president occupies the White House is in response to threats
from hospitals and nursing homes to shut down if Medicaid cuts of three
years ago are not restored.

"We're still committed ... but there's some real differences" in the
Republican and Democratic approaches to prescription drugs and managed
health care, said House GOP Conference Chairman J.C. Watts.

The curbs on fees from Medicare, the nation's health insurance program for
the elderly and disabled, were part of 1997 legislation to balance the
federal budget.

After health care providers complained they were being squeezed too tight,
Congress voted last year to restore $16 billion to the program. There is
broad agreement in both parties that it wasn't enough.

President Clinton has proposed a $21 billion boost in Medicare payments
over five years, and several lawmakers have offered proposals of their own.
GOP leaders, however, have yet to endorse a specific amount.

A bipartisan group of House and Senate lawmakers also wants to begin
allowing the re-importation of prescription drugs. Supporters argue that
Americans are paying more for U.S. drugs sold cheaper in other countries.

That measure has been attached to the agriculture spending bill, but with
heavy opposition from the pharmaceutical industry - among the biggest
corporate givers of campaign funds this year - whether it will survive is
uncertain.

Still, the list of accomplishments in an election year full of jockeying
over health care issues is a lot smaller than the agendas laid out by
either party.

Both sides have proposals pending. On patients' rights, the House has
passed a bipartisan bill by Rep. Charles Norwood, R-Ga., and John Dingell,
D-Mo., that would let consumers sue HMOs for inadequate health care.

Another House-passed measure by Rep. Tom Campbell, R-Calif., would amend
antitrust law to let physicians in private practice form what would
effectively be unions to bargain collectively with health insurance plans
over fees and treatments.

Neither may get a vote in the Senate, where Republican leaders generally
accept the arguments of business and insurance groups that each would raise
health care costs and spawn a barrage of new lawsuits.

And the White House has shown no interest in a modest, Senate-passed
Republican HMO reform bill that would widen access to emergency room care
but permit patient suits only after an independent review, while still
disallowing punitive damages and class-action claims.

On prescription drugs, a GOP House-passed measure to provide limited
subsidies to the poorest elderly for buying private coverage has been
pronounced dead by its sponsors. A Senate Republican proposal to have
states run a prescription program has drawn so much opposition from the
White House that sponsors there concede its defeat, too. Both parties have
ads accusing the other of rather having an issue for the November election
rather than a solution.

There's even debate over how health care issues - routinely ranked with
education and Social Security at the top of the list - are playing with
voters.

An ABC News-Washington Post poll after the summer political conventions
gave Gore an 18-point advantage over Bush on the issue of prescription
drugs. But Republicans claim they've been successful pointing out how much
the Clinton-Gore prescription plan would raise monthly Medicare premiums
while still leaving potentially thousands of dollars in yearly
out-of-pocket costs.

For Arizona Sen. John McCain, the gridlock is only to be expected.

"The Democrats are in the grip of the trial lawyers who want everybody to
sue everybody for anything," McCain said last spring during his
unsuccessful bid for the GOP presidential nomination.

"And the Republicans are in the grip of the HMOs and the insurance
companies and their huge six- and seven-figure donations. We will not move
as long as the special interests rule in Washington over the public
interests."

The House-passed Medicare drug coverage bill is H.R. 4680.

Patient rights-HMO bills are H.R. 2723, H.R. 2990 and S. 1344. (The
Associated Press, September 25, 2000)


                              *********


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

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

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

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

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

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


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