CAR_Public/010102.MBX              C L A S S   A C T I O N   R E P O R T E R

             Tuesday, January 2, 2001, Vol. 3, No. 1

                             Headlines

ANICOM SECURITIES: Consolidated Securities Complaint Pending in Chicago
AUTO FINANCE: Class Reversed in Garcia Case for Dissimilar Interests
AUTO FINANCE: Ford's Reaffirmation  Agreement Permitted in Ch 7 Case
CANADA: Immigrant with Deadly TB Launches Suit for Wrong Landing
CHEMICAL LEAMAN: Officers Cannot Undo Defective Merger, Pa. Ct Says

EAGLE GLOBAL: EEOC Seeks to Join Employment Discrimination Lawsuit
FIRST FAMILY: 11th Cir Finds Clause on Arbitration OK under TILA, ECOA
FIRST FAMILY: Law Expert Says Ruling Renders Classwide Relief Difficult
FOUNDRY NETWORKS: Cauley Geller Announces Securities Suit in California
INMATES LITIGATION: MI Lawsuit over Rights Drags on for 12 Years

LAIDLAW, INC: Kirby McInerney Announces Securities Lawsuit in New York
LINCOLN LIFE: Settles with Benefits and Claim Process to Policyholders
MCKESSON HBOC: 9th Cir Rejects Law Firm's Appeals on Shareholder Contact
NATIONAL TREASURY: Union and DOJ Progress in Special Rates Payment Talk
NETWORK ASSOCIATES: Milberg Weiss Files Securities Lawsuit in California

NETWORK ASSOCIATES: Rabin & Peckel Announces Securities Suit in CA
NY CITY: Addict's Suit Claims Police Ignore Needle-Swap Law
PROVIDIAN FINANCIAL: Agrees to Settle Lawsuits over Marketing Practices
PUBLIX SUPER: Settles Employment Race Bias Suit Filed 1977 in Florida
SYNTHETIC STUCCO: Federal Judge allows NC Homeowners’ Suit against Maker

TOBACCO LITIGATION: R.J. Reynolds Wins FL Trial and Defeats Cert. in PA
TOBACCO LITIGATION: Spaniards Who Lost Voices to Cancer Set for Suits

* Law Report Suggests Five Factors to Determine Fairness of Settlement

                                *********

ANICOM SECURITIES: Consolidated Securities Complaint Pending in Chicago
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A consolidated complaint has been filed in the Anicom Securities Class
Action, pending before Judge John Darrah of the U.S. District Court in
Chicago.

The present defendants include Anicom Inc. and several former individual
officers and/or directors of Anicom, including Scott Anixter, Alan
Anixter, Carl Putnam, and Don Welchko.

The case involves, among other things, Anicom's recent admission of an
overstatement of net profits and revenues of at least $35 million over a
period of just over two years. There are approximately 25 million common
shares of Anicom stock outstanding. Many may have been purchased during
the class period.

Anicom has just issued a press release stating that it does not now
expect Anicom shareholders who continue to hold Anicom common stock to
receive any of the proceeds from an anticipated bankruptcy. (See Dec. 22,
2000 Anicom press release.) This lawsuit seeks damages for those who
purchased during the class period of April 29, 1998 through July 18,
2000.

Judge Darrah has appointed Kenneth McNeil and the law firm of Susman
Godfrey LLP in Houston, Texas, as lead counsel in this class action. The
law firm of Susman Godfrey has played a leadership role in a number of
class actions.

Liaison counsel in Chicago is Foley & Lardner, represented by Doug
Hagerman.

Assisting trial counsel is Lynn Sarko and the law firm of Keller Rohrback
in Seattle, Washington. Special advisory counsel on the matter is the law
firm of Wolff Popper in New York City.

Lead plaintiff in the case is the State of Wisconsin Investment Board.

Inquiries about the case should be directed to 800/776-6044, or any of
the following:

    Kenneth McNeil Lead Counsel Susman Godfrey LLP 1000 Louisiana, Suite
5100 Houston, TX, 713) 653-7814

    Doug Hagerman Liaison Counsel Foley & Lardner One IBM Plaza, Suite
3300 330 North Wabash Avenue Chicago, IL 60611, (312) 755-1900

    Lynn Sarko Assisting Trial Counsel Keller Rohrback LLP 1201 Third
Avenue, Suite 3200 Seattle, WA 98101, (206) 623-1900

Contact: Keller Rohrback L.L.P. Jen Veitengruber, 800/776-6044


AUTO FINANCE: Class Reversed in Garcia Case for Dissimilar Interests
--------------------------------------------------------------------
A consumer, who receives mandatory disclosures regarding a vehicle lease,
cannot adequately represent a class in an action against a dealership if
her interests in the litigation are different from the interests of other
class members. (Courtesy Auto Group Inc. v. Garcia, et al., No. 5D00-340
(Fla. Dist. Ct. App. 11/17/00).)

Wilma Garcia leased a van from Courtesy Auto Group Inc. Immediately
thereafter, Garcia tried to rescind the lease based on Courtesy's
advertised 30-day money back guarantee. Courtesy refused to rescind her
lease, claiming that the guarantee did not apply because of the financial
incentives provided to Garcia. Courtesy assigned the lease to General
Motors Acceptance Corp., which also refused to rescind the lease. Garcia
sued Courtesy and GMAC for intentional misrepresentation and fraud and
for violations of the Florida Deceptive and Unfair Trade Practices Act
and the Florida Motor Vehicle Lease Disclosure Act. She sought
rescission.

When Garcia moved for class certification, she claimed the class
consisted of all lessees of motor vehicles whose lease agreement failed
to contain the mandatory disclosure requirements "in a separate blocked
section, in capital letters of at least 12-point bold type."

Garcia and GMAC settled, and pursuant to the settlement agreement Garcia
returned the vehicle and was released from all future liability under the
lease. Although no evidence was introduced at the certification hearing,
the court determined that Garcia met the class action requirements and
granted her motion for certification.

                          Disclosures

The Florida District Court of Appeal noted that when Garcia executed the
lease, she also executed a "Florida Consumer Lease Disclosure" which
contained the disclosures required by Florida statute. Garcia argued that
the disclosure must be in the lease itself. The court stated, "it is a
generally accepted rule of contract law that, where a writing expressly
refers to and sufficiently describes another document, that other
document ... is to be interpreted as part of the writing."

The Court of Appeal concluded that Garcia had no cause of action against
Courtesy for a violation of the Florida Motor Vehicle Lease Disclosure
Act. As a result, the court found that the trial court erred in
concluding that Garcia had standing to represent the class. Judge
Orfinger stated, "[I]f the named plaintiff purporting to represent a
class fails to establish the requisite case or controversy with the
defendant, she may not seek relief on behalf of herself or any other
member of the class."

Courtesy argued, and the court agreed, that Garcia was not an adequate
class representative because her interests in the litigation were
different from the interests of other class members. The court held that
Garcia failed to show her representation would not be antagonistic to the
rest of the class and reversed the decision certifying the class.
(Consumer Financial Services Law Report, December 26, 2000)


AUTO FINANCE: Ford's Reaffirmation  Agreement Permitted in Ch 7 Case
--------------------------------------------------------------------
Creditors do not violate the automatic stay by sending reaffirmation
agreements to debtors who say they want to reaffirm their debts and then
accepting their payments. And, if these actions violate the discharge
injunction, there is no private right of action for debtors to seek
redress from offending creditors, the 6th Circuit Court of Appeals ruled
in David J. and Karen A. Pertuso v. Ford Motor Credit Co., No. 99-1132
(Nov. 22, 2000).

The debtors filed for Chapter 7 relief owing 18,950 to Ford Motor Credit
Co. Their statement of intentions regarding their secured loans said they
wanted to reaffirm this debt and retain possession of the family's van,
which was collateral for the loan.

Ford responded to the debtors' stated intention by sending them a
reaffirmation agreement proposing monthly payments and terms according to
the terms of the parties' original contract. The agreement also included
all the disclosures required by Section 524(c)(2). The agreement was
signed by a Ford representative.

Shortly after receiving the agreement, the debtors and their attorney
signed the agreement and returned it to Ford. The agreement was never
filed with the court. At no time were the debtors delinquent in their
payments to Ford.

More than a year after receiving their discharge, the debtors attempted
to bring a class action suit against Ford for improper debt collection
practices. Their complaint alleged that Ford regularly solicited
reaffirmation agreements from debtors, failed to file signed agreements
with the court and used unfiled agreements to collect money from debtors
even though the agreements were unenforceable and the debts discharged.
The debtors alleged Ford's conduct violated Sections 362 and 524, as well
as state law.

The district court granted Ford's motion to dismiss the debtor's case.
The 6th Circuit affirmed.

             No Private Right Of Action Under Section 524

First, the appellate court ruled that Section 524 does not impliedly
create a private right of action for violations of the discharge
injunction and Section 105 does not allow courts to create remedies under
Section 524.

"The recognition of a private right of action requires affirmative
evidence of congressional intent in the language and purpose of the
statute or in its legislative history," the court said. Section 524(a)(2)
enjoins creditors' efforts to collect discharged debts. The traditional
remedy for violations of an injunction is a contempt proceeding, not a
class action lawsuit. The other part of Section 524 relied on by the
debtors - Section 524(c) - does not proscribe any conduct but merely sets
forth the conditions that must be met for a reaffirmation agreement to be
enforceable. The consequence of failing to satisfy these conditions is
that the agreement is rendered unenforceable.

Not only did the court not find an intent to create a private remedy in
Section 524's language, it could not find one in the section's
legislative history.

"Congress amended the Bankruptcy Code in 1984 to provide an express right
of action under the automatic stay provision of 11 U.S.C. Section
362(h)," the court noted. "It did so because reliance on the contempt
power to remedy violations of Section 362 had been widely criticized. ...
Congress amended Section 524 at the same time it amended Section 362, but
no private right of action was added in Section 524. The contrast, we
think, is instructive."

       Not Filing Reaffirmation Agreement Did Not Violate Stay

The private right of action under Section 362(h) was of no benefit to the
debtors because the 6th Circuit found that Ford's action did not run
afoul of the automatic stay.

The debtors said they wanted to reaffirm their debt. Ford sent them an
agreement consistent with that stated intention. The agreement was
reasonable and was accepted by the debtors and their counsel.
Characterizing Ford's actions as a violation of Section 362 misconstrues
what happened, the court said.

"It would be fair to infer from the facts alleged in the complaint that
Ford did not intend to file the reaffirmation agreement. But Ford's plans
in this regard are irrelevant, given the facts that the [debtors] were
represented by an attorney, that they had previously stated their intent
to reaffirm the debt, that they reaffirmation agreement was reasonable on
its face, and that Ford was not guilty of harassment," the court said.

                      No State Law Relief

The appellate court also agreed with the district court that the debtors
could find no relief under state law because those provisions were
preempted by the Bankruptcy Code. The relief requested by the debtors
presupposes a violation of the Bankruptcy Code. "Permitting assertion of
a host of state law causes of action to redress wrongs under the
Bankruptcy Code would undermine the uniformity the Code endeavors to
preserve and would stand as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress," the 6th
Circuit concluded. (Consumer Bankruptcy News, December 26, 2000)


CANADA: Immigrant with Deadly TB Launches Suit for Wrong Landing
----------------------------------------------------------------
An immigrant who exposed hundreds of Hamilton residents to a deadly
strain of drug-resistant tuberculosis has launched a $500 million lawsuit
against the federal government for wrongly allowing him to come to
Canada.

Gaspare Benjamin, 37, of the Dominican Republic, is suing, along with his
Canadian wife, Hilary Lomas, and friends Julio Rodriguez and Mickey
Medina. All three were infected by Benjamin after he immigrated to Canada
in December, 1999.

His contagious TB remained undetected for nearly a year.

One of Benjamin's lawyers, David Smye, expects that more of the 92 people
possibly infected and 1,500 others potentially exposed to the man will
join the class-action lawsuit against the federal government, two unnamed
doctors working for Citizenship and Immigration Canada, and physician Dr.
Margaret Krol-Szpakowski. "I think all of them share a sense of outrage,"
Smye said. "They were infected and they shouldn't have been."

A notice of action filed Dec. 18 claims immigration officials and Krol-
Szpakowski were negligent for "failing to properly assess and test"
Benjamin. It states they "knew or ought to have known (he) would be a
danger to public health" and his illness could "cause excessive demands
on health or social services."

These allegations have not been proved in court. Smye said a statement of
claim is to be filed within 10 days.

Lomas would not comment on the lawsuit when contacted at West Park
Hospital in Toronto, where the couple are being treated, but said, "The
treatment is working and we're hoping to be home in a month."

Krol-Szpakowski was unavailable for comment yesterday, and Citizenship
and Immigration Canada refused to discuss the case. But the ministry has
already admitted that a string of errors led to Benjamin being allowed to
come to Hamilton to join his wife.

Smye said Benjamin is entitled to join the lawsuit because he should have
been promptly diagnosed and treated. (The Toronto Star, December 29,
2000)


CHEMICAL LEAMAN: Officers Cannot Undo Defective Merger, Pa. Ct Says
-------------------------------------------------------------------
Officers Cannot Undo Defective Merger, Avoid Challenge, Says Pa. Court In
an issue of first impression, a Pennsylvania state court judge found that
officers and directors of Chemical Leaman Corp. cannot just nullify a
merger that failed to comply with Pennsylvania's Business Corporation Law
because such flawed transactions are "voidable," rather than void
outright. The court said that it would defeat the purpose of the PBCL to
allow executives to simply undo a flawed transaction and thus shield
themselves from liability. (Corporate Officers and Directors Liability
Litigation Reporter, November 6, 2000)


EAGLE GLOBAL: EEOC Seeks to Join Employment Discrimination Lawsuit
------------------------------------------------------------------
The United States Equal Employment Opportunity Commission ("EEOC") on
December 29, 2000 moved to intervene in a nationwide class action lawsuit
filed in the United States District Court in Philadelphia against one of
the largest freight delivery services in the nation, Eagle Global
Logistics ("Eagle"), a company formerly known as Eagle USA Airfreight,
Inc.

The EEOC filed formal papers this morning in the United States District
Court for the Eastern District of Pennsylvania (Philadelphia) seeking to
intervene in the case of Augustine Dube, et al. v. Eagle Global
Logistics. The case could affect more than 1000 current, former and
potential employees of Eagle.

The suit, filed as a class action by eight Black, Hispanic and female
plaintiffs on behalf of numerous class members, alleges that Eagle has
discriminated against African-Americans, Hispanics and women in its
hiring, promotion and compensation practices, and that Eagle has
subjected African- Americans, Hispanics and women to a hostile work
environment.

Eagle is a publicly traded company on the Nasdaq as "EAGL."

Eagle maintains offices in cities across the country including New York,
Philadelphia, Atlanta, San Francisco, Los Angeles, Chicago, Kansas City,
Houston, Dallas, Nashville and Miami.

As part of its effort to become part of the existing lawsuit brought by
the eight named plaintiffs on behalf of a class of more than 1000 people,
the EEOC is asserting, after a two and one-half year investigation
resulting in an extensive finding, that Eagle has violated the Equal Pay
Act, Title VII of the Civil Rights Act of 1964, as amended, and the Age
Discrimination in Employment Act. Eagle violated these federal laws,
according to the EEOC's Complaint, by paying its female employees at wage
rates which are less than the rates paid to its male employees performing
substantially equal work; by underpaying Black, Hispanic and female
employees relative to White male employees; by discriminating against
older female and African-American employees and applicants for
employment; and by unlawfully constraining promotional and transfer
opportunities for Black, Hispanic and female employees. As examples of
the alleged discriminatory attitudes of Eagle management, the EEOC's
Complaint cites the following contentions of witnesses:

* members of Eagle management used racial slurs to describe African-
  Americans;

* Eagle management discouraged the hiring of women by claiming that
  there would be too much "hormonal activity," that women would become
  pregnant or that male employees would not work for a woman; and

* Eagle's president revoked a job offer as soon as he realized that the
  qualified applicant was an African-American female.

In addition to the allegations of unlawful employment discrimination, the
EEOC asserts that Eagle destroyed relevant documents during the
government's two and one-half year investigation of Eagle's employment
practices.

Discovery in the existing lawsuit has revealed that Eagle shredded
original job applications after the EEOC began its investigation. Some of
these applications were submitted by minorities just a few months before
being destroyed. Federal law requires that companies, like Eagle, must
retain applications for at least one year.

The federal court in Philadelphia has already denied two motions filed by
Eagle to dismiss individual plaintiffs' suits, and has issued an order
barring Eagle from retaliating against employees who attempt to protect
their rights under federal anti-discrimination laws.

The existing class action lawsuit was filed by a team of law firms led by
the Washington, D.C. office of Provost & Umphrey, one of the nation's
most successful plaintiffs litigation firms. Provost & Umphrey served as
counsel for the State of Texas in its litigation to recover billions of
dollars from the tobacco industry. The firm also served as counsel in the
largest series of cases ever brought under the Federal False Claims Act,
resulting in the recovery of hundreds of millions of dollars in alleged
unpaid oil royalties to the federal government.

"The government's intervention in this litigation against Eagle is a
signal that the issues before the Court are of national importance to a
large number of employees," said Reuben A. Guttman, counsel for the
plaintiffs in the case.

The EEOC issued its own press release, which contained the following
comments and statements:

Jim Sacher, Regional Attorney of the EEOC's Houston District Office and
lead counsel for the government in this matter, noted "This case is
particularly appropriate for involvement by EEOC since the evidence
indicates that Eagle's unlawful practices have affected scores of
employees and applicants for employment across the country." Mr. Sacher
further stated that "EEOC participation in this lawsuit will ensure that
appropriate injunctive relief is fashioned to correct past discrimination
and prevent future discriminatory conduct; through our intervention, we
seek to represent the public interest and to enable victims of Eagle's
discrimination to secure a just remedy for the unlawful employment
practices to which they have been subjected."

H. Joan Ehrlich, Director of the EEOC's Houston District Office, stated
that "the EEOC will not tolerate discrimination in the workplace,
particularly when the discrimination goes so far as to become corporate
policy."

Rudy L. Sustaita, Senior Trial Attorney at the EEOC's Houston District
Office, stated that "it is unacceptable that Eagle for years has denied
equal employment opportunities based on race, national origin, sex, and
age."

The EEOC enforces Title VII of the Civil Rights Act of 1964, as amended
by Title I of the Civil Rights Act of 1991, which prohibits employment
discrimination based on race, color, religion, sex, or national origin,
and prohibits employers from retaliating against those who oppose the
practices made illegal by Title VII. Additionally, the EEOC enforces the
Age Discrimination in Employment Act; the Equal Pay Act; Title I of the
Americans with Disabilities Act, which prohibits entities in the private
sector and state and local governments from discriminating against
individuals; and prohibitions against discrimination in the federal
sector affecting individuals with disabilities. Further information about
the Commission is available on the agency's Web site at
http://www.eeoc.gov.

The government's efforts have been coordinated by the EEOC's Houston
Regional Attorney, Jim Sacher. He may be reached at 713-209-3398,
209-3390 or 209-3362.


FIRST FAMILY: 11th Cir Finds Clause on Arbitration OK under TILA, ECOA
----------------------------------------------------------------------
Can consumers be required to sign away their rights to litigate claims
arising under the Truth in Lending Act as a condition of obtaining a
loan? The 11th U.S. Circuit Court of Appeals came one step closer to
answering that question in the affirmative when it held that a lender's
requirement that credit applicants sign arbitration agreements as part of
the loan process does not violate Section 1691(a)(3) of the Equal Credit
Opportunity Act. (Bowen v. First Family Financial Services Inc., No.
97-01279-CV-S-N (11th Cir. 11/22/00).)

                        Loan Requirements

Ozie Bowen and Ethel Ford separately obtained small consumer loans from
First Family Financial Services Inc. In order to obtain the loans, First
Family required them to sign arbitration agreements in which they
consented to arbitrate "all claims and disputes" with the loan company,
including "any claim or dispute based on federal or state statute." Bowen
and Ford sued First Family, alleging that the TILA grants consumers a
non-waivable right to obtain judicial, as distinguished from arbitral,
redress of statutory violations, including the right to pursue class
actions. The debtors argued First Family's requirement that they sign
arbitration agreements violated the ECOA because it forced them to waive
their right to litigate TILA claims in order to obtain credit.

The debtors' complaint sought actual and statutory damages, as well as
declaratory and injunctive relief. The court noted that, other than their
challenge to the arbitration agreement requirement, the debtors did not
claim that First Family violated a substantive provision of the ECOA, the
TILA or any other provision of the Consumer Credit Protection Act.

                      Right to Litigate

The court began its analysis by noting that Section 1691(a)(3) of the
ECOA makes it unlawful for a creditor to discriminate against any credit
applicant who has "in good faith exercised any right" under the CCPA. The
TILA is part of the CCPA, and it imposes disclosure obligations upon
creditors and authorizes consumers to recover both actual and statutory
damages when a creditor makes inaccurate or inadequate disclosures. The
debtors argued that the TILA thus creates a "right to litigate," both
individually and as a class, statutory claims for disclosure violations.
The debtors further argued that First Family discriminated against them
by requiring them to agree to arbitrate any claims arising under the
CCPA, including any claims under the TILA.

                    Congressional Intent

The court disagreed, holding that "Congress did not create a non-waivable
right to pursue TILA claims in a judicial forum, either individually or
through a class action." The court rejected the debtor's contention that
the legislative history of the TILA evinced an intent by Congress that
claims initiated as class actions be exempt from binding arbitration,
relying on the 3rd U.S. Circuit Court of Appeals' similar conclusion in
Johnson v. West Suburban Bank, 225 F.3d 366 (3rd Cir. 2000) (see Consumer
Financial Services Law Report, Sept. 15, 2000, p. 1).

The court also rejected the debtors' contention that consumer arbitration
agreements undermine a "critical statutory enforcement mechanism of the
TILA." The court concluded that the debtors did not give up any rights or
claims by signing the arbitration agreements, but "simply" agreed to move
TILA claims, and all others, into an arbitral rather than a judicial
forum.

                   Discrimination Claims

The court also disagreed with the debtors' claim that First Family
discriminated against them for exercising their rights under the CCPA.
The court emphasized that the debtors did not allege that they had
objected to the arbitration agreement before signing the loan documents,
or that they were refused a loan or offered unfavorable credit terms
because of their objections. The court concluded that "in order to
establish the discrimination element of a Section 1691(a)(3) claim, it
may be necessary for the plaintiff to show either that the creditor
refused to extend credit to the applicant or that it extended credit but
on less favorable terms."

                         Standing

The debtors contended that, even if requiring applicants to sign
arbitration clauses as a condition of credit was not a violation of the
ECOA, the agreements they signed were unenforceable. The court found
that, as the debtors had not shown a substantial likelihood that First
Family would compel arbitration, they lacked standing to argue that the
agreements were unenforceable. (Consumer Financial Services Law Report,
December 26, 2000)


FIRST FAMILY: Law Expert Says Ruling Renders Classwide Relief Difficult
-----------------------------------------------------------------------
Arbitration law expert Alan S. Kaplinsky of Ballard, Spahr, Andrews &
Ingersoll in Philadelphia stated that the recent 11th U.S. Circuit Court
of Appeals' decision of Bowen v. First Family Financial Services Inc.,
No. 97-01279-CV-S-N (11th Cir. 11/22/00), "will make it more difficult
for plaintiffs' lawyers to obtain classwide relief in a Truth-In-Lending
claim against a lender that has adapted an arbitration program." The 11th
Circuit held that a named-plaintiff in a Truth In Lending Act case can be
compelled to arbitrate his individual claim even if the arbitration will
not provide him with classwide relief.

Kaplinsky observed that the 11th Circuit in Bowen joined the 3rd U.S.
Circuit Court of Appeals in holding that a named-plaintiff in a TILA
class action can be compelled to arbitrate his individual TILA claim. In
Johnson v. West Suburban Bank, 225 F.3d 366 (3rd Cir. 2000), the 3rd
Circuit ruled that a consumer can contract away his ability to pursue a
class action and that a creditor can compel arbitration of claims under
the TILA and the Electronic Funds Transfer Act (see Consumer Financial
Services Law Reporter, Sept. 15, 2000, p. 1). After the 11th Circuit's
holding, it is clear there is no "non-waivable right to litigate claims
brought under TILA," Kaplinsky stated.

The Bowen court recognized Kaplinsky's experience with consumer financial
services arbitration agreements, citing in a footnote the May 2000
findings of Kaplinsky and Mark J. Levin that consumer financial services
companies implemented arbitration programs with their customers at a
record pace in 1999.

Kaplinsky also noted that oral argument in Bowen took place more than one
year ago, and observers speculated that the 11th Circuit was holding the
case pending the Supreme Court's anticipated opinion in Randolph v. Green
Tree Financial Corp. (Consumer Financial Services Law Report, December
26, 2000)


FOUNDRY NETWORKS: Cauley Geller Announces Securities Suit in California
-----------------------------------------------------------------------
The Law Firm of Cauley Geller Bowman & Coates, LLP announced on December
30 that it has filed a class action in the United States District Court
for the Northern District of California on behalf of all individuals and
institutional investors who purchased the common stock of Foundry
Networks, Inc. (Nasdaq:FDRY) between October 18, 2000 and December 19,
2000, inclusive (the "Class Period").

The complaint charges that the Company and certain of its officers and
directors violated the federal securities laws by concealing and
misrepresenting the problems it was experiencing due to the problems many
of its customers were having raising money and the impact this was
causing and would cause on Foundry's future revenue growth. The complaint
alleges Foundry concealed this information so that the individual
defendants could sell additional shares of their Foundry stock before the
bottom fell out of Foundry's stock price. Thus, according to the
complaint, defendants made positive but false statements about Foundry's
business and future revenues during October and November 2000,
artificially inflating the price of the Company's stock during the Class
Period.

On December 19, 2000, after the market closed, Foundry announced that in
the fourth quarter 2000 it would post revenue and EPS declines from the
prior quarter. The complaint alleges that this was directly contrary to
what Foundry's CEO had told The Wall Street Transcript just weeks before.
This disclosure shocked the market, causing Foundry's stock to decline
significantly on December 20, 2000.

Contact: Cauley Geller Bowman & Coates, LLP, Boca Raton Sue Null or
Charlie Gastineau, 888/551-9944


INMATES LITIGATION: MI Lawsuit over Rights Drags on for 12 Years
----------------------------------------------------------------
Mail-order catalogues, postage stamps, gloves and old typewriters were
key issues at the latest hearing in a 12-year prison lawsuit that has
cost the state at least $1.5 million and is probably Michigan's
longest-running court case.

Up for debate this month: notary seals, ink pads and the broader question
of whether some prisoners still should be permitted to act as notary
publics behind bars.

The Cain case, notorious for revealing the minutiae of prison life and
raising the hackles of Gov. John Engler, enters a new phase this year. It
may be in its final stage, after nearly 100 witnesses -- many of them
prisoners -- and dozens of court orders from Judge James Giddings of
Ingham County Circuit Court.

"I don't want to still be doing this case at my retirement," said
Assistant Atty. Gen. Peter Govorchin, who has been on the case since
1988.

At the start, it was a dispute initiated by four lifers over property
rights. But it soon grew into a broad class-action suit involving all
47,000 state inmates and the prison classification system -- the criteria
by which the department shifts prisoners between levels of security.

Corrections officials and Engler have accused Giddings of trying to
micromanage the prison system by holding hearings on nitpicky issues.
They have been accused of stomping on human rights, ignoring court orders
and continuing to supply shoddy clothes.

"The question here is 'who's going to have control over Michigan prisons:
Is it going to be the Department of Corrections or Judge Giddings?'" said
Corrections Department spokesman Matt Davis. "He has shown, through his
rulings, a greater deference for the concerns of prisoners than for
Michigan taxpayers."

Giddings said he can't discuss pending matters, but bristles at the
criticism. He cited his 1998 finding that the brown jersey gloves being
provided to prisoners were inadequate. "They can't put inmates out in the
cold without adequate gloves," he said. "One guy got a terrible case of
frostbite on his hands. The law requires a certain base level of human
decency. True, they're prisoners, but the Corrections Department isn't
above the Constitution."

In fact, the judge's biggest rulings have backed the government. Prison
officials can control how much property inmates are allowed to keep and
what they wear, he decided. After those rulings, officials removed tons
of personal gear from cells and put all inmates in striped uniforms. Most
had been allowed to wear their own clothing.

A mid-December hearing showed why law-abiding Michiganians have no reason
to envy the regimented lives of those behind bars. Things taken for
granted on the outside had inflated again into issues hashed out in
court.

                              What's Next

The long Cain prisoner rights case against the Michigan Department of
Corrections could end this summer after 12 years of court battles.
Pending this month is a hearing regarding a new law that prohibits
prisoners from acting as notary publics. Then there will be a series of
hearings on other matters related to the two remaining major issues: how
prisoners are classified and how much the state can restrict prisoner
access to legal resources. (The Detroit News, January 1, 2001)


LAIDLAW, INC: Kirby McInerney Announces Securities Lawsuit in New York
----------------------------------------------------------------------
On December 29 by Kirby McInerney & Squire LLP announced Class Action
Lawsuit on Behalf of All Persons Who Purchased Call Options or Sold Put
Options With Respect to Laidlaw, Inc. Bonds:

Please take notice that the law firm of Kirby McInerney & Squire, LLP has
commenced a class action lawsuit in the United States District Court for
the Southern District of New York on behalf of all persons who purchased
call options or sold put options or other similar securities exercisable
for the bonds of Laidlaw, Inc. (NYSE: LDW, TSE: LDM) or the cash value
thereof, at any given time, during the period September 24, 1997 through
and including May 12, 2000 (the "Class Period").

The complaint charges defendants Laidlaw, Inc. and certain of its
officers and directors with violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. Also named as defendants in the action
are the Company's independent auditors during the Class Period, as well
as several underwriters of bond offerings. The lawsuit seeks to recover
losses suffered by individual and institutional investors who purchased
Laidlaw bonds during the class period, excluding the defendants and their
affiliates.

Contact: Kirby McInerney & Squire, LLP Peter S. Linden, Esq. Richard L.
Stone, Esq. Mark A. Strauss, Esq. Shan Anwar, Paralegal 212/317-2300 or
888/529-4787 sanwar@kmslaw.com


LINCOLN LIFE: Settles with Benefits and Claim Process to Policyholders
----------------------------------------------------------------------
Lincoln National Corporation (NYSE:LNC), the parent company of the
Lincoln Financial Group of companies, announced on December 29 that its
subsidiary, Lincoln National Life Insurance Company (Lincoln Life), has
entered into an agreement to settle a class action lawsuit, which was
previously reported in the CAR, and, in a separate matter, has received
payment for an amendment to a prior acquisition agreement.

Fourth quarter earnings will include a charge of $28.3 million after-tax
related to the settlement of the class action lawsuit and income of $28
million after-tax for amending a prior acquisition agreement. These two
separate and unusual transactions will virtually offset each other in
fourth quarter earnings.

Lincoln Life has entered into an agreement to settle a pending class
action lawsuit by providing benefits and a claim process to policyholders
who purchased universal life and participating whole life insurance
policies between Jan. 1, 1981 and Dec. 31, 1998. The settlement covers
approximately 431,000 policies.

The settlement, which is subject to court approval, includes all
universal life class action suits pending against Lincoln Life.

Lincoln National Corporation operates under the marketing name of Lincoln
Financial Group, with headquarters in Philadelphia. Lincoln Financial
Group has consolidated assets of over $103 billion and annual
consolidated revenues of $ 6.8 billion.


MCKESSON HBOC: 9th Cir Rejects Law Firm's Appeals on Shareholder Contact
------------------------------------------------------------------------
The U.S. Court of Appeals for the Ninth Circuit has dismissed the appeals
of Much Shelist Freed Denenberg Ament & Rubenstein regarding the law
firm's solicitation of shareholders in the securities fraud class action
against McKesson HBOC Inc. The court ruled that the orders issued by the
Northern District of California restricting the contact are not
appealable injunctions or reviewable under the collateral-order doctrine.
In re McKesson HBOC Inc. Securities Litigation, Nos. 00-16142, 00-16495
and 00-16535 (9th Cir., Sept. 18, 2000).

In the suit, HBOC is accused of improperly recognizing revenue for three
years, prior to being acquired by McKesson. In 1999, the district court
consolidated 53 complaints against the merged entity and appointed the
New York State Pension Fund Group as lead plaintiff. The court also
approved Bernstein Litowitz Berger & Grossmann and Barrack Rodos & Bacine
as lead counsel.

Thereafter, Much Shelist contacted shareholders to see if they wanted to
opt out of the class, which had not been certified, and file individual
suits challenging the allegedly false proxy statements endorsing the
McKesson/HBOC merger.

The retirement fund opposed the mailing, asserting that it was misleading
and counter to the purposes of the Private Securities Litigation Reform
Act regarding who should control securities litigation -- the
shareholders or plaintiff attorneys.

In May, the district court ordered Much Shelist to refrain from any
further "potentially misleading" com munications with the class and
authorized the lead plaintiff to issue a curative notice regarding class
membership.

Much Shelist appealed the court orders arguing, among other things, that
their clients would be irreparably harmed if review was not granted and
that its First Amendment rights had been violated.

The pension fund countered that the orders were not appealable because
Much Shelist is not a party to the action and that the orders do not
grant any of the substantive relief sought in the complaint.

Moreover, the fund asserted that numerous federal appellate courts have
held that order regulating class communications are not sufficiently
important to be reviewed prior to final judgment. "This is not a
sufficiently important issue to warrant immediate review, and granting
review of such a determination would unnecessarily entangle this court in
the minute details of the litigation below," said the fund.

The circuit court agreed, holding that it lacks jurisdic tion over the
appeals as they "relate only to the conduct or progress of litigation
before the district court." (Corporate Officers and Directors Liability
Litigation Reporter, November 6, 2000)


NATIONAL TREASURY: Union and DOJ Progress in Special Rates Payment Talk
-----------------------------------------------------------------------
The National Treasury Employees Union and the Justice Department have
"finally" made progress in seeking an agreement on how to pay current and
former "special rate" employees the millions of dollars in back pay owed
them.

But while "some encouragement can be taken" from discussions, "there
still are a lot of outstanding issues," said NTEU President Colleen M.
Kelley, following a status conference before U.S. District Court Judge
John Garrett Penn. Kelley said she hoped that government lawyers would
"continue in the same spirit" as negotiations proceed.

Penn, who set another status conference for Dec. 18, ordered the Dec. 7
session in October when NTEU and government lawyers appeared before him
to move the long-running case to conclusion.

The class action suit covering some 188,000 special rate employees dates
back to 1983 when NTEU challenged an Office of Personnel Management
regulation blocking annual salary increases for such employees.

In January 1998, the federal court determined that special rate employees
- those paid a special wage to work in hard-to-fill jobs - were denied
salary increases in the 1980s due to an illegal OPM regulation. The U.S.
Court of Appeals for the Federal Circuit determined that affected
employees were owed back pay, but remanded the case back to district
court to determine the proper award. (Federal Human Resources Week,
December 26, 2000)


NETWORK ASSOCIATES: Milberg Weiss Files Securities Lawsuit in California
------------------------------------------------------------------------
Milberg Weiss (http://www.milberg.com/network/)announced on December 29
that a class action has been commenced in the United States District
Court for the Northern District of California on behalf of purchasers of
Network Associates Inc. (NASDAQ:NETA) common stock during the period
between July 19, 2000 and Dec. 26, 2000 (the "Class Period").

Network Associates is a supplier of security and availability solutions
for e-businesses. The complaint alleges that Network Associates relied
heavily on its distributors to purchase and resell its product to end
users. Many of these distributors would not agree to accept new shipments
and by the beginning of the Class Period, Network Associates'
distributors were "returning" tens of millions of dollars worth of the
company's product. Defendants knew this was then having a dramatic
adverse impact upon, and would continue to severely impair Network
Associates' future revenue growth. However, defendants wanted to spin off
their Japanese subsidiary before the bottom fell out of Network
Associates' stock price. Thus, defendants continued to make positive but
false statements about Network Associates' current business and future
prospects throughout the second half of 2000. As a result, Network
Associates' stock traded as high as $27.

On Dec. 26, 2000, after consulting with the company's auditors, Price
Waterhouse Coopers LLP, defendants were forced to announce that for the
fourth quarter 2000, Network Associates would post significant revenue
and earnings per share losses and would change the way the company
accounted for its sales to distributors. Network Associates also revealed
that its Board of Directors had made arrangements to replace its Chairman
and Chief Executive Officer in mid-November and that it had also accepted
the resignations of its Chief Financial Officer and President. This was
directly contrary to what Network Associates' CEO had told analysts and
shareholders just weeks before.

This disclosure shocked the market, causing Network Associates stock to
decline to as low as $3.25 per share before closing at $4.50 per share on
Dec. 27, 2000, on record volume of more than 25 million shares, wiping
out hundreds of millions of dollars of shareholder value.

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


NETWORK ASSOCIATES: Rabin & Peckel Announces Securities Suit in CA
------------------------------------------------------------------
The law firm Rabin & Peckel LLP announces that a class action complaint
has been filed in the United States District Court for the Northern
District of California on behalf of all persons or entities who purchased
Network Associates, Inc. common stock (Nasdaq: NETA) between July 19,
2000 and December 26, 2000, inclusive (the "Class Period").

The Complaint alleges that Network Associates and certain of its officers
and directors violated the Securities Exchange Act of 1934 by making a
series of materially false and misleading statements concerning the
Company's financial results during the Class Period. In particular, it is
alleged that during the Class Period the Company failed to disclose that
it was experiencing significant product returns from its distributors.
Instead it made positive, but false, statements about the Company's
business and future financial results during the Class Period. The
Complaint alleges that as a result of these false and misleading
statements the price of Network Associates common stock was artificially
inflated throughout the Class Period causing plaintiff and the other
members of the Class to suffer damages.

Contact: RABIN & PECKEL LLP Elana M. Bourkoff (800) 497-8076 (212)
682-1818 Fax: (212) 682-1892 email@rabinlaw.com


NY CITY: Addict's Suit Claims Police Ignore Needle-Swap Law
-----------------------------------------------------------
James Roe, as he is identified in his lawsuit against New York City, was
21, homeless and a heroin addict when he was searched and arrested in the
West Village on a spring afternoon in 1999. He was carrying a syringe
from a needle-exchange program on the Lower East Side.

He said he was also carrying a card showing that he was enrolled in the
program, in a storefront on Avenue C, and could lawfully carry syringes
he picked up there. But the card was of no help. When he was released the
next morning, "I was starting to sweat and shake because I was way past
my last fix." He left with two cigarettes and a court summons on a charge
of criminal possession of a hypodermic instrument.

And the card that was supposed to protect him was gone, he said: the
officer he gave it to had cut it up.

New York, like many states, carved an exception to its drug paraphernalia
laws when it became clear in the early 1990's that needle sharing was
spreading H.I.V. and hepatitis. But the suit against New York City, and a
similar case in Connecticut, contend that the exception is often ignored,
innocently or willfully, by officers on the street. "They get a kick out
of it," the New York plaintiff said in a telephone interview from New
Jersey, where he now lives. "They say, 'You stupid junkie.' I know I'm
stupid for shooting dope, but they just like to watch you get sick."

The district attorney's office declined to prosecute, but the man is
seeking damages for his arrest. In his suit, filed in Federal District
Court in Manhattan, he remains anonymous, with the agreement of the
corporation counsel's office and the court, and he agreed to speak for
publication only on the condition that his name not be used.

His lawyer, Corinne Carey of the Urban Justice Center, a Manhattan
organization that provides legal services to the poor, said he would be
in danger from users and dealers if he were identified.

His story and those of two addicts in Bridgeport, Conn., all disputed by
the police, are simple allegations of unconstitutional search and
seizure. But in effect they ask for a resolution of disparate policies on
public health and law enforcement. "These two cases are going to be a
real litmus test of how this country is going to deal with the whole
question," said Scott Burris, a law professor at Temple University. "It
doesn't make sense for the state to decide we have a policy of
encouraging needle exchanges and a policy of arresting people who have
needles."

The people who run needle exchanges hope that litigation will stop
arrests of the people who use them. Even more, they hope that court
intervention will quiet addicts' fears of using the exchanges, because
the consequences of one shared needle can be staggering. As one heroin
addict in California told interviewers for an academic study, "I would
rather get AIDS than go to jail."

In Connecticut, possession of a syringe is legal, but a class action suit
in Federal District Court there maintains that the police harass people
who use the Bridgeport Exchange Program, sometimes charging them with
drug possession on the basis of residue in their used syringes.

In November, a judge in Federal District Court issued a temporary order
barring arrests of exchange participants carrying dirty needles.

Some medical and legal experts do not support needle exchanges at all,
and dispute the broader strategy known as harm reduction, which
encourages addicts who will not quit to adopt the safest practices
possible. In a few states, including New Jersey, needle exchanges remain
illegal. And even some of those people who run exchanges, most of them
patched together by social service agencies using anything from shopping
carts to storefronts, do not welcome a lawsuit that could bring a
backlash against their tenuous legitimacy.

Their cause has inched forward as exchanges have been shown to reduce the
incidence of H.I.V. infection by about a third among drug users. "We've
seen the proliferation of needle-exchange programs to areas even like the
Deep South in church basements where church members are handing out
needles," said Daniel Abrahamson, the legal director of the Lindesmith
Center, a national drug policy organization.

And as the new year starts, New York becomes the eighth state --
Connecticut was the first -- to allow over-the-counter sales of syringes
in pharmacies.

But not everyone will go to pharmacies, although they charge only 20 to
30 cents for a syringe -- the street price can easily be 10 times higher
-- or to needle exchanges. In Connecticut, many addicts continue to avoid
both, for fear of raising police suspicion and being caught with a dirty
needle.

Donald Grove, the development director of the Harm Reduction Coalition,
an umbrella group of drug treatment providers that is based in New York,
said addicts "may be extremely wary of carrying the syringe they need if
they've already been busted."

He said that when he started working in "this weird realm" in 1994, "I
talked to a lot of cops, and they said if they want to bust a person
they're going to bust them whether they have a card or not."

Mr. Grove started collecting reports from needle-exchange participants
who had been arrested and charged under the drug paraphernalia laws, and
he faxed more than 100 reports to the city health commissioner.

Soon afterward, police officials issued a directive that participants in
the city's nine state-authorized exchanges not be charged for possessing
a syringe, even when other charges are brought.

But like most advocates for drug users, Mr. Grove maintains that
harassment continues. And Ms. Carey, the lawyer in the New York lawsuit,
said that in a brief survey she did at the Lower East Side Harm Reduction
Center, where her client got his needles, 15 of the 23 people questioned
said they had been stopped by the police in the previous year. Of the 15,
Ms. Carey said, 8 said their cards were not honored and 4 were jailed.

Advocates for needle exchanges allow that officers are usually looking
not for syringes, but for charges that will stick. Ms. Carey's client,
too, said usually "they see your card and tell you to get on your way."

Drew D. Kramer, the executive director of the Lower East Side center,
likened addict and officer to Ralph Wolf and Sam Sheepdog, the cartoon
characters who punched in every morning, exchanged genial greetings and
then clobbered each other until quitting time. "We've had cops bring
people to our door and say, 'Do something with him,' " Mr. Kramer said.

The arrests "come in waves," he said. "The police will come up with some
crackdown and our folks get swept up in the nets."

Police officials did not respond to questions about department policies
on drug arrests. But Ralph Smith, a Police Department spokesman, said a
person found with a syringe would be held "pending an investigation to
find out why the person has a needle." And he said that presenting a card
-- "you can get an ID card from anywhere" -- would not necessarily
suffice.

Since New York prohibits only "unlawful" possession of a syringe, people
who buy needles at pharmacies registered to sell them under the new law
will be protected just as needle-exchange participants have been since
1992. But it is not clear whether they will have to show, if questioned,
that a syringe in their possession came from an authorized source.

As the plaintiff in the New York suit describes his arrest, he was
stopped on West 10th Street near the West Side Highway while the police
had staked out the area for crack sales. He said he was carrying one used
syringe but no drugs.

He said that he showed his needle exchange card but that the officers who
took him to the Sixth Precinct station house did not call the number on
the card. At the station, he said, another officer cut up the card with
scissors. He received a court summons listing charges of drug possession
and possession of a hypodermic instrument. Both charges were later
dropped.

The corporation counsel's office has not filed its response to the suit,
but a spokeswoman, Lorna Goodman, said, "He was arrested because he was
shooting up heroin on the street." Ms. Goodman also said he never showed
a card. She said her office could not provide the arrest report written
that night. A police spokesman said it would take several weeks to obtain
a copy of the report. Ms. Carey said her client would never inject on the
street; because he "passes well," unlike many addicts, she said, he was
able to go into restaurants and inject himself in the bathroom. And in
the interview, he explained, "I don't use dope outside because I don't
want to get caught." (The New York Times, January 1, 2001)


PROVIDIAN FINANCIAL: Agrees to Settle Lawsuits over Marketing Practices
-----------------------------------------------------------------------
Providian Financial Corp. has agreed to pay $105 million and take a $22
million fourth-quarter  charge to settle a series of consumer
class-action lawsuits that alleged "unlawful business practices" in its
marketing and sales procedures. Subject to court approval, the proposed
settlement covers dozens of consumer lawsuits that have been filed
against the San Francisco credit provider since the middle of 1999. Those
suits  have been consolidated into two pieces of litigation, one filed in
California Superior Court in  San Francisco and the other in U.S.
District Court in Philadelphia.

Providian didn't admit any wrongdoing in the settlement plan, which came
out of nine months Of mediation discussions. A spokesman for Providian
said that since last year, Providian has   examined all of its marketing
pitches and created service initiatives that have substantially boosted
customer retention and satisfaction rates.

The suits alleged that Providian violated consumer protection and other
laws in the marketing  and sale of add-on products to its credit cards,
including credit protection and credit-line increases. Robert Green, an
attorney for the customers bringing the suits, said the suits alleged,
among  other things, that consumers were confused by Providian's
"aggressive" sales pitches about so-called price-protection products like
movie coupons. Providian could charge such products to an account under a
"satisfaction guaranteed" plan, leaving customers responsible for
returning unwanted items that they weren't sure they had purchased, he
said.

Under the proposed settlement, more than three million customers could be
eligible for reimbursements, Mr. Green said. The $105 million would cover
attorneys' fees as well as customer restitution in cash and "in-kind
payments."

This isn't the first time Providian has offered to reimburse customers to
settle disputes about allegedly problematic marketing practices. As
previously reported in the CAR, in June, the company agreed to repay
consumers at least $300 million to settle both a lawsuit filed by San
Francisco and an administrative enforcement action taken by the Office of
the Comptroller of the Currency. At the time, it was The largest
settlement ever in an OCC enforcement action.

Providian said the $22 million fourth-quarter charge should subtract
about seven cents a share from earnings. Despite the charge, the company
said it expects to earn 71 cents to 73 cents a share in its fourth
quarter, matching previous guidance. (Dow Jones, December 29, 2000)


PUBLIX SUPER: Settles Employment Race Bias Suit Filed 1977 in Florida
---------------------------------------------------------------------
Publix Super Markets Inc. and the attorneys representing the Plaintiffs
has filed a proposed settlement of a class-action race discrimination
case and sought preliminary approval from the U.S. District Court in
Tampa, Fla. The lawsuit, known as the Middleton case, was filed against
the company in 1997.

The agreement calls for Publix to continue its 1997 Registration of
Interest (ROI) program, whereby associates register interest for
promotions and candidates are selected based on their qualifications.
Publix will continue its system of goals for promotions into management
positions. Due to the ROI program and the goals system, today 8.4% of
Publix's retail management is black, which represents a 31% increase
since 1997. The company will also be expanding its current process for
reviewing discharge decisions to ensure they are fair and in accordance
with company policy.

Publix CEO and Chairman Howard Jenkins said: "The decision to discharge
an associate is based on our rules of unacceptable conduct. Our goal has
always been to ensure fairness and dignity in dealing with these
difficult decisions. Under the agreement, we will formalize and improve
how we review associate discharges."

Under the agreement, $2.25 million will be paid for promotion claims and
$ 5.45 million for discharge claims dating back to 1993.$2.4 million will
be paid to the Plaintiffs' lawyers. Publix estimates that approximately
15,000 of its current and former black retail associates could be
eligible to participate in the monetary distribution.

Publix is the largest employee-owned supermarket chain in the country,
with 1999 sales of $13.1 billion. Currently Publix has 646 stores in
Florida, Georgia, South Carolina and Alabama. It has been named one of
America's top 10 places to work in the book, "The 100 Best Companies to
Work for in America," as well as one of the top companies in Fortune's
recent list of best workplaces.


SYNTHETIC STUCCO: Federal Judge allows NC Homeowners’ Suit against Maker
------------------------------------------------------------------------
North Carolina homeowners may proceed with a class-action lawsuit against
a manufacturer of a synthetic stucco product, a federal judge has ruled.
Senior U.S. District Judge W. Earl Britt certified the class this month
for owners of an estimated 300 to 500 homes across the state who claim
the exterior material traps water inside the walls, rotting wood
structures.

"It's not a victory, but clearly it's a significant step toward victory
for these people," said Raleigh lawyer Gary Jackson, who represents the
homeowners.

Synthetic stucco first surfaced as a widespread problem in 1996 in New
Hanover County, where the first class-action lawsuit was filed in the
state court system.

The federal lawsuit involves a different type of stucco product than the
class-action lawsuit filed in state court, which was settled in January,
allowing homeowners to receive $6 per square foot of damaged exterior, as
previously reported in the CAR.

Lawyers estimated the five major synthetic stucco manufacturers that were
defendants in the state lawsuit would pay tens of millions of dollars
under the settlement agreement. The manufacturers didn't admit liability
and blamed the problems on building contractors.

The state court suit involved a stucco application process called
"exterior insulation finish system," where the stucco is applied to an
insulation material and then affixed to the house. More than 15,000 homes
were treated with EIFS in North Carolina.

In the federal lawsuit, the stucco application is called "direct exterior
finish system," and the stucco is applied directly to the wood sheathing
of a house. Jackson said the federal lawsuit helps those homeowners who
believed they could file claims in the statewide EIFS lawsuit but were
rejected because they actually had DEFS on their homes.

The federal lawsuit was filed against Dryvit Systems Inc., a Rhode Island
company. (The Associated Press State & Local Wire, December 29, 2000)


TOBACCO LITIGATION: R.J. Reynolds Wins FL Trial and Defeats Cert. in PA
-----------------------------------------------------------------------
R.J. Reynolds Tobacco Holdings Inc. won a new trial in a case that had
brought a $ 200,000 judgment against the company in favor of the family
of a deceased Tampa smoker. The cigarette maker also defeated
Pennsylvania smokers' bid for class-action status in a separate case.

Florida state Judge Ralph Steinberg on Thursday threw out the $ 200,000
in compensatory damages the family of Suzanne Jones had been awarded in
his courtroom in October. The jury had declined to award punitive damages
to the family of the 62-year-old mother of one.

In his order, Steinberg said he erred in allowing the jury to see several
depositions, including one from Bennett LeBow, the head of Liggett Group
Inc.'s parent company. LeBow became an industry pariah in 1996 when his
company became the first cigarette maker to settle a health-related
lawsuit. "The publication of these depositions to the jury appeared to be
contrary to due process and fairness to both the defendants and the
deponents," Steinberg wrote. The depositions had been taken for a
different tobacco case, Steinberg said.

On Oct. 26, Florida's Supreme Court ruled that a legislative amendment
allowing the depositions to be admitted was unconstitutional.

If Steinberg had known it was under consideration by the high court, "the
deposition testimony would not have been admitted in evidence," he wrote.

R.J. Reynolds said it was optimistic about the new trial and was
"gratified" with the decision.

Separately, R.J. Reynolds said a Pennsylvania court has declined to grant
class-action status to a lawsuit that had sought to represent all
Pennsylvanians who purchased light or ultra-light cigarettes. The suit
claimed the company misrepresented the health risks of smoking those
types of cigarettes.

The court said a class action would not be feasible since it would need
to look at the individual claims as to why consumers chose to smoke the
light or ultra-light cigarettes, R.J. Reynolds said.

The six jurors in the Jones case, who deliberated for about a day,
decided the company was negligent in making a dangerous product that
caused her death. Jones, who suffered from lung and colon cancer, smoked
for about 42 years.

The case in Steinberg's Hillsborough County courtroom was the first
tobacco trial in Florida since a Miami jury in July assessed $ 145
billion in punitive damages against the industry in a class-action
lawsuit on behalf of hundreds of thousands of smokers in the state. (Los
Angeles Times, December 29, 2000)


TOBACCO LITIGATION: Spaniards Who Lost Voices to Cancer Set for Suits
---------------------------------------------------------------------
Spaniards who lost their voices to throat cancer after years of smoking
plan a series of class-action lawsuits against tobacco companies,
including the Spanish affiliates of U.S. giants R.J. Reynolds and Philip
Morris, attorneys and activists said Friday.

Starting Wednesday, associations representing 4,300 cancer patients will
file separate suits in 14 Spanish cities in a bid to win damages totaling
about $22 million.

That's a minuscule fraction of the $145 billion that Florida smokers were
awarded in July in a landmark ruling against major U.S. cigarette makers,
including R.J. Reynolds and Philip Morris.

The Spaniards want compensation for a very specific purpose: To fund
rehabilitation centers where cancer victims whose larynxes were removed
can receive psychological counseling and learn to speak again.

''We are not interested in money. What we want are services,'' said Jose
Angel Manoso, a lawyer for 650 plaintiffs in Barcelona. His clients are
seeking a lump-sum payment of $2.8 million to leave the tiny rehab center
they rent in Spain's second largest city and buy a more spacious place of
their own, $165,000 a year to run it. Manoso said he and attorneys for a
similar association in the northern city of Leon will file suit
Wednesday.

The other 12 groups will do so by the end of January, once the government
formally grants them status as nonprofit groups, which means if they lose
their suits they don't have to pay court costs. That's important because
these suits will probably take years to decide, Manoso said.

The defendants will be the same each time: The Spanish branches of
Reynolds, Philip Morris and British American Tobacco, plus the
Franco-Spanish tobacco company Altadis, Cita Tobacos de Canarias and
another Spanish firm called Logista.

Gumersindo Rodriguez, president of the Leon association, said groups like
his are essential because Spaniards who undergo laryngectomies surgical
removal of the larynx or voice box get absolutely no postoperative aid
from the government. ''The state health care system carries out the
operation, then leaves you there to rot,'' he said.

They must learn a new way of breathing, through a hole in the neck called
a stoma, which also allows speech techniques that don't involve the vocal
chords. (AP Online, December 29, 2000)


* Law Report Suggests Five Factors to Determine Fairness of Settlement
----------------------------------------------------------------------
To determine whether the proposed class action settlement was fair,
adequate and reasonable under the circumstances, Judge Jay C. Waldman
considered the following five factors in Hall v. Midland Group and
Midfirst Bank, No. 99-3108 (E.D. Pa. 11/20/00):

* The complexity, expense and duration of the litigation.

* The reaction of the class.

* The extent of discovery and the stage of the proceedings.

* The risk of liability.

* The risk of establishing damages.

(Consumer Financial Services Law Report, December 26, 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.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to be
reliable, but is not guaranteed.

The CAR subscription rate is $575 for six months delivered via e-mail.
Additional e-mail subscriptions for members of the same firm for the
term of the initial subscription or balance thereof are $25 each.  For
subscription information, contact Christopher Beard at 301/951-6400.


                    * * *  End of Transmission  * * *