CAR_Public/001129.MBX               C L A S S   A C T I O N   R E P O R T E R

             Wednesday, November 29, 2000, Vol. 2, No. 232

                             Headlines

AMERICAN PAD: Securities Suit Against Underwriters Dismissed in Dallas
ANNTAYLOR STORES: High Court Won't Review Securities Suit Reinstatement
AUTO INSURANCE: State Farm to Cut Rates for Big Cars, Trucks, Sport Car
CHUBU ELECTRIC: Ct Orders Firm & Japanese Govt to Pay for Air Pollution
CROWN CENTRAL: Announces Dismissal of Securities Suit in Texas

DAIMLERCHRYSLER: CNN Coverage on Lawsuit over Merger
GIANT FOOD: Employees Vow to Appeal Denial of discrimination suit Cert.
HELIONETICS, INC: Milberg Weiss Files Securities Suit in California
HELIONETICS, INC: Milberg Weiss Files Securities Suit in California
INDIANAPOLIS POLICE: Court Strikes Down Random Drug Stops

LABORATOIRE SERVIER: Decision Time Approaces In Action Over Isomeride
LASON, INC: Names Ronald D. Risher Chief Financial Officer
MAGELLAN HEALTH: Journal Reviews Lawsuits’ Focus on Contractor Role
MICROSOFT CORP: Says Trial Judge in Antitrust Suit Made Series of Errors
ODYSSEY PICTURES: Securities Suit in 1996 Dismissed; New Filings Pending

PNC BANK: Check Cashing Charge on Non-Customer Does Not Violate PA Code
POLYMEDICA CORP: Shapiro Haber Files Suit in MA on Behalf of Shareholder
PRESIDENTIAL ELECTION: Judge n. Sanders Chosen for Fla. Recount Case
SECURITY STORAGE: Sale at Merger Price Defeats Minority Shareholder Suit
SOTHEBY'S, CHRISTIE'S: Art Sellers Look to Use Coupons in Settlement

ZONOLITE LITIGATION: Suits against W.R. Grace, Sealed Air Merged in MA

                            *********

AMERICAN PAD: Securities Suit Against Underwriters Dismissed in Dallas
----------------------------------------------------------------------
A federal judge in Dallas has dismissed a securities fraud complaint
against the bankrupt American Pad & Paper Co., some of its officers and
directors, the parent of the company's lender bank, and underwriters of
its July 1996 initial public offering. Zishka et al. v. American Pad &
Paper Company et al. , No. 3:98-CV-0660-M (N.D. Tex., Sept. 13, 2000).

Under the heightened pleading standards of the Private Securities
Litigation Reform Act of 1995, the class-action complaint contained
undetailed, repetitive and conclusory allegations and is undifferentiated
as to the various defen dants, said Judge Barbara M.G. Lynn of the
Northern District of Texas. Even so, the court granted leave to replead
the complaint and the investors have the option of stating actionable
claims within a limited time period.

The investors filed suit under Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and under Rule 10b-5 for the period from July 2,
1996, through Dec. 17, 1997.

The complaint fails to meet the heightened pleading requirements of the
PSLRA, the judge ruled.

In part, the plaintiffs alleged that the chief executive officer and
chief operation officer knew that bad news was forthcoming and used that
insider knowledge to sell shares not long before the stock price dropped
substantially. Those allegations are sufficient to satisfy the motive of
scienter as to those two officers, Judge Lynn said, and their key roles
in the company provided an opportunity to defraud.

However, the judge held that the complaint inadequately alleged scienter
as to two directors who allegedly were motivated by the prospect of
lucrative compensation and bonuses under their employment contracts.

As to outside directors, she said scienter and motive were inadequately
pleaded, and there were no individual allegations against the directors
except for signing the 1966 10-K and registration statement.

Moreover, there was no showing that a bank holding company committed any
wrongdoing or that it controlled or conspired with either its
underwriting subsidiary or its lender subsidiary, Judge Lynn said.

Regarding the underwriters, the court also ruled that the complaint did
not adequately plead motive. For example, it does not allege that they
took part in the making of statements they knew or should have known to
be false during or before the IPO. And a vague hope of future business
and the existence of an indemnity do not provide an adequate motive, said
the court.

The facts are inconsistent with the purported profit motive of other
defendants, and the court held that the compensation motive is legally
insufficient to state a claim.

In granting leave to replead, Judge Lynn cautioned that she will
carefully scrutinize any amended complaint for allega tions that are
directly at odds with clearly, accurately disclosed risks in the
prospectus. She also directed the investors to make clear the basis for
any primary liability allegations as to each defendant. (Corporate
Officers and Directors Liability Litigation Reporter, October 23, 2000)


ANNTAYLOR STORES: High Court Won't Review Securities Suit Reinstatement
-----------------------------------------------------------------------
The U.S. Supreme Court won't review the reinstatement of a class-action
securities suit pending against AnnTaylor Stores Corp., a decision that
short-circuits for now the court's consideration of the burden
shareholder lawsuits must meet to survive early stages of litigation.

The high court's refusal to weigh in on the case means that AnnTaylor
must continue to battle allegations the company and former executives
fraudulently engaged in a scheme to inflate its stock price in 1994 by
hiding excess inventory, described in the initial shareholder complaint
as a "box and hold" strategy.

The case stems from a 1996 lawsuit brought by shareholders Carol Novak
and Robert Nieman on behalf of all purchasers of AnnTaylor stock between
Feb. 3, 1994 and May 4, 1995.

In November 1998, a federal judge dismissed the case, saying that the
plaintiffs didn't allege facts in their complaint that would have
strongly indicated AnnTaylor and its officials acted fraudulently.

But in June of this year, the Second Circuit Court of Appeals vacated
that decision and sent the case back for further proceedings, saying that
the district judge erred in concluding that the "plaintiffs failed to
plead sufficient facts to support a strong inference of fraudulent
intent" and that the judge placed an "exceedingly onerous burden" on the
shareholders to supply specifics, such as the names of their confidential
sources.

In broader terms, the decision means that lower federal courts will
continue to interpret in their own way certain key provisions of the
Private Securities Litigation Reform Act, passed in 1995, to help
companies fight off lawsuits claimed to be frivolous.

In its petition for review, lawyers for AnnTaylor, a New York-based
apparel retailer, argued that the reform act reflected Congress's attempt
"to create a uniform pleading standard for securities fraud class actions
more stringent" than previously applied. Instead, the lawyers said, the
courts of appeals have interpreted the pleading requirements "in
irreconcilably divergent manners, with the practical consequence that
securities class action complaints that would be dismissed in one
jurisdiction will be permitted to stand in others." (Dow Jones Business
News, monday, November 27, 2000)


AUTO INSURANCE: State Farm to Cut Rates for Big Cars, Trucks, Sport Car
-----------------------------------------------------------------------
State Farm, the nation's biggest auto insurer, plans to announce a shift
in its pricing policies that will cut rates for drivers of the biggest
cars, trucks and sport utility vehicles, like the Chevrolet Suburban,
based on claims data showing them to be the safest for their occupants.
By disregarding the threat that bigger cars pose to smaller vehicles, the
new pricing structure -- which will replace near-universal discounts for
vehicles equipped with air bags -- drew criticism from consumer
advocates. (The New York Times, November 28, 2000)


CHUBU ELECTRIC: Ct Orders Firm & Japanese Govt to Pay for Air Pollution
-----------------------------------------------------------------------
A Japanese court ordered the government and 10 firms Monday to pay some
307 million yen in damages to victims of air pollution in this central
Japan city.

Nagoya District Court ordered the government to make payments totaling
18.09 million yen to the plaintiffs, confirming its responsibility for
air pollution caused by automobile exhaust fumes on national roads
running nearby Nagoya port.

The court said the 10 firms, including Nippon Steel Corp. and Chubu
Electric Power Co., must pay 289.62 million yen for discharging toxic
smokes at their plants around the port in the southern part of the city.

The ruling thus admitted that suspended particulate matters, or SPMs,
which are included in exhaust gases, and nitrogen oxide discharged from
industrial plants, caused respiratory diseases that hit residents in the
city in the 1960s and 1970s.

A total of 145 citizens filed the damages suit in March 1989, including
those who were officially identified by the government as victims of
pollution-caused diseases, and the families of dead victims.

The total damages imposed on the defendants were far less than the 4.2
billion yen as sought by the plaintiffs.

The court, presided by Judge Akinori Kitazawa, also ordered the
government to suspend SPM emissions in excess of 0.159 milligram per
cubic meter on daily average, on National Route 23.

The Nagoya case was the last pending suit filed by victims of hazardous
smokes from industrial plants in Japan.

Resolved suits include one concerning air pollution damage in Amagasaki,
Hyogo Prefecture, western Japan, which resulted in defendant companies'
compensation payments to victims in an out-of-court settlement in
February 1999.

Monday's court ruling also came as a fresh defeat for the government
after it lost a series of past suits filed against its failure to stop
emissions of harmful exhaust fumes on roads.

The Nagoya case represented the second suit, in which the government was
ordered to stop emissions of certain levels of SPMs after a similar
pollution suit in Amagasaki, for which a ruling was handed down in
January 2000. (Jiji Press Ticker Service, November 27, 2000)


CROWN CENTRAL: Announces Dismissal of Securities Suit in Texas
--------------------------------------------------------------
Crown Central Petroleum Corporation (Amex: CNP.A, CNP.B) announced on
November 27 that in an opinion dated November 20, 2000, federal Judge
Richard A. Schell, Chief Judge of the Eastern District of Texas, denied
an attempt to certify a class in a discrimination case filed against
Crown. The case was filed in 1997 by eight employees of Crown alleging
various claims of racial and sexual discrimination. When the case was
originally filed, the plaintiffs purported to represent a national class
of all female and African-American employees throughout the Company. They
initially alleged claims involving company-wide disciplinary and
promotional policies as well as harassment.

During the course of the litigation, the plaintiffs eventually dropped
all of their claims on behalf of the alleged class regarding discipline
and promotions as well as all claims relating to employees outside the
state of Texas. In his ruling, Judge Schell refused to certify even that
limited class, finding that a class action was an inappropriate method
for handling the case.

Crown continues to deny all of the allegations of discrimination.

The case will now proceed on the various separate claims of the eight
individual plaintiffs. Crown believes these individual cases are also
without merit.

Headquartered in Baltimore, Maryland since 1930, Crown advises that it
operates two Texas refineries with a total capacity of 152,000 barrels
per day, 329 Crown gasoline stations and convenience stores in the
Mid-Atlantic and Southeastern U.S., and 13 product terminals along the
Colonial, Plantation and Texas Eastern Products pipelines.


DAIMLERCHRYSLER: CNN Coverage on Lawsuit over Merger
----------------------------------------------------
(Broadcast on the Cable News Network on November 28, 2000)

    HEADLINE: 'Financial Times': Kirk Kerkorian Sues DaimlerChrysler,
Alleging Fraud

    BYLINE: David Haffenreffer, Deborah Marchini

    HIGHLIGHT: One of DaimlerChrysler's biggest shareholders, Kirk
Kerkorian, is suing the company, alleging fraud. Kerkorian wants the
merger dissolved, but this morning Daimler said it has no plans to cut
Chrysler off. Lionel Barber, of the "Financial Times," discusses what
Kerkorian wants and his chances for success.

    DAVID HAFFENREFFER, CNN ANCHOR: Well, one of DaimlerChrysler's
biggest shareholders, Kirk Kerkorian, is suing the company, alleging
fraud.

    DEBORAH MARCHINI, CNN ANCHOR: Kerkorian wants the merger dissolved,
but this morning Daimler said it has no plans to cut Chrysler off.

Lionel Barber, of the "Financial Times," joins us from the "FT"'s London
newsroom.

And what do you sense that Kirk Kerkorian wants?

     LIONEL BARBER, NEWS EDITOR, "FINANCIAL TIMES": I think he wants a
lot of money. He has seen his shareholding in DaimlerChrysler plunge
since the merger by almost 50 percent, he has filed this $8 billion suit,
we know he is not going to get $8 billion.

But he is going to stoke up the pressure and he is basing his case partly
on an interview which Juergen Schrempp, the DaimlerChrysler boss, gave to
the "Financial Times" a few weeks ago, in which Mr. Schrempp made clear
that there was always a bit of a plan B, that yes, he would cast this as
a merger of equals between Daimler- Benz and Chrysler, but actually,
after a few months, Chrysler would assume a more subsidiary role in that
division, and then it would be a full-scale takeover. And that is
actually what has happened recently.

    HAFFENREFFER: Do you think it is Mr. Kerkorian's hope that perhaps
this turns into a class-action suit?

    BARBER: He may have that in the back of his mind, although what we
are going to try and look at in tomorrow's paper is how serious he has a
chance of succeeding and whether this is really serious or frivolous. I
mean, after all, if you look at some of the great mergers recently, look
at Citigroup and Travelers, somebody eventually -- they cast it as a
merger of equals -- but somebody comes out on top and in Citigroup's case
it was Sandy Weill.

    HAFFENREFFER: All right, Lionel Barber, at the "Financial Times,"
thanks for joining us.

And we should note that the folks at DaimlerChrysler said -- they called
the lawsuit "without merit."


GIANT FOOD: Employees Vow to Appeal Denial of discrimination suit Cert.
-----------------------------------------------------------------------
The attorney for plaintiffs in a discrimination suit against the Giant
Food supermarket chain said she will appeal the denial of class-action
status by a federal judge. "It's not over til it's over, til the fat lady
sings. Isn't that what they say?" plaintiffs attorney JoAnn P. Miles said
following the ruling.

U.S. District Judge Frederick J. Motz granted the motion for summary
judgment, in effect refusing class certification in a case filed by six
black employees - Raquib A. Muhammad, Daniel E. Johnson III, Darnell
Hart, Ronald A. Evans, Linda A. Jones and Myra B. Jones. Evans is the
only employee still working for the supermarket chain.

Miles said the ruling is far from the end of the case. "Class
certification could be reinstated. We still have another case. The great
thing about motions for class certification is that they can be
reinstated two or three times," Miles said.

The other case, Gregory Carson et al. v. Giant Food Inc., was filed
against the company in 1996 on behalf of 11 black employees in Giant
stores and its warehouse, Miles said.

The Carson case is still pending before Motz.

Barry F. Scher, Giant vice president for public affairs, said that the
company would not comment on the case.

In addition to granting Giant's motion for summary judgment, Motz ordered
the case to be separated into six individual cases.

Miles said she had never seen such a decision made before, and was not
sure how it would affect her appeal to the 4th Circuit Court of Appeals.

"We may end up having to ask the 4th to consolidate the cases," Miles
said.

"The point is, the class certification is not a dead issue."

Last year, Giant executives pledged to work with NAACP officials in
Prince George's County to assure that minorities have equal access to
jobs and business opportunities with the retailer. The move, however, was
immediately criticized by a plaintiffs attorney as a token effort to
derail the multi-million dollar lawsuits.

The company has entered into a similar fair employment practices pact in
1997 with the national office of the National Association for the
Advancement of Colored People, based in Baltimore.

The lawsuits allege management at the supermarket chain routinely used
racial epithets to describe black workers; condoned the use of such terms
by white employees; maintained segregated locker facilities at one site;
and condoned the hanging of black dolls by nooses and offensive pictures
in the work place.

Black employees were also wrongly accused of theft and not given the same
opportunities for full-time work and advancement, the suits contend. (The
Associated Press State & Local Wire, November 28, 2000)


HELIONETICS, INC: Milberg Weiss Files Securities Suit in California
-------------------------------------------------------------------
Milberg Weiss (http://www.milberg.com)announced on November 27 that
after 6 years of litigation, a federal jury in the United States District
Court for the Central District of California returned a verdict in favor
of a class of investors in the now bankrupt company, Helionetics, Inc.
The jury found that investors were defrauded by certain of the company's
senior officers and directors in a scheme that violated sections 10(b)
and 20(a) of the Securities Exchange Act of 1934. The jury awarded
plaintiffs' aggregate class-wide damages of $15.4 million against those
officers and directors and against the spouse of Company's Chairman for
her control over the defendants. Lead trial counsel were Milberg Weiss
partners Mark Solomon and Paul Howes. Commenting on the verdict, Mark
Solomon stated: "This should serve as a warning to corporate executives
who lie and try to hide behind the Company's assets -- ultimately their
individual assets should be, and are, on the line."

Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach,
800/449-4900 wsl@mwbhl.com


HELIONETICS, INC: Milberg Weiss Files Securities Suit in California
-------------------------------------------------------------------
Milberg Weiss (http://www.milberg.com)announced on November 27 that
after 6 years of litigation, a federal jury in the United States District
Court for the Central District of California returned a verdict in favor
of a class of investors in the now bankrupt company, Helionetics, Inc.
The jury found that investors were defrauded by certain of the company's
senior officers and directors in a scheme that violated sections 10(b)
and 20(a) of the Securities Exchange Act of 1934. The jury awarded
plaintiffs' aggregate class-wide damages of $15.4 million against those
officers and directors and against the spouse of Company's Chairman for
her control over the defendants. Lead trial counsel were Milberg Weiss
partners Mark Solomon and Paul Howes. Commenting on the verdict, Mark
Solomon stated: "This should serve as a warning to corporate executives
who lie and try to hide behind the Company's assets -- ultimately their
individual assets should be, and are, on the line."

Contact: Milberg Weiss Bershad Hynes & Lerach LLP William Lerach,
800/449-4900 wsl@mwbhl.com


INDIANAPOLIS POLICE: Court Strikes Down Random Drug Stops
---------------------------------------------------------
The Supreme Court Tuesday declared random police drug stops
unconstitutional.

The 6-3 decision strikes down an Indianapolis policy in which police
randomly stopped vehicles going into drug-infested neighborhoods for
inspection by drug-sniffing dogs.

Writing for the majority, Justice Sandra Day O'Connor said, "The Fourth
Amendment requires that searches and seizures be reasonable. A search or
seizure is ordinarily unreasonable in the absence of individualized
suspicion of wrongdoing."

O'Connor conceded that in the past the Supreme Court has upheld "brief,
suspicionless seizures of motorists at a fixed Border Patrol checkpoint
designed to intercept illegal aliensand at a sobriety checkpoint aimed at
removing drunk drivers from the road." The high court has also upheld "a
similar type of roadblock with the purpose of verifying drivers' licenses
and vehicle registrations."

She added, "In none of these cases, however, did we indicate approval of
a checkpoint program whose primary purpose was to detect evidence of
ordinary criminal wrongdoing."

The Supreme Court's three consistent conservatives -- Chief Justice
William Rehnquist and Justices Antonin Scalia and Clarence Thomas --
dissented.

Rehnquist said the only difference between those random stops approved by
the majority and those declared unconstitutional was the addition of a
drug-sniffing dog. Scalia joined fully in the chief justice's dissent,
but Thomas only partly agreed, and wrote separately in dissent.

Thomas, in very surprising language for a traditional ally of Rehnquist
and Scalia's, said he was unsure if the Supreme Court precedents allowing
drunk-driving or drivers-license stops "were correctly decided. Indeed, I
rather doubt that the Framers of the Fourth Amendment would have
considered 'reasonable' a program of indiscriminate stops of individuals
not suspected of wrongdoing."

In other words, Thomas questioned the constitutionality of all such
stops.

But he added in his short dissent that the case before the Supreme Court
did not address those precedents, and so he was forced to join Rehnquist
in disagreeing with the majority.

In the case decided Tuesday, law enforcement officers blocked a
predetermined number of vehicles going into drug-infested neighborhoods
in Indianapolis. One officer checked the licenses and registrations of
those drivers stopped. At the same time another officer led a
drug-sniffing dog around each stopped vehicle. If the dog signaled the
presence of drugs, officers believed they had "probable cause" to search
a vehicle without a warrant.

Indianapolis conducted six such roadblocks between August 1998 and
November of the same year, when the courts shut them down. Police stopped
1,161 vehicles, and arrested 55 people on narcotics offenses and another
49 for other crimes.

Two drivers who were stopped at Indianapolis drug checkpoints in 1998
filed a class-action suit against the city and city officials in federal
court. The men, James Edmond and Joell Palmer, were not charged with drug
offenses, but they contended that the stops were unconstitutional.

The Fourth Amendment to the Constitution bans "unreasonable searches and
seizures," among other things.

Though a federal judge ruled the drug roadblocks were constitutional --
citing those Supreme Court decisions that allowed stops to search for
illegal aliens and to check for sobriety -- a divided federal appeals
court eventually ruled for the men, saying that law enforcement must have
some reason to believe criminal activity has taken place if officers are
going to stop a vehicle for a criminal investigation.

The city then asked the Supreme Court for review. Tuesday's decision
"affirms" or upholds the appeals court decision. (United Press
International, November 28, 2000)


LABORATOIRE SERVIER: Decision Time Approaces In Action Over Isomeride
---------------------------------------------------------------------
The final phase of legal proceedings against the French drugmaker
Laboratoire Servier over its appetite suppressant Isomeride
(dexfenfluramine) will take place in Paris on December 22, when a
Nanterre tribunal is expected to deliver a judgement that will have a
major impact on the company one way or another. The compound was also
marketed by American Home Products as Redux, but was withdrawn from the
US and European markets following the observance of side effects
including pulmonary hypertension and deformation of the heart valves
(Marketletters passim).

The Servier action has been rumbling on for three years and concerns the
case of Anna Paulos, who is terminally ill with pulmonary arterial
hypertension which she attributes to use of dexfenfluramine, a belief
given substantiation by drug experts. Servier has always denied any
connection between dexfenfluramine and Ms Paulos' condition, and the
company's lawyer is calling for the withdrawal of the expert report on
the grounds that it fails to establish a certain cause of the disease in
this case. Earlier this year, the firm stated that it wished to draw
attention to the fact that, up to the present, "no direct and certain
causal link" has ever been demonstrated between these drugs and cardiac
valvulopathy or pulmonary arterial hypertension (Marketletter April 10).

                 7 million French patients in 10 years

Around 7 million French patients used dexfenfluramine in the 10-year
period from its launch in 1985 and, of this total, several hundred were
affected by pulmonary arterial hypertension. Following an inquiry report
published by Lucien Abenhaim in 1995 underlining the significant risk of
the condition associated with dexfenfluramine use, the French regulatory
authorities limited prescription of the agent to the hospital sector.
Despite this, it was launched in the USA the following year by AHP but
withdrawn from sale in both markets (Marketletter September 22, 1997).

In contrast to France, legal actions mushroomed in the USA and, in order
to escape a large-scale class action, AHP agreed at the end of 1999 to
pay $ 3.75 billion in compensation to Redux patients (Marketletters
passim). No class action procedure is available under French law and only
one other woman is claiming compensation and damages from Servier. She
filed her action in March 1997 and the total amount at issue is 7 million
French francs ($ 909,300).

However, the Paulos case is said by a number of observers to constitute a
serious precedent for Servier because it is being followed by a large
number of pulmonary arterial hypertension patients who have formed an
association. AHP is also understood to be considering an action against
Servier after losing billions of dollars through the drug. (Marketletter,
November 27, 2000)


LASON, INC: Names Ronald D. Risher Chief Financial Officer
----------------------------------------------------------
Lason, Inc. (OTCBB:LSON) announced that Ronald D. Risher will join the
Company as Executive Vice President and Chief Financial Officer. Mr.
Risher (age 44) was most recently a Principal of Franklin Advisors, LLC
and previously served as Vice President, Corporate Controller, Treasurer
and Secretary of Thorn Apply Valley, Inc.

Commenting on the announcement, John Messinger, president and chief
executive officer of Lason, stated, "Ron Risher joins Lason with a very
diversified experience in financial management. He served in key
financial and accounting roles for a $900 million public company,
including banking and financial institution relationships, SEC reporting,
acquisitions, budgeting and financial projection modeling. He will assume
the CFO's role from John Stelter, Lason's interim CFO from the firm of
Conway MacKenzie & Dunleavy. Mr. Risher will work closely with the Conway
MacKenzie firm in transitioning the Lason financial management team to an
in-house operation.

"Ron Risher's experience with multi-divisional financial reporting will
also be important in his role of directing the field accounting for
Lason's four newly formed divisions. He has substantial experience in
developing corporate wide accounting policies and treasury management
functions including credit, collection and cash management. We look
forward to Ron joining the senior management team at Lason and his
leadership of the financial and accounting functions."

Ronald D. Risher is a Certified Public Accountant and a Cum Laude
graduate of Western Michigan University. Prior to joining Lason, Mr.
Risher founded Franklin Advisors, LLC, a professional corporation
providing a wide array of executive management and consulting services.
He joined Thorn Apply Valley, Inc. in 1983 and most recently served as
Vice President Corporate Controller, Treasurer and Secretary of the
Company in 1999 prior to founding Franklin Advisers, LLC. Prior to
joining Thorn Apple Valley, Mr. Risher was with Price Waterhouse & Co.
since 1978.


MAGELLAN HEALTH: Journal Reviews Lawsuits’ Focus on Contractor Role
-------------------------------------------------------------------
Two major law firms have filed nationwide class-action lawsuits against
Magellan Health Services Inc. and subsidiary Magellan Behavioral Health
Inc., charging that the managed behavioral health care giant provides
coverage of lesser market value than the coverage promised by health
plans that use Magellan as a carve-out contractor.

The lawsuits are a first for the behavioral health care industry.
Previous suits have focused on denial of care or, in an unsuccessful suit
brought by a group of New Jersey providers, on price-fixing by the
industry's largest players. The issue at hand in the most recent action
is Magellan's role as a carve-out contractor and the failure to disclose
that role to health plan members.

Filed Oct. 26 in U.S. District Court in Missouri by the Washington,
D.C.-based Cohen, Milstein, Hausfeld & Toll and the Philadelphia-based
Berger & Montague, the lawsuits are similar to a consolidated set of
class-action suits filed against seven of the nation's largest health
maintenance organizations (HMOs), charging that they have failed to
disclose their managed care practices.

The new lawsuits are not intended to change the way care is managed, but
to require that companies tell the public what their practices are so
that it can make an informed choice about whether it wants to do business
with a particular company, Stephen D. Annand, an attorney with Cohen
Milstein, told ADAW.

"This lawsuit does not challenge the legality, or even the wisdom, of
managed care in general," the complaint reads. "Rather, it is aimed at
forcing Magellan to abide by its legal obligations, to refrain from fraud
and other abuses, and to return to those persons damaged by its
misconduct the unjust enrichment obtained by Magellan."

The lawsuits contend that Magellan has:

* Failed to fully identify and explain its participation in the
   provision of covered behavioral health benefits.

* Failed to inform class members that in many circumstances, it has
   assumed the underlying insurance risk for their behavioral health
   care benefits.

* Failed to disclose that it applied coverage criteria that are more
   restrictive than the definition or criteria of medical necessity used
   to describe coverage in health plan documents.

* Failed to inform class members that it created financial incentives or
   exerted pressure on physician advisers and claims reviewers to deny
   claims regardless of the medical necessity of the services involved.

* Failed to inform class members that it provided direct financial
   incentives to physicians, health care professionals and others
   through means such as capitated payment arrangements that are
   intended to reduce the amount of care provided to class members.

* Failed to inform class members that it had not adopted guidelines for
   treatment of schizophrenia and other major psychiatric disorders.

The lawsuits contend that Magellan, by means of material representations
and omissions, provided class members with coverage of lesser market
value than the coverage that had been described and presented to plan
members.

The case is an important one because it demonstrates that not only are
HMOs liable to the public, but their subcontractors have independent
liability as well. "No one has brought them before the judicial system to
be answerable for their role in this," attorney Annand said of carve-out
companies.

The plaintiffs are seeking relief under two federal statutes: the
Racketeer Influenced and Corrupt Organizations Act (RICO) and the
Employee Retirement and Income Security Act (ERISA). The amount they are
seeking remains to be determined. Roughly, it would be three times the
difference in market value between the benefits described in health plan
materials and the benefits actually delivered.

About 50 million covered lives would be affected by the decision,
including all but those covered under Magellan's federal and Medicaid
contracts.

Magellan's initial response is that the case is without merit. "We
believe that our operations are in full compliance with the law,"
spokeswoman Erin Somers told ADAW.

Attorneys for Magellan are in the process of preparing a written response
for the court, which will be filed around the end of the year. Magellan
can either file a response or submit a motion to dismiss the lawsuit, or
both.

                     Plaintiff experiences

Three plaintiffs are named in the Cohen Milstein lawsuit. One had claims
denied for detoxification and substance abuse treatment. The other two
are a mother and son. The son, as a minor, was denied inpatient
psychiatric care despite a referral by his psychiatrist, according to the
suit.

All three plaintiffs were plan members of Alliance Blue Cross Blue Shield
of Missouri. Magellan has a sizeable operation in Missouri at its St.
Louis center.

Annand said that Magellan is taking advantage of plan members it serves
by applying rigid criteria for judging the validity of proposed care.
Magellan doesn't disclose its criteria to the public, he said, nor does
it disclose its involvement as a contractor to the health plan.

The most egregious aspect of Magellan's business practice, according to
Annand, is that in many instances it assumes financial risk for paying
claims, in effect becoming an insurance company for the behavioral health
benefit, without the plan member ever knowing it.

"We find that to be particularly inappropriate," he said. "I think it's
important that the public know who they're dealing with."

The case boils down to the issue of coverage and the market value of that
coverage, Cohen Milstein attorney Margaret G. Farrell told ADAW. Magellan
sold a policy promising one set of benefits but delivered a more
restrictive package, she said.

The case, if successful, hopefully would make Magellan more accountable
to the people it serves, Farrell said. The company would have to describe
the actual level of coverage it provides, and in the process perhaps
rethink the consequences of its criteria.

The current dynamic in the private sector ultimately harms the public
system, Farrell said. The denial of coverage for mental health and
substance abuse services can lead to unemployment, jail time and Medicaid
enrollment, she said. (Alcoholism & Drug Abuse Weekly, November 13, 2000)



MICROSOFT CORP: Says Trial Judge in Antitrust Suit Made Series of Errors
------------------------------------------------------------------------
Microsoft filed a brief with the appeals court that will review its
antitrust case, contending that the judge who ordered the company's
breakup committed a host of procedural and substantive errors during the
trial.

The company said Judge Thomas Penfield Jackson, who ruled in favor of the
government on virtually every claim it brought, committed a series of
mistakes in his handling of the trial and his interpretation of antitrust
law. And it said that in commenting publicly on the case, the judge had
shown bias and violated the judicial code of conduct. (The New York
Times, November 28, 2000)


ODYSSEY PICTURES: Securities Suit in 1996 Dismissed; New Filings Pending
------------------------------------------------------------------------
In March, 1996, a class action complaint was filed against the Company
entitled Dennis Blewitt v. Norman Muller, Jerry Minsky, Dorian
Industries, Inc. and Communications and Entertainment Corp. The complaint
seeks damages in connection with the Company's treatment in its financial
statements of the disposition of its subsidiary, Double Helix Films, Inc.
in June, 1991. The complaint seeks unspecified damages on behalf of all
persons who purchased shares of the Company's common stock from and after
June, 1992.

A second action, alleging substantially similar grounds, was filed in
December 1996 in Federal Court in the United States District Court for
the Southern District of California under the caption heading "Diane
Pfannebecker v. Norman Muller, Communications and Entertainment Corp.,
Jay Behling, Jeffrey S. Konvitz, Tom Smith, Jerry Silva, David Mortman,
Price Waterhouse & Co., Todman & Co., and Tenato Tomacruz."

Following the filing of the second action, the first action was dismissed
by stipulation in May 1997. The Company filed a motion to dismiss the
complaint in the second action and after a hearing on the motion in July,
1997, the Court dismissed the federal securities law claims as being
time-barred by the applicable statute of limitations, and dismissed the
state securities law claims for lack of subject matter jurisdiction.

The lower court's dismissal of this action was upheld on appeal by the
Ninth Circuit.

The case was refiled in California state court in August 1998. The Court
granted motions to dismiss two of the complaints filed by the Plaintiff,
whereupon a third complaint was filed. More recently, a fourth amended
complaint has been filed adding claims that the defendants, including the
Company, violated provisions of the California Securities Laws. There is
no trial date set in this matter.

In a related action, Thomas Smith and Norman  Muller,  former  directors
of the Company and co-defendants in the Pfannebecker matter, filed an
action against the Company in the Los Angeles Superior Court seeking
indemnification from the Company in connection with their status as
defendants in the Pfannebecker matter. The Company intends to defend this
action on the grounds that Messrs. Smith and Muller committed wrongful
acts as directors of the Company and failed to comply with various
obligations to the Company.


PNC BANK: Check Cashing Charge on Non-Customer Does Not Violate PA Code
-----------------------------------------------------------------------
Sexton v. PNC Bank, N.A., PICS Case No. 00-2126 (C.P. Philadelphia Oct.
23, 2000) Levin, J. (5 pages).

Because a fee the defendant bank charged to non-customers who cashed
checks drawn on its commercial accounts at the teller's window neither
altered the payable-on-demand character of checks nor constituted an
undertaking or instruction by the drawer over and above the promise to
pay, the fee did not impair the negotiability of those checks.
Preliminary objections sustained.

In October 1999, defendant began to charge non-customers a $
3.00-per-item fee to cash checks presented at the teller's window and
drawn on its commercial accounts. Plaintiff brought a proposed class
action challenging this practice under 13 P.S. @ 3104. Plaintiff
contended that the collection of this fee, which was expressly authorized
by the terms of the account agreement between defendant and the drawer of
the check, violated the duty of a drawee to pay checks as drawn when
presented against good funds and bearing an authorized signature.

Defendant filed preliminary objections to plaintiff's complaint. The
court found that the fee charged by defendant was not assessed upon the
negotiation of a check. Rather, it was a charge collected by defendant in
exchange for the service of turning a check into cash, the court
determined. The court further noted that the fee neither altered the
payable-on-demand character of checks presented for cashing nor
constituted an undertaking or instruction by the drawer over and above
the promise to pay. Consequently, the court ruled that the fee did not
impair the negotiability of those checks and that it did not violate
Section 3-104 of the Pennsylvania Uniform Commercial Code, 13 P.S. @
3104. Consequently, the court granted defendant's preliminary objections
and dismissed plaintiff's complaint with prejudice. (Pennsylvania Law
Weekly, November 13, 2000)


POLYMEDICA CORP: Shapiro Haber Files Suit in MA on Behalf of Shareholder
------------------------------------------------------------------------
A class action suit alleging securities fraud has been filed in the
United States District Court for the District of Massachusetts against
PolyMedica Corp. (Nasdaq: PLMD) and its chief executive officer by the
Boston law firm Shapiro Haber & Urmy LLP.

The case, entitled Richard Bowe SEP-IRA v. PolyMedica Corp., et al., was
filed on behalf of all persons who purchased the common stock of
PolyMedica during the period September 3, 1999 through November 17, 2000,
inclusive (the "Class Period").

The complaint alleges that the defendants violated section 10(b) of the
Securities Exchange Act of 1934 ("the Exchange Act"), and Rule 10b-5
promulgated thereunder, and Section 20(a) of the Exchange Act, by issuing
materially false or misleading statements concerning PolyMedica's billing
and marketing practices. The complaint alleges that these statements were
false and misleading because defendants knew, or recklessly disregarded,
that PolyMedica, through its Liberty Medical Supply division, was
engaging in billing and marketing practices that do not comply with
federal Medicare reimbursement regulations, including shipping diabetes
testing supplies to customers without prior authorization or proper
supporting documentation, in direct contradiction of a 1998 regulation
banning such practices. The complaint further alleges that defendants'
actions artificially inflated the price of PolyMedica common stock during
the Class Period.

Contact: Thomas G. Shapiro, Esq. or Lisa Palin, paralegal, of Shapiro
Haber & Urmy LLP, 800-287-8119, or cases@shulaw.com


PRESIDENTIAL ELECTION: Judge n. Sanders Chosen for Fla. Recount Case
--------------------------------------------------------------------
The judge hearing the court fight over Florida's presidential election
speaks with a thick Southern drawl and likes to drink with friends in a
downtown pub. Most of all, he keeps his politics to himself. Leon Circuit
Court Judge N. Sanders Sauls is officially a registered Democrat and was
appointed to the bench by a Republican governor. But even to his closest
acquaintances, Sauls' political preferences are a mystery.

``He's his own man, always has been and always will be,'' said Mallory
Horne, a former Senate president and House speaker in Florida. ``Any
elected judge would prefer that this thing go away. But having said that,
Sandy Sauls will never duck it. He'll never find a way to recuse
himself.''

Sauls, the 59-year-old son of a court clerk who grew up in courthouses
with a dream of becoming a judge, was picked Monday in a random computer
selection of the four trial judges in the state's 2nd Judicial Circuit.
Four hours later, he was holding court with attorneys for Vice President
Al Gore and Texas Gov. George Bush, living up to his reputation as a
folksy jurist who likes to keep things moving.

``I think we all know what the deadline is here,'' he told the lawyers.
``We need to get something going. ... They need to file their responses,
is four days too long? Can you do it in three?  At one point, he thanked
a lawyer by drawling: ``Bless you.''

Circuit judges run in nonpartisan elections, with all the judicial
candidates on a single ballot without reference to party affiliation.

According to computerized state records, Sauls did not contribute to any
federal or state candidates at least since 1996. Horne, an ardent
Democrat, suspected Sauls was a Republican, but former state Republican
Party general counsel Richard McFarlain correctly believed the judge was
a Democrat.

McFarlain, who is now general counsel at Florida State University,
laughed when he recalls Sauls ruling against him on more than one
occasion.

``He calls 'em like he sees 'em,'' McFarlain said. ``He keeps the lawyers
in line. There won't be a lot of arm-waving or jaw-flapping.''  McFarlain
said Sauls won't dally either after the attorneys finish. ``He'll study
it hard and rule quickly.''

Sauls grew up in neighboring Jefferson County where his mother was tax
collector and his father a clerk of the circuit court. He went on to get
his law degree from the University of Florida and served as a federal
bankruptcy judge for eight years before being appointed to the circuit
bench in 1989 by then-Gov. Bob Martinez, a Republican.

Sauls, who won election in the six-county circuit in 1990 and then was
re-elected in 1996, spent some of his free time, especially on Fridays,
at a popular local sports bar, the 4th Quarter,  Sauls resigned as chief
judge in November 1998 after a controversy over his decision to fire a
longtime court administrator. Sauls, who remained on the bench as a trial
judge, had urged other circuit judges to fire longtime Court
Administrator Tom Long, a liaison between the 2nd Circuit and Leon County
government.

Long had questioned Sauls' decision to hire his own hand-picked director
for the circuit's Guardian Ad Litem program rather than accept a search
committee's choice. Sauls called Long ``disloyal.''  ``He was openly
insubordinate,'' Horne said, ``and Sandy fired his butt.'' (AP, November
27, 2000)


SECURITY STORAGE: Sale at Merger Price Defeats Minority Shareholder Suit
------------------------------------------------------------------------
A shareholder who sued the corporation and its majority stockholder for
cashing him out in a merger defeated his own legal claim when he sold his
stock to the majority holder for the $120 merger price, said a Delaware
state court judge. Norberg v. Security Storage Co. of Washington et al.,
No. 12885 (Del. Ch., Sept. 19, 2000).

Myron Steele, a Delaware Supreme Court appointee designated to decide the
case as a vice chancellor, entered summary judgment for the defendants
because plaintiff John Norberg waived his right to challenge the merger
when he accepted the majority's offer to buy his stock in Security
Storage Co., a shipping and storage company based in Washington, D.C.,
but incorporated in Delaware.

The directors on Security's board owned 82 percent of the company's
stock. So when they decided to cash out the other shareholders in early
1993, they had the votes to do it. The experts that the board hired said
$120 per share was a fair price to pay the minority stockholders because
it reflected 25 percent more than they appraised the company to be worth.

However, some of the minority shareholders sued to get a court
determination of the share value instead of accepting the $120 per share.
In March 1993 Norberg filed this class action on behalf of the minority
holders. He then waited until June 1998 to ask the court to certify the
class. In February 1993, Security's directors asked the court to dismiss
Norberg's complaint because he had voluntarily sold his shares to them
for $120 in August 1994.

Vice Chancellor Steele agreed with the directors that Norberg had waived
his right to complain by accepting the merger price, and he dismissed
Norberg's complaint. But he also said he would not address the merits of
Norberg's unfairness claim, thus implying that a minority stockholder who
had not accepted the merger price could still raise this issue on behalf
of the class.

Norberg is represented by R. Bruce McNew of Taylor & McNew in Greenville,
Del., and Robert J. Kriner Jr. of Chimicles & Tikellis in Wilmington,
Del.

Defendants are represented by Thomas A. Beck of Richards, Layton & Finger
in Wilmington and by Alfred W. Putnam Jr. and Mary Catherine Roper of
Drinker Biddle & Reath in Philadelphia. (Corporate Officers and Directors
Liability Litigation Reporter, October 23, 2000)


SOTHEBY'S, CHRISTIE'S: Art Sellers Look to Use Coupons in Settlement
--------------------------------------------------------------------
Embroiled in a scandal over price-fixing and collusion, Sotheby's and
Christie's asked a federal judge to approve a plan to offer discount
certificates to auction customers as part of a $512 million settlement of
a class-action civil suit.

The certificates, which could be used by people who wanted to sell at
future auctions, are part of a settlement that the auction houses agreed
to last month. The agreement received preliminary approval this month by
Judge Lewis A. Kaplan of Federal District Court in Manhattan. As part of
Sotheby's and Christie's obligation to buyers and sellers, the companies
said, they would pay $50 million each in certificates.

But Judge Kaplan has questioned the suitability of substituting $100
million in coupons for cash. The auction houses made their cases for the
coupon plan. Sellers, they said, could have up to five years to use their
coupons and could transfer them through a jointly appointed certificate
administrator, which they said would create a secondary market.

The proposal for administering the certificates was filed in the Federal
District Court. It specifies that the certificates would be redeemable by
customers who were overcharged as far back as seven years for buyers and
five years for sellers in either the United States or Britain, where 80
percent of Christie's and Sotheby's worldwide sales take place.

Auction house customers who were entitled to certificates but who did not
want to use them would be able to go to the certificate administrator,
who would find a party who wanted to buy them. In their papers, the
auction houses asserted that this arrangement would create premium sales
prices for the certificates by establishing a concentrated marketplace
for those most interested in buying them.

Judge Kaplan has scheduled a hearing on the final settlement for Feb. 2.
(The New York Times, November 28, 2000)


ZONOLITE LITIGATION: Suits against W.R. Grace, Sealed Air Merged in MA
----------------------------------------------------------------------
W.R. Grace & Co. and Sealed Air Corp., defendants in two separate class
action suits, have agreed to consolidate the suits in a single class
action in response to the requests of plaintiffs filed in U.S. District
Court for the District of Massachusetts (Lindholm et.al. v. W.R. Grace &
Co., No.00CV 10323; and Goldstein et.al. v. W. R. Grace & Co. et.al. No.
00CV 10873)

Both suits allege the defendants' product, Zonolite, which is used in
building insulation, contained tremolite asbestos, which the defendants
knew was hazardous.

According to the memorandum backing consolidation of the suits, the
allegations are similar and share common legal and factual questions.
Both complaints make claims for fraud, negligence, breach of warranties,
deceptive trade practices, nuisance, strict liability for ultra-hazardous
activity and unjust enrichment.

In addition to equitable damages, the Lindholm complaint seeks
compensatory and punitive damages. The plaintiffs in the case have asked
the court to remove and abate Zonolite from all residences containing the
insulation. The complaint says that Washington state health officials
urged Grace in 1973 to put a warning label on Zonolite, but the company
refused. The complaint also says the company decided not to remove the
insulation from the market in 1977 due to worries about the risks
connected with Zonolite and the danger of liability; however, the company
secretly discussed stopping the sale of the product.

Contact: Clerk, U.S. District Court, District of Massachusetts, (617)
748-9087. (Asbestos & Lead Abatement Report, November 1, 2000)


                             *********


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