/raid1/www/Hosts/bankrupt/CAR_Public/001204.MBX              C L A S S   A C T I O N   R E P O R T E R

             Monday, December 4, 2000, Vol. 2, No. 234


AGRIBRANDS INTERNATIONAL: Sued in MO over Proposed Merger with Ralcorp
CALIFORNIA: Lawyers Split $88.5 Mil for Overturning Levy in Smog Case
DEVRY INC: Computer-Systems Training Faulty, 3 Students Sue
FORD CANADA: CEO Retires; Takes Stock of Changes Including Dealership
GROVE FARM: Shareholder Seeks to Block Kauai Firm Sale to AOL Chairman

HEARTLAND FUNDS: Berman DeValerio Expands Securities Suit in Wisconsin
HOLOCAUST VICTIMS: Court Rejects Eastern Europerans Suit Against Bahlsen
MONTANA RESOURCES: Employees Sue over Layoffs at Butte Mine
PREFERRED EQUITIES: Cleared of Charges over Betterment Fees; Sued Again
PRESIDENTIAL ELECTION: Fred H. Bartlit Jr. Joins Bush's Legal Team

PRESIDENTIAL ELECTION: Bush Lawyers File Response to Challenge of Vote
PRESIDENTIAL ELECTION: Democrats File Martin County Suit
PRESIDENTIAL ELECTION: Florida Trial on Presidential Race Nears End
PRESIDENTIAL ELECTION: The New York Times Reports on Court Scene
PRESIDENTIAL ELECTION: U.S. Supreme Court Session Convened on December 1

PROTECTION ONE: Schubert & Reed Issues Notice of Pendency of Action
RENT-WAY, INC: Shareholders Have Until January 2, 2001 to Seek Lead Role
SOTHEBY'S: 2 Tycoons Waged Titanic Battle For Control
SUPERMARKETS: 3 Alleged of Underpaying Night Janitors
TOYS R US: Seeks Transfer of Internet Privacy Cases to California

USA.COM INC: Investors' Suit Charges Online Lender with $70 Mil Fraud
VESTIN MORTGAGE: Developer Alleges of Unfair Tactics in Loan Penalty

* SKorea To Allow Minority Shareholders To Take Class Action In 2002


AGRIBRANDS INTERNATIONAL: Sued in MO over Proposed Merger with Ralcorp
In September of 2000, a shareholder suit was filed in the Circuit Court of
St. Louis County, Missouri against the Company and the individual members
of the Board of Directors alleging that the Directors failed to carry out
their fiduciary duties in recommending the merger with Ralcorp Holdings,
Inc. The suit requests: (i) the certification of a class consisting of all
of the shareholders, (ii) injunctive relief, (iii) attorneys fees and
expenses, and (iv) such other relief that the Court deems appropriate.
Agribrands has responded by denying the allegations. The Company believes
it has adequate insurance coverage for damages in excess of $2,500,000. The
Company is responsible for the costs of defense up to the deductible.

CALIFORNIA: Lawyers Split $88.5 Mil for Overturning Levy in Smog Case
The Los Angeles Times reports that five law firms will split $88.5 million
for their role in successfully suing California over smog fees imposed on
people who registered out-of-state vehicles in California in the 1990s. The
report reminds that this is state tax money. An arbitration panel made the
award, among the largest attorneys' fees ever paid by the state. The money
will come from $ 665 million allocated by Gov. Gray Davis and the
Legislature to pay refunds to people who paid the $ 300 fee on as many as
1.7 million vehicles. After the state lost in a trial court and a state
court of appeal, Davis a year ago directed that it stop collecting the
fees, and called for refunds to affected motorists.

"This money never belonged to the state," Davis said when he signed
legislation authorizing the refunds earlier this year. "It shouldn't have
been collected in the first place, and it should be returned."

One of the law firms that will claim a share of the $ 88.5 million is
Milberg, Weiss, Bershad, Specthrie & Lerach. Bill Lerach and his firm, with
offices in New York and San Diego, have been among Davis' major donors,
giving him $ 221,000 during his 1998 election campaign, and $ 20,000 this

Davis distanced himself from the attorneys' fees by appointing retired
California Supreme Court Chief Justice Malcolm Lucas to the three-member
panel that set them. Lucas, a Republican, is the conservative jurist who
replaced Rose Bird as chief justice when voters ousted her in 1986.

The plaintiffs' attorneys selected another member of the panel, and both
sides agreed on a third.

"The Legislature decided that using arbitrators was the way to go, and they
put it in the bill," Davis spokeswoman Hilary McLean said. "The governor
wanted the rebates paid to people."

Representatives of the law firms declined to discuss the award, saying they
were bound by a confidentiality clause in the arbitration agreement.

The $ 88.5 million may be the largest attorneys' fee ever awarded against
the state. Lawyers in the state attorney general's office were aware of no
larger award, said spokesman Nathan Barankin. State Controller Kathleen
Connell said she believes it is the largest ever awarded by the state.

"I'm going to be exploring every option I have to freeze this payment,"
Connell said. "No one can recall any settlement that even comes close."

Connell raised the possibility of asking the panel to reconsider the amount
or persuading the firms to take less.

"It is a stunning number, isn't it," said Connell, a candidate for mayor of
Los Angeles, who must sign the check. "I'm deeply distressed. It is a huge

Connell said she is attempting to determine whether there is any recourse.
However, the panel's decision says the money must be sent by late December.

"The tort system needs a complete overhaul," said Assemblyman Tom
McClintock (R-Northridge), who pushed for the refunds. But McClintock added
that the $ 88.5-million award "is a cost the state willfully incurred when
it broke the law and imposed a fee it knew it was illegal."

If the state had settled the case earlier, the attorneys' fees would have
been far lower. The Superior Court judge who ruled against the state
ordered it to pay $ 18 million to the attorneys. The state appealed, lost
and dropped the case.

In settling on the $ 88.5-million figure, the arbitrators noted that the
lawyers had worked for five years on what was a "difficult and risky" case.
They noted that the result--legislation signed by Davis earlier this year
that granted the smog fee refunds--"provided exceptional results, in that a
potential 1.7 million claims for tax refunds would be paid 100% of the $
300 fee , plus interest."

The $ 88.5 million represents 13.3% of the $ 665-million fund set aside by
Davis and the Legislature. The attorneys had sought 17.5%, or more than $
100 million in fees.

Republican Gov. George Deukmejian signed legislation at the start of the
recession in 1990, imposing the $ 300 smog impact fee on people who
registered out-of-state cars in California.

The case was not a class action. It was brought by four people who bridled
at the fee in the mid-1990s. One was Barron Ramos, who in 1994 was a law
student in San Diego. Ramos sued after his wife was forced to pay the fee
when she brought her Mazda to California from Washington state.

In time, five law firms took the case. The courts held that the smog impact
fee violated interstate commerce laws.

So far, the state has paid $ 331.1 million to the owners of 863,340
vehicles. Another 100,000 claims are pending. People who paid the fee have
three years to claim their money. (Los Angeles Times, December 1, 2000)

DEVRY INC: Computer-Systems Training Faulty, 3 Students Sue
DeVry Inc. shares tumbled 22 percent last Thursday November 30 after the
Oakbrook Terrace technical-education concern was sued by three recent
graduates who contend the computer-systems training they received was
woefully inadequate.

DeVry downplayed the litigation as a "nuisance suit" involving "frivolous"
claims. But investors were less sanguine: In New York Stock Exchange
trading, DeVry shares fell $8.37 to close at $30.31.With about 2 million
shares changing hands, trading volume was more than nine times that of an
average day.

The for-profit education provider disclosed the student lawsuit at the same
time it released fall enrollment figures that fell somewhat short of
analysts' expectations. While that shortfall in enrollment threatens to
squeeze near-term revenue, it was the lawsuit--with its potentially
damaging assertion that DeVry is graduating students who lack "appropriate
skills for employability in the computer information systems field"--that
was the more eye-catching development.

DeVry has prospered from the protracted boom in demand for computer-savvy
workers, and any challenge to the quality of its ability to place students
into the workforce threatens one of the key factors that has fueled DeVry's
rapid growth through the 1990s. Officials hurried to limit the possible
fallout from the suit, which seeks class-action status.

The plaintiffs' claims "are belied by the facts," said DeVry President
Ronald Taylor. "Employers continue to recruit DeVry students semester after
semester," Taylor said. Of the computer-studies group the three plaintiffs
were in, he said fully 86 percent of the graduates had found employment in
the field within six months, at an average starting pay of $38,900.

"We can't do what they allege we do and still produce people who are as
successful as our students are in the workplace," he said.

With the domestic economy strong and corporate employers in a tight job
market hungry for technologically adept employees, DeVry and competitors
like ITT Educational Services have profited in recent years. DeVry's
undergraduate enrollment is up 85 percent from 1995.

DeVry now operates 21 campuses in North America, where 47,066 undergraduate
students pursue studies that range from one-year accreditation courses to
bachelor's degree programs in such fields as business administration,
electronics engineering and computer engineering. The company also operates
the 7,149-student Keller Graduate School of Management, which offers MBA
and other post-graduate degrees at sites around the country. In November
DeVry opened Keller sites in Orlando and Bellevue, Wash., said Dennis J.
Keller, DeVry chairman and chief executive.

An undergraduate accounting degree costs students a total of $31,000, while
the computer information systems degree that the plaintiffs obtained runs
nearly $35,000.

The student lawsuit, filed in Cook County Chancery Court, says DeVry's
advertising fraudulently induced students into its programs.

The ads promised "Advanced education that equips you with the technical and
business skills that companies need," along with an active job-placement
service for graduates, the suit noted. But the three students, who enrolled
in the school's computer information systems program in 1995 and graduated
from the Chicago campus in early 1999 with solid grade point averages, say
that is not true.

"The goal of the school is to put bodies in the classrooms," said attorney
Michelle A. Weinberg, who is representing the students. There's nothing
wrong with that approach, she said "if they're delivering what they

Afshin Zarinebaf, Mustafa Husain and Ali Mousavi allege in their lawsuit
that DeVry did not offer the cutting-edge computer training it promised,
but instead used dated equipment and study materials.

Zarinebaf, the suit says, was told at job fairs and in interviews with
numerous companies that they had had "bad prior experiences with DeVry
graduates' lack of training." The student was fired from his first job at a
dot-com concern after two weeks, the suit says, allegedly because he did
not have adequate knowledge of computer languages despite his bachelor's

Zarinebaf's second employer fired him after five months, citing the same
training shortcomings, the suit continues. The other two plaintiffs
reported similar brief, unhappy job experiences ending in dismissal.

"They're having trouble getting and staying employed at the level for which
they were supposedly trained," said Weinberg, the plaintiff attorney.

Taylor, the company's president, suggested that in today's hot job market
"graduates who don't have some kind of problem--personal or
personality--are doing well."

The students' suit also contends that DeVry admitted applicants who were
patently unqualified, and that "the sole purpose of recruiting and
enrolling such persons" was to get the students qualified for federally
insured loans and tuition grants--a practice that would benefit the school,
even if the students fail. (Chicago Tribune, December 1, 2000)

FORD CANADA: CEO Retires; Takes Stock of Changes Including Dealership
Bobbie Gaunt, president of Ford Motor Company of Canada Ltd., will retire
on Dec. 31 after a turbulent three-and-a-half-year term that reshaped the
Canadian unit of the world's second-largest auto maker.

Gaunt brought radical change to Ford Canada, including the elimination of
the Mercury line of cars in Canada; a move by the company to the forefront
of automotive e-commerce and a plan to construct a new head office in

But the time has come to spend more time with family and friends, the
54-year-old president and chief executive officer said, adding that she
also wants to work on behalf of such causes as improving literacy and the
fight to cure breast cancer.

"As I was thinking about what's next in the Ford world, I realized that
there isn't anything that would really come close to what I've been able to
experience at Ford Canada," she said in an interview

An internal announcement about Gaunt's departure was made late last Tuesday
November 28; some Ford dealers were told last Tuesday night.

No successor has been named although Ford Motor Company in Dearborn, Mich.,
has been aware for some time that Gaunt, a native of Washington, Pa., was
contemplating retiring to her property in Saugatuck, Mich., on the shores
of Lake Michigan.

In fact, she said, she thought about retiring last year, but wanted to
remain for at least another year to help lay what she called a foundation
for "doing business on the customer's terms."

Creating that kind of company is a major shift from the way Ford Canada did
business when she arrived in April 1997, she said.

Then, the auto maker was "narrowly focused on sales and marketing and
service in making sure that we were managing our warranty policies

But that has changed, she said, with the purchase last year of Young
Drivers of Canada, the creation of Fastline services outlets that make it
easier for Ford owners to service their vehicles, and the e-commerce
initiative called Buyer-Connection - a pilot project that will eventually
allow Canadians to buy any Ford vehicle over the Internet.

But changing the way Ford Canada does business has harmed the company's
relations with its 553 dealers who sell the cars, trucks, minivans and
sports utility vehicles produced at three assembly plants in Canada and
others in the United States and Mexico.

Halting the sale of most of the Mercury line in Canada angered many
dealers, especially those with Lincoln-Mercury dealerships. Four have
launched a lawsuit against the company that has been classified as a
class-action lawsuit.

Ford also angered some dealers by instituting a program called Blue Oval
that involved a levy on sales that would finance a bonus program for
dealers who scored well on customer satisfaction surveys. That program has
been modified, but many dealers remain unhappy. (The Edmonton Sun, December
1, 2000)

GROVE FARM: Shareholder Seeks to Block Kauai Firm Sale to AOL Chairman
A shareholder has filed suit to block the sale of Kauai's Grove Farm Co. to
America Online Chairman Steve Case.

The lawsuit was filed last Thursday November 30 in Kauai Circuit Court on
behalf of Michael Sheehan. It argues that the company's directors abandoned
their responsibility to shareholders, gave preferential treatment to Case
and entertained a $26 million offer from Case that was far too low.

The lawsuit asks that the deal for 171,000 outstanding shares, at $152 a
share, be stopped or if it is approved, that it be reversed and that
shareholders recover damages.

It also seeks class action status from the court on behalf of all

Shareholders were to meet Friday morning to approve or deny the deal. The
deal requires approval by at least 75 percent of the outstanding shares for

Grove Farm owns nearly 22-thousand acres of land on Kauai, the Kukui Grove
Shopping Center and an unsold portion of the adjoining Puakea development
project, which includes a sewage treatment plant and a 10-hole golf course,
covering about 800 acres. (The Associated Press State & Local Wire,
December 1, 2000)

HEARTLAND FUNDS: Berman DeValerio Expands Securities Suit in Wisconsin
Berman DeValerio & Pease LLP (www.bermanesq.com) expanded its securities
fraud class action against the Heartland High-Yield Municipal Bond Fund
(Nasdaq: HRHYX) and the Heartland Short Duration High-Yield Municipal Bond
Fund (Nasdaq: HRSDX).

In a complaint filed November 30 in the United States District Court for
the Eastern District of Wisconsin, the law firm extended the lawsuit to
cover investors who acquired HRHYX or HRSDX shares as early as 1997 and
suffered a loss due to fraud.

The new complaint seeks damages on behalf of investors who bought the funds
from November 18, 1997 through October 15, 2000 (the "Class Period").
Berman DeValerio & Pease, which has represented defrauded investors in
class actions for nearly two decades, had filed a complaint against
Heartland on November 13, with a class period of May 1, 1999 through
October 16, 2000.

The new complaint alleges that from at least November 18, 1997 to October
16, 2000, HRHYX and HRSDX issued materially untrue and misleading
statements about the net asset value ("NAV") of the two funds and the true
risk of investing in them. On October 16, 2000, the funds' advisors
blindsided investors by announcing that they were drastically writing down
the NAV of the funds. Specifically, HRHYX's NAV was reduced 70% from $8.01
per share to $2.45, and HRSDX's NAV was reduced 44% from $8.70 per share to

Contact: Chauncey D. Steele IV of Berman DeValerio, 800-516-9926,

HOLOCAUST VICTIMS: Court Rejects Eastern Europerans Suit Against Bahlsen
A German court rejected a reparations claim by former slave laborers
against a cookie company Friday, saying the statute of limitations had

The 60 eastern Europeans had sued the Bahlsen biscuit company for between
9,000 and 50,000 marks, each for a total claim of more than one million
marks (510,000 euros, 439,000 dollars).

Most of the plaintiffs were elderly women from the Ukraine who were
deported to Germany in 1941 and forced to work for Bahlsen.

The judges said that March 15, 1994 had been the deadline for such suits
against German companies, set as part of an international agreement
covering German unification in 1990.

The class action suit against Bahlsen was filed in 1999.

Germany has announced plans to compensate former slave laborers with a
10-million-mark fund backed by the government and industry, but the deal
has been held up by failure to reach an agreement in the United States to
prevent further suits by groups of victims.

The court did not clarify whether the fund's existence would invalidate
future suits against German companies that used slave labor. (Agence France
Presse, December 1, 2000)

MONTANA RESOURCES: Employees Sue over Layoffs at Butte Mine
Two employees of Montana Resources are suing the company, claiming it did
not give proper notice when temporary layoffs at its copper and molybdenum
mine here were extended beyond six months.

Gary Lovshin and Frank Piazzola contend in their federal lawsuit that the
company failed to comply with the federal Worker Retraining and
Notification Act by not giving written notice when layoffs at the mine were

In their five-page lawsuit, the two also ask that the case be certified as
a class action to include all employees of the mine.

Montana Resources had not been served with the lawsuit as of last Thursday
November 30, and spokesman Steve Walsh said the company would have no
immediate comment.

Lovshin and Piazzola filed their lawsuit last Tuesday November 28. Butte
attorney Robert McCarthy said he is drafting a separate lawsuit on behalf
of other employees.

"The act ... was designed to protect workers from being thrown out in the
cold," McCarthy said. "Our legal position will be that they did not get the
proper notice."

The mine, which opened in 1986, had employed about 350 people and was
Butte's third largest private sector employer.

It was idled in late June after spiking electricity prices forced a halt in

The company recalled about one-third of the work force in September to
resume pre-stripping chores.

However, on Nov. 17, Montana Resources said low copper prices, high
electricity costs and cold weather dashed plans to reopen the mine this
winter. (The Associated Press State & Local Wire, December 1, 2000)

PREFERRED EQUITIES: Cleared of Charges over Betterment Fees; Sued Again
On August 27, 1998, an action was filed in Nevada District Court, County of
Clark, No. A392585, by Robert and Jocelyne Henry, husband and wife
individually and on behalf of all others similarly situated against
Preferred Equities Corporation (PEC), PEC's wholly-owned subsidiary,
Central Nevada Utilities Company (CNUC), and certain other defendants.

The plaintiffs' complaint asked for class action relief claiming that PEC
and CNUC were guilty of collecting certain betterment fees and not
providing sewer and water lines to their property. The court determined
that plaintiffs had not properly pursued their administrative remedies with
the Nevada Public Utilities Commission (PUC) and dismissed plaintiffs'
amended complaint, without prejudice.

Notwithstanding plaintiffs' appeal of the dismissal, plaintiff filed for
administrative relief with the PUC. On November 17, 1999, the PUC found
that CNUC, the only defendant over which the PUC has jurisdiction, was not
in violation of any duties owed the plaintiffs or otherwise in violation of
CNUC's approved tariffs. Subsequent to the PUC's decision, plaintiffs
voluntarily dismissed their appeal of the trial court's order dismissing
their case without prejudice and directing plaintiffs to exhaust their
administrative remedies.

On May 4, 2000, plaintiffs refiled their complaint in Nevada District
Court, naming all of the above parties with the exception of CNUC. The
defendants have filed a motion to dismiss.

PEC, a wholly-owned subsidiary of Mego Financial Corp., manages timeshare
properties and receives management fees as well as fees based on sales of
timeshare interests. By providing financing to virtually all of its
customers, PEC also originates consumer receivables that it hypothecates
and services. Mego Financial is a premier developer and operator of
timeshare properties and a provider of consumer financing to purchasers of
its timeshare  intervals and land parcels through PEC.

PRESIDENTIAL ELECTION: Bush Lawyers File Response to Challenge of Vote
     TALLAHASSEE, Fla. (AP) - In a new legal filing, lawyers for Republican
George W. Bush say they have more than a dozen reasons why a judge should
toss out Democrat Al Gore's challenge to Florida's presidential vote.

The Republicans' first formal response to the Democrats' contest claims
Gore's challenge is baseless because the real election wasn't between the
Texas governor and the vice president. Instead, the lawyers argue, it's
between the separate groups of 25 Florida electors.

The motion filed last Thursday November 30 in Leon County Circuit Court
noted that the election in which the electors are candidates does not occur
until Dec. 18, when the Electoral College meets to cast votes for
president.  Only electors can file contests because only electors
supporting presidential candidates are on the ballot, the motion reads.
Thus, the contest is invalid because Gore has no legal grounds to call for
it, it said.  GOP lawyers also want to call 95 witnesses at the trial,
according to party lawyers.

The Democrats countered, accusing the Bush camp of delaying the process.
``They will obviously throw any procedural or technical roadblock they can
at the heart of the contest, which is the counting of ballots,'' said Ron
Klain, Gore's senior legal adviser.

Democratic voters filed a lawsuit last Friday Martin County's canvassing
board in an attempt to throw out 9,773 absentee ballots, most of which were
cast for George W. Bush. If a judge rules to disqualify all of the ballots,
Democrat Al Gore would gain 2,815 votes more than enough to grab the lead
and Florida's 25 electors from Bush.

In a case similar to one filed earlier in the same week against Seminole
County, the voters claim Republican Party officials were allowed to alter
ballot request forms by adding voter identification numbers to applications
that were left blank.

But Gary Farmer, one of the lawyers who filed the suit, said the Martin
County situation was more serious because elections officials allowed the
GOP to actually remove the request forms from the office.

A similar incident in Seaw that says only the voter, an immediate family
member or a guardian can fill out an absentee ballot application. That suit
seeks to throw out all 15,000 absentee ballots cast in Seminole County. A
trial is scheduled for [the week beginning December 4].

The motion filed in Leon County is seeking a dismissal because Gore's
lawyers filed their challenge after the 10-day deadline required by state
law. The filing says that it is a ``red herring'' to argue that the Florida
Supreme Court's extension of the recount deadline gave the Gore team any
more time to file a contest.

The motion, filed with Judge N. Sanders Sauls, also states the manually
counting only part of the ballots is illegal, and a recounting the ballots
for the entire state ``would have dire consequences for Florida and the

The filing also seeks dismissal because the judicial recounts the Gore camp
is seeking are ``illegal, inappropriate, and manifestly unfair.''

Meanwhile, as hundreds of thousands of ballots were being trucked to the
state capital, Gore's lawyers implored the state Supreme Court to step in
and get the votes recounted immediatelyllas counties, said Bush campaign
spokesman Scott McClellan. The judge has not yet considered the request.
``We believe there were a number of illegal votes for Gore in those
counties,'' McClellan said.

While saying the Bush campaign believes that ``the manual recount is
fundamentally flawed,'' McClellan said lawyers filed the motion because
``if there is to be another manual recount, it should not be another
selective one designed by and for the vice president.''

Unless the ballots are counted before Dec. 12, they said, it will be too
late. ``No legal judgment can correct any error found after the electoral
votes are cast,'' their appeal said. ``Only the judgment of history will be
left to be rendered on a system that was unable or unwilling to ascertain
the will of the voters.''

The 50-page legal brief repeatedly quoted from the justices' own decision
that allowed vote recounts and said the right of voters to be heard was

If votes are not recounted by the time Florida electors need to be chosen
Dec. 12 the briefs said, ``the resulting controversy about the legitimacy
of the presidency would be destructive for our country.''

On other legal fronts:

A committee of the Republican-controlled Legislature recommended [last
Thursday November 30] that a special session be called as soon as possible
so the lawmakers can step into the disputed presidential election. The
Legislature may decide to appoint its own electors to the Electoral College
if the issue is still unresolved by Dec. 12.

Circuit Judge Sauls held a brief hearing in which he allowed two groups of
voters to have a limited role in the contest phase. But he denied
intervention from Judicial Watch, a conservative legal group that has been
looking at the Palm Beach ballots.

PRESIDENTIAL ELECTION: Florida Trial on Presidential Race Nears End
    TALLAHASSEE (Reuters) - A lawyer for Al Gore told a court on Sunday
there are hundreds if not thousands of Florida ballots which would give the
Democrat a victory over Republican George W. Bush, and with that the
presidency of the United States, but which only a hand count can verify.

But a lawyer for the Texas governor countered that the Gore team had come
up with nothing more than speculation and two weak witnesses during an
historic two-day trial whose testimony fell far short of what it would take
to decide the next occupant of the White House.

The exchange came in the final hours of the trial before Judge N. Sanders
Sauls in Leon County District Court, where Gore is challenging the outcome
of the presidential election in Florida which state officials have decided
Bush won by 537 votes.

Time was running out for Gore to win the recount he desperately needs.
Florida is to certify its electors -- the people who actually vote for
president under the U.S. system -- in nine days following one of the
closest presidential elections in U.S. history.

Gore is seeking a partial recount in three counties, where his lawyers
contend there are enough hidden votes to give him a win and send him to the
White House in January.

After nearly 10 hours of proceedings on Saturday and more than that on
Sunday, the trial went well into the evening. There was no indication of
when the judge would hand down a ruling in the no-jury proceeding.

Whatever that decision is, it will be appealed to the Florida Supreme Court
by the losing side. In addition there are other pending court cases in
Florida which could impact the state's final vote total.

                          Machines Miss Votes

The court "has heard witnesses not called entirely by plaintiffs .. who
have told the court that in a close election a manual recount is the only
way to be sure how certain contested ballots should be counted," David
Boies, Gore's chief trial lawyer, said in his closing argument.

"From every piece of evidence we have, there are ballots that the machine
can't read, but which the intent of the voter can be determined by a manual
review," he added, "many, many hundred and perhaps thousands ... more than
enough to make a difference in this race."

But Barry Richard, leading Bush's trial team, said in wrapping up his case
there was no evidence that election officials in the three counties abused
their discretion; no evidence that the punch card voting devices questioned
were faulty and no law that says a small indention on a ballot card called
a dimple -- has to be counted as proof of the way a voter intended to cast
a ballot.

"There is nothing but two witnesses and speculation," he added, telling the
court it had to ask whether a decision that could "hinge the election of
the presidency" on the two Gore witnesses -- a statistician and a voting
machine expert.

The latter testified that there were problems with a build up of chad --
the dots punched out from ballot cards -- and hardened rubber on voting
devices that could have frustrated voters.

The former suggested that votes for Gore picked up in partial manual
recounts held so far would likely be found in thousands of others that have
yet to be subjected to the same process.

The Bush team presented witnesses that disputed both claims.

The Bush team also served notice that it would ask the judge not to
consider as evidence ballots in question from heavily Democratic Miami-Dade

It said its witnesses had proven those ballots had been shuffled by hand
and recounted by machines so many times they could no longer prove the
intent of any voter in cases where the ballots were not cleanly punched.

                            Expert Doubts Figures

The vice president, who had a small net gain in a partial recount of
Miami-Dade County, claims a full hand tally of some of the ballots there
would give him 600 more votes -- enough to win the state and the election.

The Bush side produced its own statistician on Sunday who said there was no
statistical basis for projecting Gore's gain in the partial count to other
precincts -- as the expert called by the opposing side had said.

The Gore team, however, got another Bush witness, who holds a number of
patents on voting systems and who helped develop the whole punch card
method in wide use, to agree that "You need either a reinspection or a
manual recount" in close elections. He reasoned that holes in ballots that
have not been punched out cleanly can close when run through automated
reading systems to recount them, giving false returns.

At the same time, however, the expert -- John Ahmann of Napa, California --
disputed theories offered by the Gore team that some of the devices could
become so clogged with chad -- the paper punches from ballot cards -- that
the voter would be unable to punch the ballot properly with a needle-like

At stake are Florida's 25 Electoral College votes, a prize that will decide
the Nov. 7 presidential election. Facing a Dec. 12 deadline to place the
state's presidential electors, Gore wants the court to order a quick
recount of 14,000 disputed ballots in three counties -- a move he thinks
can provide him enough votes to overtake Bush's 537-vote lead.

The Republican-led Florida Legislature was considering a special session to
appoint the electors, but that was up in the air. Florida House Speaker Tom
Feeney wanted to reach an agreement to call such a session, but Senate
President John McKay urged caution, indicating he would not be rushed into
a decision.

PRESIDENTIAL ELECTION: Fred H. Bartlit Jr. Joins Bush's Legal Team
Fred H. Bartlit Jr. might be new to Gov. George W. Bush's legal team, but
his name is well-known to Georgia litigators.

Bartlit, a partner at the Chicago firm of Bartlit Beck Herman Palenchar &
Scott and a veteran corporate litigator, was introduced as a member of
Bush's expanded legal team at a Tallahassee press conference last Tuesday
November 28.

Bartlit immediately set about rebutting Democratic arguments that the
Miami-Dade County hand recount was halted because the county canvassing
board was intimidated by Republican protesters. He told the assembled press
that the board stopped the recount because it couldn't meet the deadline
imposed by the Florida Supreme Court.

As counsel for the Bush campaign, the 68-year-old Bartlit is part of an
eight-member legal team that includes former Secretary of State James A.

                        Alone at Defense Table

But nearly eight years ago, Bartlit was the only lawyer at the defense
table in a Fulton State Court courtroom when a Georgia jury delivered a
stinging rebuke to his client: a $105.24 million verdict against General

On the winning side were Tom and Elaine Moseley, parents of a 17-year-old
who died in a fiery explosion in his 1985 GMC pickup. A drunk driver
slammed into Shannon C. Moseley's truck and the pickup's side-saddle fuel
tank caught fire.

The case became anything but a typical vehicle accident case. With
Georgia's best-known plaintiff's firm, Butler, Wooten, Overby & Cheeley
(now Butler, Wooten, Overby, Fryhofer, Daughtery & Sullivan) as their
lawyers, the Moseleys alleged that the company had deliberately ignored
evidence that the design of its side-saddle tanks was dangerously flawed.
They said the company had chosen profits over safety.

Bartlit, a West Point engineering graduate, a former Army Ranger and, at
the time, a partner with Chicago's Kirkland & Ellis, entered the Moseley
case at the 11th hour, just a few weeks before trial and long after the
automaker and its lawyers at King & Spalding had already suffered
significant and embarrassing setbacks in discovery.

GM's then-chairman Robert C. Stempel had to sit for a deposition for the
Butler, Wooten lawyers, something he had previously avoided in other
product liability cases. And GM's lawyers had been unable to limit the
scope of discovery or to stop the plaintiffs' lawyers from getting access
to reams of once-confidential GM documents.

Nor could they stop former GM employee Ronald Elwell from telling a jury
for the first time about previously undisclosed crash tests in which GM's
fuel tanks had consistently split open.

GM at the time told American Lawyer magazine the company brought in Bartlit
because it "wanted its most seasoned, big-case trial lawyer in an
emotion-charged case."

Bartlit had been doing regular defense work for GM for 20 years when he
filed his entry of appearance in Moseley in December 1992. But this trial
was unlike any other GM had faced up to that point.

Discovery was already closed and Fulton State Court Judge Albert L.
Thompson Jr. refused to give Bartlit additional time to prepare for the
January 1993 trial.

When the trial opened, it became evident that Bartlit faced a virtual
crusade led by plaintiffs' counsel James E. Butler Jr. and Robert Cheeley.

Still, Bartlit insisted on trying the case as a typical vehicle accident
suit. Clad in Italian suits that became soiled as he repeatedly hoisted
aloft the scorched gas tank from Moseley's truck, Bartlit insisted that
GM's trucks were safe and that Moseley had died, not from the fire, but
from the impact of the collision.

After the liability portion of the trial, the jury awarded the plaintiffs
more than $4 million in compensatory damages and indicated they intended to
award punitive damages. Butler, invoking Scripture, asked the jury to award
$100 million.

Bartlit tried to tell the panel that GM had received the message. "It is a
crushing blow that you've delivered us. We accept it," he told the jury.

An hour later, jurors awarded the plaintiffs $101 million, the extra
million added, five panel members told American Lawyer magazine, as an
exclamation point.

Bartlit was alone at the defense table to accept the jury's rebuke.

The Moseley verdict was overturned on appeal. The case later settled for a
confidential amount prior to a retrial. (Fulton County Daily Report,
November 30, 2000)

PRESIDENTIAL ELECTION: The New York Times Reports on Court Scene
So dazzling, numerous and expensive are the legal talents deployed here and
in Washington that it seems the only thing missing from the fight for the
presidency is for Abe Lincoln and Clarence Darrow to rise from the grave
and choose up sides.

No one can provide exact counts, but the many versions of this struggle,
playing out in state courts, federal courts, trial courts and appeals
courts, have employed more than 100 lawyers, including some of the nation's
best and best known, rolling up millions of dollars in fees in just three

Doug Hattaway, a spokesman for Vice President Al Gore, estimated that 30
lawyers were working for Mr. Gore on the election cases here, in South
Florida and in Washington.

"We're calling it the fastest-growing law firm in Florida," Mr. Hattaway

Gov. George W. Bush has "probably fewer than 20" lawyers working for him,
said Dan Bartlett, a spokesman.

Abundant as they are, some litigators are actually stretched thin by the
overlapping election disputes, including five major cases or groups of
cases, along with related appeals and assorted minor actions. Famous
lawyers can be seen hurrying down the sidewalks of this city, from
courthouse to courthouse to news conference, looking even more haggard than
the reporters chasing them.

There is Mr. Gore's lawsuit contesting the certification of Mr. Bush as the
winner in Florida; Mr. Bush's appeal to the United States Supreme Court of
a ruling by the State Supreme Court, with a hearing set for December 1; Mr.
Bush's suits against several counties over the counting of overseas
ballots; a suit by private citizens challenging the validity of thousands
of absentee ballots in Seminole County; and two citizen suits challenging
the legality of Palm Beach County's "butterfly" ballot.

"We've got a major election contest that Mr. Gore's legal team has asked to
be placed on a fast track before Judge Sauls; we have an argument before
the United States Supreme Court on Friday [December 1]; we have an action
taking place in Palm Beach," Barry Richard, Mr. Bush's chief trial lawyer
here, said in court, venting his frustration. "And we have several other
cases pending. And while it may appear that I have an unlimited resource of
lawyers, I do not. And what's more, there has to be somebody to keep
supervision of all of this, and that task has fallen to me."

Both campaigns have set up committees to collect money for the
post-election battle, and while neither has reported income or expenses,
officials on each side report raising several million dollars. Much of that
will go toward legal fees, despite the fact that many of the biggest names,
like David Boies for Mr. Gore and Theodore B. Olson for Mr. Bush, are
working without pay.

"I'm not charging anything for this," Mr. Boies said. "It's too important
for that."

Mr. Gore's legal team for all of the Florida cases is headed by Mr. Boies,
labeled 14 years ago by The American Lawyer magazine "the most sought-after
trial lawyer in America," a claim that has only gotten stronger. His
rat-a-tat speaking style, punctuated by chopping hand motions, accompanies
a daunting memory that allows him to cite page and line numbers from thick

Though famously indifferent to his appearance, Mr. Boies has emerged not
only as the vice president's chief litigator, but his chief media spokesman
as well, eclipsing former Secretary of State Warren Christopher, who has
helped map out the overall legal strategy. At Mr. Boies's side has been
Dexter Douglass, a longtime fixture among Florida's top litigators who was
chief counsel to former Gov. Lawton Chiles of Florida.

Coordinating and arguing the Florida cases for Mr. Bush is Mr. Richard,
another of Florida's best-known lawyers, who cuts an elegant figure with a
sweep of white hair and a calm, almost conversational courtroom style, even
in heated exchanges. The other leaders of the Bush team here are Fred
Bartlit and G. Irvin Terrell, both nationally known trial lawyers, and, in
the Seminole County case, B. Daryl Bristow.

In the United States Supreme Court case, Mr. Bush is represented by a group
led by Mr. Olson, Michael Carvin and Benjamin L. Ginsberg, chief counsel to
the Bush campaign. Mr. Gore's main advocates for that case are Laurence H.
Tribe, the Harvard Law School professor and author, and Teresa Wynn

Each political party, the State of Florida, each of the roughly 20 counties
involved in election suits, and each of the citizen plaintiffs, also has
multiple lawyers involved in the election cases, some of whom are also
stars in their field.

The lineup of lawyers, whose resumes include some of the major cases of the
last generation, seems like a game of six degrees of separation.

Mr. Terrell, representing Pennzoil, won a record $10.5 billion judgment
against Texaco in 1985. Mr. Boies represented Texaco on appeal. In 1993,
Mr. Boies represented Continental Airlines in an unsuccessful antitrust
lawsuit against American Airlines, represented by Mr. Terrell. Mr. Boies
and Mr. Christopher were among the lawyers who defended IBM against a
long-running government antitrust suit.

Mr. Boies is best known as the government's main advocate in the successful
antitrust case against Microsoft, and as the lawyer who defeated Gen.
William C. Westmoreland's libel suit against CBS in 1984. He represents
Napster in the case against it by the music industry.

Mr. Olson won a 1994 ruling that forced the University of Texas to end
race-based admissions, a case that pitted him against Mr. Tribe, who
represented the state in an unsuccessful appeal. A close friend of Kenneth
W. Starr, Mr. Olson played a peripheral role in the Whitewater and Paula
Jones cases that led to the impeachment of President Clinton.

He also represented President Ronald Reagan in the Iran-contra
investigation. Mr. Tribe, in turn, represented the Iran-contra special
prosecutor, Lawrence M. Walsh, in a 1988 Supreme Court case that grew out
of a different special prosecutor's investigation. The subject of that
investigation? Mr. Olson, then a top Justice Department official. (The New
York Times, December 1, 2000)

PRESIDENTIAL ELECTION: U.S. Supreme Court Session Convened on December 1
     WASHINGTON (Reuters) - The U.S. Supreme Court intervened for the first
time in a presidential election last Friday December 1. Lawyers for both
presidential candidates said the U.S. Supreme Court could rule in the case
in [about half a week’s time].

The state certified Bush as the winner by 537 votes last Sunday, meaning
that he will become president in January unless a court overturns that

In the latest chapter of the battle, a white truck loaded with 82 cardboard
boxes packed with 654,000 ballots, which Gore believes may hold the key to
his possible victory in Florida, pulled out of downtown Miami just before
dawn and arrived at a courthouse in Tallahassee about nine hours later
after a 520-mile (837-km) journey north.

Those ballots may or not be recounted, depending on rulings by courts in
Florida. The state's Supreme Court last Friday December 1 rejected a motion
from Gore to begin a recount immediately. The court left jurisdiction in
the hands of a county judge, who will hear arguments about whether the
ballots should be counted again on Saturday.

Democratic spokesman Doug Hattaway said of the Florida Supreme Court
decision not to expedite the recount, ``We're obviously disappointed.'' But
he was encouraged the trial judge planned to move quickly on the case.
Hattaway said he ``indicated the court would try to get a hearing done in a
day,'' on Saturday -- which could mean a decision on the recount sooner
rather than later.

The Florida Supreme Court also unanimously rejected a motion from citizens
in Palm Beach County who objected to the ''butterfly ballot'' used in the
county and asked for a new election. The petitioners said the ballot was
confusing and led many voters, who had wanted to back Gore, to cast votes
for Reform Party candidate Pat Buchanan by mistake. But the court held this
was not sufficient reason to void the election.

In Washington, the nine black-robed members of the Supreme Court vigorously
questioned attorneys for both sides. Seven of the justices were appointed
by Republicans and two by Democrats, but the court has often been closely
divided with a narrow conservative majority.

Bush's lawyer, Theodore Olson, argued that the Florida Supreme Court
exceeded its authority when it ruled unanimously two weeks ago to extend a
deadline for presidential votes to be counted by hand in Florida -- the
state that will decide who won the Nov. 7 election.

As a result of that ruling, Bush's margin in Florida fell from 930 to 537
votes. If the Supreme Court found for Bush, the previous result would be
reinstated, making Gore's task in trying to overtake his rival much

At stake are Florida's 25 Electoral College votes, which have given Bush
one more than the 270 needed to be elected president. Gore is challenging
that finding in Florida court cases to be heard in the coming days. If he
got the 25 votes, then Gore would become president.

                          Justices Question Ruling

Gore's lawyer, Laurence Tribe, argued that the Florida court ruling ensured
that all the votes would count. But two justices expressed concerns.

``I don't see anything in the text of the statute that requires a manual
recount,'' Justice Antonin Scalia said.

Justice Sandra Day O'Connor said the ruling pushed back the deadline for
certifying the Florida vote. ``Certainly the date changed. That is a
dramatic change,'' she said.

Other justices questioned why the federal court should become involved in
what is usually a state matter.

There were nearly 400 people in the courtroom, including Gore's four
children, his top campaign aide, William Daley, and a slew of Republican
and Democratic members of Congress.

The justices did not say how they would rule. After the 90-minute hearing,
the court took the case under advisement.

Speaking on CNN's ``Larry King Live,'' Tribe and Olson agreed their could
be a decision early [the week beginning December 4], noting the speed with
which the High Court had acted thus far.

``I wouldn't be surprised if it was before the middle of next week. It
could even be Monday,'' Tribe said, quickly noting he could be wrong in his

Olson said later on the same program that he also ``would not be
surprised'' if the ruling came before mid-week.

Tribe told reporters after the hearing that he was encouraged but cautious.
``You can't always guess anything about where the justices will come out
from what exactly they ask,'' he said.

A ruling for Gore would boost the vice president in his monumental battle
to overturn last Sunday's Florida's certification of a Bush victory in the

But Gore has a tough road ahead in any case since he faces a Dec. 12
deadline to overturn Bush's certified win before the state's
representatives to the Electoral College must be chosen. Florida's electors
will tip the balance when the Electoral College meets on Dec. 18 to select
the 43rd president of the United States.

                         Legal Maelstrom

The inconclusive U.S. election has provoked a political and legal maelstrom
in which [last Friday December 1's] U.S. Supreme Court hearing was the most
dramatic, but possibly not the most decisive.

In the legal blizzard, one potentially pivotal case will be heard by
Florida's Leon County Circuit Court on Monday December 4. The lawsuit seeks
to throw out up to 15,000 Seminole County absentee ballots on the grounds
that Republican Party workers illegally altered absentee ballot
applications, most of which were presumed to have been cast for Bush.

Also on Friday [December 1], a second similar lawsuit was filed in Florida
by a Democratic voter seeking to disqualify 9,800 absentee ballots cast in
Republican-leaning Martin County.

Gore's lawyers fought for a quick recount of contested votes in Florida
[last Thursday November 30], but Republican state lawmakers acted to
outflank them, voting to call a special legislative session to help propel
Bush into the White House.

Tribe in written submissions to the Supreme Court complained that Bush
``seeks not just to run out the clock but, extraordinarily, to have this
court turn back the clock in pending Florida contest proceedings so that he
can declare the game over.''

Olson warned that chaos would result if state courts could change the law
after an election was held. He blamed the Florida Supreme Court for
creating ``turmoil'' and ``postelection chaos.''

The Clinton administration agreed on Friday [December 1] to perform
background checks on candidates for top-level jobs in both the prospective
administrations of Bush and Gore.

White House spokesman Jake Siewert said the agreement emerged from
discussions that White House Chief of Staff John Podesta held with Bush's
chief of staff, Andrew Card, and Gore's transition chief, Roy Neel.

Meanwhile, the Central Intelligence Agency has representatives in Austin,
Texas, preparing to begin giving the Bush campaign regular intelligence
briefings early [the week beginning December 4], said White House National
Security Council spokesman P.J. Crowley. Gore already gets national
security briefings through his position as vice president.

PROTECTION ONE: Schubert & Reed Issues Notice of Pendency of Action
Pursuant to Section 21D(a)(3)(A)(i) of the Securities Exchange Act of 1934
(15 U.S.C. Section 78u-4(a)(3)(A)(i)), and the November 13, 2000 Order of
the United States District Court for the Central District of California in
Cats, et al. v. Protection One, Inc., et al., Case No. CV 99-3755 DT (Rcx),
notice is given that a class action is pending in the United States
District Court for the Central District of California, in which claims are
asserted on behalf all persons or entities who purchased or otherwise
acquired Protection One Alarm Monitoring, Inc. ("POAM") 7-3/8% Senior Notes
Due 2005 ("the Senior Notes") and POAM 6-3/4% Convertible Senior
Subordinated Notes Due 2003 ("the Convertible Notes") from February 10,
1998 through November 12, 1999 ("the Class Period").

POAM is a wholly owned subsidiary of Protection One, Inc. ("Protection One"
or "the Company"). The suit names as defendants Protection One; POAM;
Western Resources, Inc.; Westar Capital, Inc.; James M. Mackenzie, Jr.;
John W. Hesse; Peter C. Brown; Robert M. Chefitz; Howard A. Christensen;
Ben M. Enis; Joseph J. Gardner; William J. Gremp; Steven L. Kitchen; Carl
M. Koupal, Jr.; John C. Nettels, Jr.; Jane Dresner Sadaka; James Q. Wilson;
and Arthur Andersen, LLP, for violations of the federal securities laws.

The complaint asserts claims under sections 11 and 15 of the Securities Act
of 1933 (15 U.S.C. Sections 77k and 77o) on behalf of persons or entities
which acquired the Senior Notes whose purchases are traceable to POAM's
December 11, 1998 Registration Statement on Form S-4. The complaint alleges
that defendants sold the Senior Notes pursuant to a registration statement
that contained untrue statements of material facts or omitted to state
material facts required to be stated therein or necessary to make the
statements therein not misleading. Particularly, the complaint alleges that
the registration statement contained untrue statements concerning
Protection One's financial results and operations for fiscal 1997 and
fiscal 1998. Plaintiffs allege that, as a result of these material
representations, the Senior Notes were sold to the public at inflated
prices and traded at inflated prices thereafter.

Additionally, the complaint asserts claims under sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78j(b) and 78t(a)) and
Rule 10b-5 (17 C.F.R. Section 240.10b-5), promulgated thereunder by the
Securities and Exchange Commission ("SEC"), on behalf of purchasers of the
Senior Notes and the Convertible Notes during the Class Period. These
claims allege that defendants intentionally or with deliberate recklessness
misrepresented the truth about Protection One, its finances, revenues,
gross margins and future business prospects. In particular, the complaint
alleges that defendants intentionally or with deliberate recklessness
misrepresented the Company's financial results and operations for fiscal
1997, fiscal 1998 and the first two fiscal quarters of 1999, and that, as a
result of these material misrepresentations, POAM debt securities traded at
inflated prices during the Class Period.

Plaintiffs' claims arise from two restatements of prior reported financial
results by the Company, as well as reports of an ongoing SEC investigation
into the Company's accounting practices, which the Company has disclosed
are believed by the SEC to have resulted in material errors in the
Company's reported results and restated results. The first restatement was
announced April 1, 1999, and the second restatement was announced November
12, 1999.

Contact: Schubert & Reed LLP, San Francisco Robert C. Schubert or Juden
Justice Reed, 415/788-4220 mail@schubert-reed.com

RENT-WAY, INC: Shareholders Have Until January 2, 2001 to Seek Lead Role
According to Pomerantz Haudek Block Grossman & Gross LLP
(http://www.pomerantzlaw.com),which has filed a class action lawsuit
against Rent-Way, Inc. (NYSE: RWY) and four of the Company's senior
executives on behalf of all those persons or entities who purchased the
common stock of Rent-Way during the period between January 18, through
October 27, 2000, inclusive (the "Class Period"), shareholders have until
Tuesday January 2, 2001 to seek appointment by the Court as one of the lead
plaintiffs in this action.

The lawsuit charges that during the Class Period, Rent-Way allegedly issued
materially false and misleading financial statements concerning the
financial condition of the Company and the nature of its billing,
collection and accounting problems. In particular, it is alleged that the
Company misstated earnings and net income by under-reporting expenses
during the Class Period.

Contact: Andrew G. Tolan, Esq. of Pomerantz Haudek Block Grossman & Gross
LLP, 888-476-6529, agtolan@pomlaw.com

SOTHEBY'S: 2 Tycoons Waged Titanic Battle For Control
On a Sunday afternoon in April, two days after returning from a trip to
London, Detroit shopping-center developer Robert Taubman flew to New York
City to see money manager Ron Baron. Taubman had just been nominated as a
director of Sotheby's Holdings, the 256-year-old art auction house
controlled by his father, Alfred Taubman. Baron, Sotheby's largest
shareholder, wasn't happy.

It didn't take long for the shouting to begin. Five minutes after Taubman
arrived at Baron's Park Avenue duplex, Baron ordered him to leave. The
screaming was so loud, say sources close to the combatants, that Baron's
wife, Judy, lounging upstairs, thought it sounded as if someone were being
badly beaten.

The scrappy, voluble Baron and the dour, linebacker-sized Taubman simmered
down enough to exchange accusations. Baron bellowed that an outrageous
price-fixing conspiracy had flourished on Alfred Taubman's watch and that
the older Taubman had no right to keep control of the auction house. It was
"horrible," Baron yelled, that after Sotheby's had forced Al Taubman off
the board in February, he had the gall to name his son as a director.

Taubman fired back that Baron should stop moaning, that he always knew the
risks of investing in a company with special shares that enabled the
Taubmans to control the board. The Fords of Ford Motor and the Sulzbergers
of the New York Times used their privileged stock to ensure that those
great names remained in their hands. The Fords had no intention of
relinquishing those rights, Taubman roared, and neither did his family.
Baron's demands, he charged, were nothing more than a brazen grab for

That was the last time the two men talked. Since then they have engaged in
a titanic--and until now largely untold--battle to shape the destiny of the
storied auction house. Much has been written about the circumstances that
led up to the Park Avenue showdown and the events that unfolded afterward:
the price-fixing by Sotheby's and Christie's, which between them controlled
90% of the $ 4 billion auction market; the forced resignations of Sotheby's
chairman, Alfred Taubman, and brassy chief executive, Diana Brooks; the
proposed $ 512 million settlement of a class-action lawsuit brought by
100,000 victims of the commission-rigging scheme; and Brooks' agreement
with federal prosecutors to plead guilty in exchange for testimony against
her former boss, who is still the target of a criminal investigation.

But in focusing on the legal cases, the media missed the drama that took
place behind the velvet curtains--in the Sotheby's boardroom, in the
high-stakes negotiations with plaintiffs attorney David Boies, and in the
private machinations between the Baron and Taubman factions. The cast of
characters included a shrink (Sotheby's board member and former Moviefone
chairman Dr. Henry Jarecki), a media baron (Conrad Black), and a
92-year-old oilman (Max Fisher). Even Warren Buffett played a role. Indeed,
the story of how Sotheby's was saved from financial ruin, pieced together
by FORTUNE from interviews with directors and other insiders, none of whom
wanted to be named, may turn out to be not only more fascinating but of
more lasting significance.

When the price-fixing scandal broke in January and Sotheby's stock
plummeted, the biggest loser was the company's largest shareholder, Ron
Baron. But the turmoil also provided Baron with an opening: It was his
chance to end Taubman's privileged status at Sotheby's and take charge of
the company himself. Baron, 57, is a blithe spirit with a highly original
approach to investing. Unlike Taubman, a 75-year-old shopping-center
developer whose taste runs from blue bloods to Old Masters, Baron prefers
pop art, baseball memorabilia, rock & roll, and old buddies from his days
at New Jersey's Asbury Park High School. His office overlooking Central
Park is adorned with Roy Lichtenstein prints and the 1920 contract that
sent Babe Ruth from the Boston Red Sox to the New York Yankees. At a
conference in October for investors in his Baron Capital funds, Baron
provided a surprise treat--a performance by one of his heroes, Neil
Diamond. And he sang along as Diamond crooned, "Money talks, but it don't
sing and dance  "

As an investor, Baron is the Warren Buffett of small- and mid-cap stocks.
Baron Capital's mutual funds have provided excellent returns by finding
overlooked companies Baron believes have enormous growth potential, then
holding on to them as they get big. Some of his discoveries include Charles
Schwab, telecommunications equipment maker Flextronics, and the employment
agency Robert Half.

Baron started buying Sotheby's stock in 1998. He thought the company was
undervalued and could flourish if it harnessed its auction business to the
Internet. Baron immediately began lobbying Brooks and Taubman to sell
lower-priced goods on the Web, where costs are far less than at live
auctions and Sotheby's could swell its revenues by handling large volumes
of paintings, porcelain, and rugs. Though the results so far aren't
particularly promising, Baron remains convinced that Sotheby's can find
significant future growth in cyberspace. "With the help of the Net,
Sotheby's can raise its revenues from $ 400 million to $ 3 billion in ten
years," Baron says, pacing the Persian rugs in his office in ostrich-hide
shoes. "That could multiply the stock price tenfold."

By the end of last year Baron had poured about $ 500 million into
Sotheby's, at an average price of $ 20 per share--5% of his funds' $ 9
billion in assets--giving him a 41% stake in the company. His admiration
for Taubman buoyed his confidence. "He's a retailing genius who could go
into a department store, open the drawers to check the inventory, and tell
you if it was well managed or not," says Baron. He marveled, for example,
that Taubman had installed giant elevators in Sotheby's newly refurbished
building on Manhattan's Upper East Side, elevators big enough for trucks to
haul in entire estates. And, he says, Taubman had reassured him that
despite the two classes of shares, he wouldn't be treated as a second-class
owner. "I'll treat your shares exactly the same as mine," Baron says
Taubman told him before he started his buying binge.

By contrast, Taubman had acquired his controlling stake in Sotheby's for a
mere $ 37 million in 1983, when it was on the verge of collapse. When he
took it public four years later, he followed the example of his longtime
friend Henry Ford II: He established a special class of B shares--"killer
B's" to Sotheby's insiders--that gave him extra voting rights and
guaranteed him sovereignty.

That put Baron in a weaker position than Taubman, even though he owns
nearly twice as much stock. He can choose only a quarter of the board's 16
members, while Taubman gets to name the rest. To most investors, the killer
B's and the regular A shares look the same; both are selling at about $ 22
a share. But because the class B shares pack extra power, an acquirer could
have taken full control of Sotheby's--its board, strategy,
everything--simply by buying Taubman's 22% stake. (Sotheby's board has the
right to match any offer by finding another buyer or purchasing the shares
itself for the same price.) The prospective buyer would have to pay Taubman
a premium of 15% to 20% for his shares. Regular stockholders, like Baron,
would watch Sotheby's change hands without getting the fat markup in share
price that normally sweetens a takeover for all the owners.

Until the scandal broke, Taubman's killer B's didn't bother Baron. But when
the stock dropped from $ 30 to around $ 15 in the wake of the price-fixing
allegations, he began to fret. He feared that by stacking the board with
cronies, including his own son, Taubman could engineer a settlement that
protected his own pocketbook at the expense of Sotheby's. And that Baron
would be left holding a huge stake in a wounded company.

The screaming match with Robert Taubman confirmed Baron's worst fears.
Whatever assurances Baron thought he had from the older Taubman were now
off the table: "He said his interest is better than my interest," Baron
recalls. So Baron started a guerrilla campaign against the Taubmans. For
the first time, he exercised his right to name directors. And he lobbied
the board with an intriguing plan to save Sotheby's from huge damages,
proposing that Taubman pay all or most of the fines in the class-action
lawsuit by changing his B shares into regular shares, then distributing
them to the plaintiffs. Besides reviving the value of Sotheby's stock, the
plan, by eliminating the killer B's, would make Baron Capital the company's
controlling shareholder.

That set the stage for a dramatic eight-hour board meeting in New York City
on Aug. 3. For some of the directors, it was the first time they had laid
eyes on Sotheby's recently expanded glass cathedral, a building that had
Taubman's name written all over it--in the soaring auction room framed with
skyboxes, where the likes of Billy Crystal get to bid in private; in the
top-floor gallery that bathes van Goghs in glorious natural light; and in
the boardroom itself, decorated with the sunsets and gardens of Childe
Hassam and other American impressionists. But Taubman himself was nowhere
to be seen: He was off fly-fishing for salmon in Iceland.

The Sotheby's directors who sat around the blond-wood conference table
contemplating the company's fate had a different cast from previous boards.
In the past Taubman had chosen a combination of British aristocrats with
little management experience and personal friends who happened to be
lawyers or businessmen. Now the board was loaded with feisty entrepreneurs.
Baron had picked the chairmen of two companies he had invested in--Steven
Dodge of wireless-equipment maker American Tower and George Blumenthal of
NTL, the British communications giant--as well as money manager Brian
Posner and former Moviefone chairman Henry Jarecki, who also teaches
psychiatry at Yale. Jokes Baron: "Having a shrink on the board sure can't
hurt Sotheby's."

The Taubman-appointed directors included some old friends, such as Canadian
media mogul Conrad Black, longtime attorney Jeffrey Miro, and Max Fisher,
the Michigan oilman who had given Taubman his first big break in the early
1950s, commissioning him to build or renovate 153 gas stations. Lending an
air of statesmanship was the new chairman, Michael Sovern, a former
president of Columbia University. (Miro and Robert Taubman recused
themselves from all discussions about a settlement.)

Sovern explained to the board--and the directors agreed-- that Sotheby's
had two objectives. First, it had to settle quickly. The legal cloud was
discouraging collectors from selling their art through Sotheby's. Employees
were leaving in droves, lured by smaller competitors like Phillips,
recently purchased by French luxury-goods purveyor LVMH. Even a few months
of crippling lawsuits could wreck the auction house's business.

Second, Sotheby's had to settle for an amount it could afford. It had
invested $ 191 million to expand its headquarters and start an Internet
business, and the Web venture would burn a lot more cash before it got
traction. In management's estimation, Sotheby's couldn't afford to pay more
than $ 100 million without seriously damaging its financial health.

But the stakes were much higher than that. Sotheby's lawyers told the
directors that David Boies, the attorney spearheading the class-action
suits, estimated the damages--excessive commissions charged to both buyers
and sellers as a result of the price-fixing scheme--at $ 285 million. Since
plaintiffs in antitrust cases can demand treble damages, Boies planned to
pursue the auction houses for more than $ 850 million. The lawyer who had
humbled Microsoft had a strong incentive to win big: A federal judge in New
York, Sovern told the board, had approved a deal giving Boies' firm 25% of
any damages over $ 400 million.

Some of the Baron-appointed directors, including Jarecki, favored having
Taubman pay any settlement by surrendering his special shares. But
Sotheby's lawyers explained that because the B shares were enshrined in
Sotheby's charter, even the board couldn't force Taubman to relinquish
them. The partisans quickly dropped the idea and didn't push for a lawsuit
that might have forced Taubman's hand. "The Baron-appointed directors,"
says one board member, "proved far more independent than he ever imagined."

In most antitrust cases, the co-conspirators agree to cooperate so that the
plaintiffs can't play one side against the other to swell the settlement.
But the contempt between Sotheby's and Christie's was so great that they
refused to align their strategies or even talk. That freed Boies to exploit
their mutual distrust. He could settle with either Sotheby's or Christie's
for a relatively small amount, then, with the house that settled first
providing damning evidence against the other, chase its hapless
co-conspirator for a bigger sum. Boies, Sotheby's lawyers told the board,
was prepared to make just such a deal with Christie's.

By the time the directors left at 7 P.M., they were alarmed. "There was a
feeling that Christie's had far deeper pockets than Sotheby's," says one
director, "so that Christie's could afford to settle first and start a
lawsuit that could ruin us."

Over the next seven weeks Sotheby's, Christie's, and Taubman bulled and
parried their way through whirlwind negotiations. For Sotheby's, the only
escape was to get Taubman to make a huge payment--the option Baron had
proposed, except Taubman would pay in cash instead of stock. If he refused,
Sotheby's couldn't afford to settle before Christie's, leaving it
vulnerable to protracted suits and a ruinous settlement.

Taubman wasn't offering much cash. But Sotheby's had leverage: It could sue
Taubman to recover part or all of any damages. In late August, Boies
proposed the deal that got Taubman moving. He said he would accept a $ 100
million settlement from Sotheby's. The auction house would then let Boies
sue Taubman instead of having Sotheby's file suit against its former
chairman. The plaintiffs would get the first $ 130 million in
damages--assuming Boies could prove Taubman's involvement in the
price-fixing scandal--and anything more than $ 130 million would be split
with Sotheby's.

The board rejected the deal. But at the same time the directors sent a
strong message to Taubman: Unless he stepped forward, Sotheby's would
settle separately and leave its former chairman standing alone.

It was Max Fisher who helped orchestrate the final deal. The revered elder
had always been a hands-on director. He insisted that lower-level employees
get bigger percentage raises than executives, and he scoured expense
accounts for frivolous spending. "He has a bear trap for a brain and smells
b.s. a mile away," says one director. "He had an amazing way of guessing
what the opposition was doing." At board meetings Fisher would occasionally
lean forward and close his eyes, creating the impression that he was
sleeping. "Trust me, he wasn't napping," the director says. "Max was just
pacing himself." What Fisher wanted to know was why Sotheby's wasn't
talking to Christie's. He told the board it had to bury its mistrust for
its rival and reach a settlement. "Max kept insisting that Boies was trying
to keep the two sides apart," recalls a director. "It didn't make sense to
Max that Christie's wouldn't work with us on the settlement. And he was

Boies continued to play hardball. In mid-September, telling each auction
house that the other was the real villain, he offered a new deal to both
Sotheby's and Christie's: Settle for $ 212 million and help him win even
more money from the other side. The message was simple--whoever settles the
case first gets a big discount.

Sotheby's wanted to take the deal, but as Fisher and other members of the
board predicted, so did Christie's, and they couldn't both get it. Fearing
an impasse that would force Boies to sue both houses, Fisher proposed that
Sotheby's and Christie's split the difference. On Sept. 24, each agreed to
pay $ 256 million in damages. And Taubman promised to underwrite the lion's
share of the settlement himself--$ 156 million. It was a supreme irony that
the rival auction houses, which came to grief by secretly colluding to fix
commissions, only managed to escape disaster by joining hands.

Taubman's decision to finance the settlement wasn't an easy one. He was
worried that the huge payment might be perceived as an admission of guilt.
But he was convinced that it made excellent economic sense. Sotheby's will
have to pay only $ 50 million in cash. The other $ 50 million will be
distributed to plaintiffs in the form of coupons that can be used to reduce
commissions on art sold at Sotheby's, thereby binding the collectors to the
very house that fleeced them in the first place. Sotheby's will also pay a
$ 45 million criminal fine over five years, with no interest, and issue $
40 million in new stock to help settle shareholders' suits. (Taubman is
contributing an additional $ 30 million toward the latter settlement.) In
the weeks following the settlement of the class-action suit--which is still
pending final approval by a federal judge--Sotheby's share price jumped
30%, to $ 27 a share, swelling the value of Taubman's holdings by $ 90
million, about half the amount he agreed to pay. (It has since fallen back
to about $ 22.)

As for Baron, the directors he appointed helped persuade him not to sue
Taubman to force him to eliminate the B shares. "I would hope Ron is
persuaded not to prolong the agony of the company in which he's a major
shareholder," says one board member. Baron also got advice from one of his
heroes, Warren Buffett. The Oracle of Omaha told Baron it's always better
to avoid being consumed by litigation, such as the legal confrontation
chewing up so much of Bill Gates' time at Microsoft.

Baron's fears that Taubman will make a deal at his expense are receding.
Doing the wrong thing in the eyes of the Justice Department--achieving a
big gain to the detriment of other shareholders--could hurt Taubman's
chances of escaping indictment. Plus the directors hate the idea. "Taubman
would have to be brain dead to try to pull off something like that," says
one board member. "He may have already injured the company. He's in no
position to get incremental compensation. He'd meet all kinds of

How did Sotheby's get itself into such a mess? For 17 years Taubman
exercised complete sovereignty over the auction house. He revolutionized
its business, promoting customer service over snobbery, transforming
Sotheby's from an elitist club into an emporium for the new-money masses,
bringing buzz to the auctioning of rugs, paintings, and jewelry. In the
process he transformed himself--from a shopping-mall maven, the son of a
German-Jewish immigrant whose construction business collapsed during the
Depression, into the monarch of a glamorous kingdom. He decorated his
mansions in Palm Beach and Southampton, N.Y., with paintings by Degas and
Pollock. He palled around with celebrities and tycoons.

Taubman was a brilliant thinker, but he wasn't much of a manager. He never
fired anyone, hated making tough decisions, and detested saying no. He also
had a terrible temper. He often called Sotheby's officials, but it was
seldom to talk about budgets or earnings. Instead he would rant about
something his wife had told him--that Christie's had captured a collection
from Sotheby's, that Christie's salespeople attended more cocktail parties.

Innovative ideas clearly weren't enough to keep Sotheby's thriving. Taubman
needed someone who could implement his ideas, a decisive, hands-on operator
with the strengths he lacked. He found her in Dede Brooks, a jocular,
magnetic, self-confident woman, nearly six feet tall, who grew up on Long
Island's tony North Shore and left Citibank in 1979 to work at the auction
house. Friends say Taubman was cowed by strong women--among them his second
wife, Judy Mazor, a former Israeli beauty queen 22 years his junior--and he
was no match for Brooks. He allowed her to run Sotheby's largely unchecked,
and former employees say the chairman's proxy made her arrogant. Whether or
not Taubman told Brooks to fix prices, as prosecutors suspect, it's likely
that her hubris encouraged her to act above the law.

Brooks made no effort to emulate the muted sophistication of most Sotheby's
women, sporting canary-yellow or magenta suits, a leonine coif, and
politically incorrrect fur coats. She treated Taubman like one of his
buddies would. "Hiya, boss!" she'd intone in a loud basso, slapping the
chairman on the back. Her style captivated Taubman. In 1994, when CEO
Michael Ainslie retired, Brooks was named to succeed him.

At first, associates say, Brooks was a compassionate, sensitive boss. But
as her power grew, a dark side emerged. She wanted to run every part of
Sotheby's, regardless of whom she crushed. Until the mid-1990s a team of
experts negotiated the terms of sale with wealthy clients seeking to
auction famous works. Brooks took over their roles, hammering out all the
important deals herself. "I enjoyed working with her until she essentially
took over my job," recalls David Nash, former head of Sotheby's department
of impressionist and modern art. "After that I didn't enjoy it." Nash quit,
as did his wife, contemporary art expert Lucy Mitchell-Innes, and a number
of other experts.

Brooks appointed herself Sotheby's head auctioneer. Her booming,
unmodulated voice and stiff manner generated little excitement and didn't
help sales. But she consolidated her power, getting practically anything
she wanted from Taubman, including a grant of 850,000 stock options in
1998, six times what any other manager received. The award infuriated
executives, yet Taubman barely heard their complaints. Dede, and Dede
alone, ran the business. She ignored Taubman's comments in meetings, often
rolling her eyes. But the boss didn't complain. Brooks had become

The conspiracy to fix prices began in 1995, when a dreadful market created
the temptation to cheat. With Sotheby's and Christie's desperate for works
of art, sellers played the two houses against each other, driving
commissions down to 2% or even lower. "Marketing expenses ate up our
revenues," recalls Robert Monk, a former head of contemporary art at the
auction house. "We were making almost no money."

In early 1995, Brooks made a dramatic presentation to the board. She
proposed that Sotheby's change its commission structure from a flat to a
sliding scale: Sellers would pay Sotheby's 10% to auction a $ 10,000
highboy and just 2% on a $ 5 million Matisse. But the biggest change wasn't
the scale. Brooks recommended that Sotheby's make its commissions
nonnegotiable. "She said, 'We'll hold fast, with no discounts--what we want
is profits,'" recalls a director who was at the meeting. "'We'll compete on
service, not on price. If we lose consignments, we lose them.'" According
to the board member, Brooks added, "Let Christie's buy market share, but it
would be crazy for them to undercut us and beat their own brains out."

What the board didn't know was that Brooks was already meeting in limos and
restaurants with Christopher Davidge, her counterpart at Christie's,
colluding to set identical fees and refuse discounts so that sellers could
no longer shop between the two houses. With the price war over, Sotheby's
profits started climbing. The conspiracy was in place that would forever
loosen Taubman's grip on Sotheby's.

Whether Taubman told Brooks to make a deal with Christie's --as Brooks now
claims he did--is still under investigation. Taubman insists, through his
lawyers, that he's innocent. And his ex-lieutenants swear by his ethics.
Richard Kughn, former president of his real estate firm, says Taubman
wouldn't build in any part of the country where kickbacks to contractors or
politicians were de rigueur. Kughn's successor, Robert Larson, recalls that
in the 1970s, Prudential Insurance, Taubman's partner in the Woodland
shopping center in Grand Rapids, returned a check, claiming Taubman was
overpaying. Prudential was technically right. But Taubman decided that as
he understood the deal, Prudential deserved the larger payment. "It's not
in the man's character to do something illegal," says Larson.

But documents supplied to federal prosecutors last January by Davidge after
he was sacked by his boss, French luxury-goods czar Francois Pinault, are
said to provide evidence that the plot began with a 1993 conversation
between Taubman and Christie's then-chairman, Sir Anthony Tennant.
Prosecutors are currently weighing whether to indict Taubman; if convicted,
he faces a maximum sentence of three years in jail.

Insiders say it's only a matter of time before Sotheby's is sold. The list
of potential buyers includes Bernard Arnault, who heads LVMH and is said to
covet the auction house for his luxury-goods portfolio. Taubman, who lost
an estimated $ 600 million in the perilous real estate market of the early
1990s, may have to sell or borrow against his Sotheby's stock to pay his
share of the damages. Most of all, his friends say, the thrill is gone. "It
wasn't a big investment, but for Al it was a very romantic one," Max Fisher
once said. Friends of both men say Fisher is heartbroken by Taubman's woes.
But for Fisher--as for other members of the board who took matters into
their own hands--duty comes before friendship.

In the end, neither Taubman nor Baron will control Sotheby's
future--Taubman because of his legal woes, Baron because his attempted coup
simply failed. But both men gained partial victories: The board's
independent actions saved the value of their investments. Taubman and Baron
may soon be gone from the scene. And all that will remain of the Taubman
era is a splendid glass cathedral, in which a new owner can display his
trophies and patrons of the art world can pray for a good price on a
Picasso. (Fortune, December 18, 2000)

SUPERMARKETS: 3 Alleged of Underpaying Night Janitors
A coalition of civil rights and labor lawyers filed a lawsuit last Thursday
November 30 against three major supermarket chains and a national building
services contractor, alleging systematic underpayment of janitors who clean
the stores at night.

The suit, which seeks class-action status, was filed in Los Angeles County
Superior Court on behalf of an estimated 600 janitors. It named
Albertson's, Ralphs and Vons, as well as Houston-based Encompass Services
Corp., a contractor that provides janitors to the stores. All denied
wrongdoing. The suit was filed by the Mexican American Legal Defense and
Educational Fund and several area law firms.

The lawsuit alleges that the markets "implemented a scheme to evade
responsibility for janitors' wages and job benefits by pretending to hire
janitors indirectly through a contractor while retaining control over the
work the janitors perform." It asks for back pay and punitive damages and a
court order that the janitors become employees of the markets or Encompass.

A Times story this year documented supermarket janitors who worked seven
nights a week, starting at midnight, with no overtime pay, workers'
compensation insurance or protective gear. Most were paid in cash or with
personal checks, with no payroll taxes deducted. Some said they were paid
less than the minimum wage. Most were recent immigrants from rural Mexico
who were recruited by subcontractors of Encompass.

With nearly $ 4 billion in sales a year, Encompass is a young and
fast-growing firm that claims to be the largest building-maintenance
contractor in the nation. The firm provides janitors to numerous retail
outlets through a pyramid of contractors and subcontractors. On the New
York Stock Exchange, Encompass shares fell 25 cents to close at $ 3.63.

Encompass spokeswoman Jeanne Buchanan said she had not seen the lawsuit and
could not comment on specific claims. However, she said the company's
subcontractors are required to comply with federal and state laws.
"Encompass takes its obligations under the law very seriously," she said.

Spokesmen for the supermarket chains emphasized they do not employ the
janitors directly.

"Albertson's is not related in any way to Encompass," the company said in a
written statement. "Therefore, it has no direct control over the employees
of Encompass."

Similarly, Kevin Herglotz of Vons said, "These janitors do not work for us.
Encompass is a separate company. . . . We are not aware of any labor law
violations or investigations against Encompass. If anything isolated has
occurred, we do not condone it." The 40-page lawsuit contends that the
markets, which once directly hired their janitors, saved millions of
dollars a year by contracting out the work. But store managers continued to
supervise and direct the janitors and approved their work at the end of
each shift. Because of that control, the suit claims, the supermarkets
should be held jointly liable for back pay and punitive damages.

It also claims the markets should have known the janitors were routinely
underpaid and that problems were pointed out by state investigators and
union representatives.

The Service Employees International Union, which represents thousands of
janitors in Los Angeles, also joined the lawsuit, alleging that the markets
and Encompass engaged in unfair labor practices that suppressed union

At a news conference at MALDEF offices, two former Encompass janitors spoke
of their experiences. Maria Tona Orea said she worked at a Santa Monica
Ralphs for several months without a break. After asking for a day off
Christmas Eve, she said, she was fired.

Guadalupe Flores worked at numerous supermarkets in Arizona, Florida and
California for Encompass subcontractors over the last four years. "All
those years, they never paid me overtime," he said.

Flores now works for a union contractor at a Stater Bros. store in Anaheim,
where he earns $ 9 an hour with time-and-a-half for anything more than 40
hours a week. (Los Angeles Times, December 1, 2000)

TOYS R US: Seeks Transfer of Internet Privacy Cases to California
Toys R Us and Coremetrics Inc., the defendants in 12 Internet privacy
lawsuits, have asked the Judicial Panel on Multidistrict Litigation to
transfer and coordinate the actions in the Northern District of California
where Coremetrics is headquartered. In re Toys R Us Inc. et al. Privacy
Litigation, MDL No. 1381, motion filed (J.P.M.L., Sept. 25, 2000).

The plaintiffs in two of the cases, both filed in the U.S. District Court
for the District of New Jersey, have filed responses supporting transfer.

All of the actions allege that Toys R Us contracted with Coremetrics to
collect personal information from customers' computers without their
knowledge or consent by planting "cookies" -- strings of identifying
computer code -- on their hard drives.

The plaintiffs allege that Coremetrics gathered their names, addresses,
telephone numbers, buying habits, Web-surfing histories, credit card
numbers and bank account information, which it could then share with third

The defendants deny that the information Coremetrics gathered is shared
with any third parties and assert that the data was used only for internal
information management purposes.

Of the 12 federal lawsuits, all filed in August, seven were lodged in the
District of New Jersey where Toys R Us has its principle place of business.
Three were filed in the Northern District of California and two in the
Western District of Texas.

All of the actions claim that the defendants have violated the same three
federal statutes: 18 U.S.C.  @ 1030, 18 U.S.C. @ 2510 et seq. and 18 U.S.C.
@ 2701 et seq. The complaints allege improper interception and disclosure
of electronic communications; unjust enrichment; invasion of privacy;
negligence; misrepresentation or active concealment; and breach of
contract. In addition, several of the complaints allege violations of state
consumer-fraud laws.

The plaintiffs seek class-action certification, injunctive relief,
disgorgement of profits, statutory, actual and punitive damages, court
costs and attorneys' fees.

In their motion for coordination and transfer, the defendants argued that
coordination in the Northern District of California would promote the just
and efficient conduct of the actions. They said it would also help avoid
conflicting or inconsistent rulings, repetitive and burdensome discovery,
and conflicting-class certification decisions.

The defendants noted that Coremetrics is headquartered in San Francisco,
within the Northern District of California, and that its records and
witnesses are located there. Toys R Us also has a strong corporate presence
in California, with dozens of stores and distribution centers and 7,000
employees within the state, the defendants pointed out.

The proposed plaintiff classes are either identical or substantially
overlapping, the motion stated, varying only with respect to the extent of
the usage of the Web sites. The defendants suggested that U.S. District
Judge Maxine M. Chesney be assigned to preside over the coordinated suits.
Judge Chesney has already been assigned to hear two of the three actions
filed in the Northern District of California.

Mindy Robbins and Marisa Dearman, plaintiffs in two of the New Jersey
cases, filed responses to the motion to transfer supporting the defendants'
request to assign the cases to the Northern District of California.

The motion to transfer was filed on behalf of the defendants by Dennis J.
Block of Cadwalader, Wickersham & Taft in New York and Dean J. Zipser of
Morrison & Foerster in Irvine, Calif. (Electronic Privacy Litigation
Reporter, October 30, 2000)

USA.COM INC: Investors' Suit Charges Online Lender with $70 Mil Fraud
In a proposed Southern District of New York class action, investors are
charging eBanker USA.COM Inc. and two related companies with securities
fraud for allegedly cheating them on the companies' stock offerings. The
suit seeks at least $70 million in damages. Halperin et al. v. eBanker
USA.COM Inc. et al., No. 00-CV-6769, complaint filed (S.D.N.Y., Sept. 8,

The lead defendant in the suit, eBanker, is described as an online
financing company with its headquarters in Denver. The second corporate
defendant, American Fronteer Financial Corp., a Colorado company with
offices in New York City, is eBanker's corporate predecessor. The third
corporate defendant, eVision USA.COM Inc., is a public holding company
located in Denver. American Fronteer is a stock brokerage and eVision
subsidiary, according to the complaint.

The suit also names the following director and officer defendants: Fai
Chan, chairman, president and CEO of eBanker and chairman and president of
eVision; Robert Trapp, president of American Fronteer, director and
secretary of eBanker, and director and managing director of eVision; David
Chen, an eBanker director; Tong Wan Chan, a business manager of American
Fronteer, eBanker and eVision, and an eVision director; Gary L. Cook, CFO
and director of eVision, treasurer of eBanker, and CFO of American
Fronteer; and Jeffrey Busch and Robert Jeffers Jr., both eVision directors.

"The individual defendants, creating a web of domestic and foreign
corporations, used their controlled and interrelated companies and
fraudulent documents and misleading statements to induce the plaintiff
classes to invest substantial moneys in certain of the defendant companies
without disclosing such investments were intended to generate funds for the
personal benefit of the individual defendants, to the detriment of the
plaintiff classes," according to the complaint filed by Michael Halperin,
M.D., and Donald Kern, D.D.S., on behalf of all similarly situated

According to the suit, offering materials for eBanker and eVision failed to
disclose that the companies were not being operated as represented in
private stock offering memorandums, and that corporate directors and
officers were receiving allegedly improper stock options.

The 11-count complaint makes claims for securities fraud under Section
10(b) of the Securities Exchange Act, insider trading under Section 20(A)
of the Securities Exchange Act, breach of fiduciary duty and common-law
fraud. The plaintiffs are seeking class certification and at least $70
million in damages.

The investor plaintiffs are represented by Debra J. Guzov of Guzov & Rella
in New York.

Calif. Suit Charges Trading Company With Defrauding Investors on Internet

A Central District of California suit charges TLC Investments & Trade Co.
and its two principals with allegedly cheating customers out of $156
million through the fraudulent sale of stock on the Internet. Securities
and Exchange Commission v. TLC Investment & Trade Co. et al., No.
00-CV-960, complaint filed (C.D. Cal., Oct. 3, 2000).

The suit filed by the Securities and Exchange Commission asserts that TLC
principals Ernest F. Cossey and Gary W. Williams have been running an
alleged stock scam since 1998.

The fraud allegedly involved the sale of unregistered securities in
TLC-related companies that invested in depressed real estate.

According to the SEC, 2,600 people have invested at least $156 million with
TLC. Many of the investors are alleged to be senior citizens.

The suit asserts that Cossey and Williams siphoned off at least $28.3
million in investors funds to pay other investors as part of a Ponzi
scheme, and for personal investments such as racehorses.

Acting on a motion by the SEC, the court has issued a temporary restraining
order freezing the defendants assets and appointing a temporary receiver to
take over the companies.

The defendants are charged with civil violations of the anti-fraud
provisions contained in Section 10(b) of the Securities Exchange Act and
Section 17(a) of the Securities Act, as well as violation of the securities
registration rules under Sections 5(a) and (c) of the Securities Act.

Also named in the suit are Thomas G. Cloud and his company, Cloud and
Associates Consulting Inc., which sold the allegedly bogus securities and
received at least $1 million in commissions.

Nevada Federal Judge Issues Injunction, Assets Freeze Against BryCar

A federal judge in Nevada has issued a preliminary injunction against Bryan
J. Egan and his company, BryCar Financial Corp., the defendants in a
Securities and Exchange Commission suit that alleges they "looted investor
funds." Securities and Exchange Commission v. BryCar Financial Corp. et
al., No. 00-CV-1125, preliminary injunction issued (D. Nev., Sept. 26,
2000); see e-Trading Legal Alert, Oct. 13, 2000, P. 9.

The injunction by District of Nevada Judge Lloyd D. George freezes the
defendants' assets and was issued following a request by the SEC, which is
attempting to protect investor funds, according to the commission.

The SEC's suit filed last month alleges that Egan used the Web site
www.brycar.com to sell interest in two allegedly fraudulent investment
pools. The commission says the Web site posted false financial information
and that its representations about risk- and tax-free investments were
equally false.

The complaint goes on to assert that Egan withdrew $380,000 from BryCar's
BankAmerica account and deposited it into his personal bank account.

The SEC says that transaction left BryCar's account with a zero balance.
The money was allegedly used by Eagan for consumer purchases, according to
the SEC.

The suit makes claims for fraud under Section 10(b) of the Securities
Exchange Act and Section 17(a) of the Securities Act, and for failure to
register as a broker-dealer in violation of Section 15(a) of the Securities

The SEC is asking the court to order disgorgement with prejudgment interest
and for civil monetary penalties. (E-Trading Legal Alert, October 27, 2000)

VESTIN MORTGAGE: Developer Alleges of Unfair Tactics in Loan Penalty
Developer Howard Bulloch is suing Vestin Mortgage, formerly known as Del
Mar Mortgage, seeking more than $ 10 million in damages for alleged fraud.
The lawsuit contends that Vestin and Michael Shustek, chief executive
officer at Vestin, used unfair tactics to obtain penalty payments for loans
and violated state and federal securities laws.

'It's totally without merit, and we're going to counterclaim,' Shustek
said. 'This was filed in state court two months ago, and it was dismissed.'

But Keith Rooker, an attorney representing Bulloch, said the dismissal
'represents a decision on the part of my client to litigate the matter in
federal court.'

The federal suit was filed Nov. 22 on behalf of Desert Land and Casa Malaga
Motel, two entities controlled by Bulloch, and Bulloch as an individual.
The defendants include: Owens Financial Group Inc., Vestin, Shustek
Investments Inc. and Shustek as an individual.

Shustek declined to discuss specific allegations, saying he had not had an
opportunity to read the suit.

The lawsuit alleges that Shustek said he established an account in the Cook
Islands to protect his assets and has been removing assets 'from the United
States and/or concealed such assets to make himself judgment proof.'

It argues that Shustek may flee, because he and his companies are being
investigated by federal officials for numerous possible criminal and civil
violations, including money laundering.

Vestin has denied the money laundering allegations, claiming it is an
innocent victim.

The suit alleges Shustek systematically diverted assets from his companies
for his own personal benefit. The filing mentions payments of hundreds of
thousands of dollars that the plaintiffs claim were diverted and paid to
Shustek Investments.

The lawsuit claims Owens Financial was involved in the transactions, even
though it lacks a required state mortgage brokerage license.

In court papers, Bulloch stated Del Mar made a $ 13 million loan in 1998 so
he could buy real estate identified as Blue Diamond property. Bulloch said
he still owes $ 8.4 million on the loan.

In August 1999, the lawsuit claims that Vestin refused to honor a
commitment to make a $ 34.5 million loan to Bulloch and his companies
unless some of the Blue Diamond loan was paid down. Bulloch said he
complied with the demand.

In August 1999, the plaintiffs said they borrowed $ 34.5 million to acquire
real estate adjacent to Las Vegas Boulevard near McCarran International
Airport. The suit states that loan was repaid in August.

The defendants, however, collected millions of dollars in penalty fees and
sold interests in those fees to investors, according to the plaintiffs'
filings. The suit contends the investments were not registered with federal
or state officials, as required.

Some of the allegations, if proven, could be grounds for revoking Vestin's
state license, mortgage brokers say.

Scott Walshaw, the state's commissioner of Financial Institutions, said he
wasn't aware of the suit. But Walshaw said he would be reluctant to
intervene in matters involved in a pending lawsuit.

In addition to seeking a judgment for alleged damages, Bulloch is asking
U.S. District Judge Kent Dawson to prohibit the defendants from blocking
the sale of the Blue Diamond property.

After the closing, the judge then could direct repayment of the $ 8.4
million loan with some of the proceeds, the plaintiffs said. (Las Vegas
Review-Journal (Las Vegas, NV), November 30, 2000)

* SKorea To Allow Minority Shareholders To Take Class Action In 2002
The government plans to allow minority shareholders to file collective
class action law suits against management of companies listed on the Korea
Stock Exchange, beginning 2002, as part of reforms to improve corporate
governance, Finance and Economy Minister Jin Nyum said.

"The MoFE is talking with the Justice Ministry over a plan to introduce a
class action system from 2002 in phases," Jin said at a meeting with

Jin said the economy will embark on a normal growth track from the second
half of next year if restructuring be carried through, with ongoing
economic difficulties peaking out in the first quarter of next year. (AFX -
Asia, December 1, 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
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