CAR_Public/001116.MBX              C L A S S   A C T I O N   R E P O R T E R

             Thursday, November 16, 2000, Vol. 2, No. 224

                             Headlines

AIR FORCE: Residents near Lowry Charge of Pollution from Defunct Base
CENDANT CORP: Fitch Affirms Cendant & PHH Ratings Following Avis Deal
DENNY'S CHAIN: Restroom Use Sparks Controversy
HEARTLAND FUNDS: Chestnut & Cambronne Files 2 Investors' Suits in WI
HOLOCAUST VICTIMS: Lives In Limbo As Survivor Plan Scrutinized

ICG COMMUNICATIONS: Stull, Stull & Brody Announces Securities Suit in CO
LASON, INC: Names New CEO and Director; Reports on 3rd Quarter Results
LOCKFORMER CO: Lisle Homeowners Charge of Solvent Spill
P.I.E MUTUAL: Firm Pays Up For Insurer's Collapse; Auditor Agrees to Pay
PRESIDENTIAL ELECTION: Controversies Continue over Ballot Recount

PRESIDENTIAL ELECTION: Florida Secretary of State Denies Hand Recounts
PRESIDENTIAL ELECTION: Significance of Political Stance In Ruling Cited
REDLANDS CONTAMINATION: Cert Overruled for Lack of Community of Interest
SEARS, ROEBUCK: 5th Cir Says Class of Consumers Was Improperly Certified
SHELL OIL: 5th Cir Sends 6 Exposure Cases Abroad for Foreign Ownership

SOTHEBY'S HOLDINGS: Reports on Third Quarter Revenues of $42.6 Million
TOBACCO LITIGATION: Dubek and Smokers Settle; Profits to Finance Fund
WIRE TRANSFER: AP Reports on Fees Stinging Immigrants from Mexico

* Posting Website Privacy Policy Is Not Enough, NYLJ Report Says
* Study Shows Securities Fraud Cases and Settlements Are on the Increase

                             *********

AIR FORCE: Residents near Lowry Charge of Pollution from Defunct Base
---------------------------------------------------------------------
Residents in a neighborhood north of Lowry Air Force Base are suing the Air
Force, charging that pollution from the defunct base has lowered their
property values.

The chemical Trichloroethylene, which the Air Force uses to clean machine
parts, has been found in groundwater under the Montclair neighborhood.

Although no one drinks the water, the chemical turns to vapors that can
rise through the soil and enter homes through cracks in the foundations.
The fumes can cause headaches, dizziness, and liver and kidney damage.

The Air Force had not received a copy of the suit Tuesday, and a public
affairs representative declined comment.

No one has reported any illness in the neighborhood from the chemical, also
known as TCE. However, a mechanical ventilation system was installed in an
apartment house after fumes were discovered, said Jeff Edson, the Colorado
health department's remediation and restoration manager.

The federal class-action lawsuit does not specify a dollar amount. The
lawsuit claims more than 1,000 people are affected.

Edson said 15 homes above the most polluted part of an underground plume of
water flowing out of Lowry are sitting above water that contains more than
200 times the state standard for TCE. (The Associated Press State & Local
Wire, November 15, 2000)


CENDANT CORP: Fitch Affirms Cendant & PHH Ratings Following Avis Deal
---------------------------------------------------------------------
Fitch has affirmed the ratings of Cendant Corporation (Cendant) and wholly
owned subsidiary PHH Corporation (PHH). The rating action follows the
recent announcement of an agreement for Cendant to purchase for cash all of
the outstanding shares of Avis Group Holdings Inc. that it does not already
own (approximately 82% of total common shares outstanding) at a price of
$33 per share or about $935 million. In addition, Cendant will assume
approximately $560 million of senior notes and bank debt. The transaction
is expected to close in the first quarter of 2001 and will be funded with a
combination of cash, debt and equity. On Aug. 17, 2000, Fitch affirmed
Cendant's and PHH's ratings after Cendant's initial offer of $29 per share
of Avis. The Rating Outlook for both Cendant and PHH is Stable.

Ratings affirmed are Cendant's senior unsecured debt at BBB+', subordinated
debt at BBB', FELINE PRIDES at BBB' and commercial paper at F2'. PHH's
senior debt and commercial paper ratings are also affirmed at A' and F1',
respectively.

PHH will acquire on its balance sheet the fleet management and fleet
financing businesses of Avis as well as Wright Express, a fuel card service
provider. Although leverage will increase at PHH as a result of the Avis
transaction, the company's credit profile is maintained as cash flow and
earnings diversification are strengthened. Fitch believes the firewalls
between Cendant and PHH remain intact, supporting the distinction in rating
between the two companies.

Cendant's ratings consider the diversity and stability of its core travel,
real estate and direct marketing segments, the $2.85 billion shareholder
class-action settlement and the expectation that growth in core businesses
will be supplemented by a moderate level of complementary and accretive
acquisitions. Moreover, the company's ratings rely upon the maintenance of
a conservative financial policy that preserves credit protection measures.

On Nov. 3, 2000, Fitch affirmed Cendant's and PHH's ratings after Cendant
announced:

     1) an agreement to purchase Fairfield Communities Inc., a vacation
time-share company;

     2) a plan to distribute 100% of the stock of a new company
incorporating its individual membership and loyalty businesses to
shareholders in a tax-free distribution; and

     3) an agreement to sell Move.com to Homestore.com Inc. for stock in
the combined business. Fitch expects that these transactions taken together
will have a minimal impact on leverage and cash flow. Nonetheless, these
deals allow Cendant to refine its business portfolio to focus and build
scale in core service segments and to facilitate cross marketing
opportunities.


DENNY'S CHAIN: Restroom Use Sparks Controversy
----------------------------------------------
What restrooms gay and transgendered people use creates a problem for a
Spring Hill Denny's.

Spring Hill - Inside the ladies' room, Aleisha King felt like one of the
girls.

Standing in front of the mirror in a cocktail dress and heels, the
blue-eyed redhead checked her hair and makeup and joined in on the
after-hours banter among several exotic dancers who had gone to Denny's
last month for breakfast after the late shift. It wasn't until King headed
back to the table that the trouble started. "She's pretty for a guy, isn't
she?" shouted one of the dancers to a male friend across the dining room.

Then things turned ugly, King said. First, the man across the room shouted
anti-gay slurs at King, 37, who is part way through the sex-change process
and lives as a woman. Then, the man walked over, grabbed King's arm, spun
her around and demanded to know if she was a man. King, while hurt and
embarrassed, thought the incident was over after restaurant employees
called police and the man walked out of the restaurant. She had been a
regular at Denny's on weekends for more than a year and had never before
had a problem.

Two days later, though, the phone rang at Differences Pub on Kass Circle,
where King tends bar and performs as a female impersonator. King said a
night manager at Denny's talked first to her boss, then called back and
told her that the ladies' room would be off-limits to King and other
transgendered people who had frequented the restaurant on weekends after
the pub closed at 2 a.m. The manager also suggested that Lynne Greene, who
owns Differences, stand guard outside the bathroom door when King and the
others went inside.

To King, the new rules made no sense. "I can take my makeup off and still
look like a woman," she said. "I know no other life."

The problem escalated the following weekend, when a group from Differences
went to Denny's after the pub's Oct. 29 Halloween party. This time, police
were called when a disturbance erupted between employees and Jamie Benton,
41, a female impersonator and reigning Miss Gay Hernando. Benton, who also
performs as a woman at Differences but lives as a man, said employees
harassed him even though he took off his makeup and donned jeans and a
T-shirt before going in the restaurant, then used the men's restroom when
he got there.

"They were telling me that I had come out of the women's restroom, really
getting right up in my face," Benton said. "They were extremely rude. They
embarrassed me." After a loud scene, in which Benton said a cook yelled at
him in front of a packed restaurant, the group of eight walked out of the
restaurant, leaving their food on the table. They have not been back.

"Honey, if I went in there in drag and they want me to go to the men's
restroom, I have no problem with it. That's fine with me just as long as I
can go pee," Benton said. "If they had a problem with something, they
should come up and say something, not carry on the way they did in front of
the whole restaurant. There's a right way to do things and a wrong way to
do things."

King and Benton say the incidents prove that they will be harassed no
matter what they do. They, along with other patrons of Differences, have
organized a boycott of Denny's and are considering a civil rights
complaint.

Denny's manager Bill Cushman declined to discuss specifics of the
incidents. He confirmed that there had been problems at the restaurant
stemming from men dressed as women using the ladies' room. "I believe we
have it solved," he said. "They've been good guests for over a year . . .
We're trying to accommodate them."

But Greene disagrees. Her partner and co-owner of the pub, Elaine Wanker,
used to work at Denny's and the couple were at the restaurant during both
incidents. Greene is considering joining in a possible claim against
Denny's. "They basically want us to go away," she said. "I feel that is
discrimination."

Jessica Archer, who is director of the Tampa-based Florida Organization for
Gender Equality, said the incidents reflect a national trend of violence
toward transgendered people and transsexuals. "The rule is that you use the
facility of the gender that you are presenting," she said. "That rule is
based on safety."

Archer said transgendered people often face ridicule and violence. On
average, she said, more than one transgendered person has been attacked and
killed every month in the United States since 1998. "This is a problem that
is not just a problem of Spring Hill, but a problem of Florida and the
nation," she said. "At some point we have to start putting aside our
stereotypes and start appreciating people as human beings. Denny's has
treated these people as walking stereotypes."

In the early 1990s, the Denny's chain faced frequent charges it
discriminated against African-American customers. In 1994, the chain agreed
to pay $ 54-million to settle two class-action discrimination suits. Three
years later, Denny's Spartanburg, S.C.-based parent firm, gave $
1.5-million to nine civil rights organizations. (St. Petersburg Times,
November 15, 2000)


HEARTLAND FUNDS: Chestnut & Cambronne Files 2 Investors' Suits in WI
--------------------------------------------------------------------
Chestnut & Cambronne P.A. announced on November 15 that it commenced two
class action suits in the United States District Court for the Eastern
District of Wisconsin. The two lawsuits are on behalf of purchasers of the
HEARTLAND SHORT DURATION HIGH-YIELD MUNICIPAL FUND and the HEARTLAND
HIGH-YIELD MUNICIPAL FUND respectively. Both actions seek class action
status for purchases of the funds during the period from October 26, 1997
to October 13, 2000.

The defendants named in the complaints are Heartland Group, Inc., Heartland
Advisors, Inc., and the funds' directors (William J. Nasgovitz, Hugh F.
Denison, Jon D. Hammes, A. Gary Shilling, Allan H. Stefl, and Linda F.
Stephenson), the portfolio manager through September 28, 2000 (Thomas J.
Conlin) and the portfolio co-manager (Greg D. Winston). The complaints also
name PricewaterhouseCoopers ("PwC"), the auditor of the funds' financial
statements during the class period, as a defendant.

The complaints both state that during the alleged class period, the
defendants misled the investment community by disseminating an inflated
estimate of the funds' net asset value and by failing to price the funds'
portfolio securities daily.

The funds regularly disclosed that they used a pricing committee to price
the portfolios' securities on each trading day and determine the per share
net asset value of the funds. The pricing committee purportedly usually
relied on securities prices provided by an independent pricing service, but
also considered other factors. In a letter dated October 16, 2000, however,
defendant Nasgovitz stated that the funds decided to change the method by
which they value their portfolios stating they had previously relied on an
independent service, but would now utilize "fair value" pricing to permit
other factors to be considered. Nasgovitz has admitted that the funds did
not take these other factors into consideration prior to October 13, 2000,
although the funds' policy was to use "fair value pricing" whenever the
occasion demanded it. The complaints further allege that the funds were not
pricing all of their portfolio securities daily.

Also, in the Short Duration Fund, the complaint states that investors were
misled because of that fund's failure to adhere to the fund's targeted
short duration in the purchase of bonds.

When the funds corrected these inappropriate practices, the Short Duration
share price declined approximately 44% and the High-Yield share price
declined 70%, causing significant losses to person who purchased shares
during the class period.

The complaints also state that, as part of PwC's audit of the funds'
financial statements, PwC was required to confirm that the prices used by
both funds to value their portfolio securities were reasonable. PwC
allegedly failed to identify portfolio transactions that were inconsistent
with the funds' investment policies and restrictions and which violated the
Investment Company Act of 1940. The complaints also allege PwC's failure to
advise the funds' board of directors of such matters but rather opined that
the statements were prepared in conformity with accounting principles
generally accepted in the United States.

Plaintiffs in both actions are represented by the Minneapolis law firms of
Chestnut & Cambronne, P.A.; Lockridge Grindal Nauen, P.L.L.P.; Head,
Seifert & Vander Weide; the St. Paul law firm of Reinhardt & Anderson; and
the Milwaukee, Wisconsin attorney Robert Elliott. These law firms have
extensive experience representing shareholders in class actions.

In order to participate in the action as one of the lead plaintiffs, it is
required that a motion be filed in the Federal District Court in Milwaukee
by December 26, 2000.

If you would like to discuss these actions or have any questions concerning
this notice or your rights or interests with respect to this matter, please
contact Karl L. Cambronne, Chestnut & Cambronne, P.A., 3700 Piper Jaffray
Tower, 222 South Ninth Street, Minneapolis, Minnesota 55402; telephone
number (612) 339-7300; e-mail address kcambronne@chestnutcambronne.com.

Contact: Chestnut & Cambronne, P.A., Minneapolis Karl L. Cambronne
612/339-7300 kcambronne@chestnutcambronne.com.


HOLOCAUST VICTIMS: Lives In Limbo As Survivor Plan Scrutinized
--------------------------------------------------------------
One former Auschwiz slave laborer says he fears becoming "once again a
number in a sea of names." Another Holocaust survivor, a 92-year-old widow,
wonders if she will be compensated for her past pain "while I am still
alive." Still another victim puts it this way: "I am old, sick and I am
seeking justice." The anguished comments are found in the piles of letters
that have flooded Brooklyn federal court in the wake of a $1.25 billion
settlement in Holocaust survivors' massive class-action lawsuit against
Swiss banks.

Nearly two years have passed since the settlement was reached. But U.S.
District Court Judge Edward Korman still must approve a proposed plan for
the daunting task of dividing and distributing the funds to a half million
or more potential claimants scattered across the globe.

The judge has scheduled a public hearing - expected to draw scores of
Holocaust victims and attorneys - on Monday in Brooklyn.

Crafted by a court-appointed mediator, the distribution plan would pay
about $800 million to claimants who can prove their families deposited
money in Swiss Banks to hide it from the Nazis and never got it back. At
last count, about 80,000 people had identified themselves as depositors or
their heirs.

The remaining $450 million would go to wartime refugees who were denied
entrance to or expelled from Switzerland, slave laborers forced to work for
companies with Swiss accounts, and victims whose belongings were plundered
by the Nazis and apparently ended up in Switzerland.

The mediator, Judah Gribetz, former chair of Jewish Community Relations
Council of New York, estimated that each refugee would get $2,500, and
laborers $1,000 apiece. But, in a letter to potential claimants posted on
the Internet, he cautioned that "there is simply not enough money
available" to pay all the heirs of Nazi victims.

Finally, although the plan sets aside $100 million to compensate looting
victims, Gribetz said it would be too difficult and time-consuming to
validate individual claims in that category. He instead proposed using the
money to pay for food, medical care and housing for "the neediest Nazi
victims."

The Jewish Week, a newspaper based in New York, hailed the Gribetz plan as
"Solomic in its effort to balance legal principles and moral
responsibility." The proposal, it added, achieves for the victims "symbolic
compensation from those who contributed to their suffering."

Symbolism aside, the reality - compensation amounting to, at best, a few
thousand dollars per victim - has drawn reactions ranging from grim
resignation to anxiety to outrage from claimants. Many of the letters
written to Korman since the distribution plan was made public in September
complain that the settlement may be too little, too late.

Walter Simoni, 82, of Vienna, wrote that the Nazis forced him into slave
labor at a Poland factory during World War II. He said he had been
frustrated in his efforts to secure reparations through the German Claims
Conference and other funds. Simoni called the Swiss banks settlement his
"last hope" to avoid being "once again a number in a sea of names ... and
get the correct treatment I deserve."

A Brooklyn rabbi, Chaim Stauber, questioned putting the demands of the
Swiss bank depositors ahead of "frail survivors" who may not have long to
live. "We must reflect on what the real priorities must be," Stauber wrote.
"We hope it will be to put the most needy population of survivors ... as
No. 1 on the distribution plan."

The widow, Rudolfine Schlinger, of Queens, said she hoped to reclaim funds
that her husband deposited in Switzerland and left behind when he fled to
the United States in 1939. Her husband "did not live long enough to be paid
back," she wrote. "My family has waited over 60 years to recover what is
rightfully ours. Can I expect to see this money in my lifetime?"

Another survivor, Revekaa Levin, of Ontario, Canada - whose family's gold
assets were stolen during the Nazi massacre of Jews in the Minsk ghetto in
Belarus - called Gribetz's plan "terrible" because it fails to identify and
compensate looting victims. "I am old, sick and I am seeking justice,"
wrote Levin, whose family was among those massacred. "I personally, just
for the sake of my murdered father and sisters, cannot participate in this
class-action claim. ... My fight will continue until the day I die." (The
Associated Press State & Local Wire, November 15, 2000)


ICG COMMUNICATIONS: Stull, Stull & Brody Announces Securities Suit in CO
------------------------------------------------------------------------
A class action lawsuit was filed in the United States District Court for
the District of Colorado on behalf of all persons who purchased the
securities of ICG Communications, Inc. (NASDAQ:ICGX) ("ICG" or the
"Company") between December 20, 1999 and September 18, 2000 (the "Class
Period").

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
December 20, 1999 and September 18, 2000, thereby artificially inflating
the price of ICG common stock. Specifically, the statement made by
defendants were materially false and misleading because they failed to
disclose and misrepresented the following facts: that the Company was
experiencing significant and severe customer-service issues which had
arisen from network outages, equipment failures and technical problems.

These problems were of a persistent and material nature and were in
existence at all times during the Class Period; that as a result of the
Company's customer-service problems, certain customers were reducing their
commitments to ICG which would inevitably lead to the Company's reporting
reduced revenues and earnings; that once the Company's customer-service
problems were made publicly-known, its ability to access the capital
markets would be severely impaired; and based on the foregoing, defendants'
opinions, projections and forecasts concerning the Company and its
operations were lacking in a reasonable basis at all times.

Finally, on September 18, 2000, ICG shocked the market by announcing that
the Company only expected to report EBITDA of $17 million for 2000 and
EBITDA of $100-$150 million for 2001 and acknowledged its pervasive
customer-service issues. In response to this announcement, the price of ICG
common stock dropped significantly from $3.09625 per share to $1.65 per
share. This represents a decline of more than 95% from a Class Period high
of$39.00 reached on March 27, 2000.

Contact: Stull, Stull & Brody Tzivia Brody, Esq., 1-800-337-4983
SSBNY@aol.com


LASON, INC: Names New CEO and Director; Reports on 3rd Quarter Results
----------------------------------------------------------------------
Lason, Inc. (OTCBB:LSON) announced on November 14 that it removed the
interim status of John R. Messinger as Acting Chief Executive Officer and
appointed him its Chief Executive Officer. In addition, John R. Messinger
was elected as a director of Lason to replace Gary L. Monroe who resigned.
Mr. Messinger also serves as President and Chief Operating Officer of
Lason.

Commenting on the announcement, Robert A. Yanover, Chairman of Lason's
Board, stated, "John Messinger's leadership during the past few quarters
has been instrumental to Lason renegotiating the Company's credit facility,
selling non-core operations and improving the overall operational
efficiency of the Company. The Board of Directors has full confidence in
his ability to return Lason to the growth path that we enjoyed in the past.
We are also pleased to have Mr. Messinger join us on the Board. His
experience and skills will be of great benefit and value to the Board."

Lason's announcement tells about the company -- a leading provider of
integrated information management services for image and data capture, data
management and output processing. Since its founding in 1985, Lason has
grown to employ over 11,500 people with operations in 30 U.S. states,
United Kingdom, Canada, Mexico, India, Mauritius and the Caribbean. The
Company currently has over 85 multi-functional imaging centers and operates
over 100 facility management sites located on customers' premises.

Lason  also announced it is filing with the Securities and Exchange
Commission, under Rule 12b-25, a notification of late filing of the
financial portion of its Form 10-Q for the third quarter ended September
30, 2000.

The Company's notification will state it was unable to timely file the
financial portion of the Form 10-Q because it requires additional time to
collect necessary information and data and because of delays resulting from
changes in personnel.

The Company also reported in its filing that it expects to incur a
consolidated net loss, the extent of which is being determined, for the
quarter ended September 30, 2000, as compared to net income of$14.1 million
for the quarter ended September 30, 1999.


LOCKFORMER CO: Lisle Homeowners Charge of Solvent Spill
-------------------------------------------------------
A group of Lisle homeowners living near the site of a decades-old chemical
spill filed a lawsuit in federal court Tuesday, claiming a solvent used by
Lockformer Co. contaminated their private wells, damaged their property and
permanently diminished their property values.

The seven-count suit, which seeks class-action status, alleges that more
than 100 homes, all south of St. Joseph Creek, could be contaminated by a
manmade degreaser used for nearly 30 years by the metal forming and
fabricating company. The degreaser, containing the possible carcinogen
trichloroethene, or TCE, spilled onto the ground near the plant's Ogden
Avenue site.

Contributing to the contamination, the suit claims, was the company's use
of chemical solvents to clean the facility's floor and its use of a vapor
degreaser stored in a concrete tank pit inside the plant several feet below
ground. The suit claims the company's improper handling, storing, use and
cleanup of the TCE and the improper maintenance and operation of equipment
using the chemical caused the contamination of the wells.

"We have to quickly get to the bottom line, which is safe water for my
clients for their drinking, cooking and bathing," said the homeowners'
attorney, Shawn Collins of Naperville.

The plaintiffs' homes are all south of St. Joseph Creek on Front and Riedy
Streets. The two blocks are buffered to the east by the North-South
Tollway, to the west by the Lisle Public Library and an industrial park,
and to the south by Hitchcock Avenue.

"It's a geological fact that both Lockformer and the homeowners' houses
literally sit on top of a water source about 60- to 120-feet deep which is
fed directly by a thousands-year-old, underground stream which slowly moves
north to south and directly toward Front Street," said Collins.

Lockformer's attorney, Dan Biederman, declined to comment on the lawsuit,
saying he had not seen it.

The homeowners sued after samples of water from outside spigots showed the
presence of TCE or its byproduct in several of the wells. The suit claims
that testing revealed the chemicals were "far in excess of the maximum
contaminant levels" in some cases.

Although Lockformer was informed of those results, it "failed to provide
[the homeowners] with an alternate water supply and has failed to undertake
any action to solve the problem," the suit claims.

The suit seeks compensatory and punitive damages, asks the court to order
Lockformer to reimburse all costs, such as well testing, and urges that
Lockformer be ordered to provide a "safe, domestic water supply" to all
plaintiffs.

The suit claims Lockformer and its parent companies were negligent because
Lockformer was aware of the spill for eight years but didn't tell
homeowners until its representatives went before the Lisle Village Board
this summer. The company since has withdrawn its request for Lisle trustees
to prohibit the drilling of drinking water wells within a defined area
around the company, at 711 Ogden Ave.

The request was part of an effort to satisfy the Illinois Environmental
Protection Agency and receive its sign off on the spill, which was
discovered in the early 1990s when a plumber digging next to the building
smelled an odor.

Lockformer representatives have said they were unaware that some of the
chemical was landing on the ground while suppliers filled rooftop storage
tanks. The spigot and tank are no longer used.

The company plans to resubmit its ordinance request to the village,
Biederman said.

"We are continuing with our investigation in conjunction with the IEPA, and
until we complete our investigation and resolve all the outstanding issues
which have been raised, it's not a good use of anyone's time to pursue a
groundwater ordinance within the village of Lisle," he said.

Lockformer and its consultants have denied the extent of contamination
alleged in the suit. According to studies conducted for the company by
Chicago-based Carlson Environmental, the non-flammable, colorless liquid
sank about 37 feet through the earthen layers until it struck hard, dry
clay. In 30 years, it has traveled horizontally about 400 feet, consultants
have said, propelled by the groundwater moving through the silt layer above
the clay towards the nearby St. Joseph's Creek.

At its current pace of travel, Carlson had projected, the solvent would
take an additional 50 years to reach the first residential well north of
the creek. By then, it would have degraded to acceptable drinking
standards, and those wells also are pumping water from an estimated depth
far below where the solvent is traveling, the consultants said.

Collins said his clients' wells are shallower than those north of the
creek, which tested negative in studies by Carlson and the village's
consultant, Deuchler Environmental Inc.

Lockformer's consultants also have said that, although the groundwater's
path is southward toward the creek, it reverses on the other side, meaning
it would not reach any property past the creek.

But Collins said his clients believe the TCE in their wells is from
Lockformer. "There is no question because of history and common sense,"
Collins said. "The only issue is precisely how much." (Chicago Tribune,
November 15, 2000)


P.I.E MUTUAL: Firm Pays Up For Insurer's Collapse; Auditor Agrees to Pay
------------------------------------------------------------------------
BASED Benesch, Friedlander, Coplan & Aronoff has agreed to pay $ 8.75
million to settle negligence allegations involving its role as corporate
counsel to Ohio's largest medical malpractice insurer, whose collapse
triggered an $ 800 million claims avalanche and criminal investigations.

As part of the settlement, accounting firm KPMG Peat Marwick, which was
sued separately as the auditor of the failed insurer, agreed to pay $ 10
million.

Both cases were filed by the Ohio insurance commissioner, which in 1998
seized P.I.E. Mutual Insurance Co. of Cleveland. At its height, P.I.E.
insured thousands of doctors in nine states, including a third of Ohio's
licensed practitioners.

Since the shutdown, the state has liquidated P.I.E.'s assets and has
litigated against former employees and others to collect money to pay
claims, said Mark I. Wallach, a partner at Cleveland's Calfee, Halter &
Griswold who is handling litigation for the Ohio P.I.E. liquidation.

                         Thousands in limbo

To date, $ 239 million has been collected, far short of the estimated $ 800
million representing the more than 28,000 claims pending, according to
Robert Denhard, spokesman for the Ohio Department of Insurance.

The crash of P.I.E. frustrated thousands of plaintiffs in medical
malpractice cases first by putting their cases in limbo, then ultimately
undermining the hope of collecting judgments.

The company's failure also exposed alleged bribery, the alleged looting of
$ 12 million by the company's top three officials and allegations of $ 58
million in insurance fraud. Moreover, in its negligence suit, the state
alleged that the Benesch Friedlander law firm knew about the alleged
looting and fraud, but did nothing. Under the settlement terms, 62-year-old
Benesch Friedlander stipulated that it was "liable in tort," although the
firm denies all liability.

Benesch Friedlander's lawyer, John W. Zeiger, a partner at Zeiger &
Carpenter in Columbus, Ohio, explained that the settlement language is a
technical requirement to block a joint tort-feasor from bringing the firm
back into court. He said that the firm's malpractice carrier made the call
about settling the case, which was still in discovery.

"We believe very strongly the firm acted responsibly and appropriately"
while representing P.I.E., Mr. Zeiger said.

KPMG's co-lead counsel, John W. Frazier IV, a partner at Montgomery,
McCracken, Walker & Rhoads in Philadelphia, declined to comment. KPMG
spokesman Alec Houston said that the firm stands behind its work and that
it settled to avoid the cost of trial.

Though the controversy surrounding the professional firms' conduct amounted
only to allegations, the accusation of bribery involving P.I.E. has
resulted in criminal convictions.

Former Ohio Deputy Insurance Director David J. Randall pleaded guilty and
served a 75-day sentence for taking a bribe from P.I.E. President and Chief
Executive Officer Larry E. Rogers, among others. In return, the insurance
official wrote a letter declaring P.I.E. to be financially sound when it
was failing, Mr. Wallach said.

Mr. Rogers faces trial next year on state criminal charges, and a federal
criminal investigation into P.I.E. is ongoing, said William J. Edwards,
first assistant U.S. attorney in Cleveland.

As part of its negligence claim, the state alleged that Benesch Friedlander
prepared the papers for, then failed to tell the board of directors about
Mr. Rogers, the general counsel and the chief financial officer cashing in
$ 12 million in employment contracts from the soon-to-be-insolvent insurer.
Two of the three have repaid some money as part of settlement agreements,
said Mr. Wallach, the lawyer representing the insurance commissioner.

The complaint also alleged that Benesch Fried-lander was told about an
alleged fraud in which P.I.E. officials purportedly invented a $ 58 million
reinsurance asset to pad the company's 1996 balance sheet, but it did
nothing -- as directed by the company's general counsel. The firm also
represented Mr. Rogers personally, said Mr. Wallach.

A Benesch Friedlander lawyer investigated the fraud claim, after P.I.E.'s
chief accountant quit and blew the whistle, Mr. Wallach said. "In his
notes, they were instructed to 'sit on it,' so they did," Mr. Wallach said.

The firms' settlement funds will help pay claims of injured patients whose
doctors were covered by P.I.E. Plaintiffs may recover up to $ 300,000 from
Ohio Insurance Guaranty Association, a state fund that pays claims for
insolvent insurance companies.

Covington v. KPMG Peat Marwick, No. 98CVH10-8328; Covington v. Benesch,
Friedlander, No. 98CVH09-7172 (Franklin Co., Ohio, C.P.). (The National Law
Journal, November 13, 2000)


PRESIDENTIAL ELECTION: Controversies Continue over Ballot Recount
-----------------------------------------------------------------
Bush claims the Florida hand-counting law lacks sufficient guidelines and
therefore is unconstitutional; the Gore camp counters that the matter does
not belong in federal court. In their brief, the Gore lawyers said the
Republicans "had not shown, and could not possibly show, that the law will
necessarily lead to constitutional violations." They argue that
hand-counting of ballots has been in effect nationwide since the country's
founding.

Florida Secretary of State Katherine Harris, a Republican, has indicated
that she plans to certify the election results by Tuesday evening, the
deadline set by state law.

The Gore campaign has asked her to hold off until the hand-counting is
completed, and Harris will meet this morning with Gore advisers William
Daley and Warren Christopher to discuss the situation. "It would be a
terrible mistake to have a 5 p.m. Tuesday deadline," said a Gore legal
adviser. "Ballots are being counted in the state of Florida. They are being
counted under a procedure established by state law. They are being counted
expeditiously under a procedure established by state law. To cut that off
prematurely in the middle of that count would be a mistake."

Palm Beach officials announced that they will sue for an extension beyond
the 5 p.m. Tuesday deadline to finish the recounting. Volusia officials
were prepared to seek an extension but announced that the count was going
so quickly that it might not be necessary.

At the same time, another perplexing problem cropped up in Volusia.
Officials were told that the hand count had turned up as many as 300 more
votes than last week's machine count recorded in a closely contested
precinct in the western edge of the county. County Judge Michael McDermott,
chairman of the Volusia canvassing board, said he suspected a computer
glitch and was confident the discrepancy would be resolved, but officials
were still looking tonight for an explanation.

The precinct in question, in the town of DeBary, initially reported 529
votes for Bush and 491 for Gore. Tally sheets released in DeLand tonight of
the first 57 precincts completely counted and reviewed by the canvassing
board showed a net gain of 19 votes for Gore in Volusia County.

In most elections, machines fail to read a certain percentage of ballots
because the holes are not completely punched through. A hand examination of
each ballot can sometimes suggest the candidate a voter intended to
support, and Democrats believe they can gain votes for Gore through this
method in counties where he did well on Tuesday.

Republican leaders denounced the idea of hand-counting ballots at all, but
suggested that if the counts are done in Democratic strongholds, they
should be done everywhere in Florida--and perhaps in other close states,
like Iowa and Wisconsin.

Baker III renewed his offer to withdraw the Bush lawsuit if the Gore
campaign would agree to abide by the results of the machine-tallied recount
in Florida, including the overseas absentee votes due by Friday. Gore's
staff rejected the proposal. Indeed, campaign chairman William Daley,
appearing on CBS's "Face the Nation," would not commit to abide by the
recount results even after hand-counting.

So in place of negotiation, some Republicans turned up the heat. "Now that
Democrats there know how many votes they need, they may go find them," Rep.
W.J. "Billy" Tauzin (R-La.) said on "Fox News Sunday." Senate Majority
Leader Trent Lott (R-Miss.) used the same program to emphasize the risk of
vote fraud: "Republicans have shown not once, but twice, that they will be
magnanimous when it appears an election has been stolen," he said,
referring to the close results in 1960 and 1976. "I hope we don't do it a
third time." Daley scoffed at the charges. In his view, counting by hand is
simply part of the on-going recount process under Florida law. "The people
of Florida have a right under their laws to request in any county that the
county officials look at the ballots and make a judgment whether there
[are] anomalies enough to justify a hand count," Daley said. "Floridians
went into four counties and asked the county governments to take a look at
this. It hasn't been determined yet in all four whether there are enough
anomalies to move forward with full counts."

Former secretary of state Warren Christopher, the leader of Gore's team in
Florida, also scorned the suggestion of possible cheating during the
esoteric examination of partially punctured punch ballots. The Democrats,
he insisted, are only interested in assuring an accurate count.

Baker disagreed as the pair made the rounds of the Sunday morning public
affairs programs. "Florida has voted. Governor Bush won," Baker said on
ABC's "This Week." "Florida has had a complete recount. Governor Bush won.
And the Gore campaign keeps asking for more and more recounts, and they are
going to keep asking for recounts until they are satisfied with the
results." Baker denied that hand counts are more reliable than machine
counts. Instead, he said, they are more prone to "mischief."

In Palm Beach, the hand count was certainly prone to controversy. At 2 a.m.
Sunday, after 12 hours of poring over questionable ballots, Palm Beach
County election officials voted to recount the ballots in all 531 precincts
there. "I represent all the people of Palm Beach County and I believe all
the people of this county and this country deserve a hand recount,"
Commissioner Carol Roberts said.

Roberts, a Democrat, was joined by county elections supervisor Theresa
LePore, another Democrat, who has come under intense criticism for her
design of the Palm Beach ballot. Gore supporters maintain that thousands of
voters were confused by the ballot into voting for Reform Party candidate
Patrick J. Buchanan. County criminal court judge Charles Burton, who was
appointed to the bench by Florida Gov. Jeb Bush, brother of the Republican
nominee, cast the dissenting vote.

The recount of 184,000 votes in Volusia, meanwhile, began at 10:06 a.m.
Sunday, more than a day behind schedule. It had been delayed by an arduous
review of 498 write-in ballots--along with a stubborn ballot that wouldn't
go through electronic counting machines.

Not everyone who spoke out Sunday was fanning the flames. Sen. John McCain
(R-Ariz.) said on CBS, "The American people are very patient, and I don't
think that there is any kind of crisis right now. But they are growing
weary of it." Former senator Sam Nunn, a respected conservative Democrat,
issued a statement urging both sides to avoid taking the election to court,
and calling for an end to partisan rhetoric. "The two men who would lead
America must now act in a manner worthy of the office they seek," Nunn
said.

But the Republican nominee for president in 1996, former Kansas senator
Robert J. Dole, talked on ABC's "This Week" of a possible boycott of the
inauguration should Gore prevail in this dispute. And he pointed out that
Republicans control the Florida state legislature in case of "a scenario
where the state legislature would appoint the electors" if the vote cannot
be certified. Like a number of other Republicans, Dole tried to tie Gore to
the disputed 1960 election, in which John F. Kennedy narrowly defeated
Richard M. Nixon, in part thanks to heavy majorities from Chicago mayor
Richard J. Daley's machine. "Where are they going to stop?" Dole asked
about Democratic demands for recounts. "Why don't they go to Chicago where
they invented irregularities? You know, Bill Daley"--Gore's campaign
chairman and the late mayor's son--"is an expert on irregularities. Even
the dead vote in Chicago."

Democrats matched fire with fire. Gore campaign spokesman Mark Fabiani
criticized Bush for holding meetings in recent days to prepare his
transition to the White House. "We have tried very hard to avoid the public
spectacle Bush has created every day of grasping for power," Fabiani said.
"He's trying to convince people simply by talking that he has won the
election."

At a Miami synagogue Sunday, Jackson tied the Florida balloting
controversies to the history of discrimination against blacks and Jews.
"Once again, sons and daughters of slavery and Holocaust survivors are
bound together with a shared agenda, bound by their hopes and their fears
about national public policy," he said. Staff writers Ceci Connolly, Mike
Allen, Peter Slevin, George Lardner Jr., Serge F. Kovaleski and Sue Anne
Pressley contributed to this report.

(Sources: Associated Press, Washington Post, Federal Election Commission,
Florida Secretary of State)


PRESIDENTIAL ELECTION: Florida Secretary of State Denies Hand Recounts
----------------------------------------------------------------------
Florida Secretary of State Katherine Harris announced Wednesday night she
would deny attempts by scattered counties to submit hand recounts of
ballots to the results of the contested presidential election between
George W. Bush and Al Gore.  The state''s chief elections officer, sharply
criticized by Democrats in recent days as a partisan Republican, declared
it was ``my duty under Florida law'''' to reject requests from several
counties to update their totals.

Bush holds a 300-vote lead in the state whose 25 electoral votes will
settle the presidential election.

Harris said the state''s vote count would be official when overseas
absentee ballots are rolled into the totals by midnight Friday.  She noted
her decision was subject to an appeal in the courts - and it seemed likely
there would be one. (The Associated Press, Nov 15 2000)


PRESIDENTIAL ELECTION: Significance of Political Stance In Ruling Cited
-----------------------------------------------------------------------
Sticking to a firm deadline, Florida's Republican secretary of state said
all of the states' counties must finish recounting votes by 5 p.m. Tuesday.
Al Gore's advisers decried the decision as "arbitrary and unreasonable" and
promised court action. Volusia County, one of four Democratic-leaning
counties in the midst of recounting, went to state court seeking an
extension of time.

The deadline is a major roadblock for Gore, because some of the
manualrecounts requested by Democrats probably cannot be completed by the
end of the day on Tuesday. The state warned that counties that don't
certify their vote by the deadline "shall be ignored."

Warren Christopher, who is overseeing Gore's recount effort, suggested that
Harris' ruling was politically motivated. Noting that she campaigned for
Gore's rival, George W. Bush, and is a political supporter of Bush's
brother, Florida Gov. Jeb Bush, Christopher said. "Her statement has to be
taken into that context," he said.


REDLANDS CONTAMINATION: Cert Overruled for Lack of Community of Interest
------------------------------------------------------------------------
Roslyn Carrillo and other individuals living in Redlands brought a putative
class action suit against a group of companies with manufacturing
operations in the city. The plaintiffs alleged that beginning in 1954, the
manufacturing operations discharged dangerous chemicals into the city's
groundwater. The residents sought damages in the form of a court-supervised
medical monitoring program funded by the manufacturers and punitive
damages.

The residents moved for class certification of a medical monitoring class
and a separate punitive damages class. The residents claimed the class was
ascertainable because it included only persons living in a defined
geographic area, as well as students and workers from the area. The
residents estimated that this class could amount to 50,000 to 100,000
persons.

The trial court certified the class, finding that the residents had met
their burden of proof under Code Civ. Proc. @382 of showing that they had a
realistic chance of success on the merits. The trial court found that there
was an ascertainable class with a well-defined community of interest and
common questions of fact and law among members.

The manufacturers petitioned for writ review, challenging the class
certification.

The court of appeal granted the petitions and issued writs of mandate,
holding that there was an insufficient community of interest among the
putative class members to allow certification.

The court found that although sufficient common issues of fact existed
among the class members, these common issues were overwhelmed by the
numerous inquiries necessary to establish each individual's claim to
medical monitoring. The court pointed out that it would be necessary to
introduce evidence as to each class member's level of exposure to a range
of chemicals, as well as the individual's personal characteristics and
medical history. Moreover, the court noted that the manufacturers had
raised a statute of limitations defense, which would require inquiry into
each class member's knowledge of the contamination.

The court also opined that the manufacturers' liability to pay for medical
monitoring would depend on each class member's exposure, lifestyle and any
preexisting condition. Thus, a trier of fact would be confronted with a
number of factual questions as to each class member before being able to
determine if the manufacturers were liable for that person's medical
monitoring.

Counsel for petitioner Roslyn Carrillo: Thomas Girardi, Girardi & Keese,
1126 Wilshire Blvd., Los Angeles, CA 90017, 213-977-0211

Counsel for respondent Lockheed Martin Corporation: Robert Warren, Gibson,
Dunn & Crutcher, 333 S. Grand Ave., Los Angeles, CA 90071, 213-229-7000

Supreme Court Case No. S088458

Case below: E025064; Cal.Ct.App., 4th Dist., Div. 2; 79 Cal.App.4th 1019,
94 Cal.Rptr.2d 652, 00 C.D.O.S. 2809

Petition filed: May 19, 2000

Review granted: July 12, 2000

Justices voting for review: Baxter, Brown, Chin, George, Kennard, Werdegar

Procedure: Petition for review after grant of petition for writ of mandate.

(California Supreme Court Service, November 11, 2000)


SEARS, ROEBUCK: 5th Cir Says Class of Consumers Was Improperly Certified
------------------------------------------------------------------------
The 5th Circuit ruled on Oct. 27 that a class action by more than 1 million
consumers against Sears was improperly certified. The decision by Judge
Patrick Higginbotham concluded that the class was improperly certified
under Rule 23 (b) (2) of the Federal Rules of Civil Procedure, which states
that certification is proper for a class seeking "final injunctive relief
or corresponding declaratory relief." For the most part, the court found,
the plaintiffs in this case were seeking only damages. Bolin v. Sears,
Roebuck & Co., No. 99-20627. (The National Law Journal, November 13, 2000)


SHELL OIL: 5th Cir Sends 6 Exposure Cases Abroad for Foreign Ownership
----------------------------------------------------------------------
The Fifth Circuit U.S. Court of Appeals on Oct. 19 affirmed a ruling
sending six mass toxic exposure cases to other countries for trial because
a third-party defendant meets the definition of a foreign state (Franklin
Rodriguez Delgado, et al. v. Shell Oil Co., et al., No. 95-21074, 5th
Cir.).

Indirect majority ownership of third-party defendant Dead Sea Bromine Co.
Ltd. by the State of Israel satisfies the Foreign Sovereign Immunity Act,
the Fifth Circuit wrote. As a result, the U.S. District Court for the
Southern District of Texas did not abuse its discretion when it denied
plaintiffs' motion to sever the third-party claims from the primary claims
and to remand the primary claims to state court, the Fifth Circuit said.

The appeals court also was not persuaded that Dead Sea prematurely removed
the cases from the state courts where they were originally filed, and it
did not agree that the inclusion of Dead Sea by the primary defendants was
fraudulent joinder.

                      Third-Party Defendant

Citing an 11th Circuit opinion, In re Surinam Airways Holding Co. (974 F.2d
1255 [11th Cir. 1992]), the Fifth Circuit said a district court has no
"discretion to remand a plaintiff's claim when a Federal Sovereign Immunity
Act third-party defendant has removed the claims to federal court." Dead
Sea and its U.S. subsidiary, Ameribrom Inc., were served with third-party
petitions as each of the six original cases were filed in Texas state
courts. Dead Sea is owned by Israel through the majority-owned Israel
Chemicals Ltd.

Choosing Texas as the jurisdiction of the plaintiffs' filings was "forum
shopping" because of the state's "plaintiff-friendly features," the Fifth
Circuit said.

Texas' "law at the time of filing provided no applicable doctrine of forum
non conveniens pursuant to which their actions could be dismissed," the
court said, citing Dow Chemical Co. v. Castro Alfaro (786 S.W.2d 674 [Texas
1990]).

                         6 Original Cases

The six original cases were consolidated in the Southern District of Texas.
In each case, plaintiffs alleged harms resulting from their exposure to the
nematocide bibromochloropropane while working in banana fields in various
countries. Tens of thousands of plaintiffs were involved in the underlying
claims. The primary defendants are the operators of the plantations and
Dow, Shell and Occidental chemical companies.

Each of the defendants impleaded Dead Sea and Ameribrom as third parties.
By virtue of their status as a foreign state, they removed the state cases
to federal court, where forum non conveniens was available to defendants,
the court said. The third step in the defense strategy was for Dead Sea to
waive its immunity in each of the federal cases, the court said.

                        Fraudulent Joinder

The fraudulent joinder theory of the plaintiffs arose when they became
aware of an agreement between Dead Sea and primary defendants that limits
Dead Sea's liability in each foreign country where a claim might now be
filed to 2.5 percent of market share, the court said. The District Court
rejected plaintiffs' arguments that the defendants "never intended to
prosecute their claims against Dead Sea and joined Dead Sea only to gain
entry to the federal court."

The removal to federal court was challenged on the grounds that Dead Sea
was not a party to the suits in the state courts and could not be removed
to federal court. Further, the plaintiffs unsuccessfully argued, the
presence of Dead Sea alone created federal subject matter jurisdiction. In
the absence of subject matter jurisdiction, the plaintiffs argued,
magistrate judges have no authority to issue post-removal remedies and the
District Court had no choice but to remand.

                            Counsel

The plaintiffs are represented by Fred Misko Jr. of Dallas, Stephen D.
Susman, Michael A. Lee and M. Sofia Adrogue of Susman Godfrey in Houston,
David S. Siegel of Kirk, Gottesman & Lee in Houston, Charles S. Siegel of
Dallas, Scott M. Hendler of Austin, Texas, and Christian Hancock Hartley of
Ness, Motley, Loadholt, Richardson & Poole in Charleston, S.C.

Shell Oil Co. is represented by R. Burt Ballanfant of Houston, John Michael
Dorman and John L. Hill Jr. of Locke, Liddell & Sapp in Houston and Richard
W. Staff of Harrison, Bettis & Staff in Houston. Dow Chemical Co. is
represented by F. Walter Conrad Jr., Michael L. Brem and Macey Reasoner
Stokes of Baker Botts in Houston. D. Ferguson McNiel and Charles W.
Schwartz of Vinson & Elkins in Houston represent Occidental Chemical Corp.

Dole Fresh Fruit Co., Dole Food Co. Inc., Standard Fruit And Steamship Co.
and Standard Fruit Co. are represented by Terence M. Murphy and James
Stanley Teater of Jones, Day, Reavis & Pogue in Dallas, Robert H. Klonoff
of Jones Day in Washington, D.C., and Eric Allen Grant of the Pacific Legal
Foundation in Sacramento, Calif. Samuel Eugene Stubbs and William D. Wood
of Fulbright & Jaworski in Houston represent Chiquita Brands International
Inc. and Chiquita Brands Inc.

Del Monte Tropical Fruit and Del Monte Fresh Produce are represented by
James J. Juneau of Dallas, Amy W. Schulman, Boaz S. Morag and Robert T.
Greig of Cleary, Gottlieb, Steen & Hamilton in New York and Sara D
Schotland of Cleary, Gottlieb, Steen & Hamilton in Washington, D.C.

Bromine Compounds Ltd., Dead Sea Bromine Co. Ltd. and Ameribrom Inc. are
represented by Robert A. Shults, Thomas J. Brandt and Bradley Wayne Cole of
Sheinfeld, Maley & Kay in Houston and Peter R. Paden of Robinson,
Silverman, Pearce, Aronsohn & Berman in New York. (Mealey's Emerging Toxic
Torts, November 3, 2000)


SOTHEBY'S HOLDINGS: Reports on Third Quarter Revenues of $42.6 Million
----------------------------------------------------------------------Sotheby's
Holdings, Inc. (NYSE: BID; LSE), the parent company of Sotheby's worldwide
live and online auction businesses, art-related financial services and real
estate activities, announced results for the nine months and third quarter
ended September 30, 2000. For the first nine months of 2000 the Company
reported total revenues of $254.7 million, compared to $254.5 million for
the corresponding period of 1999. Net loss for the first nine months of
2000 was $ 183.2 million or ($3.11) per diluted share, compared to a net
loss of $1.6 million or ($0.03) per diluted share for the corresponding
period of 1999. During the first nine months of 2000, the Company recorded
pre-tax special charges of $188.6 million or ($2.72) per diluted share.
Excluding special charges, the Company recorded a diluted loss per share of
($0.39) for the first nine months of 2000.

For the quarter ended September 30, 2000, the Company reported total
revenues of $42.6 million, compared to $45.3 million in the corresponding
period of 1999. The Company's net loss for the third quarter of 2000 was
$184.2 million or ($3.13) per diluted share, compared to a net loss for the
third quarter of 1999 of $23.8 million or ($0.41) per diluted share. During
the third quarter of 2000, the Company recorded pre-tax special charges of
$184.8 million or ($2.68) per diluted share. Excluding special charges, the
Company recorded a diluted loss per share of ($0.45) for the third quarter
of 2000. The third quarter is a period of minimal sales activity in the art
auction market (6% of total 1999 auction sales for Sotheby's) and,
therefore, the Company historically reports a loss in the period.

"The significant loss we are reporting for the first nine months of 2000
was primarily affected by the special charges associated with the
Department of Justice investigation and related civil antitrust and
shareholder litigation settlements," said William Ruprecht, President and
Chief Executive Officer of Sotheby's Holdings, Inc. "In addition, the
continued investment in our Internet initiative impacted our results, as
did a decline in major single-owner auction sales, which in the first nine
months of the year totaled $107.0 million, compared to $239.3 million in
1999."

Mr. Ruprecht commented: "It is worth noting that in this very difficult
year, our auction sales were up slightly - a remarkable achievement under
the circumstances and a great tribute to our staff." Total revenues of
$254.7 million were essentially flat compared to the first nine months of
1999. Revenues from non-auction operations increased 23% principally due to
the Company's Realty business. Excluding special charges of $188.6 million,
total operating expenses increased $25.8 million to $281.9 million, largely
due to Internet related costs.

            Impressionist & Modern and Contemporary Sales

"Our Impressionist & Modern Art sales concluded last week and brought a
satisfactory $144.4 million. Part I of the Impressionist & Modern Art
auctions achieved $123.1 million, the Company's third highest total for a
various owners' sale in ten years. The sale was highlighted by Manet's
Jeune Fille dans un Jardin, which sold for $20.9 million. New world auction
records were established for three artists and twenty-two works sold for
more than $1 million each. Part I of the Contemporary sale, which took
place in New York last night, was extremely strong and brought $43.1
million. Of note was Rothko's No. 2 (Blue, Red and Green) which sold for
$11.0 million. Eleven artists' records were set including records for
Alexander Calder, Robert Gober, and Donald Judd. Throughout the sales,
buyers demonstrated a willingness to pay for top quality property that was
fairly estimated and of sound provenance."

                         Internet initiatives

Internet auction sales for the first nine months of 2000 totaled $39.9
million on SOTHEBYS.COM and sothebys.amazon.com and for the third quarter
totaled $8.9 million. As announced, SOTHEBYS.COM and sothebys.amazon.com
have recently combined to form one online auction web site - SOTHEBYS.COM.

"This unified site significantly enhances the scale of the SOTHEBYS.COM
marketplace and offers property in nearly 300 collecting categories,
presenting the largest selection of authenticated and guaranteed art,
antiques, and collectibles on the Internet," said Mr. Ruprecht.
"SOTHEBYS.COM continues to offer collecting advice, access to our experts,
and special-theme sales which have proven to be of particular interest to
our clients, along with the highest levels of security and customer
service. At the close of the third quarter, SOTHEBYS.COM announced the
opening of bidding to nine additional countries."

Mr. Ruprecht continued "Our original business model was for dealers to list
most of the property on our site and we are gratified to see that our
dealer associates are now listing most of the lots on SOTHEBYS.COM. Sales
for property listed by Sotheby's dealer associates in the third quarter
were up 11% over the second quarter to $5.2 million. At the end of the
third quarter, there were 11,000 lots posted on our site, of which dealer
property accounted for 75%. During the quarter, dealer auctions increased
28% to more than 50,000 lots and we expect that percentage to increase even
further."

Internet related expenses for the first nine months of 2000 were $43.9
million, driven by heavy first quarter marketing costs associated with the
launch of SOTHEBYS.COM and sothebys.amazon.com. The impact of the Internet
related operating loss for the first nine months of 2000 was ($0.41) per
diluted share. Internet related expenses for the third quarter of 2000 were
$10.7 million, reflecting a significant decrease of $3.2 million, or 23%,
from the second quarter of 2000. The impact of the Internet related
operating loss for the third quarter of 2000 was ($0.10) per diluted share.
"We remain committed to our Internet initiative and are equally committed
to controlling costs," said Mr. Ruprecht. "We anticipate a continuing
decline in Internet expenditures and are also focusing our marketing
resources to drive sales and revenue growth."

                           Special Charges

The special charges of $188.6 million in the first nine months of 2000
principally consist of the settlement of the civil antitrust class action
lawsuit related to auctions in the United States and the shareholder class
action lawsuit, both announced in September, as well as the plea agreement
with the Department of Justice announced in October 2000, all of which are
subject to court approval.

The settlement of the civil antitrust class action lawsuit provides for a
payment to the class by Sotheby's of $256 million. A. Alfred Taubman has
agreed to pay Sotheby's $156 million towards the settlement. Sotheby's will
pay $50 million in cash and will be issuing discount coupons to the class
with a value of $50 million, which the class members can use as a credit
against future vendors commissions and certain other vendors' charges. The
settlement of the shareholder class action lawsuit provides for a cash
payment to the class of $30 million. Mr. Taubman has agreed to pay
Sotheby's $30 million in cash towards this settlement. Additionally, the
class will be issued $40 million in Sotheby's Class A Common Stock.

Sotheby's net cash outlay as a result of these settlements will be $50
million, and the Company will include $140 million in respect of these
settlements in special charges for the nine months and third quarter ended
September 30, 2000.

The Company has also agreed to plead guilty to a violation of the U.S.
antitrust laws relating to auction commissions charged to sellers and has
agreed to pay a fine of $45 million over a period of five years. Included
in special charges for the three and nine-months ended September 30, 2000
is a charge of $ 34.1 million, representing the present value of this fine.

The Company has successfully amended its credit facility to accommodate the
antitrust settlements and has up to $300 million of committed financing
from an international banking syndicate.

                          Business Review

Management is nearing completion of the comprehensive strategic and
operational review previously announced in August 2000. The Company
currently intends to implement a restructuring plan in its Auction segment,
which includes Sotheby's Internet operations, subject to completion of the
plan and final approval by Sotheby's Board of Directors. The plan would
focus on strengthening both the Company's live and on-line auction
operations to make the Company more competitive in key markets and would be
designed ultimately to enhance profitability primarily by the realization
of significant cost savings.

To achieve this goal, management expects to devote additional resources to
high-end markets, which are more profitable, and reduce operating costs in
lower-end markets, which are costly to operate and contribute a much lower
percentage of revenues. Management also believes that leverage can be
achieved by managing certain markets globally rather than on a regional
basis.

"As our current planned strategy to consolidate and integrate our live and
Internet operations in our flagship York Avenue location evolves and as we
continue to redefine our sales strategy, we expect significant cost
savings," said Mr. Ruprecht. "As a result of the planned restructuring, we
expect there will be some staff reductions, a significant percentage of
which would be realized by absorbing unfilled vacancies, early retirements,
and consolidation of roles."

It is currently expected that the plan will be finalized and approved by
the Board of Directors in late 2000. As a result, management currently
believes that it is likely that the Company will record a material
restructuring charge in the fourth quarter of 2000.

                       Future Expectations

"In light of the anticipated restructuring charges, the rescheduling of the
Impressionist & Modern and Contemporary sales in London from December 2000
to February 2001, and the continuing lack of major single-owner sales, we
expect that fourth quarter and full year 2000 earnings will be down
significantly on a year to year basis," said Mr. Ruprecht.

Sotheby's Holdings, Inc. is the parent company of Sotheby's worldwide live
and online auction businesses, art-related financial services and
real-estate activities. The Company has 98 offices located in 38 countries,
with principal salesrooms located in New York and London. The Company also
regularly conducts auctions in 15 other salesrooms around the world,
including Australia, Canada, Germany, Hong Kong, Israel, Italy, Monaco, the
Netherlands, Switzerland, and Taiwan. Sotheby's Holdings, Inc. is listed on
the New York Stock Exchange and the London Stock Exchange.


TOBACCO LITIGATION: Dubek and Smokers Settle; Profits to Finance Fund
----------------------------------------------------------------------
The Dubek tobacco monopoly and lawyers representing 80 smokers in a
lass-action suit against the cigarette company have reached a compromise,
according to which people whose health has been seriously harmed during the
past seven years will receive compensation from a fund totaling hundreds of
millions or even billions of shekels.

The agreement, which must be approved by the state to go into effect, was
described by a Clalit Health Services (CHS) management spokesman as a
"massive public relations stunt by Dubek, since the state is extremely
unlikely to approve the deal."

CHS has its own NIS 7.5 billion lawsuit pending against Dubek, local
tobacco importers, and foreign tobacco companies for compensation from the
companies for health damage to their members caused by tobacco.

The CHS spokesman said that the compromise, announced on Israel TV's Mabat
news program, is a "scandal," and that the health fund "did not and will
not participate in it." According to the deal, the fund would be financed
by Dubek profits from its sales - so the more cigarettes Dubek sells, the
more money would be given to patients. In addition, Dubek is asking for
approval of a price hike on its products to finance the fund.

Gidi Frishtik, one of the lawyers representing the private group, went to
London to meet with self-exiled Dubek owner Zerah Gehl, who left Israel
many years ago under threat of alleged fraud and other misdeeds related to
Dubek. Frishtik got Gehl's approval for the deal. (The Jerusalem Post,
November 15, 2000)


WIRE TRANSFER: AP Reports on Fees Stinging Immigrants from Mexico
-----------------------------------------------------------------
Every other month, Gregorio Lazaro and his two brothers strain $600 from
modest wages and send the money home to relatives they left behind in
central Mexico. But for years, a sizable portion of those savings never
made it from the Lazaros in Los Angeles to their family in Tepatlaxco,
south of Mexico City. Instead, it was claimed as fees most in the form of
punishing exchange rates that remittance services levy on immigrants who
wire money.

Such fees, often totaling 10 percent or more of the dollars being sent,
have become especially lucrative in recent years as immigration into the
United States has increased. Last year, immigrant workers sent $17.4
billion to their home countries, nearly double the level in 1991, according
to the U.S. Department of Commerce. ''I felt...like I was being taken
advantage of,'' says Lazaro, a housepainter.

Western Union and MoneyGram, the largest wire-transfer companies, make no
apologies for their fees, which have been targeted by a number of lawsuits
alleging fraud. But now there are signs of a shifting dynamic in the
remittance business notably, new competition that could give industry
giants a run for consumers' money. ''There are more companies and people
can make better choices,'' said Esperanza Morales of Asociacion Tepeyac de
Nueva York, a social-services group that works with recently arrived
Mexican immigrants.

Those choices include independent wire transfer firms, the U.S. Postal
Service and credit unions that offer cut-rate transfers _ Gregorio Lazaro
recently joined such an institution in Los Angeles.

Activists ''have tried to create some noise, but it's been very, very
timid,'' said Manuel Orozco, a specialist in remittances at Inter-American
Dialogue, a Washington-based think tank. ''The problem is that Latin
Americans don't have consumer protection in their culture. We are used to
accepting things, no questions asked.''

Anger at wire transfer fees sparked the lawsuits by Mexican immigrants in
the late 1990s and stirred calls for reform by lawmakers. Change, however,
comes slowly wire transfer legislation died in Congress and California, and
a pending settlement of a federal suit leaves the fees intact.

Mexico, which receives more than a third of the remittances from the United
States, and many other developing countries rely on wire transfers from
abroad as a key source of domestic income. ''It is money that goes for
medical needs, for education,'' said Juan Hernandez, a professor at the
University of Texas-Dallas and an advisor to Mexico's president-elect,
Vicente Fox. ''It goes to the areas of Mexico that need it most.''

Moving money also brings in big money for wire-transfer firms and banks. A
report commissioned by the U.S. Treasury Department found the business
generated more than $1.1 billion in revenues in 1996, and transfers have
grown considerably since then.

Most remittance companies advertise low service fees for international
transfers typically $8 to $12 to wire $300 to Mexico. But that cost can
double because of what critics call ''hidden fees,'' charged when dollars
are converted to foreign currency at poor exchange rates.

For instance, it costs about 10.4 cents to buy a Mexican peso at current
exchange rates. The wire-transfer companies, however, charge their
customers as much as a penny more for that same peso. The difference,
called the foreign exchange spread, is pocketed by the companies. With
enough transactions, the money starts adding up.

Advocates charge that wire-transfer businesses have kept quiet about this
income stream, and in doing so, take financial advantage of consumers who
can least afford it. ''It's a major revenue producer for these companies,''
said Matthew Piers, lead attorney in the federal class-action suit. ''In
fact, I think it's safe to say that it's a bigger revenue producer than the
service fees.''

Transfer companies ''stole a lot of money because you'd send dollars here
and they would receive pesos there, and (the remittance firms) would charge
for the difference,'' said Arnulfo Chino Rojas, a New York restaurant
worker from the Mexican state of Puebla.

Money-transfer companies acknowledge that the foreign exchange spread is a
major profit center, and defend their practices by saying that the exchange
rate is disclosed on the receipt given to consumers. ''Were these hidden
fees? Absolutely not,'' said Peter Ziverts, a spokesman for Western Union,
a subsidiary of Atlanta-based First Data Corp. ''The foreign exchange
component is disclosed to the consumer at the time of the transaction.''

Even so, the allegations of shady practices have affected the companies'
business. ''One of the things that we're very concerned with is our
relationship with our customers, and I think, clearly, negative publicity
has hurt some of those relationships,'' said Brad Parker, a spokesman for
Phoenix-based Viad Corp., MoneyGram's parent company.

Seeking to rebuild those relationships, the companies last year agreed to a
class-action settlement that offers coupons good for discounts on future
wire transfers. They have also agreed to pay $4.6 million to community
groups assisting Mexican immigrants, and more than $10 million in
plaintiffs' legal fees. The settlement, pending before a federal judge,
would also require the companies to disclose their foreign-exchange fees in
any price-related advertising.

But Fred Kumetz, a Los Angeles lawyer who initiated the battle over fees,
criticizes the pact as a ''sweetheart settlement'' that would buy the
support of community groups while doing little to protect consumers. Kumetz
represents a group of California consumers who are pursuing a separate case
in state court that seeks direct payments from wire-transfer companies.

While the settlement won't cut fees, Western Union and MoneyGram are now
facing more price-driven competition from smaller remittance companies,
said Gustavo Mohar, an official with the Mexican embassy in Washington,
which three years ago began tracking wire-transfer rates after fielding
many complaints.

Operations like Raza Express in Los Angeles now undercut the big transfer
firms on price. In New York, Delgado Travel, a chain of 19 travel agencies
in neighborhoods with large immigrant populations, now advertises flat fees
of 4 percent to wire money to Mexico, El Salvador, Nicaragua and other
Latin American countries.

The big companies have recently pared their own fees in New York, Western
Union is now cheaper than the low-cost competitors. But the big companies'
prices remain higher than competitors in many other markets.

In Los Angeles, for example, Western Union was recently charging a $12 fee
to send $300 to Mexico at an exchange rate of 8.85 pesos per dollar
counting the foreign exchange spread, the transaction cost $28. Meanwhile,
competitor Raza Express was charging a $10 fee with an exchange rate of
9.25 pesos, for an overall cost of about $13.

The U.S. Postal Service has gotten into the act with Dinero Seguro Spanish
for ''secure money'' which allows people to wire money from Texas,
California and Illinois to Mexico. That program is scheduled to be expanded
next year to offices in every state and service to other countries.

Meanwhile, the World Council of Credit Unions has launched its own
fledgling effort as a way to attract new members. In July, the council's
IRNet program began offering discount wire transfers to Mexico, Guatemala
and El Salvador from Southern California Edison Federal Credit Union in Los
Angeles, where Gregorio Lazaro is a member. Plans call for the service to
expand to other credit unions in California, Texas, North Carolina and
Illinois. ''The fact of the matter is that Latinos in the U.S. are
underserved with financial services,'' said Dave Grace, an executive with
the credit union group.

The new ventures in the U.S. are supplemented by efforts outside the
country. Mexican president-elect Fox has asked his advisors to study the
remittances issue to find ways to cut costs for expatriates.

And a project launched by the Banque Haitienne de Developpement aims to
open wire-transfer counters inside community cooperatives in rural Haiti.
The service, funded partly with a $175,000 grant by the U.S. government,
aims to cut transfer fees and plow profits into housing and business loans
for Haitians.

But for Gregorio Lazaro, the bottom line is getting the maximum amount
home. ''I feel very good because I feel my family is receiving more money
now,'' he says. ''It's very important that hey receive this money.'' (AP
Online, November 14, 2000)


* Posting Website Privacy Policy Is Not Enough, NYLJ Report Says
----------------------------------------------------------------
During the past two years, an increasing number of Web sites have adopted
privacy policies describing for users how the sites collect and use
personal data. Significantly, these policies generally have been adopted to
meet user expectations and not because of any legal or regulatory
requirement to do so.

Many companies therefore operate under the false assumption that there can
be no legal risk to posting a comprehensive privacy policy. However, in a
number of recent cases, federal and state regulators, as well as private
litigants, have alleged that companies engaged in unlawful deceptive
practices by failing to adhere to their own privacy policies. In order to
minimize the risk of such legal and regulatory action, companies need to
consider carefully how they will use personal data, draft a policy that is
consistent with such usage, and then monitor and audit their data
activities on an ongoing basis to ensure compliance.

                    Internet Privacy Landscape

Today, consumers who buy tulip bulbs from a catalog they received in the
mail can be assured that within a few weeks they will receive catalogs from
a wide variety of garden product vendors. This is the direct result of
their name being sold as part of a mailing list of individuals with certain
buying preferences. Direct marketers have been able to engage in this type
of activity for years because, in the United States, there are only a small
handful of statutes protecting consumer privacy.

When the Internet evolved into a robust medium for communicating and
transacting with consumers, e-tailers assumed that they also could make
broad use of personal information to promote and market their products and
to sell that information to interested third parties. While these e-tailers
were correct as a matter of law, few anticipated the widespread consumer
backlash against the use of personal information that was collected on the
Internet. A number of theories have evolved as to why this backlash
developed, including the sheer power of the Internet as a technology to
collect and mine data and the loss of control consumers have as to how
their information might be used.

Whatever the cause, Web-site owners now operate in an environment where
privacy policies are not only highly scrutinized, but where broad-based
legislation might soon be enacted. Congress is currently contemplating
several on-line privacy bills, partly in response to a request from the
Federal Trade Commission that it does so.

Many consider the leading piece of proposed legislation to be the Consumer
Privacy Protection Act of 2000 (the CPPA). The CPPA would require, in part,
that consumers be given notice of personal information that is being
collected on-line and the opportunity to consent to the use of such
information. Companies would also be required to keep such information
secure and establish a viable enforcement mechanism to safeguard consumer's
privacy rights. The Consumer Privacy Protection Act of 2000, S. 2606, 106th
Cong. (2000).

The FTC's request was the result of a Web-site survey it conducted earlier
this year, in which it found, in its view, that numerous Web sites did not
have a privacy policy or had privacy policies that did not provide
consumers with sufficient information about how their personal information
might be used.

FTC Staff Report: Privacy On-line: Fair Information Practices in the
Electronic Marketplace, A Report to Congress (May 2000). The FTC vote was
3-2 and included a strong dissent from Commissioner Orson Swindle who
stated that the FTC's survey was flawed, and the recommendations too broad
given the potential impact on the industry.

                     Legal Challenges

Although most privacy legislation is still only pending, Web sites must
nonetheless be vigilant about strictly following their stated policies. The
action by the New York State Attorney General against InfoBeat LLC earlier
this year provides a good illustration of the difficulties companies may
face.

In the Matter of InfoBeat LLC, Attorney General of the State of New York
Internet Bureau, Assurance of Discontinuance, dated January 2000 (Assurance
of Discontinuance).

The InfoBeat site provided content and e-commerce for companies looking for
marketing strategies on the Internet. The site also included third-party
advertising banners that linked to the advertisers' Web sites. As is common
practice, these advertisers received a referring uniform resource locator
(URL) address that allowed them to track if a user had linked from
InfoBeat.

In its privacy policy - titled its "Statement of Integrity" - InfoBeat
stated that it never shared an individual user's personally identifiable
information (e.g., name, e-mail address or phone number) with third
parties. Unbeknownst to InfoBeat, however, the e-mail addresses of InfoBeat
users were inadvertently being imbedded in the referring URL sent to two of
InfoBeat's advertisers. Relying on state consumer protection laws, the New
York Attorney General alleged that by sending these e-mail addresses,
InfoBeat had violated its own privacy policies and thereby engaged in
deceptive business practices and false advertising.

InfoBeat was required to enter into an official Assurance of Discontinuance
with the New York Attorney General under which it was required to
distribute an e-mail message to all of its current members summarizing its
privacy practices, hire an independent third-party auditor to review its
information practices and refund to the Attorney General's office the $
75,000 cost of the investigation.

In some cases, Web sites have found that activity they would have thought
to be perfectly legitimate might violate their privacy policies. For
example, in June 2000, Toysmart.com placed its assets, including customer
records, up for sale as part of its bankruptcy proceeding and received
several bids for the customer data. ("Failed Dot-Coms May Be Selling Your
Private Information," CNETNews.com, The New York Times, July 1, 2000.)

In response, the FTC and 41 states' attorneys general filed suits against
Toysmart.com alleging that such proposed sale was in direct violation of
its privacy policy which had stated that such information would never be
shared with a third party. ("Who Are the Privacy Police?," Keith Perine,
The Industry Standard, Aug. 7, 2000.)

The FTC eventually entered into a settlement with Toysmart.com under which
Toysmart.com agreed to sell all of its assets to one entity, rather than
separately selling its customer data. A federal bankruptcy judge held the
settlement to be unenforceable, however, and the ultimate determination of
Toysmart.com's data rights remains uncertain. "Judge Overturns Deal on Sale
of On-line Customer Database," Michael Brock, The New York Times, Aug. 18,
2000.

A company's failure to adopt, adhere to, and internally audit its privacy
policy can also lead to costly class-action lawsuits. DoubleClick Inc., an
Internet advertising company, at one time faced 25 lawsuits alleging that
it deceptively tracked, recorded and sold for profit personally
identifiable user information and failed to provide adequate safeguards for
inadvertent disclosures of such information. The plaintiffs alleged that
DoubleClick violated its own privacy policy by falsely stating that its
proprietary ad-serving technology did not identify users personally and
that all users who received an ad targeted by DoubleClick would remain
completely anonymous. (See, e.g., Katie L. Steinbeck, et al. v.
Doubleclick, Inc., Plaintiff's Brief, 10-11.) The plaintiffs requested,
among other remedies, that DoubleClick publish in general circulation
newspapers and on the Web sites using its advertising services an admission
that it had been collecting personal information without the consent of
users.

                  Proactive Privacy Policies

Web sites can usually avoid the problems that InfoBeat and others have
faced by establishing proactive, ongoing privacy practices.

Draft a Policy That Reflects Practice. One of the traps that Web sites
sometimes fall into is drafting a privacy policy that, from the beginning,
does not accurately reflect how the site actually intends to use the data
it is collecting. This is often the result of preparing privacy policies in
a vacuum or merely copying the privacy policy of another site in a similar
line of business.

To avoid this trap, all areas of the company that might use data collected
on the Web site should be consulted about, and actively involved in, the
drafting of the site's privacy policy. The company should broadly consider
how it is currently using data, and how it may do so in the future.

At a minimum, any comprehensive privacy policy should accurately set forth:
the means by which user information is collected (e.g., through
registration forms, e-mails sent to the company, etc.) (ii) what types of
information are collected; (iii) how the information may be used by the Web
site; (iv) with whom, if anyone, such information is shared; (v) how such
information is kept secure; and (vi) the process by which a user may
correct or delete any information previously collected.

Web sites that are drafting new privacy policies or updating existing ones
should also take into account the data protection safe harbor principles
recently adopted by the U.S. Department of Commerce and the European
Commission. ("Safe Harbor Privacy Principles" issued by the U.S. Department
of Commerce, 65 Fed. Reg. 45666 (2000).) Sites that adopt these principles
will be deemed to have complied with the EC's requirement that entities
provide an "adequate" level of protection for personal information they
receive regarding individuals residing in EC member states. While the safe
harbor only applies to information received from the EC, many believe that
any U.S. legislation will likely be shaped by such safe harbor provisions.

In addition to the six areas of disclosure set forth above, the safe harbor
also requires that users be given the opportunity to choose whether
disclosure of their personal information is permitted and that reasonable
precautions be taken to protect personal information from loss, misuse or
unauthorized access.

Finally, companies should consider whether they are subject to any existing
privacy legislation, such as those statutes protecting the use of financial
information or the use of information collected from children. With the
exception of the collection of certain sensitive information, neither the
federal government nor any state currently requires the on-line posting of
a privacy policy. Specifically, the law mandates certain privacy practices
regarding the collection of information from children under the age of 13
and financial information. The Children's On-line Privacy Protection Act of
1998 both prohibits the collection of personal information from children
under the age of 13 without the prior, verifiable consent of a parent or
legal guardian and also requires the disclosure of all such practices. The
Financial Services Modernization Act of 1999 prohibits certain financial
institutions from disclosing to unaffiliated third parties "nonpublic
personal information" and requires consumer privacy disclosures.

Update the Privacy Policy. As diligent as companies may be in drafting
their initial privacy policies, the business reality is that their data
usage practices will evolve over time. If a company fails to update its
policy to reflect its new practices, it will expose itself to possible
lawsuits and regulatory actions.

In order to address this, companies should be sure to include in their
privacy policies a statement that they may update the policy from time to
time and that data collected under the old policy will be subject to the
terms of the new policy. Companies might also want to specify how the new
policy will be disclosed to its users. This might include merely posting
the new policy on the site and including a notice on the home page that the
privacy policy has changed, or e-mailing a notice of the new policy to the
users. For example, Amazon.com recently blanketed its customer base with an
e-mail advising of its updated privacy policy. (Tamara Loomis, "New Amazon
Privacy Policy is Road Map," New York Law Journal, Sept. 21, 2000.) In the
event that the new policy allows the site to make broader use of a user's
personal information, the site should strongly consider allowing existing
users to opt out of such new uses.

                    Audit Privacy Practices

A company can maintain or update its privacy policy only if it is aware of
its data activities. This can be accomplished through a regular and formal
data privacy audit. To accomplish this, a company should form a team that
is dedicated to addressing on-line privacy matters. For example,
DoubleClick recently established a Consumer Privacy Advisory Board and has
added the position of Chief Privacy Officer (CPO) to its executive staff.

This will provide valuable consistency and accountability to the process.
Given the growing complexity of privacy matters due to new and evolving
legislation, both in the U.S. and internationally, and new technological
means to acquire and exploit personal information, the team should include
legal, business and technical representatives.

The team should first implement and conduct employee training regarding the
company's privacy policy. Knowledgeable employees can better spot potential
issues prior to any actual problems. Such training should also minimize the
possibility that employees enter into agreements where the company is
making data sharing commitments with third parties that are inconsistent
with the company's stated policies. Indeed, a company may want to require
that any contract that involves data use be reviewed by a member of the
team.

Second, the team should adopt audit procedures to be undertaken at various
times during the year. Such procedures might include the following
measures:

i)  meeting with the marketing department to learn what data uses are being
considered and evaluating whether they are consistent with the company's
privacy policy;

(ii) testing all specific practices mentioned in the privacy policy to
verify system integrity (e.g., the ability of a user to correct or update
information previously collected on the Web site);

(iii) reviewing the integrity of database security measures;

(iv) "stress-testing" the site to make sure that no personal information is
being inadvertently disseminated; and

(v) monitoring legislative and regulatory developments in the U.S. and, if
applicable, internationally, to make sure that the site is in legal
compliance.

Some companies have elected to outsource the audit function to third
parties. For example, to increase consumer confidence in its privacy
practices, Expedia.com hired PricewaterhouseCoopers to conduct a privacy
audit. "Sellers Hire Auditors to Verify Privacy Policies and Increase
Trust," Bob Tedeschi, The New York Times, Sept. 18, 2000, at C12.
Whether or not to hire an independent, professional firm to conduct a
privacy audit will depend, among other factors, on the size of the company
and the extent to which it uses personal data.

Regardless of whether it handles these matters in-house or outsources the
function to a third party, any company collecting personally identifiable
information on-line should strongly consider a privacy audit procedure. As
demonstrated by the recent actions taken by the FTC and state attorneys
general, inadvertent disclosures of personally identifiable information
contrary to a published on-line privacy policy can result in swift and
potentially damaging monetary penalties and negative press. By adopting the
proactive measures suggested above, a company can build user confidence in
its site's privacy practices and avoid possible legal actions. (New York
Law Journal, November 6, 2000)


* Study Shows Securities Fraud Cases and Settlements Are on the Increase
------------------------------------------------------------------------
Shareholder class actions alleging securities fraud increased to 238 in
1999 from 188 in 1995, according to the National Economic Research
Associates, a New York-based economic consulting firm. The study also shows
that average settlements rose to $ 12 million from $ 8.5 million during the
same period. About 30% of the cases were dismissed in 1999, compared with
13% in 1995. (The National Law Journal, November 13, 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.

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