CAR_Public/001019.MBX               C L A S S   A C T I O N   R E P O R T E R

             Thursday, October 19, 2000, Vol. 2, No. 204

                             Headlines

3COM CORP: California Court Dismissed Gaylinn Securities Action
ADAMS MARK: Attorneys Say Tossing out Bias Case May Hurt FL Consumers
ARIZONA: Proposes Settlement of Children's Services Lawsuit
BRIDGESTONE/FIRESTONE INC: To Cut Tyre Production at Three Plants
BRIDGESTONE/FIRESTONE: Cuts Back Production; Lays off 450 at IL Plant

BROOKTROUT, INC: Schatz & Nobel Announces Securities Suit Files in MA
BUY.COM INC: Will Pay $575,000 to Settle Bait-And-Switch Suit
CANADIAN GOVT: Taxpayers Money Goes to Vets' Distant Relatives & Lawyers
CARNIVAL CORP: Fed Grand Jury Subpoena Seeks Records on Environment
FORD MOTOR: Recalls Focus Cars with Safety Hazards

IMPERIAL CREDIT: Announces Resolution of Securities Suit in Oregon
INMATES LITIGATION: DeKalb Jail Faces More Scrutiny from Court
LOCKHEED MARTIN: Settles Toxic Chemical Case in Burbank for $5 Mil
PRICE-FIXING: EU Competition Commissioner Sees Need for Crackdown in EU
PRUDENTIAL SECURITIES: Wolf Haldenstein Files Securities Suit in Iowa

SOTHEBY'S CHRISTIE'S: 2 Suits Suggest Pact Will Not Bring End to Payment
SOTHEBY'S HOLDINGS: Judge Rejects Guilty Plea Pact That Bars Restitution
TD WATERHOUSE: Moves NY Ct to Dismiss Suit over Failure to Cancel Orders
TOBACCO LITIGATION: CalPERS Votes to Sell Tobacco Stocks
WATER CONTAMINATION: Canadian E. Coli Outbreak Inquiry Could Take Months

WTO: TLPJ Files Suit in Seattle for Rights of Demonstrators

* CEO Signing SEC Filings with Scienter Could Be Held Accountable
* NLJ Presents Article on RAND Review on Class Suits

                              *********

3COM CORP: California Court Dismissed Gaylinn Securities Action
---------------------------------------------------------------
As previously reported, on May 11, 1999, a securities class action,
captioned GAYLINN V. 3COM CORPORATION, ET AL., Civil Action No. C-99-2185
MMC (GAYLINN), was filed against 3Com and several of its present and
former officers and directors in United States District Court for the
Northern District of California. Several similar actions have been
consolidated into the GAYLINN action. On September 10, 1999, the
plaintiffs filed a consolidated complaint which alleges violations of the
federal securities laws, specifically Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and seeks unspecified damages on behalf
of a purported class of purchasers of 3Com common stock during the period
from September 22, 1998 through March 2, 1999. In January 2000, the Court
dismissed the complaint. In February 2000, plaintiffs filed an amended
complaint. In June 2000, the Court dismissed the amended complaint
without prejudice. Plaintiffs filed another amended complaint. On July
24, 2000, the Company filed a motion to dismiss the latest amended
complaint.

                                Update

In September 2000, the Court dismissed the amended complaint with
prejudice.

                          Other Complaints

As previously reported, several securities complaints against 3Com
Corporation are pending. No significant change on the status of the other
complaints is known.


ADAMS MARK: Attorneys Say Tossing out Bias Case May Hurt FL Consumers
---------------------------------------------------------------------
Civil-rights attorneys warned Tuesday that a judge's decision to throw
out an $8 million settlement in the Adam's Mark-Black College Reunion
case could portend an erosion of consumer protections from discrimination
in Florida.

Allison Bethel, director of civil rights for the Florida Attorney
General's Office, said the ruling issued Friday by U.S. District Judge
Anne Conway in Orlando threatens consumers throughout the state. "It's
not just black college students at this hotel," she said. "It touches
everyone."

The lawsuit -- initially filed by five visitors to the hotel in 1998
during Black College Reunion -- claimed that the hotel discriminated
against blacks during the event weekend.

The Adam's Mark agreed in March to separate settlements with the
plaintiffs, the Attorney General's Office and the U.S. Justice
Department. In the settlement with the Justice Department, the Adam's
Mark admitted no wrongdoing but agreed to take steps to ensure no
discrimination took place at its 21 hotels.

That settlement -- expected to be approved by the judge soon -- is not
affected by Friday's ruling. The ruling threw out a proposed monetary
settlement, including $4.4 million for guests and visitors who thought
they were victims of discrimination; $1.75 million for their attorneys;
and more than $1.6 million for scholarships at black colleges in Florida
and to promote Black College Reunion.

Attorneys in the case will have to try to renegotiate a settlement deal
with the Adam's Mark, Bethel said. The hotel chain was under more
pressure to settle in March after at least five organizations canceled
conventions or banquets at Adam's Mark properties in protest against the
alleged discrimination.

Adam's Mark officials said Tuesday they have not decided what to do. They
may still pay at least part of the money as a public relations move.
However, Bethel conceded that the Adam's Mark may be less motivated to do
that because settling the class-action lawsuit would have given the
company more protection against additional lawsuits stemming from the
incident.

Bethel said she was confident that future guests at the Adam's Mark would
be protected despite the ruling. But what happens if another minority
class -- be it race, gender, age or religion -- is discriminated against
by a business next month? She worries the ruling could prohibit a
class-action suit if, say, women car buyers find themselves paying more
than men pay at a particular dealership. "I think we can probably resolve
these issues [with the Adam's Mark], but this is going to impact
everything that comes after this case," Bethel said. "We're very
concerned over what this could mean for class actions in the state of
Florida."

Much of Conway's ruling was based on a decision handed down in May by the
11th U.S. Court of Appeals in Atlanta. In that case, Rutstein vs. Avis
Rent-a-Car Systems, Jewish customers claimed they were discriminated
against because of their ethnicity. The appeals court overturned a lower
court's decision granting the case class-action status. In doing so, it
noted the difficulty of having a class-action lawsuit when the alleged
discrimination occurred on an individual basis. "The idea that individual
injury could be settled on a class-wide basis is preposterous," the
ruling stated.

Conway's decision left open the possibility of individual lawsuits
against the Adam's Mark, but some legal experts fear that's not enough.
They say high legal costs would deter individual lawsuits and, as a
result, businesses would have less to fear in discriminating against
customers.

Bruce Geary, an attorney for the NAACP and co-litigant in the Adam's Mark
case, fears the Rutstein and Adam's Mark cases could prove to be setbacks
in the civil-rights movement. "We're extremely concerned with the
[Rutstein] ruling," Geary said, adding that the NAACP likely would
address it in the future. "It has widespread ramifications for
civil-rights law in this country." (The Orlando Sentinel, October 18,
2000)


ARIZONA: Proposes Settlement of Children's Services Lawsuit
-----------------------------------------------------------
More than four years after they were sued, Arizona state officials have
submitted their first proposed settlement agreement outlining ways to
improve mental health and addiction services to some of the state's
Medicaid-eligible children.

Officials with the Arizona Department of Health Services (ADHS) and legal
advocates declined to release a copy of the 11-page document while
negotiations are pending. But ADAW has learned that the proposal's major
initiatives include spending some $ 2 million on training behavioral
health caseworkers, and better coordinating assessment, planning and
treatment services to a targeted group of 300 children.

Other initiatives include:

   *  Adding respite to the Medicaid plan so that families caring for a
      child can receive a break.

   *  Reviewing the array of Medicaid services available for children
      and adding appropriate ones.

   *  Establishing a pool of money for services that don't qualify for
      Medicaid reimbursement.

   *  Designing a uniform set of assessment standards for use by all
      agencies.

   *  Increasing the number of specialty providers by changing
      affiliation requirements.

Ira Burnim, legal director of the Judge David L. Bazelon Center for
Mental Health Law, hailed the document as an important first step. He and
other advocates attributed its timing to key personnel changes in state
agencies that suggest a commitment to children's behavioral health
services. Referring to new ADHS Director Catherine R. Eden, Burnim told
ADAW: "We're very encouraged because she seems to understand the problem
and be determined to do something about it."

Arizona's behavioral health system provides mental health and addiction
services for all Medicaid-eligible and indigent residents under a Section
1915(b) Medicaid waiver implemented in 1992. In 1996, mental health legal
advocates filed a class-action lawsuit, J.K v. Eden, seeking adequate
services for 14,000 children in Maricopa County, which includes Phoenix
and about 80 percent of the state population. Up to 3,500 of those
children have complex, chronic conditions.

The lawsuit was filed by the Bazelon Center, the Arizona Center for
Disability Law and the National Youth Law Center.

The state took over the Maricopa County program in 1997 from a private
company, ComCare Inc., after it fell into a financial tailspin. Since
1999, ValueOptions Inc. has assumed full responsibility and risk for the
program. As part of an independent, court-ordered review in the case, an
expert panel led by Ivor Groves, M.D., in July denounced the level of
services to the children (see ADAW, July 31), saying it had found "a
wide, deep and growing gap" between what the state says it is providing
"and the level of performance observed."

The state expects to depose Groves, a key witness in the lawsuit, this
week. A preliminary settlement conference has been set for Oct. 20 before
U.S. District Judge Earl Carroll.

Burnim said the proposed settlement agreement presents some "hard issues
that we're going to have to discuss." He declined to specify them, other
than to say that one area of concern is "the pace of the effort."

Like Burnim, Anne Ronan, staff attorney with the Arizona Center for
Disability Law, declined to comment about the agreement. But she also
hailed the effort. "This is the first time we've had anything in the way
of a settlement proposal, and this in itself is promising," Ronan told
ADAW. "We have had some very good, concrete conversations with the new
director about the children's system."

Appointed by Coy. Jane Dee Hull, Eden assumed the ADHS helm in June, and
last month named Leslie Schwalbe as interim director of the Division of
Behavioral Health Services. Two other relative newcomers to top positions
in agencies that involve children are John L. Clayton, director of the
Department of Economic Security, and Phyllis Biedess, director of the
Health Care Cost Containment System, the state's version of Medicaid.
Eden, saying that children's behavioral health "is a priority of this
administration," told ADAW that she has instructed her staff to begin
adopting some of the initiatives in the proposed settlement agreement.
She has said, for example, that the department will proceed with the
caseworker training.

The state estimates that its mental health system lacks about $ 350
million. In a special session this year, Hull won legislative approval to
provide an additional $ 70 million in a onetime infusion using
tobacco-settlement funds.

                     Children in state custody

Arizona officials met with behavioral health advocates and treatment
providers last month to announce a plan that they say will deliver more
comprehensive behavioral health services to children in state custody.

The plan by Gov. Jane Dee Hull's office, to be implemented over the next
several months, calls for giving responsibility for each child's
management to a single caseworker from Child Protective Services (CPS). A
child currently can have contact with as many as five state agencies. The
CPS caseworker would be responsible for coordinating behavioral health
care and authorizing services among state agencies.

The plan also calls for:

   *  Providing a faster and more comprehensive assessment of a child's
      problems.

   *  Training for CPS and behavioral health workers.

   *  Developing with the child and his or her family a single,
      comprehensive assessment and plan, including planning for
      transitions.

   *  Providing a wider array of services to children and attracting
      more specialists to Arizona who can help them.

   *  Collecting and analyzing information to improve outcomes.

"How is this going to change anything from where it's been? The one thing
I hear that's different is the involvement of the governor's office,"
Cheryl Collier, executive director of the Mental Health Association of
Arizona, told ADAW, praising the new commitment. "Overall, I am
comfortable with the direction they're going in." (Alcoholism & Drug
Abuse Weekly, October 2, 2000)


BRIDGESTONE/FIRESTONE INC: To Cut Tyre Production at Three Plants
-----------------------------------------------------------------
Bridgestone/Firestone is to scale back tyre production in North America
later this year, partly because of declining demand for Firestone-branded
tyres in the wake of a massive recall this summer.

About 6.5m tyres were subject to the recall after reports linked them to
dozens of fatal accidents.

On October 17, Japanese-owned company said it would cut tyre production
by 28 days at its LaVergne, Tennessee, and Oklahoma City plants, before
the end of the year, and by 14 days at its Decatur, Illinois, plant.
About 450 workers will be laid off indefinitely at Decatur. The plant has
been in the spotlight for the past two months, after
Bridgestone/Firestone revealed that certain tyres made at the factory in
the 1990s had a disproportionately high "incident" rate. John Lampe, the
new chairman of Bridgestone/Firestone, yesterday denied the plant would
close.

He also confirmed that Firestone, the US-based unit of Bridgestone, will
not be profitable this year, after "substantial charges" to cover the
recall, but said he hoped it could return to the black in 2001.

Separately, lawyers met before a panel of federal judges in Washington DC
yesterday to decide how to proceed with the tangled web of about 200
lawsuits claiming damages for accidents involving Ford vehicles fitted
with Firestone tyres.

The judges, sitting as a multi-district litigation panel, are expected to
decide within two weeks whether to combine all the evidence gathering for
the suits into one process.

Ford, Firestone and some of the attorneys representing clients in
personal injury and consumer class action lawsuits say they would prefer
consolidation.

It would simplify the process of hearing testimonies and taking
depositions and avoid duplication, they said. But some lawyers said it
might drag out the process unnecessarily.

Meanwhile, the National Highway Traffic Safety Administration reported on
October 17 that the death toll from crashes blamed on the Firestone tyres
had risen to 119 and reports of injuries had increased to 500. (Financial
Times (London), October 18, 2000)


BRIDGESTONE/FIRESTONE: Cuts Back Production; Lays off 450 at IL Plant
---------------------------------------------------------------------
Declining demand for Firestone tires and too much inventory has forced
Bridgestone/Firestone to lay off workers at its Decatur, Ill., plant and
cut production at two other plants.

The company made the announcement Tuesday as federal regulators said the
number of deaths linked to Firestone tires continues to climb.

John Lampe, the new CEO of Bridgestone/Firestone, said the company would
indefinitely lay off 450 workers, about 25% of the workforce, at Decatur.
That plant has been identified as the main source of tires Firestone
recalled Aug. 9 because of tread separations.

Lampe insisted the layoffs do not indicate plans to close the plant.

Coupled with production cuts at its LaVergne, Tenn., and Oklahoma City
plants, Firestone will reduce its 170,000-per-day tire production by 20%,
Lampe said. He said Firestone's current inventory is 50% higher than
necessary. "The brand has been impacted by the recall, and we are working
very hard to regain the trust of the public," he said. "It will take some
time. It is not something we can do overnight."

Lampe stressed that the pace of building replacement tires for the 6.5
million recalled will not be interrupted. About 4.2 million of the tires
have been replaced. Firestone expects to complete the recall in November.

In other developments:

    -- The National Highway Traffic Safety Administration raised the
number of deaths linked to Firestone tires to 119, up from 101 reported
Sept. 9. And more than 3,500 people have complained to NHTSA about
problems with Firestone tires, most of them on Ford Explorer
sport-utility vehicles.

   --  An independent expert hired by Firestone is focusing on "slowly
developing fatigue cracks" in the tires as a possible cause of tread
separation.

   --  In a letter to Firestone, Sanjay Govindjee, a civil engineering
professor at the University of California at Berkeley, said, "At some
point, the cracks reach a critical size," causing the tires to fail.
Govindjee expects to give Firestone a preliminary report by early
November and deliver a final report early next year.

   --  A panel of federal judges heard arguments from lawyers Tuesday on
whether more than 80 lawsuits against Ford and Firestone should be
consolidated for pre-trial hearings.

   --  Most lawyers with class-action lawsuits, which represent groups of
people with similar concerns, support consolidating the cases. But
lawyers representing individuals injured in accidents asked to remain
separate.

   --  The companies want the cases to be lumped together and heard in
Chicago.

   --   Many plaintiffs' lawyers asked for the cases to be handled in
East St. Louis, Ill., by U.S. District Judge David Herndon. He
represented injured railroad workers for 14 years before he became a
judge. (USA Today, October 18, 2000)


BROOKTROUT, INC: Schatz & Nobel Announces Securities Suit Files in MA
---------------------------------------------------------------------
A class action lawsuit has been filed in the United States District Court
for the District of Massachusetts on behalf of all persons who bought
common stock in Brooktrout, Inc. between February 3, 2000 and October 6,
2000. The Defendants in this class action lawsuit are Brooktrout, Eric R.
Giler, President of Brooktrout, Stephen Ide, Senior Vice President of
Brooktrout, and Robert C. Leahy, Vice President of Finance and Operations
and Treasurer of Brooktrout.

The class action complaint alleges that the Defendants committed
securities fraud by issuing false and misleading statements concerning
its consolidated financial results for the fourth quarter and year-end
1999 and for the first two quarters of 2000. These statements were false
and misleading because they included improperly recognized revenues from
Interspeed, Inc, a subsidiary of which Brooktrout is the majority owner.
A class action lawsuit has been commenced by Interspeed shares holders
for securities fraud after Interspeed announced on October 6, 2000 that
it anticipated its unaudited results for the first three quarters of 2000
would be restated due to improper revenue recognition. Plaintiff seeks to
recover damages on behalf of all Class members. If you purchased stock in
Brooktrout between February 3, 2000 and October 6, 2000, and wish to act
as a lead plaintiff, you may move the Court to serve in that capacity not
later than December 12, 2000. If you wish to discuss your rights as lead
plaintiff or as a class member, you may wish to contact Schatz & Nobel,
P.C. at the following toll-free number: (800) 797-5499, or by e-mail at
SN06106@aol.com.

Contact: Andrew M. Schatz, Jeffrey S. Nobel, Patrick A. Klingman, Robert
W. Cassot, all of Schatz & Nobel, P.C., 800-797-5499, SN06106@aol.com


BUY.COM INC: Will Pay $575,000 to Settle Bait-And-Switch Suit
-------------------------------------------------------------
Internet superstore Buy.com Inc. will pay $575,000 to settle a
class-action lawsuit filed last year by consumers who accused the Aliso
Viejo company of bait-and-switch tactics, company officials said Tuesday.
Under the terms of the agreement, about 7,000 customers would receive
about $ 50 each in cash. The rest of the money would cover legal fees and
court costs. Buy.com admitted no wrongdoing, saying it had settled to
avoid escalating litigation expenses.

The case is one of several moving through the courts that seek to
determine online stores' obligations to consumers when pricing errors
occur on Web sites.

Last February, Buy.com's Web site mistakenly listed the Hitachi SuperScan
753 on sale for $ 164.50 when, at the time, the product retailed for $
588. Orders flooded in. Buy.com honored the price for the 143 monitors it
had in stock but canceled thousands of other orders. The company said it
had made a simple mistake, but an irate group of customers accused it of
fraud and negligence.

The settlement is expected to be approved by a Superior Court judge in
December. (Los Angeles Times, October 18, 2000)


CANADIAN GOVT: Taxpayers Money Goes to Vets' Distant Relatives & Lawyers
------------------------------------------------------------------------
Things are not always as they appear at first glance. The chairman of a
group representing the interests of 38 veterans' organizations said the
so-called class-action victory won't help a single veteran he knows of,
but will put plenty of money in the pockets of distant relatives and
lawyers.

Cliff Chadderton, chairman of the National Council of Veterans
Associations, wants the federal government to appeal an Ontario
Provincial Court ruling that could cost Canadian taxpayers as much as $
1.5 billion, the second largest federal payout ever ordered by the
courts. "The taxpayer is being bamboozled into thinking the government
swindled these fellows out of $ 1.5 billion," Chadderton says. "Most of
these poor beggars are dead, and we've got the relatives and these
lawyers making a big grab."

Harsh words, perhaps, but then Chadderton, 80, a decorated veteran who
lost a leg when a grenade exploded during the war, has dealt with many
harsh realities when it comes to the treatment of those who served our
country so nobly.

                         Windfall for Lawyers

The settlements "would be of little or no financial benefit to the
disabled veterans," Chadderton says, but would represent a windfall for
lawyers, who will get a percentage, and for distant relatives, many of
whom weren't even involved in providing care for the vets.

Ontario Justice John Brockenshire last week ruled successive federal
governments failed in their obligation to pay interest on the pensions of
veterans rendered incapable of caring for themselves because of injuries
sustained while serving their country. The ruling paves the way for
claims for interest going back as far as 1924.

It may sound logical enough, but Chadderton says the reality is that many
of the vets in question were receiving full benefits and full medical
treatment in hospitals, where in some cases, no relatives even went to
see them, leaving visiting to veterans' organizations. He says the
government was prohibited by law from paying interest on pensions. In
lieu of interest, hospital officials provided many services to these
severely disabled vets that went above and beyond the provisions of the
pension act. Chadderton emphasizes that he is working for the veterans,
"not for distant relatives" and opposes the case on what he calls a
"common interest," rather than a legal basis. "Show me 10 cases where a
legitimate combat veteran will benefit personally from the class action
and we will support it," he says. And he says if immediate family members
of veterans were deprived, a special clause would ensure they are
compensated.

His biggest fear in the wake of this class-action suit is that veterans,
who are aging and in greater need of assistance than ever will suffer as
the government is forced to fork out up to $ 1.5 billion to relatives,
some of them "57th cousins," and lawyers.

Meanwhile, Chadderton says, the government is unable to find money for
hospital beds or aid for merchant seamen who served in dangerous waters,
or for civilian ferry command pilots who had one of the most dangerous
assignments during the war. And he fears the complaints of the 200,000
veterans represented by his association will be lost amid yesterday's
cabinet shuffle (that saw Minister of Veterans Affairs George Baker
booted to the back benches) and an impending federal election.

               Veterans Association Virtually Ignored

"I'm afraid Chretien is going to say if we appeal, we'll be looking like
the bad guys who took the money away from veterans," Chadderton says.
"That's absolutely not true."

What's most startling about this case, considering the potential $
1.5-billion liability and its obvious impact on future funding of
veterans' programs, is that the concerns voiced by the veterans'
association have been virtually ignored.

Perhaps because their ranks are dwindling and they are getting old --
First World War vets are over 100 and Second World War vets are in their
80s -- it has become too easy to shuffle their concerns to the back of a
political deck stacked with controversial issues.

"I have to speak out," Chadderton says. "The whole thing is wrong and I'm
afraid Chretien won't have the (courage) to appeal it." The veterans have
already amply demonstrated their courage. It is time for the prime
minister to show us whether he, or his government, measure up. (The
Calgary Sun, October 18, 2000)


CARNIVAL CORP: Fed Grand Jury Subpoena Seeks Records on Environment
-------------------------------------------------------------------
Carnival Corp. (NYSE: CCL), the Miami-based cruise line giant, has
received a federal grand jury subpoena asking it to produce documents and
records concerning environmental matters, reports Reuters news service.

At the present, we know very little about why the subpoena came to us and
what the U.S. attorney is looking for, Carnival said in a statement
released Monday. Once that becomes apparent, we may be able to comment
further.

Carnival received the subpoena on Aug. 22 from a grand jury sitting in
the U.S. District Court for the Southern District of Florida. Carnival
disclosed the news in a quarterly filing on Friday with the Securities
and Exchange Commission. It said it intends to respond to the subpoena,
which covered all of its lines Carnival, Holland America, Windstar,
Costa, Cunard and Seabourn -- but did not elaborate further.

Since late January, the companys share price has plunged by more than 50
percent. Carnival continues to feel the pinch from increased competition
and what some call overbuilding of new ships. In the past year, Carnival
has been plagued by three fires and technical problems about its ships
and a string of lawsuits from stockholders.

In September, Carnival agreed to settle a class-action lawsuit filed in
February by passengers angered that the cruise line ruined their plans to
celebrate Christmas on Grand Cayman Island.

Carnival shares were down $ 1.31 to $ 21.44 in midday Monday trading on
the on the New York Stock Exchange. (Broward Daily Business Review,
October 17, 2000)


FORD MOTOR: Recalls Focus Cars with Safety Hazards
--------------------------------------------------
Ford Motor Co. announced on October 17 that it is voluntarily recalling
more than 351,000 of its popular 2000 Focus cars to correct one or more
safety problems involving interior trim panels, brake assemblies and
cruise-control cables.

The company said there have been no reports of accidents because of the
problems, which involve Focuses manufactured through July and sold in
North America, almost all of the model year's production.

The biggest recall involves 351,102 cars to replace interior panels,
known as pillars, that cover the frame on each side of the windshield.
The panel, Ford said, did not provide the crash protection required by
the federal government.

The National Highway Traffic Safety Administration last year added a
standard for helping to cushion the impact of a driver or passenger
hitting an A-pillar in a crash. Ford said it thought it met the standard
in laboratory tests, but the government said its tests of cars showed
that the pillar protection was insufficient. Ford conducted new tests,
which had the same results as the government tests, a company official
said.

Ford also said it is notifying 260,390 Focus owners of possible problems
with the rear wheel hub. The company said it has 15 reports of rear-wheel
and brake-drum assemblies falling off because the nut that secures the
rear wheel bearings came loose. In addition, Ford said it is notifying
33,225 Focus owners about potential problems with the cruise-control
cable that can cause the throttle to stick with the engine running at
full speed. The company said it has had 12 reports of the throttle
sticking open when the gas pedal is fully depressed.

In all cases, Ford said it will notify owners about the problems and ask
them to bring the cars to dealers to be checked or repaired.

The announcement is the latest in a series of Ford safety problems. Two
months ago, Bridgestone/Firestone Inc. recalled 6.5 million Firestone
tires used as original equipment on Ford's popular Explorer sport-utility
vehicle. Last week, a California state judge ordered the recall of 1.7
million Ford cars and trucks for engine stalling problems.

The California case is being appealed, but if the state court is upheld
the ruling could add millions more Ford products to the recall list. The
California case is being used as the model for class-action suits in
other states over the same ignition part.

The California ignition recall involves 1983 to 1995 Fords such as
Escorts, Tempos, Mustangs, Thunderbirds and Tauruses as well as Bronco
sport-utility vehicles and Aerostar minivans.

The modestly priced Focus, a compact introduced at the start of the 2000
model year as Ford's latest "world car," has sold well. With half its
buyers over age 35, Ford has been counting on the Focus to attract a new
generation of buyers. Through September, Ford sold 225,239 Focuses in the
United States, second in sales only to its mid-size Taurus.

Light trucks such as sport-utility vehicles, minivans and pickups remain
Ford's biggest sellers. Half of the passenger vehicles sold in the United
States are light trucks. (The Washington Post, October 18, 2000)


IMPERIAL CREDIT: Announces Resolution of Securities Suit in Oregon
------------------------------------------------------------------
Imperial Credit Industries, Inc. announced the company has reached an
agreement with the plaintiffs to settle the securities class action
litigation identified as In re Southern Pacific Funding Corporation
Securities Litigation, Lead Case No. CV98-1239-MA, in the U.S. District
Court for the District of Oregon. ICII is the sole remaining defendant in
the case which, as a result of this settlement, is expected to be
dismissed in the near future by the Court. ICII has paid $3 million to
the plaintiffs' settlement fund and agreed to issue warrants to purchase
three million shares of ICII Common Stock with an exercise price of $3.00
per share. The warrants will have a term of seven years from the date of
issuance. The Common Stock to be issued upon the exercise of the warrants
will be registered and freely tradable and have the same rights as ICII's
existing Common Stock. The warrants will have change of control and
typical antidilution and adjustment features.

ICII also announced that a case for which it assumed responsibility as a
result of its acquisition of the commercial REIT Imperial Credit
Commercial Mortgage Investment Corp. ("ICCMIC"), Riviera-Enid v. ICCMIC
et al, is in the process of being dismissed by Order of the Los Angeles
Superior Court as a result of the Court granting defendants' Motion for
Summary Judgment.

ICII's Chairman, H. Wayne Snavely stated, "We are moving aggressively to
reduce the level of our non-performing and problem assets at Southern
Pacific Bank. Our attentions are focused on improving the credit quality
of the assets of Southern Pacific Bank, and continuing to reduce expenses
at all of our operating divisions. Removing the uncertainties surrounding
the litigation stemming from the bankruptcy filing of our former
affiliate Southern Pacific Funding Corporation was important to ICII and
its shareholders, regardless of our view of the merits of the case.
Furthermore, we are especially pleased that the court has agreed with the
defendants that ICCMIC and the related individual defendants were
entitled to summary judgment as a matter of law and that this case could
be brought to early conclusion. We believe this ruling affirms the
comprehensive disclosures provided to the shareholders of ICCMIC by the
parties to the merger agreement and the overwhelming approval of the
merger itself."

Imperial Credit Industries, Inc., a diversified financial services
holding company, was formed in 1991 and is headquartered in Torrance,
California. The Company's major business activities are conducted through
the following wholly owned subsidiaries: Southern Pacific Bank, Imperial
Business Credit, Inc., and Imperial Credit Lender Services, Inc. The
Company's majority owned subsidiary is Imperial Capital Group, LLC
(approximately 62% ownership).


INMATES LITIGATION: DeKalb Jail Faces More Scrutiny from Court
--------------------------------------------------------------
When a court-appointed monitor toured the DeKalb County Jail in
September, he found three garbage bags filled with unanswered inmate
requests for medical care. The bags, stashed in a room where staff nurses
were working, held 664 unanswered sick call slips and 219 requests for
dental care-some as old as four months, Dr. Robert B. Greifinger told
DeKalb Superior Court Judge Hilton M. Fuller Jr.

The former chief medical officer of the New York State Correctional
Service uncovered so many problems that Fuller issued an injunction
ordering the county and Correctional Healthcare Solutions Inc., (CHS) the
private company that provides medical care at the jail, to make emergency
improvements. Adams v. Dorsey, No. 98CV-11747-5 (DeKalb Super., Sept. 22,
2000).

The action comes in an inmate suit against Sheriff Sidney Dorsey that was
filed last year. The Southern Center for Human Rights is seeking class
certification. Whether the judge grants class status, it appears he will
pressure DeKalb to provide adequate medical care for inmates.

Now, Fuller wants to know how many inmates have died in jail since the
suit was filed. Four have died in the past year, among them two cardiac
arrests and a death involving an inmate who was high on cocaine when she
was jailed, says County Attorney Jonathan Weintraub. None of them, he
says, were related to the jail's delivery of medical services.

On Nov. 1, Fuller will hold a hearing to determine whether the injunction
should be extended or expanded, says attorney Chip Rowan of Chip Rowan
and Associates,, one of several attorneys associated with the Southern
Center for Human Rights. Meanwhile, Greifinger is scheduled to tour the
jail a second time this month.

The garbage bags of unanswered medical complaints are symptomatic of a
systemic failure to deliver adequate medical care at the DeKalb County
Jail, Greifinger told Fuller after his first inspection. "I don't think
it was any surprise to the vendor or its medical director that these
problems exist I wouldn't say anyone had any evil intent. But I do
believe that they had prior knowledge of these problems. And I do not see
strong action to solve these problems."

Fuller appointed Greifinger as a jail monitor at the request of the
inmates' attorneys. Greifinger is also monitoring court-ordered health
care improvements at the Fulton County jail. CHS was in charge of medical
care at the Fulton jail when HIV-positive inmates sued, claiming
inadequate medical care. That suit has been settled and Fulton fired CHS
as its medical provider.

The problems at DeKalb began when another private company was in charge
of medical care. That company, Wexford Health Sources Inc., was replaced
early this year when its contract expired.

CHS won the contract to provide medical care at the DeKalb jail last year
despite being a defendant in the inmate suit in Fulton. That suit settled
last January, Foster v. Fulton County, No. 1:99-CV-900 (N.D. Ga., Jan.
24, 2000). The settlement included a court order, issued by U.S. Senior
District Judge Marvin H. Shoob, establishing standards of care for the
jail's HIV-positive inmates. A month later, Fulton County Sheriff
Jacquelyn H. Barrett stripped CHS of its contract. She said the firm
failed to comply with the terms of the federal court order.

Dorsey wasn't available for comment, but county attorney Weintraub, who
is defending the sheriff, says DeKalb wasn't aware CHS had been sued for
deficiencies in health care at the Fulton County jail. The county
committee that selected CHS "might have checked their references,"
Weintraub says.

"We feel very confident that CHS has done a good job," Weintraub says. "I
have seen nothing to convince me they didn't step into a bad situation. I
haven't seen anything yet that would convince me they are doing an
inadequate job."

CHS attorney Steven D. Barnhart of Atlanta's Drew, Eckl & Farnham
acknowledges that Greifinger identified what Barnhart describes as "some
areas of concern based on what was a fairly limited opportunity to review
what CHS was doing at the DeKalb County Jail." CHS, he says, has
"addressed those areas of concern."

And Barnhart says, "CHS and probably the county and the sheriff wouldn't
mind running a public health clearinghouse if that's really what the
taxpayers want to pay for. Certainly, I know CHS and the county and the
sheriff are committed to providing adequate medical care. There is a
question of the level of service and cost of providing additional
services that may become an issue in this case."

Barnhart says, "There was not a problem with the level of care being
provided at the jail. What we're trying to do is get along instead of
litigate. In general, our attitude, and the attitude of the county and
sheriff as well, is we're trying to run a good operation and an operation
that will make everybody happy."

Rowan, who represents inmates in both jail suits, acknow-ledges that when
DeKalb County hired CHS, "It inherited a lot of problems." "However, I
think there are some common threads here that go to issues of medical
leadership," he says. "In both these situations, this company has had
significant leadership problems, administrative problems. . I can assume
these people are medically competent, but they don't have a system in
place to handle a large urban jail."

In his oral report to Fuller, Greifinger listed "clear violation or clear
non-compliance with the county contract" in almost every aspect of inmate
medical care. "The sick call system-second to public health-is the most
broken of all," he said. "I don't believe the nurses are appropriately
trained to do physical assessments. A system is not in place to make sure
there is timely care. And a system is not in place to make sure that the
medical attention is appropriate and prompt."

But Greifinger insisted: "Every problem that I have identified is
fixable. And each of the problems is fixable within a relatively short
period of time." Among the conditions that Fuller said must be
immediately rectified: Isolation rooms for tubercular inmates intended to
contain the airborne disease were circulating contaminated air throughout
the jail, placing inmates, employees and vistitors at risk of exposure.
Since July, X-ray equipment has sat idle for lack of an X-ray technician.
Inmates who have tested positive for tuberculosis or who have complained
of acute shortness of breath couldn't get X-rays to confirm a diagnosis.
A lag of three days to two months in reviewing sick call requests and an
additional two-week lag to pull an inmate's medical chart after a request
is logged "results in many cases that the patients never get to see the
physician."

A three-to-six month lag in filing laboratory results in inmates' medical
files. "I have seen many examples," said Greifinger, "where a patient was
seen but unaware of abnormal lab results that had been sitting waiting to
be filed in the medical records room." Greifinger also found 60,000
unfiled pages in the jail's medical records room.

Lapses in HIV care with as many as 40 percent of those infected having
"serious problems" receiving their medications. Greifinger called the
interruption of HIV therapy "treacherous" because it can cause the virus
to develop a resistance to the drugs.

Among those conditions that were serious enough for Greifinger to note
but that Fuller did not address directly in his order:

  * No treatment plans for inmates with mental illnesses such as
    paranoid schizophrenia and bipolar disorder.

  * Unsafe wards for inmates on suicide watch, and at least two cases in
    which inmates attempted suicide, one multiple times, but were never
    seen by a physician.

  * Asthma care that Greifinger described as "way behind the times," and
    diabetes care in which insulin doses were improperly prescribed.

  * A failure to examine inmates discharged from Grady Memorial Hospital
    and no apparent effort to get medical information from Grady
    regarding those patients.

The medical staff underestimated the diagnosis of chronic diseases such
as diabetes, asthma, hypertension and tuberculosis. "I'm surprised, even
incredulous to hear they only recognize one or two cases a year of TB,"
Greifinger said. One doctor listed as a consultant has had no connection
to the medical firm since January. Two other experts in corrections
health care listed as consultants on patient care are not associated with
the firm.

Greifinger told Fuller that in assessing medical care at the DeKalb
County Jail he was not applying higher standards of private medical care
adhered to by the community at large. "I'm applying what I would call
decency standards," he said. "Relief of pain, preventing deterioration
and unnecessary pain and . protection of the staff working in the
facility, other inmates and protection of the community to which the
inmates are released." (Fulton County Daily Report, October 18, 2000)


LOCKHEED MARTIN: Settles Toxic Chemical Case in Burbank for $5 Mil
------------------------------------------------------------------
More than 300 Burbank residents will accept a $5-million settlement from
Lockheed Martin Corp., their lawyer said Tuesday, ending four years of
litigation by people who say they were sickened by the aerospace giant's
release of toxic chemicals into the air, soil and ground water. But the
settlement, which could average as little as $ 3,000 per claim after
legal costs and lawyers' fees, was criticized as paltry in comparison
with the $ 60 million that Lockheed Martin paid in 1996 to settle similar
claims from 1,357 residents.

"Everyone would have liked a bigger settlement--no question about it,"
conceded Thomas Foley, the lead plaintiffs' lawyer. "But there is a
potential risk" that the cases might be thrown out on legal issues before
trial.

Lockheed Martin is not admitting guilt. The company, which once said it
would refuse to settle, now says that doing so is cheaper than paying
trial costs. "The bottom line is that we were able to prove there was no
cause-and-effect relationship" between Lockheed Martin's chemical
releases and the plaintiffs' injuries, spokeswoman Gail E. Rymer said,
referring to an earlier court ruling that dismissed 140 of the more than
300 residents' claims.

The settlement, however, will include those 140 cases, which are on
appeal, and about 200 other claims awaiting trial in state court. Foley
declined to say how much each plaintiff would get after court costs and
attorneys' fees. According to figures provided by one plaintiff, however,
the settlement would average about $ 3,000 per family. The settlement
will be divided among the plaintiffs based on a number of factors, Foley
said, including how long they lived in Burbank, how close they lived to
Lockheed Martin's factories and their specific illnesses.

Lynnell Murray-Madrid, 44, and her sister, Erin Baker, 43, said they
voted against taking the money, but they were outvoted by the other
plaintiffs, and the settlement was accepted for all. "I think the
settlement is a ridiculously low amount of money," Murray-Madrid said.
(Los Angeles Times, October 18, 2000)


PRICE-FIXING: EU Competition Commissioner Sees Need for Crackdown in EU
-----------------------------------------------------------------------
Mario Monti, the European Union's competition commissioner, has called on
consumer organisations to pursue compensation claims in court against
companies infringing EU law, saying that consumers should also be
considered the "victims" of anti-competitive practices by companies.

In the US, consumer groups have sued large companies indicted for fixing
prices in cartel cases. They claim compensation for customers who have
been paying higher prices as a result of illegal cartels. Mr Monti wants
to put more emphasis on the need to crackdown on cartels in the EU.

He has recently asked EU countries to give more power to Commission
officials to search the private homes of company executives and to seal
offices where incriminating evidence could be hidden.

But litigation by individual consumers or associations is extremely rare
in Europe - there has never been a class-action suit as in the US. Mr
Monti said he was aware of the difficulties facing groups that want to
pursue companies through the courts. "There are legal obstacles," he
said.

He also pointed out that even when national law allows compensation
claims, it is not always easy to prove the damage caused by restrictive
practices and also difficult to calculate the amount of compensation
necessary.

Mr Monti said he had asked his officials to look at the issue. He would
also ask EU member countries to explain current practice in their
countries. "He is asking whether there is anything in national laws that
prevents consumers from doing something against cartels or is it just
inertia on the part of EU consumers," a Commission spokeswoman said. The
Commission is pursuing investigations into 30 possible cartels ranging
from vitamins to carbonless paper and bank charges.

Mr Monti said he was interested in a proposal from the Italian government
to use some of the money levied on insurance companies as fines for
fixing premium prices to reduce the level of premiums paid by customers
of those companies.

The UK Consumers' Association said it had looked at pursuing compensation
claims in the courts, but under UK law the costs would far outweigh the
amount of money that could be recovered for consumers. A spokeswoman for
Beuc, the EU consumer umbrella body, said Mr Monti's ideas were
interesting, but consumer bodies often lacked the resources to pursue a
case through the courts. (Financial Times (London), October 18, 2000)


PRUDENTIAL SECURITIES: Wolf Haldenstein Files Securities Suit in Iowa
---------------------------------------------------------------------
Wolf Haldenstein Commences Class Action Against Prudential Securities
Incorporated and AEGON USA, Inc.; PFL Life Insurance Company; First AUSA
Life Insurance Company; AEGON USA Securities, Inc., and other "John Doe"
corporate entities.

On September 15, 2000, Wolf Haldenstein Adler Freeman & Herz LLP
commenced in Iowa state court, in the District Court for Linn County, a
class action lawsuit which had previously been filed in the Supreme Court
of the State of New York, New York County, against Prudential Securities
and against other defendants which are affiliated with each other as part
of the AEGON group of companies (the "AEGON defendants").

The class action is brought on behalf of all persons nationwide who
purchased an individual tax-deferred annuity contract or who received a
certificate to a group deferred annuity contract, sold by Prudential
Securities, the AEGON defendants or certain of the John Doe entities,
which was used to fund a contributory (not defined benefit) retirement
plan or arrangement qualified for favorable income tax treatment pursuant
to Internal Revenue Code, including but not limited to an IRA, rollover
IRA, Keogh account or 401(k). Excluded from the class are officers,
directors, and agents of the defendants. (Since the Iowa state court
action was commenced, the New York state court action was voluntarily
dismissed without prejudice.)

The complaint alleges that Prudential Securities, the AEGON defendants,
and other financial institutions, breached their fiduciary duties to
plaintiffs and the other members of the class or their employers, because
it was inherently unsuitable and inappropriate for defendants to permit
them to purchase and continue to maintain deferred annuities, which
already are tax-deferred, within qualified tax-deferred retirement
accounts such as IRAs, rollover IRAs, Keogh accounts and 401(k)s. These
deferred annuities sold by defendants are never suitable investments for
tax-deferred retirement accounts because earnings on any investment
placed in such an annuity already are tax-deferred, and purchase of a
deferred annuity in an already tax-deferred retirement account represents
a completely useless approach which simply increases carrying costs.

Contact: Wolf Haldenstein Adler Freeman & Herz LLP, New York 800/575-0735
Michael Miske, Robert B. Weintraub, Esq. or Daniel W. Krasner, Esq.
www.whafh.com whafh@aol.com classmember@whafh.com


SOTHEBY'S CHRISTIE'S: 2 Suits Suggest Pact Will Not Bring End to Payment
------------------------------------------------------------------------
Nearly a month after agreeing to pay $512 million to settle claims that
they cheated buyers and sellers by fixing commission fees, Sotheby's and
Christie's auction houses still have not signed the final settlement
papers, and the judge in the case has ordered them to appear in court
Monday to explain why.

Antitrust lawyers say it is rare for this length of time to go by without
a signing, raising speculation that difficulties have emerged that have
delayed the agreement.

Matthew Weigman, a spokesman for Sotheby's, said yesterday, however, that
the auction house "is working diligently towards submitting the required
papers and we expect they will be filed by Oct. 23." Andree Corroon, a
spokeswoman for Christie's, declined to comment. Boies, Schiller &
Flexner, the lead law firm for the roughly 120,000 auction house
customers in the class-action suit, also declining to comment.

Several lawyers close to the case said they believed that two
class-action suits filed on behalf of foreign buyers and sellers had been
holding up a resolution. The suits, which have been challenged by the
Boies firm, open the possibility that the settlement will not close the
door on further payments from the case.

The initial agreement was reached on Sept. 21. In an order signed October
17, Judge Lewis A. Kaplan of the Federal District Court in Manhattan
noted that he had been advised that settlement papers would be signed
shortly after that. That he has not received them, he wrote, "suggests
that the parties in fact have not reached agreement."

In October 17's order, he said that if the papers were not signed by
Monday he would hold a conference and consider resuming discovery
proceedings in the case and reinstating a February trial date.

Both houses have been embroiled in a federal criminal antitrust
investigation which heated up earlier this year when Christie's turned
over critical documents outlining collusion in the setting of commission
fees. After providing the documents, the company received conditional
amnesty from prosecution.

Earlier this month Sotheby's and its former chief executive, Diana D.
Brooks, pleaded guilty to conspiring to violate antitrust laws. Sotheby's
agreed to pay a $45 million fine in addition to its obligation in the
civil suit. Ms. Brooks faces a possible prison sentence and a large fine.
She has agreed to cooperate in a continuing investigation of A. Alfred
Taubman, Sotheby's largest shareholder and former chairman. (The New York
Times, October 18, 2000)


SOTHEBY'S HOLDINGS: Judge Rejects Guilty Plea Pact That Bars Restitution
------------------------------------------------------------------------
SAYING THAT FINAL resolution of the criminal antitrust case charging
Sotheby's Holdings Inc. with price-fixing was "inextricably intertwined"
with a pending class action, Southern District Judge Lewis A. Kaplan
earlier this month refused to accept the auction house's guilty plea.

In the plea agreement with the government, the company admitted it
colluded with rival Christie's International to fix sellers' commissions.
Sotheby's agreed to pay $ 45 million in fines over a five-year period in
the pact, which includes a clause stating the auction house will not be
obligated to pay restitution to victims in the case. This clause was the
sticking point for Judge Kaplan.

The judge is also presiding over the class action against the auction
houses, which have reached an agreement in principle with plaintiffs'
lawyers to settle the case for $ 512 million.

Judge Kaplan said that his obligation to ensure that the proposed
settlement is "fair and reasonable" to the class made him wary of
accepting a plea agreement that prevents the government from seeking
restitution. "I am, in a sense, being asked to pre-judge the adequacy of
the settlement," he said.

His ruling came after Sotheby's Senior Vice-President and General Counsel
Donaldson Pillsbury admitted that in 1994 and 1995, senior officials at
the auction house set up the price-fixing scheme with their counterparts
at Christie's.

Former Sotheby's chief executive Diana D. Brooks pleaded guilty to
violating the Sherman Antitrust Act before Southern District Judge
Richard M. Berman. Ms. Brooks told Judge Berman in court, "I agreed to
fix prices with respect to commissions charged sellers." She will be
sentenced on Jan. 5. Ms. Brooks' plea leaves A. Alfred Taubman, Sotheby's
former chairman and to this day its largest shareholder, as a target of
the government's three-year criminal investigation into the scheme.

The Sotheby's plea agreement states that the Justice Department will not
bring criminal charges against any current or former director, officer or
employee of Sotheby's, except for Ms. Brooks and Mr. Taubman.

Christie's was granted conditional amnesty by the government in return
for its ongoing cooperation with the investigation. Mr. Pillsbury said
after the hearing that talks with the government on a plea agreement go
back to February.

                            Key Admission

Mr. Pillsbury admitted that the conversations between top officials at
the auction houses resulted in a fixed schedule of seller commissions,
which was not negotiable. The result was that sellers were blocked from
negotiating a more favorable deal for auctionable items with one or the
other of two nominal competitors.

If Judge Kaplan had accepted the deal between the government and
Sotheby's, which he said was a "Type C" plea agreement, he would have had
no discretion to alter its terms. It was only through his power to accept
or reject the guilty plea that Judge Kaplan retained any leverage over
the sentence imposed on Sotheby's. The judge said he felt "obliged to
make a fully informed judgment," on the adequacy of the class settlement.
He said he was therefore currently in "no position" to rule whether the
class settlement or the plea agreement were appropriate, including
whether the settlement would "make restitution inappropriate or
superfluous."

The ruling came despite the desire of Sotheby's lawyer, Steven Reiss of
Weil, Gotshal & Manges, to settle the entire matter yesterday.

Judge Kaplan instructed Mr. Reiss and Assistant U.S. Attorney John J.
Greene of the Justice Department's Antitrust Division, to submit papers
stating "what the economic losses caused by the conspiracy really were."
"Without knowing that, I don't know much about the adequacy of the civil
settlement or this (agreement), notwithstanding its has a very large
number next to it," he said.

He also instructed Sotheby's to report to the probation department, which
will produce a report that will have impact on his ability to accept or
reject the plea. "I am looking for a serious submission here," he said.
"I don't regard this as pro forma."

John Siffert, of Lankler Siffert & Wohl, represented Ms. Brooks. (New
York Law Journal, October 6, 2000)


TD WATERHOUSE: Moves NY Ct to Dismiss Suit over Failure to Cancel Orders
------------------------------------------------------------------------
TD Waterhouse Investor Services Inc. has asked a New York City federal
judge to dismiss a securities fraud class action brought by online
investors over the brokerage's alleged failure to timely execute the
plaintiffs' order cancellation requests. Waterhouse called the complaint,
which was filed last winter, "just another-by now, very tired-attempt to
misuse the federal securities laws for purposes they were never intended
to serve." Hoffman et al. v. TD Waterhouse Investment Services Inc. et
al., No. 00 Civ. 0958 (MBM), motion to dismiss filed (S.D.N.Y., July 14,
2000).

The litigation was initially filed by Tony Hoffman, a New Mexico resident
who had opened an online account with Waterhouse in 1998. In February
1999, Hoffman sought to purchase 400 shares of Shop At Home Inc. (SATH);
he canceled his order within five minutes, and received confirmation of
the cancellation. Later that same day, Hoffman placed a second order on
400 shares of SATH at a lower price, and subsequently withdrew that order
as well. He subsequently placed a third order that same day.

All three of Hoffman's orders were in fact executed, resulting in a
purchase of 1200 shares of SATH for $32,688, nearly 10 times the balance
in Hoffman's non-margin trading account. Within 48 hours, Waterhouse sold
the shares at a nearly $14,000 loss, liquidated Hoffman's holdings and
charged him commission fees. He brought suit against the brokerage and
its president, John H. Chapel, in the U.S. District Court for the
Southern District of New York last February. Three other investors have
since joined as plaintiffs.

In seeking dismissal, Waterhouse asserted that the investors failed to
offer "a single particularized allegation from which anyone could
reasonably infer that Waterhouse acted with deceptive intent." While the
plaintiffs generally alleged a motive of generating additional
commissions for the failure to honor the cancellations, Waterhouse
argued, they "wholly fail ed to create a plausible let alone the
requisite 'strong' -- inference of fraudulent intent."

The brokerage contended that "the most that plaintiffs have alleged is
that Waterhouse's technology and systems failed to carry out instructions
to cancel a trade on four or five occasions. These isolated alleged
failures to honor a customer's instructions do not make a securities
fraud class action."

David S. Nachman and Robert S. Frenchman of Solomon, Zauderer, Ellenhorn,
Frischer & Sharp in New York submitted the dismissal motion on behalf of
TD Waterhouse Investor Services Inc. and Chapel.

James P. Bonner of Shalov Stone & Bonner in New York and Dennis J.
Johnson and Jacob Perkinson of South Burlington, Vt., represent Hoffman.
(E-Trading Legal Alert, September 15, 2000)


TOBACCO LITIGATION: CalPERS Votes to Sell Tobacco Stocks
--------------------------------------------------------
The California Public Employees' Retirement System has voted to sell the
System's primary tobacco holdings totaling more than $525 million. The
action follows months of debate and testimony on the economic effects of
divestment. It was taken because of the unusual and unique situation that
the tobacco industry faces.

"The unprecedented amount of legal, regulatory and legislative action in
the industry could substantially reduce our shareholder value in
tobacco," said William D. Crist, President of CalPERS Board of
Administration. "Our decision means that we will have tobacco-free
indices and benchmarks for all of our passively managed investments. This
action was taken to protect our member's assets in the long-term."

Primary tobacco holdings are those companies that are directly involved
in the manufacture of tobacco products and include industry giants such
as Philip Morris, Loews Corp., and British American Tobacco.

A report to the System's Investment Committee showed that CalPERS tobacco
stocks are largely held in passively managed equity indexed funds that
aim to replicate the returns of the broader market.

Approximately $365 million of the System's tobacco holdings are held in
U.S. portfolios that are managed for the CalPERS defined benefit plan,
Legislator's Retirement Fund, Volunteer Firefighter's Funds, Judges'
Retirement System, Supplemental Contributions Program, and Long-Term Care
Program. More than $158 million are in international tobacco holdings.

"We have not taken this decision lightly," said Michael Flaherman, Chair
of CalPERS Investment Committee. "We have reviewed volumes of staff
reports and listened to the experts and have determined that this is the
best action for the System."

According to an analysis provided to the System's Investment Committee,
in the last three years the tobacco industry faced and will continued to
face other class action lawsuits that could extract additional billions
of dollars in proceeds.

CalPERS tobacco stocks represent less than one percent of the System's
passively managed equity and fixed income investments. The Committee
delegated the timing of the sale of tobacco stocks to the System's
investment staff. The action follows on the heels of other public pension
funds which have voted to divest in tobacco stocks. Recent sellers
include the California State Teachers' Retirement System.

CalPERS is the nation's largest public pension fund with assets totaling
more than $177 billion. The System provides retirement and health
benefits to 1.2 million members. For information on the CalPERS, please
visit the System's web site at www.calpers.ca.gov.


WATER CONTAMINATION: Canadian E. Coli Outbreak Inquiry Could Take Months
------------------------------------------------------------------------
Officials discovered broken valves, corroded pipes and substandard
chlorination when they arrived last spring to scrub deadly E. coli
bacteria from the town's tap water, an inquiry heard on Tuesday. Marc
Ethier of the Ontario Clean Water Agency painted a portrait of an
antiquated water system in dire need of upgrade as he testified at the
inquiry into the worst E. coli outbreak in Canadian history. But despite
a long list of problems, Ethier -- part of a team dispatched to Walkerton
in the midst of the outbreak last spring -- described the system and its
condition as typical of many Ontario municipalities. "I would describe it
as (in) good condition, typical of being able to do the job it was
designed to do, which is deliver a potable water supply from a
groundwater source," Ethier told lawyer Brian Gover.

As well, two of the three wells providing water to the town had only a
single chlorination system in place when Ontario government guidelines
require two, Ethier said.

Seven people died and more than 2,000 were sickened in May as a result of
tainted water, touching off a growing political scandal about the impact
of deep Conservative government cuts on the provincial Environment
Ministry and the decision in 1996 to privatize municipal water testing.

The inquiry could take months to complete. An investigation by Ontario
provincial police is also underway. Some residents are suing the Ontario
government in a class-action suit and others are seeking compensation
from the province. (The Calgary Sun, October 18, 2000)


WTO: TLPJ Files Suit in Seattle for Rights of Demonstrators
-----------------------------------------------------------
Trial Lawyers for Public Justice (TLPJ) has filed what it hopes will
become a class action on behalf of hundreds of World Trade Organization
(WTO) demonstrators. The suit was filed on Oct. 2 in U.S. District Court
for the District of Western Washington. TLPJ lawyers argue that Seattle
Mayor Paul Schell and police officials violated the constitutional rights
of demonstrators by creating a "no-protest zone" that banned unauthorized
people from a 26-block area of the city during the WTO conference last
December, reports the Seattle Times. (The National Law Journal, October
16, 2000)


* CEO Signing SEC Filings with Scienter Could Be Held Accountable
-----------------------------------------------------------------
A CEO could be liable for material misrepresentations in Securities and
Exchange Commission filings if the executive signed the documents with
scienter, the U.S. Court of Appeals for the 9th Circuit ruled on Sept. 29
in partially reversing a dismissed shareholder class action. The court,
in a decision written by Judge A. Wallace Tashima, ruled that the CEO had
scienter when signing the allegedly false documents because he had "a
motive to inflate sales" and because there was evidence he signed the
documents in the face of "alarming" financial information. Howard v.
Everex Systems Inc., No. 98-7324. (The National Law Journal, October 16,
2000)


* NLJ Presents Article on RAND Review on Class Suits
----------------------------------------------------
Byline: By Geoffrey C. Hazard Jr.; Mr. Hazard, a law professor at the
University of Pennsylvania, is one of the nation's leading experts on
legal ethics and a regular NLJ columnist.

The class action is a uniquely American institution, unusual in its
evolution, multifarious in its possibilities and very controversial. More
than 40 years ago, the Federal Committee on Practice and Procedure
revised Rule 23 in ways that liberated it from deep analytic confusion.
The class suit has become a prime mechanism for bringing judicial
authority to bear on questions of public policy. Witness the asbestos
litigation, the tobacco cases, design defect cases and, of course, civil
rights claims of all kinds. Ask Ford and Firestone.

The class action combines several special features. The multiplicity of
claims can establish circumstantial evidence of liability much more
strongly than could be developed if the claims were prosecuted one by
one. The suits' real authors are not the claimants but plaintiffs'
lawyers.

The certification of a class action can pose the question of whether
"nuisance value" claims should be transformed into potential "bet the
ranch" liability. If certification is granted, the pressure on defendants
to settle is intense.

The definition of a proper class suit has defied the rule-making process,
despite valiant efforts to clarify Rule 23. Determination of whether a
class suit yields a conclusive judgment has produced some opaque
decisions by the Supreme Court, notably in Amchem Products v. Windsor,
521 U.S. 591 (1997), and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999).

There is much anecdotal lore about class actions; and every lawyer, most
judges and many legislators "have their opinions," as we say. But
information about how class suits work has been in short supply.

                          Gathering Background

A new study by the RAND Institute of Civil Justice, however, casts some
light on the picture. The product of its research is titled Class Action
Dilemmas, which indicates that it is providing information and not
answers. The findings will certainly not end the debate, but they may
sharpen the issues, particularly concerning products liability class
litigation.

The RAND report (ISBN 0-8330-2601-1 for the paperback) is based on
intensive case studies of 10 major class actions. The most conspicuous
common element is that all resulted in settlements. Of course, that is an
immediate consequence of the selection of cases. In fact, there are some
class suits that actually go to trial, but they are rare.

Hence, the RAND study tends to confirm that class actions, particularly
suits for damages, as distinct from civil rights injunction cases, are
settlement proceedings, not cases for trial.

There may be an unexplored underlying problem here. Ordinary suits settle
because lawyers on either side can calculate the probability of outcomes.
A class suit, however, fuses into one all the cases out of which
probability can be estimated. The ordinary logic of trial vs. settlement,
therefore, may be inapposite. Perhaps we should think of class actions as
similar to reorganization in bankruptcy, in which everything is brought
together and nothing is conclusively decided in terms of right and wrong.

A finding in the RAND study is that the share received by plaintiffs'
lawyers, relative to the payout to the class members, covers a
substantial range. That is, plaintiffs' lawyers receive a hefty share in
some cases, while in others their share is relatively modest --
especially considering that the plaintiffs' lawyers work on a risky
contingent fee basis.

                           Select Purview

A related inference is that class action litigation appears to be growing
concentrated in the hands of a relatively few plaintiffs' firms, with
defense similarly concentrated in even fewer defendant firms.

A third finding confirms that the question of certification is absolutely
key, but also that the proper basis for certification remains elusive. It
would seem that damages actions ought to be framed in terms of a right of
members of the class easily to "opt out." Establishing such a right would
mean that those who remain in the class are closer to being volunteers,
rather than conscripts. The study also tends to confirm the importance of
affording appellate review of the certification question, as has been
provided in the federal courts in the recent amendment of Rule 23.

The RAND study is rich in other details. It suggests that the class suit
for damages should not be disparaged, let alone abolished. Serious
discussion should focus on changes to the rules governing class actions,
including those administered in state courts. The study will be a helpful
guide. (The National Law Journal, October 16, 2000)


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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.

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