/raid1/www/Hosts/bankrupt/CAR_Public/001009.MBX               C L A S S   A C T I O N   R E P O R T E R

              Monday, October 9, 2000, Vol. 2, No. 196


ACME ELECTRIC: Lawsuits Seek Injunction on Merger with Miranda Holdings
BREAST IMPLANT: Jury Awards Missouri Woman $4.5 Mil in Damages
BRIDGESTONE/FIRESTONE, FORD: Law Firm Seeks Global Status for Tire Suit
HIALEAH: Reverse discrimination costs Hispanic Police Chief $1.4
HOME SECURITY: Sued in Aust and Belgium over Sale of Alarm System

IXYS CORP: Defends Securities Suit Filed in 1996 in Santa Clara
JAPANESE GOVT: Mother with HIV+ Son Sues and Goes into Politics
OVERLAND DATA: Resolves Lawsuits in CA over IPO
OWENS CORNING: Files for Bankruptcy ; Asbestos Lawsuits Could Cost $7B
PARADYNE NETWORKS: Broadband Provider Responds to Securities Suit in FL

PARADYNE NETWORKS: Milberg Weiss Announces Securities Suit Filed in FL
PARTY CITY: 12 Securities Suits at Early Stage in New Jersey
PARTY CITY: Faces New York Lawsuit under Robinson-Patman Act
PARTY CITY: Settles Franchisees Cases in NY over Unfair Trade Practices
RITALIN LITIGATION: Parents at Odds with Educators over Use of Drug

SARA LEE: Matters over 1998 Zeeland Facility Meat Recall Still Pending
SOTHEBY'S HOLDINGS: Former Chief Pleads Guilty to Price Deal
TOBACCO LITIGATION: Judge Bars the Word 'Addiction' in Opening Argument
WHITMAN EDUCATION: Judge OKs $ 7.3 M Settlement in Sham Case
WORLDCOM INC: Judge Approves Hearing in Digex Shareholders Case


ACME ELECTRIC: Lawsuits Seek Injunction on Merger with Miranda Holdings
Following the execution of a merger agreement with Miranda Holdings,
Inc., an affiliate of Strategic Investments and Holdings, Inc., in April
2000, Acme was sued in four separate actions each seeking preliminary and
permanent injunctive relief against consummation of the merger with
Miranda Holdings, rescission of the merger if consummated and
rescissionary damages, monetary damages to shareholders, and costs and
attorneys' fee.

On April 27, 2000, David Shaev filed a class action lawsuit in the
Supreme Court of the State of New York, New York County against Acme and
its officers and directors alleging that Acme and its directors breached
their fiduciary duties by failing to provide shareholders a fair price
for their Acme shares in the proposed transaction with Miranda Holdings.

On April 27, 2000, Shirley E. Powell filed a class action lawsuit in the
Supreme Court of the State of New York, New York County against Acme, its
officers and directors, and Strategic Investments and Holdings, alleging
that Acme and its directors breached their fiduciary duties by failing to
provide shareholders a fair price for their Acme shares in the proposed
transaction with Miranda Holdings.

On April 27, 2000, Brickell Partners, a Florida partnership, filed a
class action lawsuit in the Supreme Court of the State of New York, New
York County against Acme and its officers and directors. The claim
alleges that the proposed transaction with Strategic Investments and
Holdings was grossly unfair, inadequate, and undervalues Acme's shares
and that Acme and its officers and directors breached their fiduciary
duties to the shareholders.

On May 9, 2000, Robert Corwin filed a class action lawsuit in the Supreme
Court of the State of New York, Erie County against Acme, its officers
and directors and Strategic Investments and Holdings alleging that the
proposed terms of the merger with Miranda Holdings were unfair, and that
by accepting the terms, Acme and its officers and directors breached
their fiduciary duties and responsibilities to the shareholders. When the
proposed transaction with Strategic Investments and Holdings was
terminated in May 2000, plaintiff amended his complaint. The amended
complaint included all prior allegations and further alleged that Acme
and its officers and directors continue to breach their fiduciary duties
to Acme shareholders with respect to the proposed transaction with Key
Components. Specifically, plaintiff alleges that the $2.5 million
termination fee and expenses paid to Strategic Investments and Holdings
caused Key Components to lower its offer price for Acme's shares.
Plaintiff also alleges that the proxy statement fails to disclose all
facts to Acme shareholders. In the amended complaint plaintiff seeks the
following relief:  injunctive relief; compensatory and/or
rescissory damages in the amount of $2.8 million; and costs and
attorneys' fees.

BREAST IMPLANT: Jury Awards Missouri Woman $4.5 Mil in Damages
In a rare victory for women who have been disputing the safety of breast
implants, a jury has awarded a St. Louis woman $4.5 million in damages
for the injuries incurred due to a ruptured device. As part of the total
award, the jury also awarded punitive damages in the amount of $2.25
million against defendant Medical Engineering Corp. Haltom v. Medical
Eng'g Corp. (Breast Implant Litigation Reporter, September 5, 2000)

BRIDGESTONE/FIRESTONE, FORD: Law Firm Seeks Global Status for Tire Suit
A Chicago law firm says it has filed the first complaint seeking
worldwide class-action status to combine lawsuits against
Firestone/Bridgestone Inc. and Ford Motor Co. for injuries, deaths and
economic loss allegedly resulting from tire blowouts and tread loss.

The Chicago law firm of Kenneth B. Moll Associates has filed a complaint
to expand the firm's lawsuit against Firestone and Ford.

Moll told reporters at a news conference in Chicago that his lawsuit
seeks compensation for people around the world who were injured as a
result of defective Firestone tires, and an expansion of the tire recall.
The Moll lawsuit includes plaintiffs from the United States, Venezuela,
England and Saudi Arabia.

"It's unrealistic to think that one court can address the issues of every
single claimant around the world for a multitude of different incidents
and differing circumstances," said Ford spokesperson Susan Krusel.
Firestone said the proposed class action is "misdirected and baseless."

HIALEAH: Reverse discrimination costs Hispanic Police Chief $1.4
A Hispanic police chief violated the civil rights of seven white
non-Hispanic police sergeants when he favored Hispanics in giving out
assignments, a jury decided. It awarded the plaintiffs 1.4 million.

The plaintiffs said that the Hispanic police chief repeatedly passed them
over for specialty assignments in favor of Hispanic employees.

The chief denied the allegations and said the sergeants were opposed to
his policies and that he made his assignment selections based on
nondiscriminatory reasons.

The jury found for the plaintiffs, but the city is filing post-trial
motions to reduce the award or overturn the verdict. Shaw, et al. v. City
of Hialeah, No. 97-CV-2130 (S.D. Fla. Aug. 7, 2000). (HR Reporter,
October 6, 2000)

HOME SECURITY: Sued in Aust and Belgium over Sale of Alarm System
A class action lawsuit has been filed against Home Security International
in the Victorian registry of the Federal Court of Australia alleging
violations of the Australian Trade Practice Act by authorized
Distributors of the Company. The class action alleges that
misrepresentations were made by salespersons when selling SecurityGuard
alarm systems from July 9, 1993 to present to customers who used FFC to
finance their purchases. This litigation is in its very preliminary
stages and no discovery has been undertaken, and therefore, the Company
cannot quantify its ultimate liability, if any, for the payment of
damages in this lawsuit. Notwithstanding the foregoing, the Company
believes that the allegations in the lawsuit do not provide a basis for
the recovery of damages because the Company believes that the materials
provided by the Company to its Distributors and its sales force did not
violate the Australian Trade Practice Act. The Company intends to
aggressively defend this lawsuit. In the event the Company is not
successful in defending this lawsuit, the outcome could have a material
adverse effect on the financial condition and results of operation of the

On September 17, 2000, a former distributor in the Company's Belgium
market has initiated legal proceedings in the Belgium courts seeking
compensation in relation to representations made by the Company to the
distributor and the validity of product approvals. This action seeks to
recover approximately $200,000 from the Company. The Company intends to
aggressively defend this action.

IXYS CORP: Defends Securities Suit Filed in 1996 in Santa Clara
On August 12, 1996, IXYS and Robert McClelland, Richard A. Veldhouse and
Chiang Lam (the "Paradigm Defendants") were named (along with others
subsequently dismissed from the case) as defendants in a purported class
action (entitled Bulwa et al. v. Paradigm Technology, Inc. et al., Santa
Clara County Superior Court Case No. CV759991) brought on behalf of
stockholders who purchased IXYS' stock between November 20, 1995 and
March 22, 1996 (the "Class Period"). The complaint asserted violations of
California Corporations Code sections 25400 and 25500 ("Sections 25400
and 25500") along with other causes of action that have been dismissed.

Plaintiffs have served the Paradigm Defendants with discovery requests
for production of documents and interrogatories, to which the Paradigm
Defendants have responded. Plaintiffs have also subpoenaed documents from
various third parties. Plaintiffs have also taken the depositions of five
former employees of IXYS including Defendant Richard Veldhouse, Defendant
Robert McClelland, former outside director Defendant Chiang Lam and the
analyst who covered IXYS for Smith Barney. Plaintiffs have noticed the
depositions of Michael Gulett, IXYS' auditors and another former employee
to take place in August and September of 2000. The Paradigm Defendants
have served the plaintiffs with an initial set and a supplemental set of
discovery requests, to which plaintiffs have responded. The Paradigm
Defendants also took the depositions of the named plaintiffs.

On February 9, 1998 the Court certified a class consisting only of
California purchasers of IXYS' stock during the Class Period. Following
the California Supreme Court decision in Diamond Multimedia Systems, Inc.
v. Superior Court, 19 Cal. 4th 1036 (1999), plaintiffs moved to modify
the prior class certification ruling to include also non-California
purchasers. The Court granted this motion on April 28, 1999.

ISYS says that there can be no assurance that the company will be
successful in the defense of this action. If unsuccessful in the defense
of any such claim, IXYS' business, operating results and cash flows could
be materially adversely affected.

          Lawsuit Filed in Northern District of California

On May 19, 1998, the law firm that filed the Bulwa, et al. action
described above filed an additional securities class action lawsuit
against IXYS, Michael Gulett, Robert McClelland, Richard A. Veldhouse and
Chiang Lam, this time in the United States District Court for the
Northern District of California. The complaint alleged violations of
section 10(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Commission Rule 10b-5 and section 20(a) of the
Exchange Act. Plaintiff alleged the same class and the same substantive
factual allegations that are contained in the Bulwa, et al. action as
amended. Defendants responded to the complaint on July 27, 1998 by filing
a motion to dismiss the complaint for failure to state claims upon which
relief can be granted and for various pleading inadequacies. In lieu of
opposing the motion, plaintiff filed a first amended complaint.
Defendants renewed their motion to dismiss, and on January 20, 1999 the
Court issued an order granting the motion and dismissing plaintiff's
action and entered judgment thereon. On February 3, 1999, the Court
entered an amended judgment clarifying that the judgment is with

On March 12, 1999, plaintiff filed a notice of appeal. Plaintiff then
agreed to dismiss the appeal in exchange for defendants' agreement not to
seek to recover defendants' costs incurred in responding to the appeal
and agreement not to pursue any action against the plaintiff for having
filed the action. The appeal was dismissed with prejudice on October 25,

JAPANESE GOVT: Mother with HIV+ Son Sues and Goes into Politics
Kawada, 51, deputy chairwoman of the Human Rights Activists Group, became
a household name overnight as one of the instigators of a 1989 HIV/AIDS
class action against the government.

Next to her at the news conference was her son Ryuhei, 24 - the first
HIV-infected plaintiff in that lawsuit to go public.

Calmly, Etsuko Kawada announced she would run for a Lower House seat as
an independent in the Oct. 22 by-election for Tokyo's 21st Electoral

The seat had been vacated by Minshuto's (Democratic Party of Japan) Joji
Yamamoto who resigned after being arrested on suspicion of
misappropriating his secretary's salary.

The politician who invited Kawada to contest the upcoming poll was Upper
House member Atsuo Nakamura, who met her in 1996.

Nakamura said to Kawada: "Sometimes it's hard for the existing political
parties to carry out their policies, given the cozy relations between
politicians and industry or labor unions. That is the reason why I would
like you to join me and help me."

Nakamura asked Kawada to file her candidacy on Sept. 13, the same day
Takeshi Abe's trial at Tokyo District Court concluded. (Abe, former vice
chancellor of Teikyo University, was being prosecuted for negligence and
manslaughter for continuing to use HIV-tainted blood products to

Nakamura agreed, with one proviso: that she not be asked to align herself
with any political party. In return, she agreed to cooperate with him on
policy matters within the Diet.

Kawada had planned to meet her son Ryuhei in Germany on Sept. 21 and go
to Italy for a holiday together. She canceled the trip and scheduled a
news conference for Sept. 19.

"From the massive Snow Brand Products food-poisoning case to the cover-up
of automobile recalls by Mitsubishi Motors Corp., these problems revolve
around one thing: the desire to conceal the truth. In the Diet I intend
to press for corporate information to be opened up to public scrutiny,"
she said.

At the height of the HIV scandal, Kawada repeatedly challenged the
government's cozy relationship with the private sector.

She also criticized attempts to hide the truth from the public and the
government's reluctance to accept responsibility in the
contaminated-blood affair.

This time, Kawada is ready to take on nothing less than the political
apparatus itself. Explaining what compelled her to run for office, Kawada
told the news conference that she could not forget what she had witnessed
during the Diet session at which the AIDS prevention bill was debated.

"Some members of the relevant Diet committee dozed off, others read
magazines. That brought home to me how desperately politics needs reform.
If politics and society are to change, I cannot simply keep quiet," said

But, she added, support from Ryuhei had been the turning point in her

Kawada said she felt torn about how to respond when Nakamura first
approached her. She immediately tried to call Ryuhei in Frankfurt, but
couldn't get through. A few days later, when they finally spoke, he was
enthusiastic: "What an interesting idea. It's a good move. Why don't you
do it, mom?" "I had no intention at all of going into politics. Ryuhei,
on the other hand, has had a certain passion for it for years. In most
cases, children don't encourage their mothers to go into politics,"
Kawada said.

Kawada admits that if Ryuhei been against the idea, she would not have
agreed to run. At the same time, Ryuhei indicated that he would assist in
her campaign in whatever way he could.

This all coincides with strenuous efforts by Minshuto to bolster its
dented reputation.

Secretary-general Naoto Kan has known Kawada since 1996, when he was
welfare minister in Tomiichi Murayama's administration. At the time, he
acknowledged to the HIV-infected plaintiffs' group, led by Kawada, that
the national leadership had committed an error.

That Minshuto should run a candidate against Kawada in the upcoming vote,
therefore, is deeply ironic. Minshuto has endorsed Akihisa Nagashima, 38,
a specialist in diplomatic affairs. Other candidates in the poll include
Sekiichi Kato, 43, a former member of the City of Tachikawa assembly, who
is backed by the Liberal Democratic Party, and Susumu Suzuki, 60,
representing the Japanese Communist Party. Both were candidates at the
last election so this is their second ballot test.

The Social Democratic Party has Teiko Kudo, 51, a City of Kokubunji
employee. Obviously, most mainstream political parties see opportunity
beckoning in the 21st Electoral District.

One electoral official with the City of Tachikawa, speaking on condition
of anonymity, said: "As Yamamoto was an independent, I wonder where
Yamamoto's votes will go. If they're not well directed, those with party
backing will have an advantage. But, right now, things look very
unpredictable." (Asahi News Service, October 6, 2000)

OVERLAND DATA: Resolves Lawsuits in CA over IPO
Overland Data Inc., its directors and certain of its officers were named
as defendants in two class action lawsuits filed on April 21, 1997 and
May 2, 1997 in the U.S. District Court for the Southern District of
California. In both cases, the plaintiffs purported to represent a class
of all persons who purchased the Company's Common Stock between February
21, 1997 and March 14, 1997.

The complaints alleged that the defendants violated various federal
securities laws through material misrepresentation and omissions in
connection with the Company's initial public offering and its
Registration Statement on Form S-1, which the Securities and Exchange
Commission declared effective on February 21, 1997.

On November 23, 1999, the defendants entered into a Stipulation of
Settlement for this litigation, and on March 6, 2000, the Court approved
the settlement. In accordance with the settlement, the litigation was
dismissed with prejudice.

OWENS CORNING: Files for Bankruptcy ; Asbestos Lawsuits Could Cost $7B
Corning filed for bankruptcy protection in the face of asbestos-related
lawsuits that could cost the company $7 billion (U.S.), or more than $10
billion (Canadian).

The voluntary Chapter 11 filing will let the company develop a plan of
reorganization to resolve asbestos liabilities while allowing Owens
Corning to continue in operation, the company said in a news release.

Asbestos, which can cause health problems when inhaled, is a white, flaky
substance widely used during the 1940s and 1950s for insulation and in
shipbuilding and power plants. The material is linked to lung cancer and
asbestosis, a lung-scarring disease. (The Toronto Star, October 6, 2000)

PARADYNE NETWORKS: Broadband Provider Responds to Securities Suit in FL
Paradyne Networks, Inc. (Nasdaq:PDYN), provider of broadband access
systems, on October 5 responded to a press release regarding a lawsuit
filed against the company in the United States District Court for the
Middle District of Florida.

On Thursday, October 5, 2000, a law firm of certain plaintiffs purporting
to represent Paradyne's stockholders issued a press release announcing a
lawsuit against Paradyne for alleged violations of the federal securities
laws. The company has not been served with any complaint or provided with
a copy. The allegations contained in the press release, however, are
baseless and completely without merit and the company intends to defend
any such litigation vigorously.

Andy May, the company's CEO, said "we intend to pursue dismissal of any
litigation of this type at an early stage, but, even if it is not
dismissed, the litigation should not be a significant distraction. This
type of litigation goes with the territory of being a leader in our
market segment. Other companies have overcome similar situations like
this, and we intend to do the same. We are committed to continuing the
progress Paradyne has made and to maximizing stockholder value."

The litigation in this case is a classic example of the type of suit
Congress sought to prevent in passing the Private Securities Litigation
Reform Act. The Reform Act is designed to combat meritless securities
suits, which are often based on nothing more than a drop in stock price.
Congress also intended the Reform Act to give companies targeted for such
suits a better chance of obtaining dismissal at an early stage. That
Congressional intent has led to a higher percentage of early dismissals.

Paradyne is headquartered in the Tampa Bay area.

PARADYNE NETWORKS: Milberg Weiss Announces Securities Suit Filed in FL
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on October 5, 2000, on behalf of
purchasers of the securities of Paradyne Networks, Inc. (Nasdaq:PDYN)
between September 28, 1999 and September 28, 2000 inclusive.

A copy of the complaint filed in this action is available from the Court,
or can be viewed on Milberg Weiss' website at:

The action, numbered 800-CV-205-7T17E, is pending in the United States
District Court, Middle District of Florida, Tampa Division, located at
611 N. Florida Avenue, Tampa, FL against defendants Paradyne, Andrew S.
May ("May"), Thomas E. Epley and Patrick M. Murphy ("Murphy"). The
Honorable Elizabeth A. Kovacheviech 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 September 28, 1999 and September 28, 2000, thereby
artificially inflating the price of Paradyne common stock. For example,
on August 14, 2000, a little more than thirty business days prior to the
disclosure of the Company's true financial condition, defendants filed a
quarterly report on Form 10-Q signed by both defendants May and Murphy,
which reiterated the Company's second quarter 2000 financial results.
There was no discussion in the Management's Discussion and Analysis
section of the Form 10-Q of any of the problems then allegedly facing the
Company, including a lack of customer demand for the Company's products.
On September 28, 2000, defendants shocked the market by revealing that,
contrary to the repeated class period statements touting "record" growth
and financial performance, third quarter results would be significantly
lower than previously estimated, due to "reduced shipments to a few
network service provider customers." The press release also revealed that
Paradyne expects results in the fourth quarter of 2000 and calendar 2001
to be impacted by these changes. In response to the news, Paradyne stock
plummeted 42%, from $10 on September 27, 2000, to slightly over $5 on
September 28, 2000, after the news was revealed, on unusually high
trading volumes of over 7 million shares.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP, Boca Raton Kenneth J.
Vianale or Maya S. Saxena, 561/361-5000 or Milberg Weiss Bershad Hynes &
Lerach LLP, New York Steven G. Schulman or Samuel H. Rudman, 800/320-5081

PARTY CITY: 12 Securities Suits at Early Stage in New Jersey
Party City Corp. has been named as a defendant in the following twelve
class action complaints:

(1) Weber v. Party City Corp., Steven Mandell, and David Lauber, Civ.
     Action No. 99-CV-1252;
(2) Opus GT Partners LP v. Party City Corp. and Steven Mandell, Civ.
     Action No. 99-CV-1327;
(3) Klein and Shiffrin v. Party City Corp., Steven Mandell and David
     Lauber, Civ. Action No. 99-CV-1325;
(4) Flynn v. Party City Corp., David Lauber and Steven Mandell, Civ.
     Action No. 99-CV-1328;
(5) Catanzarite v. Party City Corp., Steven Mandell and David Lauber,
     Civ. Action No. 99-CV-1317;
(6) Tabbert v. Party City Corp. and Steven Mandell, Civ. Action No. 99-
(7) Maietta v. Steven Mandell and Party City Corp., Civ. Action No. 99-
(8) Barry v. Party City Corp., Steven Mandell and David Lauber, Civ.
     Action No. 99-CV-1453;
(9) Kurzweil v. Party City Corp., Steven Mandell and David Lauber, Civ.
     Action No. 99-CV-1396;
(10)Hormel v. Party City Corp., Steven Mandell and David Lauber, Civ.
     Action No. 99-CV-1689;
(11)Sacher v. Party City Corp., Steven Mandell and David Lauber, Civ.
     Action No. 99-CV-2238; and
(12)Gross v. Party City Corp., Steven Mandell and David Lauber, Civ.
     Action No. 99-CV-2355.

The Company's former Chief Executive Officer and former Chief Financial
Officer and Executive Vice President of Operations have also been named
as defendants. The complaints have all been filed in the United States
District Court for the District of New Jersey. The complaints were filed
as class actions on behalf of persons who purchased or acquired Party
City common stock during various time periods between February 1998 and
March 19, 1999. In October 1999, plaintiffs filed an amended class action
complaint and in February 2000, plaintiffs filed a second amended

The second amended class action complaint alleges, among other things,
violations of sections 10(b) and 20(a) of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated thereunder, and seeks unspecified
damages. The plaintiffs allege that defendants issued a series of false
and misleading statements and failed to disclose material facts
concerning, among other things, the Company's financial condition,
adequacy of internal controls and compliance with certain loan covenants.
The plaintiffs further allege that because of the issuance of a series of
false and misleading statements and/or failure to disclose material
facts, the price of Party City common stock was artificially inflated.

Defendants have moved to dismiss the second amended complaint on the
ground that it fails to state a cause of action. The Court has not yet
issued a decision with respect to the motion to dismiss. Because this
case is in its early stages, no opinion can be expressed as to its likely

PARTY CITY: Faces New York Lawsuit under Robinson-Patman Act
On April 23, 1999, plaintiff Emil Asch, Inc. filed a Complaint in the
United States District Court for the Eastern District of New York against
the Company and co-defendants Amscan, Inc., Hallmark, Inc., and Rubie's
Costume. The Complaint alleges five violations of the Robinson-Patman
Act, which pertains to price discrimination, unfair competition, tortious
interference with contractual relations, and false and deceptive

Plaintiff seeks damages of $2 million, as well as treble and/or punitive
damages for certain counts. On February 3, 2000, Emil Asch amended its
Complaint by adding Ron's: The Party Store, Inc., as an additional
plaintiff to the suit. The Amended Complaint asserts the same causes of
action against the same defendants and seeks the same damages that were
sought in the original Complaint. The Company has answered the Amended
Complaint, and discovery is proceeding. At this point, no opinion can be
expressed as to the likely outcome of the litigation.

Although the Company's management is unable to express a view on the
likely outcome of these litigations because they are in their early
stages, they could have a material adverse effect on the Company's
business and results of operations.

PARTY CITY: Settles Franchisees Cases in NY over Unfair Trade Practices
The Company was named as a defendant in a complaint filed with the
Supreme Court of the State of New York, County of New York, on January
16, 1998 (the "Complaint"), by each of Party City of Greenbrook, Inc.,
Party City of Watchung, Inc., Party City of 22, Inc., Party City of Ralph
Avenue and Party City of Jersey City, Inc., each a franchisee of the
Company. Four of the plaintiffs in the suit have existing Party City
franchise stores, with the remaining plaintiff possessing a right of
first refusal to develop a Party City store in Watchung, New Jersey.

The Complaint stated various causes of action, including unjust
enrichment, unfair competition, fraud and misrepresentation, breach of
contract, misappropriation of information and violations of the New
Jersey Franchise Practices Act and the New York State Franchise Sales
Act. The crux of the Complaint was that the Company undertook a course of
conduct intentionally designed to adversely impact the value of the
Plaintiffs' franchise stores in order to permit the Company to purchase
such stores at a substantially reduced value. The Company settled the
lawsuit on June 30, 1999, at no cost to the Company. In connection with
the settlement, the Company agreed to sell the plaintiff one store at its
fair value.

RITALIN LITIGATION: Parents at Odds with Educators over Use of Drug
One day last year, a social worker came knocking on the door of Michael
Carroll's home in West Berne, N.Y. The trouble: The father of four had
been reported to Child Protective Services for putting his seven-year-old
son, Kyle, at risk. Stunned, Mr. Carroll asked what he'd done.

The answer infuriated him and put the Carroll family at the center of a
heated debate about the educational system and the larger culture's
increasing use of psychotropic drugs, such as Ritalin, to cope with
difficult kids.

Carroll's supposed misdeed was not abusing the drugs, but refusing them.
He'd been reported by the local school district for taking Kyle off
Ritalin. The stimulant, whose use in the United States has increased 700
percent in the past decade, had, Carroll says, turned the
once-rambunctious boy into a withdrawn insomniac with no appetite. And
his reading level, which was the original cause of Carroll's concern, had
not improved.

"The school never objected, it just immediately called child protection,
without any contact with me whatsoever," he says. "It was crazy."

While the case may be extreme, it is not unique. Parents who question the
use of Ritalin increasingly find themselves at odds with educators,
psychologists, and a medical community firmly convinced of the drug's
ability to help hyperactive kids lead relatively normal and stable lives.

The controversy has prompted a series of congressional hearings,
proposals for a national policy to guide schools in their advocacy of the
drug, and several class-action lawsuits. The suits charge the American
Psychiatric Association and the drugmaker Novartis with conspiring to
promote the fraudulent use of Ritalin in American children.

"The drugging of children has gotten so out of hand that America is
waking up to this," says Peter Breggin, a critic of the use of Ritalin.
"This is a national catastrophe. I'm seeing children who are normal who
are on five psychiatric drugs."

But advocates of the use of medicine to help disruptive and impulsive
youngsters worry the controversy will create a backlash that could
prevent millions of children from getting the help they need to focus and
do better in school.

The National Institute of Mental Health estimates that 3 to 5 percent of
American children - as many as 6 million - suffer from attention deficit
hyperactivity disorder (ADHD). If untreated, NIMH says, the disorder
could lead to serious problems in later life. In the largest clinical
study of its kind, NIMH researchers concluded that Ritalin can eliminate
the symptoms up to 85 percent of ADHD children. Currently, Ritalin is
prescribed to as many as 2 million US children.

"People need to stand back from the issue and let reason and factual
understanding of what these medications do and don't do prevail," says
Patricia Dalton, a clinical psychologist in Washington. But she is also
troubled by the intervention of child welfare services and the courts in
the Carroll case. Short of a life-threatening situation, she says,
parents should have sovereignty in making decisions that affect their

"But if you see a child that improves greatly on medication, that's
important, too," Dr. Dalton says. "If they're better able to learn and
function, you have to look at the cost of not being on it."

From the start, Carroll says he simply wanted Kyle to get special
education to improve his reading. After local pediatrician prescribed
Ritalin, the school gave Kyle speech and occupational therapy. But
Carroll saw that as a way for the school to say Kyle was getting special
help, without really addressing his reading problem. "From the beginning
... I kept asking for special-education classes," he says. "They just
wanted him to sit still and to push him through the system."

After child welfare officials told Carroll to put his son back on Ritalin
or risk losing custody on grounds of neglect, Kyle resumed taking the

But this summer, a judge ruled that if Carroll could find another doctor
to say Ritalin was unnecessary, Kyle could stop taking it. Carroll
succeeded. Since August, Kyle has not used Ritalin. He's regained his
appetite, and his father says Kyle is his old outgoing self and is doing
well in special-education classes at a different school.

Lawrence Diller, author of "Running on Ritalin," says more and more
parents who buck the medication find themselves, like the Carrolls, at
odds with schools. The problem is indicative of a growing cultural
acceptance of what he calls a misperception - that physiological factors
are primarily responsible for influencing children's misbehavior and
underperformance. "In most of these situations, the kids are dealing with
a host of issues," says Dr. Diller. "What's being overlooked is that
there are alternative strategies to medication that work well for
hard-to-handle kids."

The problem is they take more time, money, and effort than Ritalin. But
class-action lawsuits in California and New Jersey, brought last month,
accuse the makers of Ritalin and APA of worse than expedience. They claim
the two conspired to create a market for the drug by concocting the ADHD
diagnosis and putting out pamphlets in schools that touted the drug's
effectiveness without advising that it has "no long-term effect" in
improving academic performance or in helping kids overcome hyperactivity.

In a prepared statement, the APA contends that's "unfounded and
preposterous." At a hearing in Congress, the APA's Dr. David Fassler
defended its definition of the disorder. "The diagnostic criteria are ...
the product of extensive and numerous research studies."

But Breggin and other critics say there is still nothing physical that a
doctor can point to, besides behavior, to determine if a child has ADHD.

That, among other factors, led the Frasers of Rockville, Md., to question
the pattern of increasing drug use their son was subjected to.

Andrew has a high IQ. When he was in second grade, a teacher recommended
he get treatment for ADHD. After a visit to a doctor, Andrew was put on
Ritalin. But, like many children on the stimulant, he eventually had
trouble sleeping. To make a long story short, side effects of one drug
were addressed by prescribing additional drugs - until Andrew was taking
four psychotropic medications at once, including Prozac.

The Frasers, deciding enough was enough, looked for alternative
treatments. Andrew's now in eighth grade in a private school. "He's doing
great. He's not taking any medications at all, his behavior has
improved," says Fraser. "There's no question in anybody's mind that
getting him off the medication was the right thing to do."

Fraser says he never felt pressured by the schools to medicate his son.
But when he began the withdrawal process, it was clear the school would
have preferred Andrew continue with the medication. "He is an active and
an energetic kid, and I think a lot of times schools are looking for that
leveling device, which certainly these medications can be," he says.

The Frasers say they learned a difficult lesson themselves. In
retrospect, they wish they'd never put their son on the drugs, and
instead, had taken a look at their family situation and made some hard
career choices so they could spend more time with him.

"If you have a child that has a higher level of need, maybe more than
you'd like, you have to bite the bullet," says Fraser. "That's what you
have to do, labor in anonymity and become that world-class parent." (The
Christian Science Monitor, October 6, 2000)

SARA LEE: Matters over 1998 Zeeland Facility Meat Recall Still Pending
On December 22, 1998, Sara Lee announced the recall of specific
production lots of packaged meat products produced at the corporation's
Zeeland, Michigan facility between July 1, 1998 and the date of the
recall. This action was taken as a result of concerns that the specified
products may contain listeria bacteria that can pose a health hazard. The
Center for Disease Control and Prevention ("CDC") has conducted an
investigation into these concerns.

On May 27, 1999 the CDC issued a public report linking the consumption of
packaged meat products from the Zeeland, Michigan facility, which
allegedly contained listeria, to 21 fatalities (15 adult deaths and 6
miscarriages) and approximately 100 illnesses in total. Sara Lee is
cooperating with pending government investigations into the matters
alleged by the CDC.

Several lawsuits, including individual and class actions, have been filed
against the corporation. A majority of the matters have been resolved and
nine lawsuits, two involving deaths, remain pending. The Company tells
investors that although the outcome of the pending litigation cannot be
determined with certainty, Sara Lee believes that the pending litigation
and expected claims should not have a material adverse effect on the
corporation's consolidated results of operations, financial position or
cash flows.

SOTHEBY'S HOLDINGS: Former Chief Pleads Guilty to Price Deal
Speaking in a low, controlled voice, Diana D. Brooks, the former
president and chief executive of Sotheby's auction house, pleaded guilty
on October 5 in a federal courtroom in Manhattan to fixing commission
fees with the company's archrival, Christie's, and pointed the finger at
A. Alfred Taubman, Sotheby's former chairman, whose orders she said she
was following.

Within an hour, Mr. Taubman, the Detroit shopping center magnate who
bought a controlling interest in Sotheby's in 1983, fired back with a
sharp denial issued through a spokesman. "Whatever Ms. Brooks chose to
do, she did completely on her own without my knowledge or approval," Mr.
Taubman, 75, said. "If the need arises, I will vigorously defend myself
against any charges." He and Ms. Brooks resigned under pressure in
February as the case against them built.

Ms. Brooks's statement was the dramatic high point of a day in which the
$4-billion-a-year auction industry was exposed in court as a cozy duopoly
that for most of a decade colluded to fix hundreds of millions of dollars
in fees to the detriment of customers unable to negotiate commission

By pleading guilty to a single felony count after a three-year Justice
Department investigation, Ms. Brooks, 50, faces up to three years in
prison and a fine that could potentially soar into the hundreds of
millions of dollars when she is sentenced Jan. 5. In return for her plea,
the government promised to file a motion seeking a lesser sentence than
that provided under sentencing guidelines. But the decision on whether to
file the motion remains the government's, depending on Ms. Brooks's level
of cooperation.

In court papers filed, the government named Mr. Taubman as its only
remaining target at Sotheby's in its continuing criminal investigation,
which Ms. Brooks has now agreed to assist in an effort to reduce her

In a separate but related case, Sotheby's also pleaded guilty in federal
court to price-fixing and other antitrust violations and agreed to a $45
million fine payable over five years. But the judge assigned that case --
by happenstance, Judge Lewis A. Kaplan, who is presiding over a
class-action civil lawsuit against Sotheby's and Christie's stemming from
the criminal investigation -- deferred his approval of the plea until he
reviewed additional information.

Judge Kaplan said he wanted to see how far a $512 million civil
settlement in the class-action case, which was agreed to last month by
Sotheby's and Christie's, would go in providing restitution to victims of
the antitrust schemes and whether the $45 million fine in the plea was a
fair figure. Judge Kaplan set Dec. 4 for a hearing on Sotheby's financial
capacity and the losses to victims.

The guilty plea by Sotheby's was offered by Donaldson C. Pillsbury, its
senior vice president and general counsel, accompanied by Steven A. Riess
of Weil, Gotshal & Manges.

The pleas by the company and by Ms. Brooks, and a news conference on the
cases by the Justice Department's antitrust division in Washington put a
strong spotlight on an industry that for all its art and glamor prefers
to keep its financial practices out of public view.

"Those charged today were engaged in classic cartel behavior --
price-fixing, pure and simple," said A. Douglas Melamed, acting assistant
attorney general for the antitrust division. "There are serious crimes,
and the antitrust division will prosecute them wherever they occur."

In a statement released in Washington, the Justice Department said, "As a
result of the conspiracy, sellers lost their principal bargaining tool."
The government put Sotheby's revenues from sellers' commissions in the
period charged, from April 1993 to December 1999, at more than $225
million in the United States.

Ms. Brooks, somber in a dark gray suit, offered her guilty plea before
Judge Richard N. Berman of Federal District Court in Manhattan. Ms.
Brooks, asked by Judge Berman to describe her offense for the court, read
a few lines written on a slip of paper: "At the direction of a superior,
I had a number of meetings and conversations with a representative of
Christie's International in which, among other things, I agreed to fix
prices with respect to the commissions charged to sellers during the
period charged." And she added, "Many of the objects sold crossed state
lines and elsewhere."

Mr. Taubman was Ms. Brooks's only superior.

Ms. Brooks, accompanied by her lawyers, Stephen E. Kaufman and John S.
Siffert, made no effort to evade the throng of reporters in the courtroom
and photographers outside, but declined to say anything about the

Government prosecutors in the case, John J. Greene and Patricia Jannaco,
were far more specific and wide-ranging in their charges against Ms.
Brooks, contending that she and co-conspirators also agreed which company
would raise its commission rates first and which would then follow, and
agreed to exchange customer information in order to monitor their illicit

The prosecutors also charged that Ms. Brooks and co-conspirators agreed
not to make interest-free loans to sellers or to make charitable
contributions to sellers like museums, libraries and family foundations
as a way of soliciting business. By her plea, Ms. Brooks accepted guilt
on these charges, criminal acts under the Sherman Antitrust Act.

By coming forward first with evidence of the conspiracy in January,
Christie's was provided conditional amnesty from prosecution and so has
not been charged. It must, however, cooperate fully with the

Ms. Brooks, once called the most powerful woman in the art world, must
also cooperate fully -- as must Sotheby's if its plea is accepted by
Judge Kaplan -- at the risk of jeopardizing the plea agreement. Ms.
Brooks is specifically required to produce all documents sought by the
government, to answer all questions fully and truthfully and to testify
before the grand jury and at any trial. (Ruby Washington/The New York
Times, October 6, 2000)

TOBACCO LITIGATION: Judge Bars the Word 'Addiction' in Opening Argument
The mere mention of the word "addiction" in a class action lawsuit
against tobacco companies may cause trouble in Ohio County Circuit Judge
Arthur Recht's courtroom.

Recht told lawyers he will decide on a case-by-case basis whether they
may raise the issue of addiction related to the use of cigarettes, cigars
and other tobacco products. "We need to see the context in which it would
be used," he said.

The lawsuit by more than 1,000 plaintiffs demanding payment from tobacco
companies for periodic medical testing is set to begin Dec. 4.

Recht said he will meet with lawyers each time they use the word
"addiction" or when the word may come up during testimony by a witness.
He also ordered attorneys to not use the word "addiction" in their
opening arguments.

Recht ruled last month that addiction is not an issue within the scope of
the lawsuit. Instead, he said plaintiffs must demonstrate significant
exposure to a proven hazardous substance and, as a result of the
exposure, prove damages from increased risk of serious disease that
requires periodic medical exams.

That ruling was a victory for smokers, whose lawyers say addiction is
unrelated to their claim that a design defect led to smoking-related
health problems. Lawyers for cigarette maker R.J. Reynolds Tobacco Co.
say smokers should prove why they continued to smoke despite warnings on
cigarette packs required by the federal government since 1964. (The
Associated Press State & Local Wire, October 6, 2000)

WHITMAN EDUCATION: Judge OKs $ 7.3 M Settlement in Sham Case
The CAR reported months ago on the announcement of a $ 7.3 million
settlement in a class action suit against a national chain of schools for
ultrasound medical technicians brought by students who said the programs
were a "sham" that failed to meet even minimal standards. Now Federal
Judge Anita B. Brody has approved it.

In a 25-page opinion in Cullen v. Whitman Medical Corp., U.S. District
Judge Anita B. Brody said the settlement is "the largest recovery ever
obtained against a trade school in a reported class action brought by
students." She also said it achieves "an immediate recovery for the
members of the class that substantially exceeds the likely recovery to
the class had the case proceeded to judgment, while avoiding the
considerable risks and expenses inherent in trial."

In the same opinion, Brody awarded fees of more than $ 2.3 million to the
team of plaintiffs' lawyers Ruben Honik of Golomb & Honik; Howard Langer
and Kay E. Sickles of Sandals Langer & Taylor; and Roberta D. Liebenberg
of Fine Kaplan & Black. Brody said the award of one-third of the fund or
about double the lawyers' hourly rates for the 3,900 hours they logged on
the case was justified because "the skill of each of these attorneys is
reflected both in settlement and in the aggressive manner in which they
pursued this litigation from start to finish."

In the suit, the former students of the Ultrasound Diagnostic Schools
claimed that they were the victims of a fraud scheme in which school
officials misrepresented the nature of the ultrasound program and failed
to provide the education represented. They complained that the schools
misrepresented the graduation and placement rates of students to the
Accrediting Bureau of Health Education Schools in order to qualify for
federally guaranteed student loans. As attorney Honik put it, the
students not only felt that they had been "robbed," but that the school
had forced them to borrow the money it stole. The students complained
that the schools had no meaningful admissions criteria and hired
unqualified administrative personnel who turned over annually. Throughout
the litigation, the defendant vigorously contested all of the
allegations.Brody found that the settlement is a fair one partly because
the defendant cannot afford to pay any more.

Applying the nine factors outlined by the 3rd U.S. Circuit Court of
Appeals in Girsh v Jepson, Brody found that the settlement satisfied
every one.

The settlement provides for payment of $ 5.97 million in cash and about $
1.3 million in loan forgiveness of delinquent obligations owed by
students to the schools. It also provides for certain non-monetary relief
enforceable by the court.

Over the next four years, the Ultrasound Diagnostic Schools agreed to
maintain certain admissions criteria and to adhere to those criteria. The
settlement provides that Brody appoint an "ombudsman" who will report
directly to her on an annual basis about the schools' adherence to its
admission requirements in its actual admissions of students.

Brody has appointed Anne Markey Jones, a former chair of the American
Registry of Diagnostic Sonographers, a credentialing agency, to serve as
ombudsman.In her opinion, Brody said that the last of the Girsh factors
ability to withstand greater judgment was her "dominant consideration" in
approving the settlement in this case."There was great risk that even if
the class were able to obtain a successful verdict, it would have
resulted in an uncollectible judgment," she wrote. "A favorable judgment
for the class would have rendered the defendant insolvent and would have
immediately disqualified it from the federal financial aid programs. This
would have effectively ended defendant's existence as a going concern."
Brody found that the defendant "lacked significant hard assets or cash
against which the class could have levied," and that there was "a
substantial question as to whether any insurance exists that would
provide coverage for the claims asserted by the class had the claims been
tried." The remaining eight factors, she said, lent support to her
approval of the settlement.

Considering the "best possible recovery," she said that the settlement is
"fair and reasonable" because, even if amounts to just "a fraction" of
the potential $ 42 million recovery, it cannot be considered "grossly
inadequate." Brody said the settlement must also be balanced against all
of the risks of further litigation. "There was a considerable risk that
plaintiffs would not prevail under the 'complete sham' theory, which
required the most extreme measure of proof. They faced significant
obstacles to success, including consistent inaction by government
agencies, positive student satisfaction surveys, and testimony by
employers who had hired some of defendant's graduates," she wrote. The
legal and factual difficulties in such a case, she said, together with
the "unpredictability" of a lengthy trial and the appellate process "make
the fairness of the settlement readily apparent."

Brody also found that the reaction of the class to the proposed
settlement was "overwhelmingly positive. "Out of more than 5,250 persons
who received notice of the settlement, she said, not a single class
member chose to opt out, and there was only one objector who said only
that he wanted a higher award because of the severe hardship he allegedly
experienced. Another factor that supported approval, she said, was that
the settlement came after many months of hard-fought discovery. "Courts
generally recognize that a proposed class action settlement is
presumptively valid where, as in this case, the parties engaged in arm's
length negotiations after meaningful discovery," Brody wrote. Brody also
approved "incentive" awards to the seven lead plaintiffs that represented
a 100 percent reimbursement of their tuition. Most received about $
10,000. Other class members will receive about 17 cents on the dollar.
(The Legal Intelligencer, October 6, 2000)

WORLDCOM INC: Judge Approves Hearing in Digex Shareholders Case
Intermedia officials are accused of failing to protect Digex shareholders
when they agreed to a deal with WorldCom. Class action lawsuits filed by
Digex Inc. shareholders against directors and officers of Tampa-based
Intermedia Communications were placed on a fast track by a Delaware

The Digex shareholders argue that when Intermedia's officers and
directors voted to sell Intermedia to Mississippi-based WorldCom last
month, they were acting in their self-interest, and against the interest
of minority shareholders in Digex.

Intermedia, which provides telephone and Internet services to businesses,
owns 55 percent of Digex, which manages Web sites for Fortune 1,000

Chancery Court Judge William B. Chandler III found the claimed breaches
of fiduciary duty on the part of six Digex board members, all of whom
have ties to Intermedia, were "sufficiently viable, at this juncture, to
warrant scheduling a preliminary injunction hearing." No hearing date has
yet been set.

Originally, Intermedia had said it planned to sell its stake in Digex,
and it received at least three offers. One of them reportedly was from
Exodus Communications for $ 120 a share. Instead, Intermedia's board of
directors voted to sell all of Intermedia, including its 55 percent stake
in Digex, to WorldCom for about $ 3-billion in stock and $ 3-billion in
debt. The deal allowed WorldCom to acquire control of Digex at a deep
discount to the Exodus offer. As a result, Digex's stock fell 20 percent
to $ 67.88 - far below the $ 120 a share offered by Exodus - while
Intermedia's stock rose 38 percent to $ 31.48 the first day after the

Since then, Digex shareholders have filed a dozen lawsuits against
Intermedia's officers and directors at the Chancery Court in Wilmington.
All the suits allege that six of the eight members on Digex's board of
directors had "conflicts of interest and divided loyalties which
precluded them from exercising independent business judgment." That's
because five of the six Digex directors are also directors or officers of
Intermedia, and the sixth owns Intermedia stock.

One of the suits, filed by the Kansas Public Employees Retirement System,
suggests that that five of Digex's directors also had a vested interest
in selling debt-swamped Intermedia instead of fast-growing Digex. The
lawsuit filed by Stuart M. Grant, an attorney with Grant & Eisenhofer in
Wilmington, states that Intermedia chief executive David Ruberg will
personally make $ 41.3-million from selling his Intermedia stock, but he
would not have made a penny from selling Digex. The same is allegedly
true of Digex directors Robert Manning and Mark Shull, who will make $
9.9-million and $ 650,013 respectively if the WorldCom deal closes.

The lawsuit also states that Digex directors John Baker and George Knapp
will make much more money from the sale of Intermedia than they would
have made from the sale of Digex to Exodus. As a result, the lawsuit
accuses these directors of breaking their fiduciary duty to Digex
shareholders by placing their own interests first.

Intermedia spokesman Alan Hill said his company intends to fight the
lawsuits. He added that the company was optimistic that it will be able
to close the deal with WorldCom as planned.

Intermedia's stock closed last Thursday October 6 at $ 25, down $ 2.38.
Digex's stock closed at $ 39.63, up 13 cents.

Separately, WorldCom Inc. CEO Bernie Ebbers will sell 3-million shares of
company stock to cover a margin call, regulatory filings show. In
November 1999, WorldCom was trading above $ 60 a share. (St. Petersburg
Times, October 06, 2000)


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

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

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

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

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

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

                    * * *  End of Transmission  * * *