/raid1/www/Hosts/bankrupt/CAR_Public/001206.MBX               C L A S S   A C T I O N   R E P O R T E R

             Wednesday, December 6, 2000, Vol. 2, No. 236


AGRIBRANDS INTERNATIONAL: Terminates Ralcorp Deal; Turns to Cargill
AVCO FINANCIAL: 1st Cir Clears Way for National Debt Relief Enforcement
AVENTIS CROPSCIENCE: Expresses Regrets of StarLink Corn Debacle
CALIFORNIA: Disparate Impact Did Not Void Basic Skills Test For Teachers
DAIMLERCHRYSLER: Investment Firms Join Shareholders in Attack

DUPONT: Ecuadorian Shrimp Farmers Win $10M Verdict for Fungicide Impact
FEN-PHEN: AHP Alleges Class Plaintiffs Didn't Prove Latent Injury
FEN-PHEN: Crawford & Company Selected to Administer Screening Program
HANGER ORTHOPEDIC: Schatz & Nobel Announces Securities Suit Filed in MD
HEARTLAND FUNDS: Investor's Business Daily Sees Long Way To Recovery

INMATES LITIGATION: City of Phil. Sanctioned for Failure to Remedy
INMATES LITIGATION: NJ Senate Unanimously Endorses New Parole Board Head
LOCKHEED MARTIN: EEOC Asks To Join Employee Racial Discrimination Suit
MAINE: Lawyers Say State Hasn't Met 10-Year-Old Court Agreement Terms

NATIONSBANC MORTGAGE: Debtor Class Rid of Claim Fee in North Carolina
NETMANAGE, INC: Schubert & Reed Clarifies on Securities Suit
POTOMAC ELECTRIC: Ct Uses Supplemental Authority To Hear Oil Spill Case
RIVERSIDE SCHOOL: Architect Answers in Proposed Class Action over Mold
SATELLITE CONTROL: Weiss & Yourman Announces of Securities Suit in CA

TURKCELL ILETISIM: Rabin & Peckel Announces Securities Lawsuit in NY
UPS: Settles Suit Over Alleged Racial Bias
VITAMIN PRICE-FIXING: Companies Face Record Fine in Australia

* Recent Appellate Rulings Could Encourage Debtors' Action, Review Says
* RESPA Roundup By Practitioner; Summarizes The Status Of Class Action


AGRIBRANDS INTERNATIONAL: Terminates Ralcorp Deal; Turns to Cargill
Agribrands International Inc. terminated Ralcorp Holdings Inc.'s proposed
merger of equals on Monday, and instead agreed to be bought by Cargill
Inc., a privately owned Minnesota corporation, for $ 54.50 per share, or
$ 580 million. Ralcorp had offered $ 450 million.

Wall Street rewarded Agribrands' move, sending its share price soaring 20
percent, or $ 8.75, to close at $ 52.56. Ralcorp, which had hoped that
its proposed merger would spark a similar rise, closed down 2.2 percent,
or 31 cents, at $ 13.88. Ralcorp shares had closed at $ 14.19 on the day
of the proposed merger announcement.

Minnesota-based Cargill is the country's largest private corporation,
with diversified operations in food, animal feed and steel production,
among other areas. It posted sales of $ 47.6 billion, with earnings of $
480 million. Agribrands, which produces animal feed, is based in Ladue,
and Ralcorp, a private-label food producer, is based in St. Louis. Both
were spun off from Ralston Purina Group, Ralcorp in 1994 and Agribrands
in 1998.

If the deal goes through, Agribrands will be merged into Cargill Animal
Nutrition, one of Cargill's subsidiaries that is based in Minneapolis.
Richard Frasch, president of the subsidiary, will head the new
organization. The two businesses will operate 178 plants in 26 countries.
Cargill's 108 feedmills are in the U.S. and 18 other countries;
Agribrands' 70 feed production facilities are all outside the U.S.

There is little overlap between the two businesses, according to Cargill.
Existing direct sales and dealer networks for both companies will be

Cargill isn't releasing sales figures on its Animal Nutrition division,
although Jeffrey Kanter, an analyst with Prudential Securities Research,
said both companies are believed to be on a par. Agribrands had $ 1.3
billion in sales last year.

It's too early to know if there will be any effect on employees for both
companies, said Mark Klein, a Cargill spokesman. One Agribrands executive
guaranteed of a role so far is Chief Operating Officer Bill Armstrong.
Armstrong was tapped to be part of Cargill's transition team, which will
include senior executives of both companies, according to Cargill.

There was no word of what role, if any, that William Stiritz, chairman
and chief executive of Agribrands and also chairman of Ralcorp, would
have at Cargill after the Cargill-Agribrands merger. Agribrands employs
50 at its Ladue offices.

Cargill and Agribrands now enter a 30-day period in which other companies
can make a bid on Agribrands, and analysts differ on whether rivals will
jump in with an offer. While Tom Burnett, president of Merger Insight,
said the Cargill offer is "as high as you're going to get," Kanter said
Nutreco Holding NV, based in Holland, and Ridley Inc., based in
Australia, are companies that could make a move. If the merger with
Cargill is terminated, Agribrands will have to pay Cargill a $ 10 million

What the analysts agree on is that the Cargill-Agribrands merger makes
more sense, and is a better value for shareholders. Previously, analysts
had speculated that Ralcorp had plans to sell Agribrands soon after the

If the shareholders and regulators approve, the deal is expected to close
in April 2001. "They finally got their shareholders a fair price,"
Burnett said, referring to Agribrands.

Investors and analysts had opposed Ralcorp-Agribrands' Aug. 8 merger
announcement on the grounds that Ralcorp's offer for Agribrands'
shareholders, at $ 39 per share, was too low. Agribrands' shares had
traded higher than the offer less than a month before the announcement.

In late August, a lawsuit opposing the merger and seeking class-action
status was filed against Agribrands and its executives in St. Louis
County Circuit Court. A New York-based hedge fund manager with a 5.2
percent stake in Agribrands also sent a letter to Stiritz, calling
Ralcorp's offer "woefully inadequate."

Cargill's approach several weeks ago quashed that merger. The
Ralcorp-Agribrands move, which informally began in April, would have
allowed Ralcorp to use Agribrands' cash on hand, at $ 174.6 million as of
Aug. 31, to speed up its growth in private-level foods. Agribrands had
realized late last year that it had plenty of cash on hand that it didn't
need; in fact, in January, Agribrands' board of directors had agreed to
free up $ 30 million for investments.

That leaves Ralcorp still looking for ways to fund acquisitions and to
increase its share price, which had plunged 25 percent between January
and March. A Banc of America Securities presentation in June, with
Ralcorp and Agribrands executives present, had noted that the
private-label food industry was fragmented, and that numerous acquisition
candidates existed.

Now, without Agribrands' deep pockets, Ralcorp Chief Executive Joe
Micheletto said he could dig into Ralcorp's cash on hand, at $ 28.3
million as of May 31, or get rid of its 21.8 percent stake in Vail
Resorts Inc. At Vail's Monday closing price of $ 22.50, that amounts to
about $ 135 million; Vail has risen 51 percent, and is currently at a
52-week high.

With the termination of the merger talks, Agribrands has paid Ralcorp a $
5 million breakup fee, which the two agreed upon if either side were to
pull out of the deal. (St. Louis Post-Dispatch, December 5, 2000)

AVCO FINANCIAL: 1st Cir Clears Way for National Debt Relief Enforcement
Bankruptcy and district courts may issue orders enforcing the discharge
injunction entered by any court in the country, the 1st Circuit Court of
Appeals ruled in Cheryl Bessette v. Avco Financial Services, No. 99-2291
(Oct. 27, 2000). The appellate court found that the plaintiff was not
asking for an individually fashioned remedy, but seeking the protection
promised to her and all debtors by Section 524.

This ruling "rejects the parochial approach of those courts that have
held a discharge can only be enforced by the issuing court through a
contempt proceeding," commented Christopher M. Lefebvre, one of the
attorneys representing Cheryl Bessette. It is now clear that district and
bankruptcy courts in the 1st Circuit "have the authority to enter
appropriate orders to combat systematic and rampant abuses of the
bankruptcy system by the credit industry."

Bessette said she signed an agreement reaffirming her debt to Avco
Financial Services before receiving her Chapter 7 discharge. This
agreement was not filed with the bankruptcy court and did not satisfy the
requirements of Section 524. Consequently, she sued Avco in district
court for violating the automatic stay and discharge injunction. The
district court dismissed her claims believing it was powerless to issue a

The 1st Circuit reversed, ruling that Section 105 authorized the court to
use its equitable powers to fashion an appropriate remedy.

"There is no dispute that the reaffirmation agreement involved in this
case falls short of the Section 524 criteria," the appellate court said.
"However, Section 524 is silent on the ramifications of that failing, and
consequently the issue presented in this case is the proper remedy for a
violation of Section 524."

While it can be - and has been - debated whether Section 524 creates a
private right of action for damages or sanctions, the 1st Circuit avoided
the fray by finding that Section 105 provides a remedy if Section 524
does not.

Section 105 enables bankruptcy courts to use their equitable powers, when
necessary or appropriate, to facilitate the implementation of other Code
provisions. "Thus, Section 105 does not itself create a private right of
action, but a court may invoke Section 105(a) if the equitable remedy
utilized is demonstrably necessary to preserve a right elsewhere provided
in the Code," the court said. This power includes the ability to issue
contempt orders.

           Contempt power not geographically restricted

Avco conceded that bankruptcy courts may use Section 105 to enforce
Section 524's discharge injunction, but the creditor argued that only the
court issuing the discharge order could do so. According to Avco, a class
action could not proceed for violations of the discharge injunction
because each debtor would need to seek sanctions in the court where his
or her bankruptcy was filed.

The 1st Circuit noted that Avco's argument has support and would prevail
if the debtor was seeking to enforce an order unique to the issuing
court. However, the debtor was seeking to enforce an order entered
pursuant to Section 524, not one crafted just for her case. Accordingly,
the court reversed the district court's ruling that the debtor's claims
could be brought only in the court in which she received her discharge
and directed the court to consider the enforcement of Section 524 through
Section 105.

The 1st Circuit said the district court may refer the case to the
bankruptcy court if it deems such a transfer to be appropriate. The court
added that referral of the case to the bankruptcy court would not affect
the plaintiff's ability to seek class certification. The appellate court
offered no opinion on the suitability of class certification. (Consumer
Bankruptcy News, November 28, 2000)

AVENTIS CROPSCIENCE: Expresses Regrets of StarLink Corn Debacle
Aventis CropScience is committed to repairing the damage to American
agriculture caused when the company's genetically altered "StarLink" corn
contaminated the human food supply, a company official told grain and
feed industry executives.

To date, the French biotechnology company has contacted almost 4,400
farmers, redirected a thousand rail cars and nearly a hundred barges and
pledged to do whatever else it can to keep more of the corn from getting
into food, even if Aventis gets retroactive approval to use StarLink for
that purpose.

The comments to a National Grain and Feed Association conference in
Kansas City, Mo., came from John A. Wichtrich, vice president and general
manager of Aventis' U.S. headquarters in Research Triangle Park. Between
80 and 100 Aventis employees work full time on the StarLink problem,
Wichtrich said, even though the company doesn't even sell the product any

The company released a transcript of Wichtrich's speech Monday. It
constitutes Aventis' most extensive public statement on the issue since
the StarLink debacle became public in September.

That month, an environmental group announced it had detected the
genetically altered corn in store-bought taco shells, despite Aventis'
promise to keep it out of the human food supply.

In his speech, Wichtrich sidestepped claims that the company did not
adequately uphold its license agreements - contracts that required seed
companies to ensure StarLink would be segregated from other corn on and
off the farm.

"I don't want to get into a position of suggesting how good a job they
did of this, nor do I want to second-guess how many of the growers
actually received the information," Wichtrich said. "I do know that this
was a requirement of the registration and to the extent it was not done,
we bear some of the responsibility."

Wichtrich countered allegations that the company had tried to cover its
back at the last minute, saying: "The reports are not true that Aventis
sent a letter to growers in late September 2000 asking them to sign
grower agreements for the 2000 season. We did no such thing."

He continued: "But ... as I said earlier ... this is a chain and all of
us - ourselves, the seed company and the grower - had a role in making
sure the chain didn't break and this is a problem that needs to be
addressed ... as an industry."

The U.S. Environmental Protection Agency approved StarLink in 1998 for
animal feed and industrial uses such as ethanol, but it stopped short of
allowing it for human consumption. The EPA worried that the "Cry9c"
protein that made up StarLink's selling point - a built-in pesticide -
could cause allergic reactions in people.

Last week, a scientific panel convened by the EPA debated the safety of
StarLink. The EPA will use the panel's recommendation to help decide
whether to approve Aventis' request for a four-year temporary approval of
StarLink for human consumption.

That's how long it could take for the remaining corn from the 1998
through 2000 crop to work its way through the food distribution and
processing network. An EPA spokesman said he expects a decision on the
retroactive approval within the next few weeks.

"That will make it easier for the food manufacturers to avoid costly
recalls if StarLink is again found in food such as taco shells,"
Wichtrich told the grain and feed association. "But even if we are
granted that [approval], we are sticking to our plan. We will continue to
work with all of you to channel the 2000 StarLink crop to approved uses."

The approval would also help Aventis defend against an expected wave of
lawsuits. Last week, a class-action federal suit filed in Illinois on
behalf of farmers blames Aventis for depressing the corn market with its
mishandling of StarLink.

Aventis is also coping with another surprise - a seed company's discovery
of the StarLink Cry9c protein in a different variety of corn. Wichtrich
tried to put the best face on the presence of a renegade bio-engineered

"The bad news is that a seed company is now in a position of explaining
how this could have happened," Wichtrich said. "The good news is that the
'chain' can feel secure in the fact that the current program of
monitoring tests is robust enough it is even capturing the unexpected."
(The News and Observer (Raleigh, NC), December 5, 2000)

CALIFORNIA: Disparate Impact Did Not Void Basic Skills Test For Teachers
A California basic skills test for prospective public school teachers
concededly had a disparate impact on minority candidates, who received a
greater number of failing scores than non-minority candidates. Why wasn't
the test struck down as violating Title VII of the Civil Rights Act of
1964? Because several studies "validated" the test as actually measuring
the candidates' basic skills in reading, writing and mathematics.
Association of Mexican-American Educators v. State of California, Nos.
96-17131 and 97-15422 (9th Cir. 10/30/2000).

California law required teachers and administrators to pass the
California Basic Education Skills Test as a prerequisite to employment in
the state's public school system. The pass-fail exam consisted of three
sections covering reading, writing and mathematics.

To pass the test, a candidate must receive a "scaled" score of 123. Since
the test's inception, minority candidates disproportionately received
failing scores. Three non-profit organizations representing the interests
of Mexican-American, Asian-American and African-American educators
brought a class action suit against the state.

The minority educators asserted that the test was invalid under Title
VII. A federal district court dismissed the suit (see National Public
Employee Reporter, Vol. 3, Iss. 6, p. 2).

In affirming, the 9th U.S. Circuit Court of Appeals conceded that a
direct employment relationship between the minority educators, who were
only potential employees, and the individual school district was not a
prerequisite to Title VII liability. Title VII applied here because the
school districts "interfered" with the minority educators' employment
opportunities with local school districts by requiring and administering
the test, and because the state highly controlled the operation of local
public school districts.

The court also conceded that the minority educators established an
initial case that the test caused a disparate impact on the basis of
race. However, extensive evidence indicated that the test was properly
validated through studies showing that it actually measured skills,
knowledge and ability required for the successful performance of the job.
"Professionally acceptable" methods showed that the test questions were
'predictive of or significantly correlated with the element of work
behavior' that they were designed to measure," it reasoned.

The court also rejected the minority educator's argument disputing the
amount of the passing score necessary to pass the writing section of the
test. That score reflected the state's reasonable judgment about the
minimum level of basic skills competence that should be required of
teachers, it concluded. (National Public Employment Reporter, November
29, 2000)

DAIMLERCHRYSLER: Investment Firms Join Shareholders in Attack
Investment firms joined the shareholder siege of DaimlerChrysler, with
Standard & Poor's and J.P. Morgan & Co. downgrading the embattled
automaker's stock as it struggles to recover from heavy losses at its
U.S.-based Chrysler division.

Standard & Poor's, which measures the risk of buying corporate bonds, cut
DaimlerChrysler's long-term credit rating, saying the company's minivans,
sport utility vehicles and pickups -- long the mainstay of its business
-- are coming under increasing attack from competitors.

The agency also slammed the 1998 union between Chrysler Corp. and
Daimler-Benz AG and forecast Chrysler's losses would put a significant
hole in the group's earnings and cash flow.

Rating the company's outlook "negative," Standards & Poor's said "few
noticeable benefits have been derived from the merger."

The downgrade comes on the heels of a similar move by Moody's Investors
Service, which said Chrysler's operating earnings will come in far below
those of last year.

DaimlerChrysler chief executive Juergen Schrempp was quoted in Wall
Street Journal as saying the company would skate by with a "very low
profit for the year."

Judging by the healthy earnings posted earlier in the year, the comments
implied more losses at Chrysler in the fourth quarter.

The ratings cuts will make it more expensive for Stuttgart-based
DaimlerChrysler to borrow money and Moody's said the company was still on
its watch list for further downgrades if a rescue plan expected in
February is unconvincing.

A New York law firm on Monday released details of a class-action lawsuit
launched in Delaware on behalf of shareholders who exchanged their
Chrysler Corp. shares for DaimlerChrysler AG after the August 1998 merger
was completed.

The suit, filed last week, alleges DaimlerChrysler violated U.S.
securities laws, charging the company had been "issuing materially false
and misleading statements to the market" at the time of the merger.

Turning the automaker around will take time, said auto analyst Himanshu
Patel, who wrote the J.P. Morgan report.

It dropped the earnings estimate for next year to $ 2.58 US a share from
$ 4.20 US.

Patel said restructuring at Chrysler probably won't deliver a significant
rebound in the unit's earnings until the second half of next year.

"The wild card in that is how fast the anticipated restructuring plan
will be. We're in a wait-and-see pattern until those details come out."

Dwindling cash reserves at the world's fifth-largest automaker could
further hamstring a comeback, Standard & Poor's said.

Standard & Poor's said those reserves have declined severely during the
last year and blamed the drain, in part, on Schrempp's massive spending
spree, which included taking a 34-per-cent stake in debt-ridden Japanese
automaker Mitsubishi Motors.

According to a Newsweek magazine article , DaimlerChrysler's cash
reserves - a cushion against any economic turndown -- will dwindle to $ 2
billion US by the end of the year, down 78 per cent from two years ago.

That compares with rainy day funds of more than $ 13 billion US at rivals
General Motors and Ford, the magazine said.

DaimlerChrysler would not comment on the report, which cited company

Various shareholder groups have attacked DaimlerChrysler's German
management during the last week. Germans demanded the immediate
resignation of Schrempp for a slump in the stock price, while American
investors filed a wave of lawsuits, including an $ 8-billion US claim by
U.S. investor Kirk Kerkorian, DaimlerChrysler's third-biggest

Kerkorian claims Schrempp defrauded shareholders by depicting the 1998
union as a merger of equals instead of a full-blown German buyout.

During the weekend, Schrempp reiterated the company's combined name is
proof it was a merger of equals.

Schrempp also said he expects the Chrysler unit to contribute to the
group's full-year operating profit, even though it racked up a $
512-million US loss in the third quarter. (The London Free Press,
December 5, 2000)

DUPONT: Ecuadorian Shrimp Farmers Win $10M Verdict for Fungicide Impact
Ecuadorian shrimp farmers won a $10 million verdict in an eight-week
trial against chemical maker DuPont that alleged that the DuPont
fungicide Benlate(R) and other fungicides used in combination negligently
impacted the shrimp production in Ecuador. The plaintiff claimed the
fungicides used on the banana plantations in Ecuador ran off into the
shrimp farms and poisoned them, thus reducing the shrimp harvest.

Allegations were that DuPont Benlate and its breakdown products and other
fungicides used in combination with Benlate from other chemical
manufacturers ran off from the banana farms. The shrimp farmers who used
that water were affected by the run-off that combined with the fungicide,
damaging their shrimp-producing ability. The plaintiff claimed the
shrimp's exposure to these poisonous chemicals weakened the shrimp,
making them more susceptible to disease.

The plaintiff, Desarrollo Industrial Bioacuatico, S.A., or DIBSA, a major
shrimp farming corporation, was awarded $10,063,165 by a jury that found
the defendant, E.I. DuPont de Nemours and Company, Inc., more commonly
referred to as DuPont, negligent. The jury also ruled that DIBSA did not
bear any fault in the cause of their losses and tacked on another $4
million in accrued interest since 1994. With legal issues still pending
regarding attorney's fees and costs, the total judgment may approach $20
million. Twenty-nine more cases remain.

This case has important implications for Florida, since a significant
portion of the shrimp Floridians eat comes from Ecuador and the
negligence of chemical companies like DuPont can reduce seafood supply
and increase prices.

Joint lead attorneys Senator Walter G. "Skip" Campbell and his partner,
Robert J. McKee, represented the plaintiffs from the Fort Lauderdale law
firm of Krupnick Campbell Malone Roselli Buser Slama Hancock McNelis
Liberman & McKee. Associate Ivan Cabrera was also heavily involved in the
case. This trial team will be continuing to represent the interests of
shrimp farmers in the remaining 29 cases. It is likely that the next
trial will be scheduled in early 2001.

Ecuador is the third largest producer of shrimp in the world. Shrimp
farming is also the third largest income producer for Ecuador and employs
over 200,000 people in that country.

This jury verdict should cause a change in the way Benlate and the other
fungicides are marketed and used. If the guidelines for use consider the
impact on the environment, farmers should be able to produce more shrimp
with the supply going up and prices coming down.

Krupnick Campbell partner Robert J. McKee said, "I hope that this
litigation raises awareness among corporations of the fragile nature of
the environment. All companies must be accountable and responsible for
their actions and the harm their products cause the environment."

Contact: Krupnick Campbell et al, Fort Lauderdale Tricia Rutsis,
954/763-8181, Ext. 8603 954/592-3209 (cellular) 954/763-8292 (facsimile)

FEN-PHEN: AHP Alleges Class Plaintiffs Didn't Prove Latent Injury
Iowa diet drug plaintiffs have failed to demonstrate that they may have
latent injuries, American Home Products Corp. says in response to a
plaintiffs' medical monitoring class action appeal to the Iowa Supreme
Court (Donna J. Luce, et al. v. Gate Pharmaceuticals, et al., No. 00-174,
Iowa Sup.). (Mealey's Emerging Toxic Torts, November 17, 2000)

FEN-PHEN: Crawford & Company Selected to Administer Screening Program
Archie Meyers, Jr., chairman and chief executive officer of Crawford &
Company (NYSE: CRD.A CRD.B) announced that Crawford & Company has been
chosen to administer the medical screening component of the American Home
Products Corporation diet drug class action settlement. Crawford was
selected by the trustees of the settlement trust and approved by the
Federal District Court for the Eastern District of Pennsylvania.

Meyers said, "Among other services, Crawford will arrange for a
nationwide network of physicians and healthcare facilities to provide the
screening benefits, and will provide a call center that eligible class
members can use to identify network providers in their area."

Under the medical screening program, eligible class members will be
entitled to diagnostic testing and interpretive physician services to
determine whether they have suffered heart valve damage that would
qualify the class member for additional settlement benefits.

Contact: Pat Sandor of Crawford & Company, 404-845-3158

HANGER ORTHOPEDIC: Schatz & Nobel Announces Securities Suit Filed in MD
On November 28, 2000, a class action complaint was filed in the United
States District Court for the District of Maryland on behalf of all
purchasers of the common stock of Hanger Orthopedic Group, Inc. (NYSE:
HGR) from November 8, 1999 through and including January 6, 2000,
inclusive (the "Class Period").

The Complaint alleges that during the Class Period, Hanger and certain of
its officers (collectively, the "Defendants") violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 by, among other things,
knowingly or recklessly making material misrepresentations concerning (i)
Hanger's financial results for the quarter ended September 30, 1999 and
(ii) the progress of Hanger's efforts to integrate the recently-acquired
operations of Novacare Orthotics & Prosthetics, Inc.

The Complaint further alleges that by making these material
misrepresentations, the Defendants artificially inflated the price of
Hanger common stock during the Class Period. Plaintiff seek to recover
damages on behalf of all class members. If you purchased Hanger common
stock (NYSE: HGR) during the Class Period and wish to act as lead
plaintiff, you may move the Court to serve in that capacity not later
than February 2, 2001. If you wish to discuss your rights as lead
plaintiff or as a class member, please call Schatz & Nobel, P.C. toll-
free at (800) 797-5499, or by e-mail at SN06106@aol.com.

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

HEARTLAND FUNDS: Investor's Business Daily Sees Long Way To Recovery
Investors in Heartland High-Yield Muni Bond Fund might have been
pleasantly surprised when they looked at the listings of top-performing
funds for November. The fund ranked No. 36 in performance among all funds
for the month, returning 6.73%. It was the top-ranking bond fund, ahead
of such perennial winners as target maturity funds. But the $ 17 million
Heartland High-Yield's good fortune is recent. And more than a month of
better performance may be needed to get the fund back on track, experts

                           'Stabilized A Bit'

"The fund seems to have stabilized a bit over the month," said Tom Doe,
president of Municipal Market Advisors. That firm's online service,
TheConsensus.com, counts about 80 large trading firms among those
providing it muni transaction prices. "Heartland has moved up as the muni
market has rallied," Doe said. Paul Beste, Heartland's chief operating
officer, cited another factor. "We've been selling some securities and
found some strategic buyers," he said. "With a strategic buyer, we can
get prices that add value." The advance in the high-yield fund's net
asset value looks like one of its few bright spots, though. For much of
the past three months, a couple of the firm's high-yield muni funds have
had problems with liquidity.

The persistent issue has been that bonds held by the funds didn't trade
very often. But mutual funds have to come up with an NAV each day,
whether holdings trade or not. Instead of using old market values, funds
like those that deal in high-yield munis call on pricing services to
evaluate bonds' worth at the end of each day.

In a filing in early October with the Securities and Exchange Commission,
Heartland noted that markets for some of its high-yield muni holdings
were getting much less liquid. Due to that, the firm said it would start
using a new method of computing its NAV. It would take into account
"factors and information in addition to prices." Heartland also changed
the management of its High-Yield Muni and Short-Duration High-Yield Muni
funds. It then slashed the NAVs of the two funds. The high-yield muni
fund's NAV was cut 70%, to $ 2.45 from $ 8.01. The short duration fund's
value was nearly halved, to $ 4.87 from $ 8.70.

                           Shareholders Sold

These funds had another kind of liquidity problem. Some shareholders
began selling even before the NAV cuts. When the funds tried to sell
holdings to meet redemption demand, they likely became more aware that
their holdings were overvalued, observers say.

Law firms filed class-action suits against Heartland almost immediately
after the NAV cuts. But suits may prove costly to all fund shareholders.
Why? Look at Heartland's prospectus supplement of Nov. 14: "If the
plaintiffs ultimately are determined to be entitled to any recovery, some
or all of the amounts of such recoveries could be charged against the
Funds," Heartland said. "Therefore, the Funds' assets are exposed to a
risk of loss in connection with these lawsuits, and the potential loss
could exceed the assets of the Funds."

That's not the only pressure on Heartland. Its bank cut off a credit line
after the revaluation, and demanded payment of outstanding borrowings.
These totaled $ 1.8 million. The funds have paid back all of that debt,
Beste says. The Heartland high-yield muni funds have other serious
issues, observers say. For one, they still have most of their holdings in
unrated bonds. These are bonds with the lowest level of credit

                       More Chances Of Default

Issuers of these bonds are more likely to default on them than holders of
other bonds. Unrated bonds also are much less liquid than better-quality
bonds, says Dianne Sales. She's head of the tax-exempt investment team at
John Hancock Funds. Clark Stamper, manager of $ 363 million-asset
Evergreen High Income Municipal Bond Fund, compared selling unrated bonds
to real estate. "It's a very quirky market," he said. "It has a lot of
small pieces that may not move for some time and may be hard to value."

Another problem for Heartland is that "it made a huge sector bet in
health care," Sales said. "That's been a very difficult sector." Other
high-yield muni funds have ducked woes of the type Heartland faces by
diversifying more, Doe says. "Heartland has a narrow range of holdings in
consistently distressed issues," he said. "Diversity is key," said Reid
Smith. He runs $ 3 billion-asset Vanguard High-Yield Tax-Exempt Fund. It
limits holdings of unrated bonds to 20% or less of assets. Another thing
managers need to watch out for, paradoxically, is focusing too much on
yield, he says. "The higher the yield, the less economically viable the
issue will be and the higher the probability of default," Smith said.
Unrated bonds also tend to be the smallest and least liquid issues, he
says. (Investor's Business Daily, December 5, 2000)

INMATES LITIGATION: City of Phil. Sanctioned for Failure to Remedy
Jackson v. Hendrick, PICS Case No. 00-2256

The City of Philadelphia's failure to remedy unsanitary and degrading
conditions in its prison system, despite the existence of a consent
decree, justified a finding of civil contempt and the imposition of
monetary sanctions on the city. Affirmed.

An order of the Court of Common Pleas of Philadelphia County, as amended,
found the city in contempt for failure to comply with a Sept. 6, 1991,
consent decree and subsequent stipulations governing conditions in the
city's prison system. The trial court also ordered the city to pay
monetary sanctions for its noncompliance. The consent decree was the
result of a class action lawsuit filed by five prisoners in 1971 alleging
conditions of confinement that amounted to cruel and unusual punishment
under the federal and state constitutions.

The trial court found the city in contempt because of its failure to
remedy those conditions by, inter alia, providing adequate clothing and
linens and social-worker services to inmates in city prisons. The city
appealed to the Commonwealth Court.

The city argued that the trial court imposed an indirect criminal
contempt fine, rather than a civil contempt fine. Although the trial
court's order required the city to pay its fine to the trial court, the
Commonwealth Court found that the long history of this case indicated
that the trial court would hold the fine monies for the benefit of the
prisoners. Therefore, the court concluded that the sanction was civil
because the fine was compensatory and remedial. The city next contended
that the trial court erred in requiring it to be in full compliance,
instead of substantial compliance, with the consent decree because
substantial compliance was all that a Jan. 17, 1995, stipulation

The court noted, however, that in a subsequent stipulation, the city
agreed that it would be subject to a fine for contempt if it were not in
full compliance with the consent decree and the Jan. 17, 1995,
stipulation with respect to social services. The court also observed that
given the city's admission that there was a serious problem regarding
personal supplies, the trial court did not err in finding that the city
did not substantially comply with either the consent decree or the Jan.
17, 1995, stipulation. The court also rejected the city's contention that
the trial court erred in finding that the prisoners proved noncompliance
by a preponderance of the evidence. Where the prisoners, an impartial
inspector and the city all indicated that there was a widespread clothing
problem during 1995 and 1996, the court concluded that the prisoners had
proven by a preponderance of the evidence that the city was not in
substantial compliance with the clothing requirements of the consent

Given the testimony of several social workers, the court reached a
similar conclusion regarding the consent decree's social-services
requirement.Finally, the court found no abuse of the trial court's
discretion in the amount of fines it imposed or in its interpretation of
the consent decree's provisions concerning various inmate services and
programs, social-service caseloads, clean clothing and linens and
vocational training. Consequently, the court affirmed the trial court's
order. (Pennsylvania Law Weekly, November 27, 2000)

INMATES LITIGATION: NJ Senate Unanimously Endorses New Parole Board Head
The state Senate unanimously approved Governor Whitman's choice to head
the state parole board.

Former Corrections Department Assistant Commissioner Mario A. Paparozzi
replaces the parole board chairman who reportedly is the subject of
criminal investigations.

Paparozzi is now an assistant professor of law at the College of New

Andrew Consovoy stepped down in July amid reports of a criminal
investigation centered on alleged dealings with former organized crime

In August, the state Attorney General's office reported that a backlog of
parole cases in New Jersey was much greater than Consovoy had indicated.

The backlog of some 3,400 cases had prompted a class-action lawsuit on
behalf of inmates overdue for parole hearings.

Paparozzi retired as assistant commissioner in 1998. Most of his career
focused on parole.

Before becoming assistant commissioner, he spent eight years running the
state parole system after several supervisory assignments.

He started out as a parole officer in 1973. (The Record (Bergen County,
NJ), December 5, 2000)

LOCKHEED MARTIN: EEOC Asks To Join Employee Racial Discrimination Suit
The Equal Employment Opportunity Commission is asking a federal judge to
let it intervene in two racial discrimination lawsuits filed against
Lockheed Martin by black employees.

The EEOC filed a motion Tuesday with U.S. District Judge Owen Forrester
in Atlanta seeking to join in the plaintiffs' cases, which were filed in
May. A hearing date was not set.

The two suits, filed by seven hourly and four salaried workers, seek
class-action status for hundreds of black workers at the Lockheed
manufacturing plant in Marietta.

Plaintiffs allege that Lockheed, based in Bethesda, Md., fostered a
racially hostile work environment at the plant.

The suits also contend that Lockheed's black workers were subjected to
racial harassment by coworkers and that the company promoted white
employees with less experience and seniority over blacks.

The EEOC said the company also retaliated against black employees who
complained about the discrimination.

"The egregious nature of the racial harassment and Lockheed's persistent
failure to respond to the systemic discrimination make these cases
entirely appropriate for involvement by EEOC," Commission Chairwoman Ida
Castro said.

Lockheed Martin did not have an immediate response to the EEOC's action,
spokesman Peter Simmons said.

EEOC attorney Katherine Bissell said the agency decided to intervene
instead of filing its own suit because the claims would have been

Josie Alexander, the plaintiffs' lead attorney, said she was "very
excited" about the EEOC'S participation.

"The EEOC brings an additional level of class-action experience, as well
as the fact that this puts the case on a heightened level with respect to
claims of racial discrimination and retaliation," she said.

Lockheed Martin employs 149,000 workers worldwide at more than 900
plants. (The Associated Press State & Local Wire, December 5, 2000)

MAINE: Lawyers Say State Hasn't Met 10-Year-Old Court Agreement Terms
Community mental health services needed to keep severely mentally ill
Mainers out of psychiatric hospitals are not adequate to meet the terms
of a 10-year-old court agreement, say lawyers for past and present
Augusta Mental Health Institute patients.

That assessment by lawyers who successfully sued the state in 1989 comes
as debate continues about the appropriate size of a planned $ 33 million
state psychiatric hospital that would replace AMHI.

'The September 2000 report (from the Maine Department of Mental Health,
Mental Retardation and Substance Abuse Services) is a tremendous
disappointment,' the lawyers wrote in a report to the court.

The lawyers, Helen M. Bailey and Peter Darvin, represent about 3,000
patients in a class-action lawsuit known as the AMHI consent decree.

'Plaintiffs had expectations that the report would show the defendants'
ability to demonstrate compliance with the consent decree,' they wrote.
'(But) one cannot read the report and at the end know exactly what steps
defendants are taking to achieve compliance and when they expect to be
able to claim compliance,' they wrote.

The terms of the original consent decree were due to be in place by 1995.
The state has been cited for contempt of court twice in intervening years
for failing to meet that schedule. Department officials failed to respond
to repeated requests for a reaction to the assessment.

The patients' lawyers prepared their critique of the department's
analysis of its consent-decree accomplishments for the Superior Court
judge overseeing the administration of the court order and the court
master who works for her.

Bailey and Darvin panned portions of the state report having to do with
state hospital operations in an earlier report to the court.

'Plaintiff(s) have eagerly awaited the September 2000 report from
defendants (state mental health officials) because it was supposed to
unveil the working quality improvement system and demonstrate compliance
with most of the settlement agreement,' the lawyers wrote. 'Instead the
defendants have demonstrated on paper that they have a system that could
work, but that it is currently not functioning.'

The patients' legal team declined to comment on their findings. A judge
had warned them not to discuss the case publicly.

The consent decree was supposed to guarantee community treatment for
anyone who had been treated at AMHI since 1988, but Bailey and Darvin
noted what they believe to be flaws in that treatment, including what
they call refusal by the state to provide important treatments to many of
the former hospital patients.

They point to a recent survey of consent-decree class members. In that
survey, they said, more than one-third of former AMHI patients in the
class said they needed counseling but were not getting it.

'Rather than indicating that defendants' have met class members'
treatment needs, the quality improvement report suggests there is a
glaring need for increased treatment services; class members (patients)
not only are not being asked what they need, when they speak, they are
being ignored,' Bailey and Darvin wrote.

Despite the shortcomings, they said, the department claims to have
identified no unmet treatment needs for the affected patients in 1999.

Dr. Lawrence B. Mutty, who has followed the state's mental health
policies for the Maine Psychiatric Association and the Maine Medical
Association, said shortages of community services can increase the need
for inpatient admissions. Those services may be provided in local
hospitals as well as state hospitals, however, he said.

'The success of their bed capacity is closely linked to the community
system, including availability and treatment. To the extent they can't
provide those services, it calls into question the programs' adequacy,'
Mutty said.

Newly elected state Senate Democratic Leader Beverly C. Daggett, of
Augusta, said the success of the new state psychiatric hospital will
depend on the ability of community services to adequately treat the
mentally ill in their communities.

Daggett co-chaired a study group this summer that called for state mental
health officials to offer a timetable for developing community-based
services for the mentally ill. She said her committee was only partially
successful in nailing down an enforceable schedule.

'If you have people in the community who need beds or need to be
hospitalized a bit longer in order to be stabilized, we need to take a
look at that ... . I think there will continue to be lingering questions
about the size of the hospital,' Daggett said. (Kennebec Journal
(Augusta, ME), December 5, 2000)

Settling a federal class-action lawsuit, the Metropolitan Transportation
Authority agreed Monday to improve service to riders who use wheelchairs

Under terms of the pact, approved by U.S. District Judge Consuelo B.
Marshall, an independent firm will be hired to monitor the agency's

The American Civil Liberties Union brought the lawsuit two years ago on
behalf of riders who complained that wheelchair lifts on the MTA fleet
were often out of order, and that drivers frequently failed to stop for

ACLU attorney Peter J. Eliasberg said after Monday's hearing that the MTA
has since made significant strides to improve service for the disabled,
but much more needs to be done. Many of the MTA's 2,000 buses, he said,
are not equipped with proper clamps and straps to secure wheelchairs.

Larry Beauchamp, a plaintiff in the lawsuit who uses a motorized
wheelchair, said MTA drivers have told him they don't have time to see
that he is properly secured aboard their buses.

The MTA's lawyer, Deputy County Counsel Alan Terakawa, said the agency
was the first transit system in the nation to make its bus fleet totally
accessible to the disabled. "Admittedly, there are times when things
don't work the way they should,' he said, "but our commitment to the
disability community goes back many years."

He said the settlement's provisions exceed the requirements of federal
and state law, and should result in better service to wheelchair

In agreeing to the settlement, the MTA denied any liability or
wrongdoing. The suit accused the transit agency of violating the
Americans With Disabilities Act, as well as related federal and state

"To the contrary," said the agency, "MTA takes the position that it has
been in full compliance with both state and federal law, as well as its
own policies, with respect to mobility-impaired passengers."

Nonetheless, the 33-page agreement contains a long list of requirements
that the MTA must satisfy:

Every MTA bus must be inspected daily to determine whether lifts, ramps
and wheelchair clamps are in working order.

A bus can be sent out with defective equipment only as a last resort. In
no case will the MTA's use of such buses exceed 4% on a monthly average.

Any broken equipment must be repaired within 72 hours, and each bus yard
must have on duty at least one mechanic trained to make those repairs.

Drivers must give wheelchair passengers adequate time to board and exit
their buses. They must offer to help them secure their wheelchairs to
clamps and safety straps.

A driver with a broken lift or ramp who comes upon a wheelchair passenger
on the street must stop and explain the problem. Then the driver must
call for alternative transportation, which can include another bus, a van
or a taxi. Ninety percent of the time, the substitute transportation must
arrive with 30 minutes.

The MTA must keep a record of all complaints by wheelchair riders.
Complaint forms must be available on all buses. The agency must also
accept complaints by e-mail and telephone.

Bus drivers, dispatchers and supervisors must be informed about their
obligation to accommodate people with disabilities. And drivers, in
particular, must be told that maintaining their schedules does not take
precedence over stopping for riders in wheelchairs.

The MTA must now face a federal suit brought by other disabled commuters.

Last month, the ACLU, the Western Law Center for Disability Rights and
Advocacy Inc. sued the MTA and Access Services Inc., a nonprofit agency
under contract to the MTA to provide van and cab service to 40,000
disabled people in Los Angeles County.

The suit charged that Access Services, which operates about 450 specially
equipped vans, is often hours late for pickups and sometimes fails to
show up at all.

Officials at the MTA and Access Services denied the allegations. (Los
Angeles Times, December 5, 2000)

RIVERSIDE SCHOOL: Architect Answers in Proposed Class Action over Mold
One of the five defendants in the proposed Riverside (Washington) School
District mold contamination class action answered the complaint Oct. 6 by
denying it designed the air-handling system in the high school where the
exposure to mold is alleged (Talana Mielke, et al. v. Riverside School
District, et al., No. CS-00-0097-FVS, E.D. Wash.).

Architects West Inc. admits that it is the architect of record for the
1994 addition to the Riverside High School and that it prepared the
architectural drawings for the project. A subcontractor, the answer says,
prepared mechanical drawings of the heating, ventilating and air
conditioning systems for the project.

(Amended Complaint available. Document # 42-001113-031. Answer available.
Document # 42-001113-005.)

                            Air Quality

Plaintiffs allege the indoor air quality in the high school addition is
causing them to be ill because of the design of the ventilation, because
of the windows used in the construction, because of building defects and
because the district administration failed to adequately respond to
complaints and tests showing mold spores in the building. Defendants have
countersued each other, and third-party defendants include subcontractors
and construction component suppliers.

Architects West cites the indemnification clause of the contract with
Shea Construction Inc. in its counterclaim against the contractor.

"Shea Construction is obligated to indemnify and save Architects West
harmless from any damages that may be recovered by plaintiffs," the
answer says,

The complaint was filed on behalf of teachers and students of the
Riverside School District. It alleges a civil rights violation by the
district and the administration for having "established and overseen a
state-created danger posing an unusually serious risk of harm to named
plaintiffs and the class." Teachers and students have a constitutional
right to "safe conditions and to physical security," the complaint

By its failure to "exercise reasonable care in insuring a safe school
environment," the district and superintendent of schools have been
negligent, the complaint says. Plaintiffs seek injunctive relief for the
immediate remediation of the conditions.

                         Building Evacuated

According to the complaint, outside consultants have found the indoor air
quality at the school to be severe enough to warrant evacuation of the
building in January 2000. Prior to evacuating a portion of the high
school, the complaint says, the district "disclosed to teachers and
staff" the presence of Stachybotrus, Aspergillus/Penicillium and
Ulocladium molds in the building.

The complaint alleges the windows provided by Jen-Weld Inc. "are not
reasonably safe in design" and manufacture and are not accompanied by
adequate warnings. Shea Construction is accused by the proposed class
action complaint of breaching its "duty to exercise reasonable care in
the construction of the Riverside High School Addition."

Defendants moved the case to the U.S. District Court for the Eastern
District of Washington March 29 from the Spokane County Superior Court.

Darrell W. Scott of Lukins and Annis in Spokane, Wash., represents the
plaintiffs. Edward George Johnson of Perkins Coie in Spokane and Michael
E. McFarland Jr. of Evans, Craven & Lackie in Spokane represent the
Riverside School District and Superintendent of Schools Jerry M. Wilson.
Peter S. Ehrlichman and Jeremy R. Larson of Foster, Pepper & Shefelman in
Seattle represent Jeld-Wen Inc. Matt Murray and Jeffory E. Adams of
Murray, Dunham & Murray in Seattle represent Shea Construction Inc.
Kenneth G. Yalowitz of Hight, Green & Yalowitz in Seattle represents
Architects West Inc. (Mealey's Emerging Toxic Torts, November 17, 2000)

NATIONSBANC MORTGAGE: Debtor Class Rid of Claim Fee in North Carolina
NationsBanc Mortgage Corp. violated Section 506(b) and Rule 2016 by
including a 125 bankruptcy fee in proofs of claim filed in the Western
District of North Carolina, Judge J. Craig Whitley ruled in Jason E.
Tate, et al., v. NationsBanc Mortgage Corp. (In re Jason E. and Sherri A.
Tate), No. 97-32126 (Oct. 2, 2000). The court found it had jurisdiction
to enter summary judgment in favor of all debtors who filed for
bankruptcy in the district and against whom NationsBanc filed a proof of
claim asserting a bankruptcy or similar fee.

The 125 fee was the amount it paid to its lawyers to prepare and file
claim forms. NationsBanc defended this fee as being its reasonable cost
of protecting its security interest. However, Judge Whitley found the fee
to be per se unreasonable because the creditor did not comply with Rule

"The Rule 2016 procedure, which requires thorough documentation from a
claimant, allows the court, the debtor, and other parties in interest to
carefully review each fee application. It is this detailed application
that courts rely on in gauging the reasonableness of fee requests under
Section 506(b)," Judge Whitley said.

"In short, due to the lack of notice and the costs involved in objecting,
bundling fee requests into proofs of claim all but guarantees their
allowance and guarantees that other parties will not dispute them. This
stands the congressional intent of Section 506 and Rule 2016 on its head.
Without a motion, notice to creditors, and court approval, the attorney
fee cannot be termed 'reasonable' under Section 506."

Judge Whitley found that Section 105 allowed him to order NationsBanc to
disgorge the fees improperly collected from the class plaintiffs and to
reimburse their attorney's fees. The factual issues regarding the amount
of actual damages and whether sanctions should be imposed were reserved
for a later date. (Consumer Bankruptcy News, November 28, 2000)

NETMANAGE, INC: Schubert & Reed Clarifies on Securities Suit
The following is an announcement by Schubert & Reed LLP:

     Schubert & Reed LLP wishes to clarify that it did not file a class
action case against NetManage, Inc. on November 29, 2000. A press release
issued that date by Schubert & Reed LLP was altered without its consent
to announce that a class action case had been filed by the firm against
NetManage, Inc. The incorrect release has been retracted and a corrected
release was issued, also on November 29, 2000. The corrected release
announced the settlement of a pending shareholder derivative action
brought on behalf of the company against certain officers and directors
of NetManage, Inc., and bears the headline "Schubert & Reed LLP Announces
Important Notice to Current Shareholders of NetManage, Inc."

The announcement regarding the settlement of the pending shareholder
derivative action says:

     YOU ARE HEREBY NOTIFIED that the parties to the action pending in
the United States District Court For the Northern District of California
entitled Sucher v. Alon, et al., No. 98-17323, on appeal to the United
States Court of Appeals For the Ninth Circuit, Docket No. 98-17323 (the
"Derivative Action"), have entered into a Stipulation of Settlement to
resolve the claims asserted therein.

     Pursuant to an Order of the United States District Court for the
Northern District of California, a hearing will be held on January 26,
2001 at 10:00 a.m. before the Honorable Charles R. Breyer, United States
District Court Judge, for the purpose of determining:

       (1) whether the proposed settlement of the claims in the
            Derivative Action should be approved by the Court as fair,
            reasonable and adequate;
       (2) whether the application of Plaintiffs' Counsel for the payment

            of attorneys' fees and reimbursement of expenses incurred in
            connection with the Derivative Action should be approved; and

       (3) whether judgment should be entered, dismissing the Derivative
            Action with prejudice as against all defendants in the
            Derivative Action.

     If you are a current shareholder of NetManage, Inc., your rights may
be affected by the settlement of the Derivative Action. You may view the
detailed settlement notice posted on the NetManage, Inc. website at
http://www.NetManage.com.You may also obtain copies of the detailed
settlement notice by contacting, in writing, Plaintiff's Counsel at the
address set forth below.

     Any objection to the settlement or to the application for fees and
reimbursement of expenses must be filed with the Clerk of the Court, 450
Golden Gate Avenue, San Francisco, California 94102, no later than
January 12, 2001 and show due proof of service on:

     Two Embarcadero Center, Suite 1050 San Francisco, CA 94111
     Counsel for Derivative Plaintiff Harold M. Sucher


By Order of the United States District Court, Northern District of

Contact: Schubert & Reed LLP, San Francisco Juden Justice Reed,

POTOMAC ELECTRIC: Ct Uses Supplemental Authority To Hear Oil Spill Case
The U.S. District Court for the District of Maryland exercised
supplemental jurisdiction over a class action removed from state court in
which the claimants sought damages resulting from an oil spill. In doing
so, the court held that it possessed supplemental jurisdiction to decide
the case even though each individual class member might not meet the
minimum damage amount needed for diversity jurisdiction. (Williams, et
al. v. Potomac Electric Power Co., No. PJM 00-1429 (D. Md. 10/10/00).)

The Potomac Electric Power Company operates a 51-mile pipeline to
transport oil to the Chalk Point Generation Station where oil is
converted to electricity. On April 7, 2000, a section of the pipeline
burst. 100,000 gallons of oil leaked into marshland near the station and
entered the Patuxent River. The oil washed ashore. Anthony and Toni
Williams, on behalf of themselves and other landowners, sued PEPCO in
state court for negligence, trespass, strict liability and nuisance,
seeking damages from the oil spill. The landowners claimed the oil spill
caused environmental damage. They sought damages for loss of use and
enjoyment of their property; decrease of their property values; loss of
recreational and commercial use and enjoyment of the resources of the
Patuxent River; They also sought to recover for medical expenses; mental
distress and loss of income.

The Calvert County Circuit Court removed the case to the District Court.
PEPCO moved to dismiss and the landowners moved to remand the case to
state court. In opposing the landowners' motion, PEPCO argued the damages
claimed by the landowners exceeded the requisite jurisdictional amount
for federal diversity jurisdiction. The landowners denied the damages
claimed exceeded the jurisdiction amount.

PEPCO argued that the landowners sought to enforce a "simple, unitary,
individual right" on behalf of the class. Therefore, PEPCO maintained
that the damages of the class, including the punitive damages, should be
aggregated in determining the jurisdictional amount.

The District Court noted that the U.S. Supreme Court held in Zahn v.
International Paper Co., 414 U.S. 291, 300 (1973), that separate and
distinct claims by class members could not be aggregated for
jurisdictional purposes. Furthermore, the court stated that under
Maryland law "any claim that an individual proprietor of land bordering
on navigable waters may have regarding his use and enjoyment of the
waters and to have them remain free of unreasonable pollution is an
individual right." The court refused to aggregate damages based upon the
Zahn decision.

In the alternative, PEPCO urged the District Court to exercise
supplemental jurisdiction over any unnamed plaintiffs whose damages might
not satisfy jurisdictional minimums. According to the court, PEPCO's
argument required it to find that 28 USC 1367, the supplemental
jurisdictional statute, overruled Zahn "insofar as Zahn prohibited a
federal court from exercising ancillary jurisdiction over the state law
claims of individual class members who do not meet the amount in
controversy requirement." Although the Supreme Court and 4th circuit have
not decided this question, the court chose to follow the 5th Circuit and
7th Circuit, which have concluded that Section 1367 effectively overruled

The District Court held that it had supplemental jurisdiction over all
other prospective class members "whether or not each individual member
meets the minimum amount in controversy." (Real Estate/Environmental
Liability News, November 27, 2000)

SATELLITE CONTROL: Weiss & Yourman Announces of Securities Suit in CA
Summary Notice of Pendency of Class Action Announced by Weiss & Yourman;
To: All Persons Who Purchased Shares of Stock in PageStar, Inc.;
Satellite Control Technologies, Inc. and/or J.F.A. Tech., Inc. Between
October 29, 1996 and September 8, 1997:

On April 7, 2000, the Superior Court of the County of Los Angeles
certified the matter entitled Joseph Nigro, et. al. vs. Satellite Control
Technologies, Inc. (OTC Bulletin Board: SATX), et. al., Case No. BC
190882, as a class action involving matters pertaining to violations of
California securities laws under California Corporations Code Sections
25400 and 25500.

The case involves allegations that representatives and individuals
affiliated with Satellite Control Technologies, Inc.; PageStar, Inc.
and/or J.F.A. Tech., Inc. manipulated the price of publicly and privately
traded securities in these companies during the period between October
29, 1996 and September 8, 1997 and, in so doing, did injure the investing
public who traded in these securities during that time frame. In
particular, it is alleged that representatives and/or officers of the
above-referenced companies issued public statements which incorrectly
characterized the financial health and business prospects of these
companies as well as the readiness for production and commercial
distribution of certain automotive-related products. The defendants in
this action have denied and continue to deny each and every allegation of
these charges.

. . .

The documents filed in this action are available for review between the
hours of 8:30 a.m. and 4:00 p.m., at the Office of the Clerk, Los Angeles
Superior Court, 111 North Hill Street, Los Angeles, California.
Shareholders have the right to receive information from Class Counsel and
should request such information if they have any questions concerning
their rights in this matter. Class Counsel are: Kevin J. Yourman, Esq.,
James Tullman, Esq., Mark S. Levine, Esq., Weiss & Yourman, 10940
Wilshire Blvd., 24th Floor, Los Angeles, California 90024, (310)

The Court has not ruled on the merits of the claims or defenses of any of
the parties and this Notice is not an expression of any opinion by the
Court with respect to the merits of the claims or the defenses asserted
in the action. This Notice is merely to advise that this action is
pending and that shareholders in these companies who purchased their
securities during the above-referenced class period may have certain
rights as members of the Class. If individuals or other entities hold
shares in beneficial interest for another, the Court asks that you
communicate this Notice to those persons or entities that have such an

. . .

At this time, discovery is proceeding relative to the total amount of the
anticipated recovery and, as such, there is no basis to form a prediction
relating to the anticipated fee which will be sought by Class Counsel or
the net proceeds which will be allocated to the Class members after
reimbursement for litigation-related expenses. It is estimated that there
may be costs as high as $500,000 for the future discovery in this matter
including the retention of experts, document production, depositions and
other costs relating to the investigation of this case. Said amounts may
be paid from the funds recovered before distribution of the net proceeds
to members of the Class.

The attorneys for the parties are:

Kevin J. Yourman, Esq.
James Tullman, Esq.
Mark S. Levine, Esq.
Weiss & Yourman
10940 Wilshire Blvd., 24th Floor
Los Angeles, California 90024
(310) 208-2800

Counsel for the Plaintiff Class
Stephan Math, Esq.
The Law Offices of Stephan Math
100 East Thousand Oaks Blvd., Suite 225
Thousand Oaks Blvd., CA 91360
(805) 373-5828

Attorney for Defendant,
Steven Lipman Arnold J. Rothlisberger, Esq.
1927 Vista Grande Road
El Cajon, California 92019
(619) 444-78919

Attorney for Defendants SATX, Inc. (formerly Satellite Control
Technologies, Inc. and PageStar, Inc.) and J.F.A. Tech, Inc.
Gregory J. Sherwin, Esq.
Fields, Fehn & Sherwin
11755 Wilshire Blvd., 15th Floor
Los Angeles, California 90025-1521
(310) 473-6338

Attorneys for Defendant, Eric Chess Bronk

Contact: Mark S. Levine, Esq. of Weiss & Yourman, 310-208-2800

TURKCELL ILETISIM: Rabin & Peckel Announces Securities Lawsuit in NY
A class action has been commenced in the United States District Court for
the Southern District of New York, on behalf of all persons or entities
who purchased or otherwise acquired Turkcell Iletisim Hizmetler, A.S.
("Turkcell" or the "Company") American Depositary Shares (NYSE: TKC)
during the period from July 10, 2000 through September 21, 2000,
inclusive (the "Class Period").

The Complaint alleges that defendants Turkcell Iletisim Hizmetler, A.S.,
Goldman Sachs International, Morgan Stanley Dean Witter, Credit Suisse
First Boston (Europe) Limited, Lehman Brothers International (Europe),
Deutsche Bank AG London, UBS AG, Cuneyt Turktan, and Ekrem Tokay violated
section 11 of the Securities Act of 1933. In particular, it is alleged
that the Registration Statement for the initial public offering of
Turkcell's ADSs on the New York Stock Exchange misstated the churn rate
for Turkcell's cellular phone customers in Turkey, by a factor of at
least 30 and possibly 100.

Contact: Rabin & Peckel LLP Jacqueline Sailer, Elana M. Bourkoff
800/497-8076 or 212/682-1818 email@rabinlaw.com

UPS: Settles Suit Over Alleged Racial Bias
United Parcel Service has agreed to pay two of its managers a total of $
54,000 to settle their claims that the company discriminated against them
because they are black.

Managers Les Morgan and Kenneth Stacker had filed a class-action suit
against UPS. They alleged racial discrimination in the denials of their
efforts at promotion.

The Equal Employment Opportunity Commission announced the settlement
Monday, more than six years after Morgan and Stacker filed the suit in
U.S. District Court in St. Louis. The agency intervened in the case after
the class-action claims were dismissed.

UPS had denied in court documents that it discriminates against
employees. A company spokesman has said that competition for midlevel
management jobs is intense.

Stacker and Morgan had held entry-level management positions at UPS in
the St. Louis area. (St. Louis Post-Dispatch, December 5, 2000)

VITAMIN PRICE-FIXING: Companies Face Record Fine in Australia
Three animal vitamin companies face an Australian record fine of $26
million for their part in a worldwide conspiracy to fix prices and market

The Australian Competition and Consumer Commission (ACCC) launched the
Federal Court proceedings after similar action in the United States and
Canada resulted in hefty fines.

Jeffrey Hilton, SC, for the ACCC, told the court Roche Vitamins Australia
Pty Ltd, BASF Australia Limited and Aventis Animal Nutrition Pty Ltd had
admitted the anti-competitive arrangements and had cooperated with the

He told Justice Kevin Lindgren, who reserved his decision, that the ACCC
and the companies agreed the appropriate penalty should be $15 million
for Roche, $7.5 million for BASF and $3.5 million for Aventis.

At a later news conference, ACCC chairman Professor Allan Fels said the
previous record fine had been $21 million for three concrete companies.

"This behaviour is even more serious - it's Australia-wide, it went on
for a number of years, it was done in secret at meetings and by phone
calls and it was highly organised," he said.

"It took the form of agreeing to charge certain prices, it also took the
form of colluding on certain tenders for business, agreeing who would get
which tender to avoid competition."

He said the companies supplied vitamins A and E, and a pre-mix containing
them, used in animals feeds in the poultry, swine and ruminant

Prof Fels said the poultry industry was particularly large and the
arrangements would have affected the price of food.

While the ACCC was unable to estimate the effect on Australian products,
he said the US authorities estimated there had been a 75 per cent rise
due to the cartel.

"It is very important that corporate Australia, including multinational
companies, learn that if they try to translate any international cartels
into Australian behaviour they'll face further proposals for record fines
by the courts," he said.

If companies said they were only following orders, Prof Fels said "you
cannot follow orders to break the Australia law and expect not to get
fined heavily".

It is believed a class action by some businesses has begun against the
three companies, but Prof Fels said there was no direct consumer recourse
over the anti-competitive conduct. (AAP Newsfeed, December 5, 2000)

* Recent Appellate Rulings Could Encourage Debtors' Action
Rulings from the 1st Circuit Court of Appeals and the 5th Circuit Court
of Appeals support the prosecution of class actions by debtors against
creditors in bankruptcy courts. While neither ruling provided relief to
the class plaintiffs, both decisions gave debtors precedential support
for their actions.

In Bessette v. Avco Financial Services (see page 6), the 1st Circuit
ruled that Section 105 provides a private right of action for violations
of the discharge injunction. The court also ruled that the relief did not
need to be entered by the court that issued the discharge order. Although
the plaintiff in this action sought class certification, the district
court never reached the issue because it ruled that it could not fashion
an appropriate remedy. Having been reversed, the district court will now
face the question of class certification.

In Bolin v. Sears, Roebuck & Co. (see page 7), the 5th Circuit ruled that
the plaintiff's allegations suggested that Sears had a policy of
violating the Bankruptcy Code. Although the plaintiff's version of the
facts were sufficient to sustain a class action against the retailer, the
appellate court ruled that the district court's certification of the
class was inappropriate. On remand, the appellate court did not rule out
the class being certified under another procedural rule or being modified
to fit within the original rule. (Consumer Bankruptcy News, November 28,

* RESPA Roundup By Practitioner; Summarizes The Status Of Class Action
Litigation regarding whether yield spread premiums paid by mortgagors to
brokers violate the Real Estate Settlements Procedures Act hasn't slacked
off; it has just stalled because of the many class action cases pending
in the appellate courts. David R. Donaldson of Donaldson, Guin & Slate in
Birmingham, Ala., and class counsel in Culpepper v. Inland Mortgage Co.,
provided attendees at the National Consumer Law Center's 9th Annual
Consumer Rights Litigation Conference in Broomfield, Colo., with a update
on the status of important cases.

                            The RESPA

The RESPA mandates the use of the Department of Housing and Urban
Development's good faith estimates and settlement statements, explained
Donaldson to conference attendees. Section 8 of the act prohibits
kickbacks and referral fees. The act does not prohibit payments for bona
fide, legitimate goods or services (other than "services" associated with
referring borrowers) that are actually provided.

Culpepper, et al. v. Inland Mortgage Corp.

Perhaps the most well known YSP action is the Culpepper case. In
Culpepper, mortgage borrowers challenged their lender's payments of YSPs
to a mortgage broker. The Culpeppers alleged their lender paid their
broker a kickback for convincing them to accept a loan with an above par
interest rate. The Culpeppers contended the YSP was not based upon the
services provided by the broker but upon the size and interest rate of
the loan.

Initially, the U.S. District Court for the Northern District of Alabama
ruled in favor of Inland Mortgage Corp., finding that the yield spread
premium fell within an exception of the RESPA's anti-kickback provision.
(See Consumer Financial Services Law Report, July 23, 1999, p. 1).

On appeal, however, the 11th Circuit vacated the lower court's denial of
the class action claims and motion for class certification. Culpepper, et
al. v. Inland Mortgage Corp., 132 F.3d 694 (11th Cir. 1998). The 11th
Circuit later clarified its decision by stating that YSPs are not per se
violations of the act and emphasized that its decision was based on the
facts of the case before it. Culpepper, et al. v. Inland Mortgage Corp.,
No. 97-6109 (11th Cir. 6/22/98).

                     First class certification

While Culpepper was pending again before the District Court, the first
RESPA class action was certified. The U.S. District Court for the
Northern District of Alabama ruled in Dujanovic v. Mortgage America, 185
F.R.D. 660 (N.D. Ala. 1999), that plaintiff's claims that the defendant's
YSP practices violated the RESPA were certifiable. (See Consumer
Financial Services Law Report, April 30, 1999, p.1). Another judge in
that same District Court reconsidered the Culpeppers' motion for class
certification and ruled the class satisfied Fed.R.Civ.P. 23. Culpepper,
et al v. Inland Mortgage Corp., No. CV 96-BU-0917-S (N.D. Ala. 6/22/99).

Judges in the Northern District of Alabama have also certified classes in
Heimmermann v. First Union Mortgage Corp., 188 F.R.D. 403 (N.D. Ala.
1999), Wilson v. Commercial Federal Mortgage Corp., No. 98-J-0184-S (N.D.
Ala. 3/21/00), Perry v. Mid South Mortgage Inc., CV 98-C-3205-W and
Taggart v. Great Eastern Financial Services Inc., CV-98-C-1697-W
(11/6/00). A RESPA class was also certified by Judge Frank of the
District of Minnesota in Glover v. Standard Federal Bank and Heartland
Mortgage, No. 97-2068 (DWF/AJB) (D. Minn. 3/22/00), who stated:

[T]he test articulated in the HUD Policy Statement-as construed by the
Defendants in this case and the courts of this District-simply makes no
sense. Under such an interpretation, a lender could offer a broker an
explicit kickback, but then justify that kickback post hoc by tying the
"total compensation" to goods and services. Even if such an
interpretation were not in conflict with the plain language of RESPA, it
would surely qualify as irrational.

                           Pending litigation

Donaldson explained to conference attendees that the 11th Circuit agreed
to hear Culpepper and Heimmerman. According to Donaldson, the court has
also agreed to hear the denial of motion for class certification in the
consolidated cases of Hirsch, et al. v. BankAmerica Corp., et al., and
Richardson v. Bank of America, Nos. 99-900010-D, 1:98-CV-1031-ODE (N.D.
Ga. 4/29/00) as well as McBride v. Reliastar Corp., No. 1:98-CV-215-TWT
(N.D. Ga. 4/29/99).

In the 2nd U.S. Court of Appeals, the case of Potchin v. Prudential, 1999
WL 1814612 (E.D.N.Y. 1999), is pending, Donaldson added. In Potchin, the
U.S. District Court for the Northern District of New York denied the
motion to certify a class to adjudicate RESPA claims despite Dujanovic,
Heimmermann and Culpepper. The court interpreted the Department of
Housing and Urban Development's March 1, 1999 policy statement to mean
that individual issues will predominate under the RESPA, making class
certification inappropriate. (See Consumer Financial Services Law Report,
March 19, 1999, p. 3, and April 2, 1999, p. 3).

Donaldson stated that the defendants filed a motion to consolidate all
cases before the 11th Circuit, but the court denied the motion and set
the briefing schedule. The parties filed their briefs with the 11th
Circuit during November and December, 1999. The 11th Circuit recently
sent a notice stating that it expects to schedule oral arguments in all
four pending cases during the week of Jan. 22, 2001. In the meantime,
mortgage lenders will continue to pay brokers YSPs, arguing that they are
in exchange for goods or services actually provided and are reasonable
under the act. (Consumer Financial Services Law Report, November 27,

WATER CONTAMINATION: Ontario Official Says E. Coli Known Before Outbreak
A provincial government environmental officer has admitted to a judicial
inquiry that he allowed positive E. coli results in this farming town's
drinking water to slide for years without ordering a remedy (Jamie Smith,
et. al. v. the Government of Ontario, the Corporation of the Municipality
of Brockton, the Bruce-Grey-Owen Sound Health Unit, the Walkerton Public
Utilities Commission and commission manager Stan Koebel, No.
00-CV-191273CP, Ontario Super.; See 10/20/00, Page 30).

Larry Struthers told Justice Denis O'Connor of the Ontario Court of
Appeal, who is heading the public inquiry, that he took the word of Stan
Koebel that Walkerton's utility manager would disinfect the water and
make badly needed repairs.

Koebel, manager of the Walkerton Public Utilities Commission, is one of
the defendants in a pending $ 300 million class action lawsuit.

The same day that Struthers testified, one of the inquiry lawyers
revealed that Koebel entered inaccurate data on his testing records in
the months leading to the town's E. coli contamination - the largest
waterborne E. coli disaster in North America, which claimed seven lives
and made 2,300 others ill.

The attorney, Paul Cavalluzzo, noted that the chlorine measurements on
Koebel's daily operating logs "should not be relied upon."

                         Inaccurate Reporting

Another document written by Koebel and admitted as evidence indicated
that one of the town's wells was shut down in May when it was actually
operating without a functioning chlorinator.

Cavalluzzo stopped short of suggesting that Koebel's results were
falsified, but said he learned from the manager's lawyer that they were
inaccurate and described the manager's weekend water-flow readings in
1999 as "estimates."

Struthers, a veteran officer with the Ontario Ministry of the
Environment, acknowledged that on three occasions between 1995 and 1997
he received test results showing E. coli in Walkerton's treated water. A
fourth report showed total coliforms, which indicates that E. coli may be

He changed jobs within the ministry in 1997 then returned in October 1999
and was met with even more ominous results - a test two months earlier
turned up E. coli in tap water while four samples showed total coliforms
in the months leading to April of this year. Struthers testified that, in
each case, he contacted Koebel, who twice indicated he was in the process
of replacing malfunctioning chlorinators.

                       Authorities In The Dark

Others who have taken the witness stand so far have said that Koebel kept
local authorities in the dark even though he had known for days that the
drinking water was tainted.

That testimony confirmed allegations made in May that Koebel didn't alert
authorities about the contamination.

Philip Bye, supervisor of the Environment Ministry's office in nearby
Owen Sound, told O'Connor that Koebel was recovering from a nervous
breakdown when the manager met May 23 with government officials and the
local health unit to account for his actions. Bye said a distraught and
depressed Koebel confessed that he knew the town's water supply was
contaminated, but failed to speak up.

That evidence supports allegations by Dr. Murray McQuigge, the regional
medical officer of health, that as local residents were pouring into
emergency rooms with nausea and bloody diarrhea, Koebel sat on positive
E. coli test results for several days. McQuigge accused Koebel in May of
misleading health officials by claiming the water supply was clean.

The inquiry continues. (Mealey's Emerging Toxic Torts, November 17, 2000)


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

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

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

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