CAR_Public/001222.MBX               C L A S S   A C T I O N   R E P O R T E R

             Friday, December 20, 2000, Vol. 2, No. 248

                              Headlines

ASBESTOS LITIGATION: Judge Denies Cert in Simon I for Broader Simon II
BRISTOL-MYERS: AIDS Group Protests Accusing Drugmaker of Price Gouging
CANADA: Federal Government Fails to Halt Disabled Vets' Suit
HONOLULU DISPOSAL: Written Word Comes Before The Spoken In Labor Dispute
PHYSICIAN COMPUTER: Additional Settlement Reached for Stockholders' Suit

PLAYMOBIL: Zwerling, Schachter Anounces Preliminary Settlement Reached
POLYMEDICA CORP: Schatz & Nobel Commences Lawsuit on Behalf of Investors
PSINet INC: Announces 14 of 15 Securities Fraud Complaints Dismissed
PSINet INC: Berger & Montague Says Metamor Merger Claims Sustained
PSINet INC: Wechsler Harwood Announces Former Metamor Shareholders' Suit

REZULIN LITIGATION: Judge Sets Schedule For MDL Discovery
SAENZ: Group Says CA Turns Away People Who Qualify for SSI and Medi-Cal
U OF CALIFORNIA: Students Sue for Admission; Joined By ACLU
U OF MICHIGAN: Admissions Policy Upheld; Next Bout Is over Who Gets in
VIRGINIA: Parents Sue for Group Home Aid; Autistic Son on Waiting List

* Congress Approval in Funding May Signal Renewed Support for Legal Aid

                             *********

ASBESTOS LITIGATION: Judge Denies Cert in Simon I for Broader Simon II
----------------------------------------------------------------------
Although a suit seeking compensatory and punitive damages for cancer
allegedly caused by smoking is a viable class action, a New York federal
judge on Nov. 6 denied class certification because it would better
preserve court resources to certify a separate and pending proposed class

action that asserts broader claims (Ellis Simon, et al. v. Philip Morris
Inc., et al., Nos. 00-CV-2340, 00-CV-4632, 00-CV-4442, 98-CV-1492,
99-CV-6142, 98-CV-3287, 97-CV-7658, 98-CV-0675 and 99-CV-7392, E.D. N.Y.;

See 10/20/00, Page 14).

Subsequently, U.S. Judge Jack B. Weinstein of the Eastern District of New

York in a Nov. 16 memorandum ruled that New York law and federal
procedure will govern the compensatory claims in the broader proposed
class action, which seeks an opt-out class for compensatory damages and a

mandatory class for punitive damages.

Pending asbestos/tobacco related cases that may be subject to the class
re-certification include National Asbestos Workers Medical Fund v. Philip

Morris (No. 98-CV-1492, E.D. N.Y.), H.K. Porter Co. v. B.A.T. Industries,

et al. (No. 97-CV-07658, E.D. N.Y.), Blue Cross and Blue Shield, et al.
v. Philip Morris (No. 98-CV-3287), Raymark Industries v. American
Tobacco, et al. (No. 98-CV-0675, E.D. N.Y.), and Falise v. American
Tobacco (No. CV-99-7392, E.D. N.Y.).

(Text of Nov. 6 Opinion in Section A. Document # 04-001127-111. Nov. 16
Memorandum in Section B. Document # 04-001127-112. Plaintiff's memorandum

supporting class cert available. Document # 04-001127-013. Opposition to
class cert available. Document # 04-001127-014. Reply to opposition.
Document # 04-001127-015. Defense memorandum on proposed evidentiary
hearing available. Document # 04-001127-016. Certain defendants'
opposition to class cert available. Document # 04-001127-017. Plaintiffs'

supplemental memorandum on choice of law available. Document #
04-001127-018.)

At issue are two proposed class actions, referred to as Simon I and Simon

II. Simon I seeks compensatory damages and punitive damages for cancer
allegedly caused by smoking. Simon II involves a broader class of all
people who may have been injured by tobacco, and includes plaintiffs
named in Simon I.

Simon I plaintiffs moved for class certification. Named defendants
include Brown and Williamson Tobacco Corp., Lorillard Tobacco Co., R.J.
Reynolds Tobacco Co., British American Tobacco, Philip Morris Inc., The
Council for Tobacco Research USA Inc., The Tobacco Institute, the
Smokeless Tobacco Council, U.S. Tobacco Co. and Liggett Group.

                         Class Cert Denied

In a Nov. 6 order, Judge Weinstein noted that Simon II includes almost
all potential claims against defendants for related injuries. The judge
further noted that Simon II includes a subclass for parties in Simon I.

The judge held that even though Simon I is a viable class action, the
motion for certification in Simon I is denied because it would better
preserve court resources to certify the broader Simon II class for trial.

The judge added that tolling of the statute of limitations continues
under Simon II.

"It appears likely that plaintiffs will be able to demonstrate in Simon
II, at least provisionally, a basis for certification of an opt out class

for compensatory damages . . . and a non-opt out, mandatory class for
punitive damages," the judge said.

The judge then said that he would allow a motion for certification in
Simon II.

                          Court's Memorandum

Subsequently, Judge Weinstein in a Nov. 16 preliminary memorandum
addressed requests that, with limited exceptions, the individual and
class actions pending before his court be tried as part of Simon II. The
judge ruled that the parties may amend Simon II to include additional
claims for tobacco-related injuries due to passive exposure of
nonsmokers.

"Simon II, as ultimately amended, would then cover all private claims for

injury as a result of tobacco's activities, with some exceptions," the
judge added.

The judge noted that his memorandum deals primarily with conflicts of
laws as they affect an opt-out compensatory national class. The judge
added the proposed, non-opt out, national punitive damages class will be
treated in a separate memorandum.

                            Choice Of Law

Addressing the issue of choice of law, the judge decided that the
significant contacts with New York state in this case satisfies due
process. The judge reasoned that the tobacco industry and present
defendant activities underlying the litigation have may connections to
New York. The judge noted that Philip Morris and Lorillard both have
their principle place of business in New York City, and both of these
companies have been headquartered in New York for several years.

"Much of Tobacco's conduct took place in New York, particularly the
conduct relating to the alleged tobacco conspiracy that led to
plaintiffs' damages," the judge said. "New York's interest appears more
significant in this action than that of any single other state. It has a
greater interest in determining general compensatory liability issues
since, like punitive damages, they may bear directly on the regulation of

dangerous conduct within its borders."

The judge added that the interests of other states in this action are
largely limited. Moreover, the judge said that differing state interests
will be less implicated in any conflict because he envisions transferring

to each plaintiff's home district individual compensatory questions, and
that each claimant will rely upon his or her own state law with regard to

critical individual recovery issues.

"Determining general questions of liability under New York law dovetails
well with ensuring that New York can enforce its own set of civil
obligations amongst its own domiciliaries and serve as a effective forum
for determining injuries for its own (and others') citizens, who, without

a centralized trial, may be left without an effective remedy," the judge
said.

The judge concluded that, interpreting applicable law, it appears that it

is the "unitary and substantive law of New York and the unitary federal
procedure that will govern much of Simon II. If, on appeal from an order
certifying the class, the court of appeals of this circuit of the New
York Court of Appeals should disagree with the interpretation of conflict

of laws suggested in this memorandum, then, certification based upon a
similarity of state substantive law and its classification into a
relatively few types would probably permit certification on that basis."

                                Counsel

Plaintiff counsel includes Joshua Kassner and John Angelos of the Law
Offices of Peter G. Angelos in Baltimore, Melvyn I. Weiss of Milberg
Weiss Bershad Hynes & Lerach in New York, Richard L. Akel of Weitz &
Luxenberg in New York and Steven E. Fineman and Elizaveth Cabraser of
Lieff Cabraser Heimann & Bernstein in New York.

Brown and Williamson is represented by Kevin J. Dunne and Eric M. Kraus
of Sedgwick, Detert, Moran & Arnold in New York, Marjorie P. Lindblom,
David Bernick, Andrew R. McGaan and Deirdre A. Fox of Kirkland & Ellis in

New York, Peter A. Bricks, James L. Stengel and Michael T. Stolper of
Orrick Herrington & Sutcliffe in New York and U. Gwyn Williams of
Goodwin, Proctor & Hoar in Boston.

Lorillard is represented by William L. Allinder and Lori Connors McGroder

of Shook, Hardy & Bacon in Kansas City, Mo. RJR is represented by Ursula
M. Herringer of Womble Carlyle Sandridge & Rice in Winston-Salem, N.C.
Lorillard is represented by Alan Mansfield of Greenberg Traurig in New
York. BAT is represented by Adam I. Stein of Simpson Thacher & Bartlett
in New York.

Philip Morris is represented by Peter L. Critchell of Dechert Price &
Rhoads in New York, John B. Williams and Thomas W. Mitchell of Collier,
Shannon, Rill & Scott in Washington, D.C., Kenneth J. Parsigian and Paul
E. Namser of Goodwin, Proctor & Hoar in Boston and Peter Bleakley of
Arnold & Porter in Washington, D.C.

The Council for Tobacco Research is represented by Harry Zirlin and
Steven S. Michaels of Debevoise & Plimpton in New York. The Tobacco
Institute is represented by Jacob Horowitz of Seward & Kissel in New
York. The Smokeless Tobacco Council is represented by Bryan A. McKenna of

Jacob Medinger & Finnegan in New York.

U.S. Tobacco is represented by Arthur H. Aizley and Eric S. Sarner of
Skadden Arps Slate Meaher & Flom in New York. Ligget is represented by
Leonard A. Feiwus of Kasowtiz Benson Torres & Firedman in New York.
(Mealey's Litigation Report:, Asbestos, December 1, 2000)


BRISTOL-MYERS: AIDS Group Protests Accusing Drugmaker of Price Gouging
----------------------------------------------------------------------
A band of AIDS activists invaded the global headquarters of drug giant
Bristol-Myers Squibb Co., disrupting its Christmas party by shouting
allegations the company was price-gouging on its newest medicine against
HIV.

A spokesman for the nation's No. 3 drugmaker confirmed that members of
the New York chapter of ACT UP had gotten inside its offices at 345 Park
Ave. but said they were quickly ejected by company security officers.

The ACT UP members staged the event to protest the price Bristol-Myers is

charging for a new "enteric" formulation of its drug Videx that is easier

to take and easier on the gastrointestinal tract. (The Washington Post,
December 21, 2000)


CANADA: Federal Government Fails to Halt Disabled Vets' Suit
------------------------------------------------------------
A class-action lawsuit on behalf of disabled veterans that could cost
Canadian taxpayers as much as $ 2 billion won't be delayed by a
government appeal.

Ontario Chief Justice Roy McMurtry on December 20 ruled that a hearing to

determine how much interest is owed the veterans should go ahead while
the federal government appeals the suit. McMurtry turned down a request
by government lawyers to halt all proceedings until the appeal is
decided.

Ottawa is appealing a landmark Superior Court ruling in October that
found it liable in a suit brought on behalf of thousands of vets who
spent much of their lives in hospitals with shell shock or other
cognitive disabilities.

Their pensions and other personal funds that were held in a government
account between 1914 and 1990 were never invested and some estates were
confiscated by Ottawa after veterans died, the court heard.

That means the amount owed to the veterans and their heirs could be
determined before the government's appeal is heard, said David Greenaway,

one of the lawyers for the veterans.

"We've broken every single tackle (by the government lawyers)," Greenaway

said.

"There's nothing between us and the end zone but open field ... Though
it's a good day for the veterans and a great victory, the taxpayer is not

being served by (Prime Minister Jean) Chretien and (Finance Minister
Paul) Martin continuing to ignore our request that the government sit
down and negotiate with us."

The amount owed to the veterans could climb as high as $ 2 billion with
tax concessions and cover as many as 10,000 former soldiers.

Government lawyers say they need time to dig up the details of 80 years
of payments to disabled veterans to get accurate numbers.

"Clearly (McMurtry) feels that - even if it's work thrown away - it
should be done, so we'll go forward with it," said government lawyer John

Spencer. (The Edmonton Sun, December 21, 2000)


HONOLULU DISPOSAL: Written Word Comes Before The Spoken In Labor Dispute
------------------------------------------------------------------------
Unions use many different techniques to persuade employers to sign
collective bargaining agreements. Sometimes, a union representative tells

an employer that such an agreement will cover only a very small number of

its employees. Other times, the representative assures the employer that
it doesn't have to make benefit payments for all of its employees even
though the agreement clearly states otherwise. The employer is convinced
and signs the deal that sounds too good to be true. And it is.

The employer gets the "special" deal for a while, sometimes for years.
Things go along smoothly until someone -- usually an employee benefit
trust fund or the union itself -- wakes up and sues the employer for
unpaid union wages and benefit contributions.

The employer tries to defend itself on the basis of the "special" deal,
not the one written down, but nevertheless a deal just the same. Or so
the employer thinks. The employer usually learns that the enforceable
collective bargaining agreement is worth the paper it's written on.

                              Facts

In 1978, Liborio Cadiz, a business agent for the Laborers Union, told
Clyde Kaneshiro, the vice president of Honolulu Disposal Service, Inc.
(HDS), that the company had to sign up with the union to pick up refuse
at a construction site. They allegedly orally agreed that the bargaining
unit covered by the collective bargaining agreement (CBA) would be
limited to a couple of drivers. Kaneshiro then signed a written CBA
prepared by the union.

The first CBA, with a term from 1979-81, stated that it applied to all
HDS employees employed by the company in the state of Hawaii in the job
classifications listed in exhibit A to the CBA. Exhibit A listed seven
classifications, including roll-off driver. The CBA provided for employee

benefit contributions from HDS to the trust funds for each hour worked by

each employee covered by the agreement.

The CBA also contained a clause prohibiting oral modification; all
changes to the agreement had to be made in writing and signed by the
parties. In addition, the CBA had an "integration clause," i.e., a
provision stating that the written document contained the entire
agreement of the parties and that neither party had made any
representations to the other that were not set out in the written
agreement.

When the first CBA expired, HDS and the union entered into five
succeeding CBAs covering the years 1982-1999. All of the agreements
contained coverage provisions referring to exhibit A, no-
oral-modification clauses, integration clauses, and trust fund provisions

substantially similar to those in the first CBA. In each agreement,
exhibit A listed roll-off drivers as a covered classification.

HDS and the union abided by the oral agreement of Kaneshiro and Cadiz
during the term of each successive CBA. The bargaining unit was limited
to two or three designated employees who knew they were "in the union."
None of the six CBAs reflected the terms of that oral agreement. All
stated just the opposite and did not restrict the scope of the bargaining

unit in any way.

Four former and current roll-off drivers filed a class-action lawsuit
against HDS, the union, and the trust funds, claiming that they had been
covered by the CBAs and were entitled to back pay in the form of union
wages and benefits. They contended that they had done the same type of
work performed by the two or three employees who HDS considered to be
covered by the CBAs.

The trial court granted judgment without a trial in favor of HDS, the
union, and the trust funds, upholding the terms of the alleged oral
agreement to cover only a couple of drivers with the CBAs. The drivers
appealed.

                     Ninth Circuit's Decision

HDS and the union admitted on appeal that the CBAs, by their written
terms, covered roll-off drivers. But they argued that evidence of the
oral agreement was admissible and overrode the written agreements.
Unfortunately for them, the Ninth Circuit did not agree. As the court
viewed it:
Faced with clear, unambiguous written agreements
containing integration clauses and no-oral-modification clauses, and in
the absence of language acknowledging any supplemental agree-ments, we
hold that the parole evidence rule bars introduction of evidence of a
proffered oral agreement that directly contradicts a key term of the
written contracts.
In essence, the written CBAs were so
clear that evidence of an oral agreement that conflicted directly with a
critical term of the CBAs, namely the coverage provision, would not be
permitted under a rule of contract construction called the parole
evidence rule.

The court emphasized that in the case before it, the CBAs were
unambiguous, extending coverage to all full-time employees in the
classifications listed in exhibit A. The oral agreement, on the other
hand, contrasted sharply with the CBAs' terms. The court found that the
oral agreement between the parties was "unquestionably inconsistent with
the straightforward and broad coverage provisions of the CBAs." As the
court saw it, the "gap" between all of the employees listed in exhibit A
and a couple of drivers "could hardly be more dramatic."

The court also pointed to the other provision of the CBAs that expressly
ruled out any supplemental oral agreement as support for its conclusion
that the parole evidence rule barred consideration of the oral agreement.

The court termed the combination of the no- oral-modification and
integration clauses a "zipper clause" intended to prevent claims of any
representations outside the written contract other than those made in
another writing and signed by the parties. There was no language in any
of the CBAs here even "hinting" at the possibility of supplemental
agreements, according to the court.

Under those circumstances, the Ninth Circuit could not approve the
introduction of evidence of an oral agreement that would "eviscerate the
very essence of the contracts." Therefore, the appeals court sent the
case back to the lower court for further proceedings. Pace v. Honolulu
Disposal Service, Inc., 227 F.3d 1150 (9th Cir. 2000).

                                Lesson

A CBA is a binding contract. Before signing such an agreement, you need
to be absolutely certain that it reflects everything you have agreed on
-- nothing more, nothing less. If the union is willing to agree to
something, it should have no objection to putting it in the written
agreement itself.

As this decision demonstrates, it is extremely difficult to argue
successfully that the written document means something other than what it

says. It may be possible to make that argument successfully if the issue
is the interpretation of an ambiguous term of the CBA. But when a
so-called "oral" term directly conflicts with a written provision of the
CBA and the agreement prohibits oral changes and states that it is the
whole agreement, such an argument probably is doomed to failure.

This case also shows that even if the union and the trust funds are on
your side, it will do no good in the face of an employee lawsuit with
provisions in the written agreement, such as the ones here. The
no-oral-modification clause coupled with the integration clause
effectively close the door on pleas of some other, more favorable oral
agreement.

And guess who's stuck holding the bag on back pay and benefits? It's not
the union or the trust funds, that's for sure. So there's only you left.
(California Employment Law Letter, December 11, 2000)


PHYSICIAN COMPUTER: Additional Settlement Reached for Stockholders' Suit
------------------------------------------------------------------------
The following is being issued by The Garden City Group:

TO: All persons or entities who purchased or acquired common stock of
Physician Computer Network, Inc. ("PCN") from February 21, 1996 through
April 1, 1998, inclusive (the "Class")

This Summary Notice is given pursuant to Rule 23 of the Federal Rules of
Civil Procedure and an Order by the United States District Court for the
District of New Jersey, dated September 14th, 2000.

The purpose of this Notice is to inform you of the proposed additional
settlement that has been reached in this Class Action (the "Action") by
Lead Plaintiff, the State of Wisconsin Investment Board, with defendants
John Mortell and Thomas Wraback. The proposed settlement which is in
addition to the $ 21,150,000 partial settlement of this Action set forth
in the Notice of Partial Settlement dated January 22, 2000 (available
online at http://www.blbglaw.comunder the Notice and Proof of Claims
section), will resolve all claims that any member of the Class has
against defendants Mortell and Wraback relating to the subject matter of
this Action. This settlement consists of $45,000 in cash from defendant
Mortell plus the cooperation that Wraback provided to Lead Plaintiff in
connection with its investigating and evaluating the Class' potential
claims against KPMG LLP ("KPMG"), PCN's independent auditor during the
Class Period. The $45,000 in cash will not be distributed to Class
Members but will rather be used to fund the investigation and prosecution

of the Class' claims against KPMG. A hearing will be held by the Court on

January 25, 2001 at 9:00 am, in the United States District Court for the
District of New Jersey, Martin Luther King, Jr. Federal Courthouse, 50
Walnut Street, Court Room 5B, Newark, New Jersey 07101 to consider
whether this settlement is fair, reasonable, and adequate and should be
approved and the Action dismissed as to defendants Mortell and Wraback;
and the reasonableness of an application by Lead Counsel for
reimbursement of out-of-pocket expenses incurred in achieving this
settlement.

If you purchased or otherwise acquired PCN common stock between February
21, 1996 and April 1, 1998, inclusive, you are a Class Member. Your
rights against the Defendants will be affected by this Settlement as set
forth in the Detailed Notice dated September 14, 2000. If you have not
already received a copy of the Detailed Notice you may obtain such
information by contacting:

In re Physician Computer Network, Inc. Class Action Securities Litigation

P.O. Box 9353
Garden City, NY 11530-9353
Phone Number: 888-889-8746

or

Bernstein Litowitz Berger & Grossmann LLP
Attn: Daniel L. Berger, Esq.
Lisa Buckser-Schulz, Esq.
1285 Avenue of the Americas
New York, NY 10019

Please do not contact the Court or the Clerk's office for information.

Source: The Garden City Group

Contact: Brian Burke of The Garden City Group, 516-465-6814


PLAYMOBIL: Zwerling, Schachter Anounces Preliminary Settlement Reached
----------------------------------------------------------------------
The United States District Court, Eastern District of New York has
preliminarily approved a settlement of the action entitled In re
Playmobil Antitrust Litigation. Playmobil denies the allegations in
Plaintiffs' complaint, denies liability, and denies that any class member

is entitled to damages. However, Playmobil, along with Plaintiffs,
desires to resolve this litigation under the terms preliminarily approved

by the Court. The Hearing for Final Approval of the Settlement will be
held on March 2, 2001, at 10:00 a.m. at the Courthouse, 1034 Federal
Plaza, Central Islip, NY.

The complete details of the Settlement and settlement procedure are
contained in the Notice of Class Action Settlement (the "Class Notice")
which is available at http://www.playmobilclassaction.com,or by writing
to Plaintiffs' Counsel: Dan Drachler, Zwerling, Schachter & Zwerling,
LLP, 1904 Third Avenue, Suite 1030, Seattle, WA, 98101. If the Settlement

receives final approval, purchasers of Playmobil products between
February 1, 1990 and May 22, 1995 can submit the Claim Form included in
the Class Notice and receive a check for five percent (5%) of the
purchase price.

Contact: Dan Drachler of Zwerling, Schachter & Zwerling, LLP,
206-223-2053


POLYMEDICA CORP: Schatz & Nobel Commences Lawsuit on Behalf of Investors
------------------------------------------------------------------------
A class action lawsuit has been filed in the United States District Court

for the District of Massachusetts on behalf of all persons who purchased
the common stock of PolyMedica Corporation (Nasdaq: PLMD) from September
3, 1999, to November 17, 2000, inclusive (the "Class"). Plaintiff is
represented by the law firm of Schatz & Nobel, P.C.

The class action complaint alleges that the Company and certain of its
officers violated the federal securities laws during the Class Period.
Specifically, Plaintiff alleges that Defendants mislead investors about
the Company's billing and marketing practices, which did not comply with
federal Medicare reimbursement regulations.

When the nature of the Company's billing and marketing practices became
publicly known, the price of PolyMedica stock dropped almost 50% in heavy

trading to close at $25.75 per share. Shortly before the public became
aware of the billing and marketing issues, the CEO and other directors of

the Company sold large numbers of shares of PolyMedica common stock at
prices ranging from $ 55 to $60.07 per share.

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


PSINet INC: Announces 14 of 15 Securities Fraud Complaints Dismissed
--------------------------------------------------------------------
PSINet Inc. (Nasdaq:PSIX), announced that The United States District
Court for the Eastern District of Virginia on December 20 dismissed, in
their entirety, 14 purported class action complaints filed in November
2000 against PSINet and certain of its officers and directors alleging
securities fraud under the Securities Act of 1934.

In an oral ruling, Judge Leonie M. Brinkema held that the complaints had
failed to allege any facts that would support the allegations of
securities fraud, the announcement goes on.

In granting the plaintiffs' leave to amend their complaints within 30
days, the Court warned plaintiffs' counsel that they had a duty to
investigate their claims to determine if they had any factual basis
before filing complaints, and that the Court would impose sanctions on
plaintiffs if they filed amended complaints that did not have an adequate

factual basis, PSINet notes in the announcement.

According to the company's announcement, in her ruling, Judge Brinkema
also dismissed all of the claims under the Securities Exchange Act of
1934 that had been included in a 15th purported class action complaint,
permitting only three counts under the Securities Act of 1933 to proceed
to discovery. In so holding, the Court made no determination as to the
merits of these claims. The Company's announcement also says that a press

release issued by the law firm of Berger & Montague, P.C. earlier
misleadingly reported that the Court had "sustained" the plaintiffs'
claims.

Headquartered in Ashburn, VA, PSINet is an Internet Super Carrier
offering global eCommerce infrastructure and a full suite of retail and
wholesale Internet services through wholly-owned PSINet subsidiaries.
Services are provided on PSINet-owned and -operated fiber, satellite, Web

hosting and switching facilities providing direct access in more than 800

metropolitan areas in 28 countries on five continents. PSINet information

may be obtained by e-mail at info@psi.com, by accessing the Web site at
www.psinet.com or by calling in the U.S., 800-799-0676.


PSINet INC: Berger & Montague Says Metamor Merger Claims Sustained
------------------------------------------------------------------
On December 20, 2000, the United States District Court for the Eastern
District of Virginia denied defendants' motion to dismiss as to certain
claims contained in a complaint filed by the law firm of Berger &
Montague, P.C. (http://www.investorprotect.com)on behalf of all former
shareholders of Metamor Worldwide Inc. ("Metamor") who acquired PSINet
Inc.'s (Nasdaq: PSIX) stock through PSINet's merger with Metamor, which
was consummated on or about June 16, 2000.

The complaint charges PSINet and certain of its officers and directors
with violations of Sections 11, 12(a)(2) and 15 of the Securities Act of
1933. The complaint alleges that Defendants made materially false and
misleading statements in the Registration Statement/Prospectus filed in
connection with the Metamor merger. The misrepresentations concerned
whether the businesses of Metamor and its subsidiary Xpedior Incorporated

were complementary in nature to the business of PSINet, and the effect
that the merger would have on PSINet.

Source: Berger & Montague, P.C.

Contact: Sherrie R. Savett, Esquire, or Michael T. Fantini, Esquire, or
Kimberly Walker, Investor Relations Manager, of Berger & Montague, P.C.,
888-891-2289 or 215-875-3000, or fax, 215-875-5715, or
InvestorProtect@bm.net


PSINet INC: Wechsler Harwood Announces Former Metamor Shareholders' Suit
------------------------------------------------------------------------
Wechsler Harwood Halebian & Feffer LLP has been engaged to file a class
action lawsuit against PSINet, Inc. and certain other defendants in the
United States District Court for the Eastern District of Virginia on
behalf of all investors who acquired the common stock of PSINet, Inc.
(Nasdaq: PSIX) through the Company's merger with Metamor Worldwide Inc.
which was consummated on or about June 16, 2000.

Plaintiffs charge that PSINET and certain other defendants violated
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, by issuing a
materially false and misleading registration statement and prospectus in
connection with the Merger. Plaintiffs allege that defendants overstated
PSINet's results of operations and financial condition for the year ended

December 31, 1999. Plaintiffs also allege that defendants failed to
disclose the incomparability of the operations of Metamor and the state
of the Company's true financial position and liquidity.  Finally,
plaintiffs allege that defendants misrepresented PSINet's overall revenue

growth rate and business prospects particularly in regard to the
Company's international web-hosting presence.

On November 2, 2000, PSINet issued a press release announcing the
resignation of its president, a planned dramatic restructuring of the
Company, and fourth quarter results well below its prior guidance. In
response to this announcement the price of PSINet common stock plummeted
by more than 55%.

Contact: Patricia Guiteau, Shareholder Relations Department of Wechsler
Harwood Halebian & Feffer LLP, 877-935-7400, pguiteau@whhf.com


REZULIN LITIGATION: Judge Sets Schedule For MDL Discovery
---------------------------------------------------------
U.S. Judge Lewis A. Kaplan has given the parties in the Rezulin
litigation just more than a year to complete discovery.

"On or before Jan. 31, 2002, the parties shall meet, confer and report to
the court concerning any other pretrial proceedings, including
dispositive motions and/or motions in limine, or any discovery, that
remains to be completed in any of the then pending cases, so that this
court can determine whether each is ready for trial and remand to its
respective transferor court," the judge said in a Nov. 9 order.


REZULIN LITIGATION: Judge Sets Schedule For MDL Discovery
---------------------------------------------------------
U.S. Judge Lewis A. Kaplan has given the parties in the Rezulin
litigation just more than a year to complete discovery.

"On or before Jan. 31, 2002, the parties shall meet, confer and report to
the court concerning any other pretrial proceedings, including
dispositive motions and/or motions in limine, or any discovery, that
remains to be completed in any of the then pending cases, so that this
court can determine whether each is ready for trial and remand to its
respective transferor court," the judge said in a Nov. 9 order. (Pretrial
Schedule in Section B. Document # 19-001207-102.)

To get to that point, the judge ordered the plaintiffs to submit an
amended complaint, in the form of a class action, by Dec. 15 and to begin
depositions of non-party fact witnesses immediately. Plaintiffs with
claims of personal injury must also produce sworn answers to a
questionnaire by Jan. 2, or 40 days after the questionnaire form is
approved by the court. Failure to provide answers is grounds for
dismissal of a lawsuit.

Documents By Feb. 1

The defendants were ordered to place into the document depository the 3.5
million documents it says are relevant to the case by Jan. 2, to produce
the detail force documents stored in a Roanoke, Va., warehouse by Feb. 1,
and to produce present and former employees and agents by Sept. 30, 2001,
for depositions.

Discussion in and out of court suggests the parties are sensitive to the
need for speed. Counsel for Warner-Lambert told Judge Kaplan that if
discovery did not move forward, plaintiffs in state courts would ignore
the MDL and conduct their own discovery, partly defeating the purpose of
the MDL, which is to consolidate discovery. Plaintiff lawyers acknowledge
that their colleagues in the state courts will be reluctant to, in
effect, buy their discovery product if it does not meet their needs or
does not become available in a timely manner.

        Special Master Orders Master Pleadings In New Jersey

Special Master Peter Ciolino has ordered a master complaint and answer in
consolidated Rezulin litigation in New Jersey (In Re: Rezulin Litigation,
No. 246, N.J. Super., Middlesex Co., Law Div.).

Special Master Ciolino ordered Arthur Penn of Pellettieri, Rabstein and
Altman in Mount Holly, N.J., liaison counsel for the plaintiffs, to
compile a master complaint, which will be deemed to amend previously
filed complaints. John Brenner of McCarter & English in Newark, N.J., is
then to file a master answer on behalf of Warner-Lambert. (Case
Management Recommendation in Section H. Document # 19-001207-108.)

Both attorneys are also to file uniform sets of interrogatories and
requests for documents, with defense interrogatories to include a request
for patient profiles.

Discovery is to begin first in those cases that entail personal injury,
with class actions to come later.

In addition to Penn and Brenner, physician defendants were represented at
a litigation conference before Special Master Ciolino by John Zen Jackson
of Kalison, McBride & Jackson in Liberty Corner, N.J. (Mealey's
Litigation Report: Diabetes Drugs, December, 2000)

To get to that point, the judge ordered the plaintiffs to submit an
amended complaint, in the form of a class action, by Dec. 15 and to begin
depositions of non-party fact witnesses immediately. Plaintiffs with
claims of personal injury must also produce sworn answers to a
questionnaire by Jan. 2, or 40 days after the questionnaire form is
approved by the court. Failure to provide answers is grounds for
dismissal of a lawsuit.

Documents By Feb. 1

The defendants were ordered to place into the document depository the 3.5
million documents it says are relevant to the case by Jan. 2, to produce
the detail force documents stored in a Roanoke, Va., warehouse by Feb. 1,
and to produce present and former employees and agents by Sept. 30, 2001,
for depositions.

Discussion in and out of court suggests the parties are sensitive to the
need for speed. Counsel for Warner-Lambert told Judge Kaplan that if
discovery did not move forward, plaintiffs in state courts would ignore
the MDL and conduct their own discovery, partly defeating the purpose of
the MDL, which is to consolidate discovery. Plaintiff lawyers acknowledge
that their colleagues in the state courts will be reluctant to, in
effect, buy their discovery product if it does not meet their needs or
does not become available in a timely manner.

        Special Master Orders Master Pleadings In New Jersey

Special Master Peter Ciolino has ordered a master complaint and answer in
consolidated Rezulin litigation in New Jersey (In Re: Rezulin Litigation,
No. 246, N.J. Super., Middlesex Co., Law Div.).

Special Master Ciolino ordered Arthur Penn of Pellettieri, Rabstein and
Altman in Mount Holly, N.J., liaison counsel for the plaintiffs, to
compile a master complaint, which will be deemed to amend previously
filed complaints. John Brenner of McCarter & English in Newark, N.J., is
then to file a master answer on behalf of Warner-Lambert.

Both attorneys are also to file uniform sets of interrogatories and
requests for documents, with defense interrogatories to include a request
for patient profiles.

Discovery is to begin first in those cases that entail personal injury,
with class actions to come later.

In addition to Penn and Brenner, physician defendants were represented at
a litigation conference before Special Master Ciolino by John Zen Jackson
of Kalison, McBride & Jackson in Liberty Corner, N.J. (Mealey's
Litigation Report: Diabetes Drugs, December, 2000)


SAENZ: Group Says CA Turns Away People Who Qualify for SSI and Medi-Cal
-----------------------------------------------------------------------
The Social Security Administration and state officials routinely turn
away disabled and mentally ill people who qualify for SSI and Medi-Cal,
according to a class action suit filed Wednesday in federal court by a
Berkeley watchdog group.

In Kildare v. Saenz C004732JL, attorneys for the Homeless Action Center
and seven needy Bay Area residents allege state officials often don't
seek out county hospital records when they decide whether people qualify
for benefits - although those facilities are most often used by poor
people. Instead, the applicants are evaluated by doctors contracted by
the state. Those physicians often reject applicants seeking long-term
disability and Medi-Cal, according to the suit.

The state is required to seek medical records from the physician most
familiar with the applicant's medical history, said Steven Weiss, staff
counsel for the action center along with Heller Ehrman White & McAuliffe
partner Robert Borton.

The legal fight will center on how far the state is required to go to get

an accurate picture of an applicant's medical history, said Borton. "It's

certainly highly possible (state officials) will say they do the best
they can with limited resources," he said, adding that those efforts are
not enough because so many qualified people have been rejected.

A spokesperson for the California Department of Social Services -- the
agency handling the initial application process for people who want
federal disability benefits -- declined comment on the suit, as did local

representatives for the Social Security Administration.

"If a person lists that they were an inpatient (at a county hospital) I
assume that those records would be sought," said Dan Ramage, who is in
the Santa Rosa office of public affairs for the Social Security
Administration. When an applicant's medical records are "inconclusive,
people occasionally will be asked to go to a consultative exam," he said.

"Each case is handled on its own merits." Ramage added that many factors
are considered in addition to medical history to determine if someone is
eligible for benefits.

The state Department of Social Services distributes SSI and other
supplemental payments to more than 1 million people, and 68 percent of
those people are also disabled, said department spokeswoman Blanca Barna.

When people fall through cracks in the system, cities and counties pick
up the tab, said Homeless Action Center director Patricia Wall.

The lawsuit names the director of the state social services department,
the commissioner of the Social Security Administration, and state
officials who oversee disability programs. (The Recorder, December 21,
2000)


U OF CALIFORNIA: Students Sue for Admission; Joined By ACLU
-----------------------------------------------------------
Seven high school seniors who say bureaucratic bungling by their schools
kept them out of the University of California system sued Wednesday for
another chance at admission.

The students, who are joined in their lawsuit by the American Civil
Liberties Union, say they are being unfairly denied a guaranteed UC
education.

Nearly a sixth of California's 852 public high schools missed an Aug. 31
deadline to submit the transcripts the UC system needed to offer
guaranteed admission to the top 4 percent of each high school's seniors.

The students that the program was most intended to help those from
low-income and minority neighborhoods are being disproportionately shut
out as a result, said Mark Rosenbaum, legal director of the ACLU of
Southern California. The lawsuit, filed in Los Angeles Superior Court,
seeks class-action status. ''It angers me to know I was kind of wronged
from this opportunity,'' said plaintiff Yanira Leon, 17, a senior at
Manual Arts High School in Los Angeles and one of the plaintiffs.

Although Leon is confident she'll go to college, she said early admission

to the UC system would have assured she would go to a prestigious
university and reduced the stress of college applications.

Gov. Gray Davis pushed the guaranteed admission program last year to
ensure diversity at UC's eight undergraduate campuses. Enrollment of
blacks, Hispanics and American Indians declined 9.5 percent after the UC
Board of Regents voted in 1995 to ban affirmative action. The ban first
affected undergraduates applying for fall 1998 admission.

UC spokesman Terry Lightfoot said he could not comment on the suit, but
that the system could not re-open the admissions process this year. He
said the system is already halfway through the selection process for next

year's freshman class.

Because the 4 percent plan focuses on class standing in individual high
schools rather than standardized test scores, the state estimates it will

bring to the UC system about 3,600 students who otherwise would not have
been admitted.

Bonnie Plummer, a Santa Clara County school official, said 13 of 36 high
schools in her area had failed to submit transcripts to the UC because
admissions guidelines ''got lost in the system.''

Another student plaintiff, Victor Cabada, 16, a senior at Los Angeles'
Manual Arts High School, said the mix-up was not unusual. ''I was mad,
but this kind of thing doesn't really surprise me coming from my school,
because it happens a lot,'' he said. ''What outraged me more is that
nobody's taking responsibility.'' (AP Online, December 21, 2000)


U OF MICHIGAN: Admissions Policy Upheld; Next Bout Is over Who Gets in
----------------------------------------------------------------------
In a split court ruling, the University of Michigan has withstood a
vigorous legal assault over its consideration of race in undergraduate
admissions. Now comes the next class-action bout - the combatants the
same and the issues not much different. The stakes are just as high. Nine

days after a colleague upheld the school's existing use of affirmative
action in undergraduate admissions, U.S. District Judge Bernard Friedman
will hear arguments over similar race matters, this time over who gets
into the university's law school.

In a closely watched, 3-year-old case that may be headed for the Supreme
Court, the university argues its law school admissions policy in place
since 1992 considers an applicant's race among several factors. Unlike
the undergraduate school, there's no questioned point system, only an
admissions' dean's discretion.

To the university, educational benefits flow from a racially, ethnically
diverse student body, and there's a compelling state interest in creating

one - notably so in molding well-rounded lawyers. "One of the essential
skills for lawyers is to understand issues from multiple perspectives,
the ability to really get inside the shoes of another person. And there's

no better way to do that than through a diverse student body," said
Elizabeth Barry, deputy general counsel at Michigan.

"Diversity has unique applications to the law school setting."

Not so, argues the Center for Individual Rights, the conservative,
Washington-based law firm that brought down affirmative action at the
University of Texas law school in 1996 and looks to do the same at
Michigan's. "The issue here is the purpose in which it (race) is being
used - to get a racial mix of students, and that's what we're saying is
unconstitutional," violating the 14th Amendment's equal-protection
clause, said Terence Pell, the center's CEO.

Pressing the case on behalf of a white student denied admission, Pell's
center accuses Michigan's law school of minority-leaning double standards

in deciding who gets in.

On Friday, each side will ask Friedman to rule in its favor without a
trial, with the university insisting its law school's admissions policies

are on firm legal footing, the center countering they're illegal.

It is not immediately clear how quickly Friedman might rule in the case
set for trial for Jan. 16; in the undergraduate case, U.S. District Judge

Patrick Duggan took 27 days to issue an opinion.

In it, Duggan ruled against the school's 1995-1998 undergraduate
admissions policy but upheld standards in place since 1999, dealing a
blow to the Center for Individual Rights' challenge pressed on behalf of
two white students denied admission to the undergraduate school. Duggan
found that the old undergraduate policy represented an impermissible,
quota-like use of race in reserving spots for underrepresented
minorities, something he ruled the existing policy does not do.

Pell said it has not yet been decided whether his center would appeal
Duggan's ruling to the 6th U.S. Circuit Court of Appeals.

In the law school case, Pell's center argues in court papers that the
premise of the university's diversity justification that skin color is an

effective proxy for viewpoints and experiences "is a noxious form of
stereotyping." Counters Barry: "The law, it's clear. Universities can
take race into account among factors to enroll a diverse student body."

On its Web site, the university flatly acknowledges its law school
admissions process isn't colorblind, saying "an applicant's race
sometimes makes the difference in whether or not a student is admitted."
"Whenever an applicant's file reveals that he or she might add to the
diversity of perspectives that are voiced in class, that helps the
applicant's chances of admission," the Web site says.

The Michigan lawsuits could lead to a further rollback of affirmative
action in higher education - a follow-up to California's Bakke case of
1978, in which the high court outlawed racial quotas but allowed
consideration of race in university admissions.

The drive against affirmative action has accelerated in recent years,
notably with the 1996 victory in Texas. The Texas law school, like
Michigan, argued that race-conscious admissions foster diversity. But the

5th U.S. Circuit Court of Appeals in New Orleans found no compelling
interest for taking race into account in admissions, ruling that schools
can consider an applicant's socio-economic background - which can
correlate with race or ethnicity - but "race itself cannot be taken into
account."

The Supreme Court chose not to hear the Texas case because the school
already had decided to end affirmative action.

Earlier this month, the 9th U.S. Circuit Court of Appeals ruled that the
University of Washington Law School acted legally when it considered race

in its now-abandoned admissions policy. The school was sued by three
people who said they were denied admission because they are white. (The
Associated Press State & Local Wire, December 21, 2000)


VIRGINIA: Parents Sue for Group Home Aid; Autistic Son on Waiting List
----------------------------------------------------------------------
The parents of an autistic Fairfax man have filed a class-action lawsuit
to try to force the commonwealth of Virginia to pay for group homes and
other types of assistance designed to keep mentally retarded adults out
of institutions.

Marcel Rudin Tan Quibuyen, 24, has been on a waiting list for a group
home for five years. In the meantime, he shuttles between his
grandparents' and parents' homes and a state-subsidized job at a bakery.
But his mother and stepfather say they can no longer care for a 6-foot-2,

hyperactive young man who regularly breaks furniture, wanders away from
his home and darts into traffic. So, they sued Virginia Secretary of
Health and Human Resources Claude A. Allen in U.S. District Court,
alleging that the waiting list violates federal law. "A lot of disabled
people blossom when they go into a group home. We don't want Rudin to
miss out," said his mother, Evelyn Powers, 46, an editor for USA Today.
"I want [Virginia officials] to live up to their responsibilities."

Their complaint argues that once a state implements a so-called "waiver
program" that pays for services to help a mentally retarded adult stay
out of an institution, it cannot then set extra conditions or barriers,
such as a waiting list, for the more expensive services such as group
home care. Under the program, the federal government waives certain
regulations for states that agree to provide community services to
patients who otherwise would be institutionalized. Such services--which
usually cost a state much less than institutional care--include group
home living, in-home care, counseling and job assistance.

"This family has moved mountains to keep Rudin out of an institution.
This lawsuit is being brought in desperation because the support system .

. . is breaking up," said Vic Glasberg, the family's attorney.

Neither Allen's spokesman Richard Parker nor the attorney general's
office would comment on the details of Quibuyen's suit, but Parker said
that state officials have convened a task force to rewrite the rules for
the waiver program to deal with its enormous growth.

Right now, 1,043 people are on the waiting list, he said, though the
number of people receiving at least some help has grown from 3,162 people

in 1998 to 4,710 this year. The budget, meanwhile, has ballooned from $
88.5 million to $ 144.6 million.

"We recognize there are some challenges, and we have already decided that

no emergency cases will be turned away," Parker said.

Virginia ranks 45 among the 50 states and the District for its spending
on community-based services for the mentally retarded, according to a
survey by the University of Illinois at Chicago.

Quibuyen, who completed a special education program at Fairfax High
School, receives state aid in the form of job subsidies to the bakery. A
source close to the case said that the state approved Quibuyen for the
waiver program on the understanding that he needed only such less
expensive services.

According to the complaint, Quibuyen's family recently asked for more
services--including group home placement--because they could no longer
manage his care. The state offered 20 hours a week of in-home care, the
lawsuit said.

In an affidavit, Powers said that falls short because her son requires
constant supervision to prevent him from hurting himself: "Our family is
shredding because of incessant, cumulative and increasing strains of
trying to cope with Rudin's needs." (The Washington Post, December 21,
2000)


* Congress Approval in Funding May Signal Renewed Support for Legal Aid
-----------------------------------------------------------------------
Congress' approval of a boost in funding for the Legal Services Corp. may

signal renewed support on both sides of the aisle for legal aid to the
poor, according to participants in what has become a yearly battle over
the federal agency's budget.

Congress late last week sent a measure to the White House calling for LSC

to receive $ 330 million -- an amount that will be reduced by about $
660,000 under an across-the-board cut sustained by 12 appropriations
bills -- in fiscal year 2001.

While $ 330 million is $ 10 million less than what LSC had sought, the
appropriation will provide about $ 30 million more than last year for
civil legal aid.

This is a positive endorsement by Congress -- by a bipartisan coalition
of Republicans and Democrats -- and President Clinton in support of legal

services for the poor," said Sheldon Roodman, executive director of the
Legal Assistance Foundation of Chicago. And while we are still
substantially short of even the funding that we had from Congress in
1995, it is a significant step in the right direction."

L. Jonathan Ross, a Manchester, N.H., attorney who heads the American Bar

Association's Standing Committee on Legal Aid and Indigent Defendants,
also said he was encouraged by lawmakers' willingness to appropriate more

money for LSC.

We're very pleased with the bipartisan support for a badly needed
increase in this funding, both on the Senate side and on the House side,"

Ross said. This gives us a message that this is no longer a political
football, but a commitment to help take care of those who have legal
needs who can't afford to hire lawyers."

But both Roodman and Ross noted that the 2001 appropriation for LSC, the
nation's largest funder of civil legal services to low-income people,
will still be lower than the $ 400 million the federal agency received in

1995.

LSC's appropriation was slashed to $ 278 million in 1996, the year
Republicans took control of Congress. LSC came under attack in the
following years for what some lawmakers perceived as its liberal agenda,
and it was subjected to such restrictions as a bar on bringing class
actions against government entities or engaging in legislative advocacy.

Although efforts to eliminate LSC failed, Congress each year battled over

how much taxpayer money -- if any -- to appropriate to the agency.

When money for technology grants was excluded, LSC's budget for fiscal
year was about $ 300 million -- lower than the $ 321 million that the
agency had received in 1981.

Before adjourning last week, Congress sent the president the
Commerce-Justice-State appropriations bill earmarking $ 330 million for
LSC in the year 2001. The amount devoted to the delivery of legal
services represented a 7.6 percent increase over last year.

Clinton, whose administration joined the LSC in asking for a $ 340
million appropriation for the agency, is expected to sign the measure.

Roodman said LAF Chicago will receive about $ 6 million -- or 55 percent
of its $ 11 million budget -- of the $ 330 million LSC appropriation.

The remainder of the local group's funding comes from state and city
governments and private donors and foundations. Contributions may be sent

to LAF Chicago at 111 W. Jackson Blvd., Chicago, Ill., 60604.

Julie Clark, vice president for government relations at the Washington,
D.C.-based National Legal Aid and Defender Association, said the increase

in LSC funds was much needed" by the organizations that receive grants
from LSC.

Clark also said the increase once again demonstrates the bipartisan
support that exists in the Congress for this vital program."

But while they were pleased with the expected boost in LSC's
appropriation, some of the agency's supporters pointed out that the
federal government's funding has dropped in terms of buying power.

If funding had kept pace with inflation over the past two decades, LSC's
current annual appropriation would top $ 550 million, according to
Roodman.

Deborah H. Bornstein, president of LAF Chicago's board of directors, said

the federal government's failure to keep up with inflation means that
lawyers must take up the slack by donating both money and legal services
to people who cannot afford to hire an attorney.

This is increasingly recognized as an important contribution of legal
services to the poor that the private bar can make," Bornstein said.
(Chicago Daily Law Bulletin, December 20, 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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Washington, DC. Theresa Cheuk, Managing Editor.

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

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