CAR_Public/010110.MBX               C L A S S   A C T I O N   R E P O R T E R

             Wednesday, January 10, 2001, Vol. 3, No. 7

                              Headlines

ASCHE TRANSPORTATION: The Desmond Law Firm Investigates Stock Price Fall
ATCHISON CASTING: Schubert & Reed Announces Securities Fraud Suit in KS
CALIFORNIA: Smokers Rights Groups Challenge Tobacco Settlement
CALIFORNIA: Students, Parents and Groups Challenge Allocation of Funds
CALIFORNIA: Taxpayer Appeals in Solar Energy System Tax Refund Action

CATTLE PRICES: AP Presents Scenario on Cattle Feeder’S Nationwide Fight
CD COMPANIES: Legal Battle Over Prices Lands Before Portland Judge
CHICAGO BOARD: Ed Employees Challenge Same Sex Partners' Health Benefits
ELECTION SYSTEMS: Cohen, Milstein Files Cases Against Officials and Cos.
HOLOCAUST VICTIMS: Fed. Special Master's Report Clears Pact With Germans

KAISER PERMANENTE: Lawsuit Filed to Stop Patient Pill-Splitting
LOUISIANA: Gay Rights Activists Appeal Seeking to Overturn Sodomy Law
MOBIL OIL: LA High Court Finds Pollution Exclusion Inapplicable In Doerr
MONSANTO CO: Corporate Legal Times’ Review of GM Suit - Mosquito? ICBM?
MONTREAL: Jewelry Designer Sells Pins to Appeal in Parking Ticket Case

NORTHWEST AIRLINES: Settles Suit on 1999 Flight Changes Due to Snowstorm
OAKWOOD HOMES: Announces Dismissal of Shareholder Lawsuit By NC Ct
PRUDENTIAL: Canada Ct Denies 1st Ever Cert. Motion Re Vanishing Premium
SECURITY CAPITAL: Hotel Employees Union To Oppose Bid for SC-U.S. Realty
TOBACCO LITIGATION: Opening Arguments Under Way in W. VA Trial

WINDSTORM UNDERWRITING: FL Suit Seeks to Block Rates Arbitration Ruling
ZARING NATIONAL: Sued over Mold Related Issues in OH Luxury Home Sites

                            *********

ASCHE TRANSPORTATION: The Desmond Law Firm Investigates Stock Price Fall
------------------------------------------------------------------------
The Desmond Law Firm is investigating the events surrounding the decrease
in Asche Transportation Services, Inc (Nasdaq:ASHE) stock price.
Previously the Company indicated that it might be restating income and
expenses. Such a restatement would be necessary to comply with Federal
Securities Laws and to comply with Generally Accepted Accounting
Principles ("GAAP").

The firm seeks relevant information from purchasers of Asche
Transportation Services, Inc between March 31, 1998 and February 28,
2000.

Contact: The Desmond Law Firm, West Palm Beach Leo W. Desmond, Esq.,
888/337-6663, 561/712-8000 Email: Info@SecuritiesAttorney.com Internet
Site: http://www.SecuritiesAttorney.com


ATCHISON CASTING: Schubert & Reed Announces Securities Fraud Suit in KS
-----------------------------------------------------------------------
A class action suit alleging securities fraud has been filed in the
United States District Court for the District of Kansas against Atchison
Casting Corporation (NYSE:FDY) and certain of its officers and directors
by the San Francisco law firm of Schubert & Reed LLP. The case was filed
on behalf of all persons who purchased Atchison common stock during the
period Jan. 8, 1998 through Nov. 3, 2000 inclusive (the "Class Period").

The Complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder by issuing a series of materially false and misleading
statements concerning the Company's financial results that had the effect
of artificially inflating the price of Atchison common stock during the
Class Period.

Specifically, on Nov. 2, 2000, Atchison president Hugh Aiken announced
that a new chief financial officer at its Pennsylvania Foundry Group unit
had uncovered accounting irregularities at the Pennsylvania unit. On Nov.
3, 2000, Atchison announced that the irregularities affected the
Pennsylvania unit's receivables, payables, operating expenses and prepaid
expenses accounts, and possibly others. As a result of the
irregularities, Atchison announced that it will delay its first quarter
results while its board of directors conducts an investigation, and that
it may be required to restate earnings for prior fiscal years.
Historically, the Pennsylvania unit accounted for 8% of all Atchison
sales. On news of the irregularities, Atchison's stock price fell more
than 19% in a single day's trading.

On Nov. 16, 2000, Atchison announced that its annual meeting of
stockholders scheduled for Nov. 17, 2000 would be postponed pending
completion of the Company's investigation, and that preliminary findings
of the accounting irregularities suggested that pretax earnings between
fiscal 1996 and 2000 may have been cumulatively overstated by $19
million. The Company also announced that the employment of the former
chief financial officer of the Pennsylvania unit had been terminated, and
that its most recent financial statements for fiscal year 2000 could not
be relied upon. On Dec. 21, 2000, Atchison announced that pretax earnings
between fiscal year 1996 and 2000 may have been cumulatively overstated
by approximately $23-25 million, rather than the $19 million previously
announced.

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


CALIFORNIA: Smokers Rights Groups Challenge Tobacco Settlement
--------------------------------------------------------------
In FORCES Action Project et al. v. State of California et al., various
smokers rights groups challenge the tobacco settlement as it pertains to
California, Utah and the City and County of San Francisco. Plaintiffs
assert a variety of constitutional challenges, including that the
settlement represents an unlawful tax on smokers. Motions to dismiss by
all defendants, including the tobacco companies, were eventually
converted to summary judgment motions by the court and heard on September
17, 1999. On January 5, 2000, the court dismissed the complaint for lack
of subject matter jurisdiction because the plaintiffs lacked standing to
sue. The court also concluded that the plaintiffs' claims against the
State and its officials are barred by the 11th Amendment. Plaintiffs have
appealed. Briefing is expected to be complete by July, 2000.


CALIFORNIA: Students, Parents and Groups Challenge Allocation of Funds
----------------------------------------------------------------------
On March 30, 2000, a group of students, parents, and community based
organizations representing school children in the Los Angeles Unified
School District brought a lawsuit against the State Allocation Board
("SAB"), the State Office of Public School Construction ("OPSC") and a
number of State officials (Godinez, et al. v. Davis, et al.) in the
Superior Court in the County of Los Angeles.

The lawsuit principally alleges SAB and OPSC have unconstitutionally and
improperly allocated funds to local school districts for new public
school construction as authorized by the Class Size Reduction
Kindergarten-University Public Education Facilities Bond Act
("Proposition 1A"). Plaintiffs allege that funds are not being allocated
reasonably and fairly according to need on the basis of a uniform, state
wide assessment of highest priority needs. Plaintiffs seek a declaration
of the illegality of the current allocation system, and a preliminary and
permanent injunction and/or a writ of mandate against further allocation
of Proposition 1A funds unless the allocation system is modified.

The Plaintiffs did not question the legality of, or sought any relief
concerning, any commercial paper notes or bonds issued by the State under
Proposition 1A, all of which funded projects based on allocations made
prior to the filing of the lawsuit. The Attorney General is of the
opinion that the lawsuit does not affect the validity of any State bonds.



CALIFORNIA: Taxpayer Appeals in Solar Energy System Tax Refund Action
---------------------------------------------------------------------
Guy F. Atkinson Company of California v. Franchise Tax Board is a
corporation tax refund action involving the solar energy system tax
credit provided for under the Revenue & Taxation Code. The case went to
trial in May 1998 and the trial court entered judgment in favor of the
Franchise Tax Board. The taxpayer has filed an appeal to the California
Court of Appeal and briefing is completed. The Franchise Tax Board
estimates that the cost would be $150 million annually if the plaintiff
prevails. Allowing refunds for all open years would entail a refund of at
least $500 million.


CATTLE PRICES: AP Presents Scenario on Cattle Feeder’S Nationwide Fight
-----------------------------------------------------------------------
April 28, 1996 - a fact-finding committee of the U.S. Department of
Agriculture was wrapping up its last public hearing in Washington, D.C.,
on concentration in agriculture. No commercial cattle feeder had
testified against the big packing houses.

Days earlier, Herman Schumacher - a committee member and a South Dakota
auction market operator - had telephoned Kansas cattle feeder Mike
Callicrate and pleaded with him to speak out.

"We have not heard from one single cattle feeder - you are our last
hope," Schumacher told him.

The commercial feed yard operator from St. Francis replied: "You have to
be willing to go out of business."

It was then that Schumacher reminded him that would be exactly what would
happen to him and others if they did not fight the rapid concentration in
the meatpacking industry.

Callicrate came.

He testified about how in 1978, when he opened his first feed yard, he
had the choice of selling live cattle to as many as 10 packers. Trade was
active all week, and the price was aggressively negotiated. Today, he
told the committee, there are basically four packers - all bidding the
same price. He sells mostly to one.

"The pressures are unbearable. The cattle feeder is being intimidated,
demoralized and is being denied market access. Feedlots have been
conditioned to take the packer's bid when offered, causing a flood of
trade within minutes," Callicrate testified. "Previously successful,
industry leaders, highly efficient and forward thinking cattlemen are
being financially destroyed."

Other speakers yielded their time to him. From the audience in back,
cries of "Amen" punctuated his testimony.

The advisory committee eventually issued a report saying the USDA was not
adequately enforcing the antitrust law designed to protect ranchers and
others from unfair trade practices, and called for more open reporting of
prices. "That testimony is when I crossed the line, and could never go
back," Callicrate said.

In the years that ensued, the 49-year-old Kansas man became a folk hero
among some of the nation's cattle producers. But among the beef
establishment, he is seen as a zealot whose crusade threatens to bring
more government meddling to the cattle industry.

In July 1996, Callicrate joined a handful of cattlemen in suing the
nation's largest meat packer in a lawsuit accusing IBP Inc. of illegally
cornering the beef market and conspiring to fix prices paid on the open
market. That suit - which cattlemen are still trying to get certified as
a class-action lawsuit - has languished in the Alabama courts where it
was filed.

The Kansas Livestock Association refused to join Callicrate in his
opposition to so-called captive supply, an industry term for cattle owned
by meatpackers or committed to them through contracts for slaughter. In
1998, Callicrate and about 600 cattlemen formed their own splinter group
- calling it the Kansas Cattlemen's Association - over the issue. "His
ideas and his policies were rejected by the vast majority of mainstream
beef producers," said Dee Likes, executive vice president of the Kansas
Livestock Association.

Callicrate now travels the country speaking out at farm meetings and
testifying before state Legislatures. He is one of the most-often quoted
opponents of farm concentration. Last month, he was on the cover of "Beef
Today" magazine, an industry publication. "He has an inordinate hatred of
packers that has pushed some of his policy recommendations over into the
more radical area, where most cattlemen do not feel comfortable with
those solutions," Likes said. "Those policies seek to narrow cattlemen's
personal freedom and inject government into this business."

His fight against the packers has come, Callicrate said, at a cost.

On March 13, a USDA administrative judge will hold a hearing to hear
Callicrate's claims that the packers are blackballing him by refusing to
buy his cattle at competitive prices.

It has been more than two years since he first filed the complaint.
Callicrate said he has misgivings about the outcome of that
administrative hearing - which pits the government's understaffed agency
lawyers against the well-financed legal resources of big corporate
agriculture.

Even if he wins that hearing, the packers law which oversees it has no
administrative provision for compensating his losses, he said.

Callicrate said the packers would have put him out of business long ago
if he had not invented and patented a device used in feedlots around the
nation for delayed castration of cattle. "They can't get me
economically," he said of the packers.

Last year, he said he spent $100,000 flying across the country in his
Piper Comanche to talk to farm groups about meatpacker concentration. "In
1996, I made the choice that it is worth going broke for," he said.

Fear that a handful of companies would control the nation's food supply -
stifling competition and raising grocery prices - first spurred adoption
of the Packers and Stockyards Act of 1921. The flurry of mega-mergers in
the past two decades has rekindled those fears. Since 1997, the four
largest firms slaughtered 81 percent of the nation's steers and heifers,
up from 36 percent in 1980, statistics show. The top four firms
slaughtered 56 percent of all hogs, up from 34 percent in 1980. Earlier
this month Tyson Foods, the nation's largest poultry producer, announced
it had made a deal to acquire IBP, the world's leading beef and pork
processor.

In the wake of such mergers, alarm has grown at the increased use of
so-called contract agriculture, where packers contract with individual
farmers rather than buy on the open market. That's at the heart of the
cattlemen's antitrust lawsuit - which alleges that IBP uses these
exclusive contracts to control the supply of beef cattle for slaughter
and fix prices.

Opponents also contend similar contracts are used to shift economic and
environmental risk onto farmers, an issue often raised in the debate over
large-scale hog farms.

In an effort to address some of those concerns, Congress passed a
mandatory price reporting rule that takes effect on Jan. 30. The law -
spurred by similar legislation passed by several states - is designed to
address livestock pricing problems and make public more pricing
information.

The livestock industry is not the only agriculture sector seeing rapid
concentration: two firms control 69 percent of the seed corn market and
47 percent of the soybean seed market, according to statistics compiled
by Roger McEowen, an agricultural law specialist at Kansas State
University.

Technology is also raising the stakes in ways never foreseen.
Biotechnology giant Monsanto Co., for example, sells 88 percent of the
genetically-engineered seeds in the United States.

IBP has long contended studies have shown changes in cattle prices are
due to basic supply and demand factors, not packer concentration or
livestock marketing agreements. "Consolidation is not unique to the
meatpacking industry," said IBP spokesman Gary Mickelson. "Many
industries, including many segments of agriculture, are consolidating as
companies and producers look for more efficient, more effective ways of
operating their businesses."

For his part, Callicrate is doing more than just testifying for
regulation of contract farming or better enforcement of antitrust laws.
He is hoping to galvanize a global uprising about corporate agriculture -
and even envisions a consumer boycott of IBP and Tyson products in the
wake of their merger. "People are upset about concentration when they
learn the most important thing - food - is under the control of a few
hands," (The Associated Press State & Local Wire, January 9, 2001)


CD COMPANIES: Legal Battle Over Prices Lands Before Portland Judge
------------------------------------------------------------------
A complex legal case in which the music industry stands accused of
artificially inflating the price of compact discs has landed before a
federal judge in Portland. A federal judicial panel assigned the case to
U.S. District Judge D. Brock Hornby, who will oversee a set of lawsuits
brought by 42 states and dozens of consumers against major CD
distributors and retailers.

Maine's Attorney General and several of Maine's top law firms are taking
leading roles in the case. At stake are hundreds of millions of dollars.

The case is the most far-reaching to be argued in Maine in recent memory.
The pre-trial stage alone is expected to last at least a year and
generate millions of pages of court documents. After that, trials could
commence in Maine or in other federal courthouses around the country.
"This is a reflection of the federal court's view of Hornby as somebody
capable of handling complex multi-district litigation," said Peter Rubin,
a Portland attorney representing plaintiffs in the case. "It's exciting
to have this come to Maine and to be a part of it."

The basic allegations in the various lawsuits are the same. The
plaintiffs claim that since 1995 consumers who bought CDs by Santana,
Madonna, Bob Dylan and many other recording artists paid artificially
high prices.

In documents filed with the court, plaintiffs allege that CD distributors
entered into unlawful agreements with retailers in order to eliminate
discount CD sales. The agreements allegedly came to light after some
discounters such as Best Buy and Circuit City began offering CDs at low
prices to lure customers. The average price of a CD allegedly dropped
from about $15 to about $10.

To push the price back up, distributors instituted minimum advertised
pricing policies, the plaintiffs allege. The policies penalized retailers
for selling CDs at discount prices. Distributors would pull back from
shared advertising ventures, an action that could cost retailers hundreds
of thousands of dollars.

After a two-year investigation, the Federal Trade Commission concluded
that the music industry engaged in unlawful restraint of trade that cost
consumers as much as $480 million. In May, the FTC entered into a consent
agreement with the nation's five largest CD distributors. The
distributors, while not admitting any wrongdoing, agreed to stop their
minimum advertised pricing policies. Two months later, in federal court
in New York City, attorneys general from across the country filed their
lawsuit against the industry.

Defendants include the five major CD distributors - Universal Music,
Capitol Records, Sony Music, Warner Music and BMG Music. Also named as
defendants are retailers MusicLand, Tower Records and Trans World.

Representatives of some of the distributors have stated in the past that,
while they engaged in minimum advertised pricing policies, the policies
are not illegal.

The number of lawsuits against the music industry continued to pile up
throughout this summer and fall. Dozens of private class action lawsuits
were filed in courts throughout the country.

A federal judicial panel decided to send all the cases, including the one
filed by the attorneys general, to one judge to ensure that numerous
federal judges weren't presiding over the same matter. Attorneys involved
in the case are scheduled to meet in Hornby's courtroom Jan. 31 for the
second of what will likely be many pre-trial conferences. (The Associated
Press State & Local Wire, January 9, 2001)


CHICAGO BOARD: Ed Employees Challenge Same Sex Partners' Health Benefits
------------------------------------------------------------------------
Rejecting contentions that the Chicago Board of Education was guilty of
bias, a lawyer argued Monday that the board was merely trying to even the
playing field when it offered health benefits to its employees' same-sex
domestic partners.

Attorney Lee Ann Lowder told a federal appeals court panel that
legitimate government interests -- including attracting homosexual
employees and encouraging tolerance -- were advanced by the board's
decision to allow same-sex partners to receive the same benefits as
spouses.

But a lawyer for a woman whose longtime male companion is not eligible
for health benefits contended that limiting such benefits to same-sex
partners is unconstitutional.

Attorney Richard P. Campbell argued that the school board is
discriminating on the basis of marital status and sexual orientation by
denying benefits to the opposite-sex domestic partners of unmarried
employees.

Campbell rejected contentions that board members had a rational basis for
distinguishing between same-sex and opposite-sex domestic partners
because same-sex marriages are prohibited by law.

Campbell said that distinction is based on the assumption that all gays
would get married if they could, if the law allowed them to and therefore
would be eligible for the same benefits available to married couples.

Contending that such an assumption is wrong, Campbell argued that a
marriage certificate -- or the lack of one -- should not determine
whether the Chicago Board of Education will provide health benefits to
its employees' significant others.

Marriage is important in this context only because they made it so in the
first place," Campbell said.

Campbell and Lowder made their arguments before a panel of the 7th U.S.
Circuit Court of Appeals in litigation pursued by Milagros Irizarry, a
board of education employee. Milagros Irizarry v. Board of Education of
the City of Chicago, No. 00-3216.

In October 1999, Irizarry filed suit under 42 U.S.C. sec1983, claiming
the board violated her constitutional rights by refusing to provide
health insurance benefits to her male domestic partner of more than two
decades.

A few months earlier, the board had agreed to offer such benefits to the
spouses of married employees and the same-sex domestic partners of
unmarried employees.

Irizarry argued that the board's refusal to provide benefits for
opposite-sex domestic partners constituted discrimination on the basis of
marital status and sexual orientation in violation of the equal
protection clause of the 14th Amendment.

Irizarry also argued that the board violated her right to procedural due
process by failing to offer a remedy for the deprivation of what she
contended was a protected property interest in employment benefits
offered to other employees.

Irizarry asked that her suit be made a class action on behalf of herself
and similarly situated employees.

Last July, U.S. District Judge Joan B. Gottschall dismissed Irizarry's
lawsuit for failure to state a claim on which relief could be granted.

Gottschall concluded that the school board had come forward with rational
grounds to support its decision to offer dependent health benefits to
same-sex domestic partners.

Gottschall also concluded that a Chicago ordinance barring discrimination
on the basis of such factors as marital status and sexual orientation had
not created a protected property interest in the health benefits offered
by the board of education.

During arguments before the 7th Circuit panel Monday, Judge Richard A.
Posner questioned whether Irizarry had even raised a constitutional
claim.

Noting that case law has addressed discrimination against married people
but has said nothing about a right not to marry, Posner said: The real
issue is, can people who can get married but choose not to ... do they
have a constitutional claim? I don't understand what right they have."

The other panel members, Judges Daniel A. Manion and Michael S. Kanne,
suggested that the reasons advanced by the board of education for
distinguishing between same-sex and opposite-sex domestic partners might
not pass muster.

Under questioning from the judges, Lowder acknowledged that unmarried
employees are not necessarily barred from obtaining health benefits for a
person of the same sex with whom the employee does not have a sexual
relationship.

The eligibility requirements set by the board of education -- which
include such requirements as jointly owning a residence or having a joint
checking account -- would allow the roommates of heterosexual employees
to put in for health benefits, Lowder said.

But Lowder said the U.S. Constitution does not require a perfect fit"
when it comes to tailoring government programs to meet such goals as
providing equal access to employment benefits.

And the board of education's decision to place same-sex partners on the
same footing as spouses offers access to health benefits to people who
are legally barred from obtaining those benefits by marrying their
domestic partner, Lowder said.

In response to a comment from Manion, Lowder asked the judge whether he
thought such arrangements as co-ownership of a car were enough to
demonstrate a committed relationship between two people.

Manion drew laughter from spectators when he replied: It depends on the
kind of car, I guess." (Chicago Daily Law Bulletin, January 8, 2001)


ELECTION SYSTEMS: Cohen, Milstein Files Cases Against Officials and Cos.
------------------------------------------------------------------------
Two nationally respected plaintiff class action law firms, Cohen,
Milstein, Hausfeld & Toll, P.L.L.C. of Washington, D.C. and Waite,
Schneider, Bayless & Chesley, L.P.A. of Cincinnati, Ohio, announced on
January 9 the filing of two class action lawsuits challenging the use of
punch card voting systems having pre-scored cards, commonly known as
"Votomatic" systems.

Both cases were filed on a pro bono basis. In one suit, voters in Florida
are challenging approval of the Votomatic by Florida Secretary of State
Katherine Harris and the use of the Votomatic by 15 counties in Florida.
The Florida suit alleges that the Votomatic has serious inherent defects
that render it unable to count votes accurately and that its use
therefore deprives Floridians of equal voting rights under the U.S. and
Florida Constitutions. The suit further alleges failure to comply with
Florida state law requiring that voting equipment must count votes
accurately.

In the second suit, filed in Illinois state court in St. Clair County,
voters in the 28 states across the country that use the Votomatic have
named as defendants the companies that sell products and services
necessary for ongoing use the Votomatic. The voters allege that the
companies, by selling and marketing their Votomatic products and services
while failing to provide notice of the serious defects in the Votomatic
that render it unable to count votes accurately, the companies are
engaging in unfair and deceptive trade practices in violation of consumer
fraud statutes. The voters also allege that the two largest elections
systems companies, Election Systems & Software, Inc. of Omaha, Nebraska
and Sequoia Pacific Systems of Exeter, California, have taken over
states' roles in running elections and violated the voters'
constitutional rights by use of the Votomatic.

According to Michael D. Hausfeld, co-lead attorney for the approximately
41 million voters, "The issues involved affect the very fundamentals of
the Democratic electoral process. They are not a matter of legislative
discretion or prerogative. They encompass constitutional rights which
cannot be violated."

Co-lead attorney Stanley Chesley says, "Too many Americans fought and
died for freedom to let one of the most cherished freedoms, the right to
vote, be taken away. The disenfranchising of American voters must end
immediately. The cases that we've filed are an important first step in
ending it. That's why we've agreed to donate our services in these
historic cases."

Attorney Matthew F. Pawa of Cohen, Milstein stated that, "It has been
known for at least 30 years that the Votomatic is inherently defective
and unable to count votes accurately. There is no excuse for its
continued use. American voters deserve better than to have their voting
rights taken away by machines that do not work."

Attorney Suzette Malveaux, also of Cohen, Milstein adds, "This suit is
about accountability and prevention. We want to make sure that Florida's
elected officials take responsibility for ensuring that every voter has
an equal opportunity to exercise their fundamental right to vote and that
the debacle that took place surrounding the 2000 presidential election
will never happen again."

Other attorneys on the complaints include: Paul DeMarco and Renee Infante
of Waite, Schneider, Bayless & Chesley, Marcus Viles and MaryPat Viles of
Viles Law Firm, P.A., Fort Myers, Florida; Steven Katz and Diane Heitman
of Carr, Korein, Tillery, Kunin, Montroy, Cates, Katz & Glass, LLC,
Belleville, Illinois; Beth Kushner of von Briesen, Purtell & Roper of
Milwaukee, Wisconsin; and J. Garrett Kendrick of Kendrick & Nutley of San
Diego, California.

Both Votomatic complaints are available to read and download at
www.cmht.com.


HOLOCAUST VICTIMS: Fed. Special Master's Report Clears Pact With Germans
------------------------------------------------------------------------
The $ 5.5 BILLION global settlement hammered out last summer to resolve
all remaining Holocaust claims against the German government and German
companies cleared an important hurdle before the turn of the year when a
federal special master filed a 123-page report recommending the dismissal
of six class-action suits before Southern District Judge Shirley Wohl
Kram.

In recommending that the pact be approved, the special master, Charles A.
Stillman, of Stillman & Friedman, found no evidence of collusion or that
absent class members rights had been prejudiced in any way.

In urging that Judge Kram dismiss the six consolidated class-actions
before her as "promptly as is practicable," Mr. Stillman warned that
"time is limited" for many aging Holocaust survivors.

The dismissal of all class-action cases against German entities is a
critical condition of the $ 5.5 billion accord, and no money may be paid
to survivors or their heirs until all 56 class-actions cases filed in the
U.S. are dismissed.

Of the three federal judges handling German Holocaust cases, only Judge
Kram has yet to dismiss the class-action cases pending before her.

In appointing Mr. Stillman special master, Judge Kram asked him to
examine the fairness of the German settlement, and in particular, to
scrutinize it for any evidence that the named plaintiffs or their lawyers
had profited at the expense of absent class members. (New York Law
Journal, December 29, 2000)


KAISER PERMANENTE: Lawsuit Filed to Stop Patient Pill-Splitting
---------------------------------------------------------------A public
interest law firm has sued Kaiser Permanente over its patient
pill-splitting policy, arguing that the practice is inaccurate and
dangerous. Trial Lawyers for Public Justice filed a class action suit in
Superior Court in Oakland, Calif., to stop the practice. Kaiser said
cutting certain double-dose Rxs in half by patients is voluntary and that
it has guidelines to determine when it is appropriate. APhA and ASCP are
among the organizations on record against the practice of pill-splitting.
(Drug Topics, January 1, 2001)


LOUISIANA: Gay Rights Activists Appeal Seeking to Overturn Sodomy Law
---------------------------------------------------------------------
Gay rights activists are seeking to overturn Louisiana's 196-year-old law
barring sodomy, maintaining that it unfairly targets gays and lesbians.

In 1999, Judge Carolyn Gill-Jefferson upheld the law, ruling that it
violates Louisiana's right to privacy but does not violate other rights
protected by the state Constitution.

An appeal was filed by the Louisiana Electorate of Gays and Lesbians
Inc., and nine gay or lesbian individuals, on grounds that the law
``denies us the right to have sex under any circumstances,'' said John D.
Rawls, LEGAL's attorney.

State attorneys, however, contend the law is needed to promote marriage
and encourage procreation.

Arguments are scheduled Monday before the state's 4th Circuit Court of
Appeal.

The case affects 63 of Louisiana's 64 parishes. A separate case in
Jefferson Parish, just outside New Orleans, has been put on hold until
rulings in Monday's case are final.

If LEGAL loses, the case cannot be appealed to federal court, Rawls
said.  ``We have not raised any federal issues in this case,'' he said.
``It is based entirely on the broad human rights that the people of
Louisiana have preserved for ourselves in the state Constitution.''

Also, the U.S. Supreme Court ruled 5-4 in 1985 that the U.S. Constitution
does not provide a right to privacy to gays and lesbians, he said.

Monday's appeal does not concern the right to privacy. Instead, it deals
with the rest of Gill-Jefferson's findings. But the privacy issue remains
under review.

In July, the state Supreme Court ruled in another case that the right of
privacy did not extend to oral or anal sex in a motel room between
consenting heterosexual adults.  The court reasoned that if consenting
adults have such sex, both are guilty and there is no victim.

Three months later, the court ordered Gill-Jefferson to reconsider her
decision that the law violates privacy rights, and the judge has
scheduled arguments on that issue March 9. (AP, January 8, 2001)


MOBIL OIL: LA High Court Finds Pollution Exclusion Inapplicable In Doerr
------------------------------------------------------------------------
In a 4-3 decision, the Louisiana Supreme Court ruled Dec. 19 that a total
pollution exclusion was not intended to be read strictly to bar coverage
for all exposures to "irritants or contaminations of any kind" and denied
an insurer's motion for summary judgment (Phyllis Kay Roby Doerr, et al.
v. Mobil Oil Corp., et al., No. 2000-CC-947, La. Sup.).

The majority concluded that the true intent of the exclusion is to
exclude coverage for environmental pollution only and a literal reading
of the broad pollution exclusion at issue would lead to "absurd
consequences," rendering it ambiguous. Therefore, its prior decision in
Ducote v. Koch Pipeline Co. (98-942 [La. 1/20/99], 730 So.2d 432m
436-437; See 3/9/99, Page 5) does not control, it said.

"When absurd results are possible from such a reading . . . the contract
is ambiguous, and the courts must construe the provision in a manner
consistent with the 'nature of the contract, equity, usages, the conduct
of the parties before and after the formation of the contract, and of
other contracts of a like nature between the same parties,'" pursuant to
the Louisiana Civil Code, the majority said.

Furthermore, "insurance policies are construed to effect, not deny,
coverage, and any ambiguity should be interpreted in favor of the
insured," it added.

                        Contaminated Water

In 1998, hydrocarbons from Mobil Oil Corp.'s refinery were released into
the Mississippi River. Residents of the St. Bernard Parish in Louisiana
filed a class action against the parish, its insurer, Genesis Insurance
Co., Mobil Oil Corp., Chalmette Refining LLC and Tenneco Oil Co. to
recover damages for injuries resulting from the contaminated water
distributed to their homes.

Under the Genesis CGL policy, the parish was self-insured against claims
of up to $ 250,000, after which Genesis would provide coverage for the
next $ 1 million of liability per occurrence.

The trial court denied the insurer's motion for summary judgment, arguing
the exclusion barred coverage. Genesis appealed. The appeals court
reversed the decision and dismissed the insurer from the suit, explaining
it was bound by Ducote. The appeals court rejected the insurer's
arguments that the clause only applied prospectively and Ducote was
improperly decided.

                                Ducote

The Ducote majority lifted the limitation of the exclusion's
applicability to pollution involving active industrial polluters who
knowingly released pollutants over long periods of time. Also, it held
that the exclusion "applies regardless of whether the release was
intentional or accidental, a one-time event or part of an ongoing pattern
of pollution."

The Doerr majority rejected the parish's argument that Ducote is
distinguishable because in that case the insured's employee caused the
contamination whereas here the pollution was caused by a third-party oil
refinery.

Overruling its decision in Ducote, the majority concluded it was a
diversion from the history of interpretations of pollution exclusions in
Louisiana and "runs counter to the true intent of the exclusion," it
said.

"[To] give the pollution exclusion the broad reading found in Ducote
would contravene the very purpose of a CGL policy, without regard to the
realities which precipitated the need for the pollution exclusion - the
federal government's war on active polluters," it reasoned.

                             Burden Of Proof

The insurer failed to meet its burden of proving the absence of material
fact as to whether the parish caused the pollution, whether the
contaminant was a "pollutant" under the policy, and whether a release of
contaminants had occurred, the majority determined. Therefore, the
insurer's motion for summary judgment was denied.

On remand, the trial court is to consider whether the parish was a
"polluter," whether the hydrocarbons are "pollutants" and whether the
distribution of the water through the town's water system constitutes a
"discharge, dispersal, seepage, migration, release or escape" pursuant to
the exclusion, the majority instructed.

                                Dissent

Justices Jeffrey P. Victory, Chet D. Traylor and Jeannette Theriot Knoll
disagreed with the majority, saying Ducote was sound and applied to this
case and its reversal is unnecessary.

The majority here has "failed to follow the proper methodology for
reviewing the special type of summary judgment that presents a coverage
issue. It has failed to review the 'total pollution exclusion' relied
upon by Genesis in the context of the allegations made in the complaint
in this case against this insured," they said, asserting that the
majority's analysis was made in a "vacuum."

Furthermore, "[this] is a classic case of a petition alleging active
pollution of an environmental character," they said. The dissenting
justices also pointed out that the policy is absent of any language
requiring the pollution to be caused by the insured in order that the
exclusion applies. In addition, the majority's explanation of the intent
of the exclusion was erroneous, they said, because the exclusion "was
written to narrow the coverage afforded in a CGL policy to protect
insurers against catastrophic losses not covered by underwriting."

The parish is represented by J. Wayne Mumphrey, Claude S. Mumphrey II,
Wayne B. Mumphrey and Alfonse S. Monteferrante of the Law Offices of J.
Wayne Mumphrey in Chalmette, La. G. Bruce Parkerson and Kenan S. Rand of
Plauche Maselli Landry & Parkerson in New Orleans represent Genesis
Insurance. (Mealey's Litigation Report: Insurance, December 28, 2000)


MONSANTO CO: Corporate Legal Times’ Review of GM Suit - Mosquito? ICBM?
-----------------------------------------------------------------------
Monsanto Co. Assistant General Counsel David Snively calls the case
"another in a series of unsuccessful attempts by veteran antagonists to
stop a technology with the potential to improve our environment, increase
food production and improve health."

THE POOR PLAINTIFFS' lawyer just can't win. If he takes a case with a big
payoff, he's greedy. If he takes a case without much chance for success,
he's political.

At this point it's hard to tell what kind of rascal Monsanto Co. is up
against in George Higginbotham, et al v. Monsanto Co. But the
agricultural giant clearly is pushing the notion that it's the latter,
and that this case is a political and public-relations exercise wrapped
around a hopeless lawsuit.

If so, it could still be a problem for Monsanto-if all the interesting
information does not remain sealed. The lead plaintiff firm, Cohen,
Milstein, Hausfeld & Toll, is well-known and well-connected,
internationally as well as domestically. It's sure to gather a lot of
ammunition for Monsanto's critics.

Genetic engineering has many detractors, but so far they haven't had much
success translating their criticisms into a court case. A lawsuit against
the FDA-alleging that its failure to require products containing
genetically engineered ingredients to be labeled as such-was thrown out
of court in October.

Organic growers fear a Monsanto corn seed that genetically incorporates a
pesticide known as Bt will breed resistant insects which will eventually
make Bt ineffective. Monsanto, a wholly-owned subsidiary of Peapack,
N.J.-based Pharmacia Corp., presumably would have other products in the
wings by the time Bt was obsolete. But that probably wouldn't solve the
problem created for organic farmers: Bt is a naturally occurring
pesticide produced by a soil bacterium known as bacillus thuringiensis
and is one of the few pesticides that are approved for strict organic
production. But organic farmers haven't taken their case to the courts
["Growing Agro-Biotech Business Fuels Patent Battles," February 1999, p.
30].

Other critics have argued for years that the mission of the land-grant
colleges has been subverted, first by agribusiness and now specifically
by the genetic-engineering companies. But that's a critique, not a
complaint.

And some environmentalists and agronomists have raised the specter of
genetic drift sullying the crops of conventional farmers and even the
world's natural germ plasm centers. These are the broad geographical
areas-for wheat, it's an area from Syria east to the Caucasus; for
potatoes, the Andes-that serve as repositories of ancient genetic
diversity in wild plants that can be tapped by breeders for traits such
as drought or disease resistance.

Now all of these criticisms and more have been wrapped up in one big
lawsuit. The suit is couched partly as an antitrust action and partly as
a suit under common law, with consumer fraud and deceptive business
practices claims. It also alleges violation of "customary international
law."

Cohen, Milstein has emerged as probably the most effective class-action
firm in the country for lawsuits with a strong social and political
component. They seem to be everywhere these days, suing gun manufacturers
on behalf of municipalities and Bridgestone/Firestone Inc. and Ford Motor
Co. on behalf of The Center for Auto Safety, among others. In recent
years, Cohen, Milstein made headlines with a $ 125 billion settlement on
behalf of Holocaust survivors against some Swiss banks, and for work that
resulted in a multimillion-dollar settlement against Exxon for Native
Americans who suffered damage from the Exxon Valdez oil spill.

Firm Chairman Michael D. Hausfeld isn't even sure how many class-actions
cases the firm is currently handling. "Probably 40 or 50," he says.

In the Higgenbotham case, the hoped-for class of plaintiffs is huge:
virtually every corn and soybean farmer in the world.

The suit actually alleges three classes. Two are in the United states:
corn or soybean farmers who use Monsanto's genetically modified products,
and corn and soybean farmers who don't use Monsanto's modified products.
A third class consists of corn and soybean farmers in the rest of the
world, both those who did and did not purchase Monsanto genetically
modified products within certain specified dates. The complaint asks for
damages for the U.S. farmers and injunctive relief for farmers abroad.

The non-users complaint is based on alleged loss of consumer faith in
U.S. product because the modified and non-modified get mixed up in the
processing and distribution chain. Thus, even the purists' product
suffers.

The allegations in the suit manage to invoke most of what critics have
been saying for years are the problems or potential problems with
genetically modified seed products. At the same time, the suit lays out a
three-count antitrust case, accusing Monsanto of attempting to monopolize
the United States modified corn and soybean seed markets and of
conspiring to fix prices and restrain trade in those markets.

This is "an exercise in legerdemain," according to the brief in support
of Monsanto's motion to dismiss. The "highly publicized, sprawling
64-page amended complaint contains a mass of accusations,
characterizations, opinions, legal theories, alarmist rhetoric, press
accounts and unsubstantiated conclusions." Yet, says Monsanto, the
complaint "fails to state a single claim upon which relief can be
granted."

According to a source familiar with the full range of Monsanto's legal
problems, this would-be class action is nothing but a publicity stunt,
instigated by a gaggle of fringe critics, notably the well-known
genetic-engineering critic Jeremy Rifkin. As a legal threat, this case is
dwarfed by a number of high-stakes intellectual property disputes in
which the company is embroiled, says the source, who asked to remain
anonymous.

In a press release issued by Monsanto, Assistant General Counsel David
Snively calls the case "another in a series of unsuccessful attempts by
veteran antagonists to stop a technology with the potential to improve
our environment, increase food production and improve health."

Snively has also accused the lawyers for the case of embracing bad
science and using the legal process to make a political statement.
According to a source at Monsanto, the real interest of the plaintiffs,
and its tepid interest in actually winning a court case, is evidenced by
the fact they have a third-year associate working on the case.

Hausfeld says he got interested in the case "because I had a lunch with
Rifkin," but after that the firm conducted its own independent research.

According to Hausfeld, the lead attorney on the case is Richard S. Lewis,
a partner. But questions about the substance of the case were referred to
Elisabeth H. Cronise, who is an associate at Cohen, Milstein. According
to Cronise, Rifkin has no involvement with the ongoing case.

Hausfeld says the firm is in the case to win, and it considers damages a
possibility. He declines to speculate on possible figures. He also
acknowledges what critics might consider a political interest.

"We don't bring cases because they are just big, or because they involve
a lot of money," he says. "We bring them after we investigate them
because we think they are important."

                         Patent As Monopoly

Although plaintiffs "colorfully" characterize Monsanto and some of its
licensees as a cartel, Monsanto's actions are nothing more than typical
lawful practices of a patent holder, according to Monsanto.

In support of its motion to dismiss, Monsanto argues that patent rights
preclude antitrust claims. It characterizes a patent as essentially a
right to a monopoly, albeit a temporary one, granted for certain reasons
that have been deemed socially beneficial. Thus, as long as the patent is
operative, an antitrust case is precluded.

The prices that Monsanto charges for its modified seeds, characterized by
the plaintiffs as "supercompetitive," do not exceed the limits of what a
patent holder can charge, according to Monsanto, because no such limits
exist. During the 17-year period of the patent, the patent holder can
charge what it wants and garner whatever license fees it can, the company
says.

Quoting precedent, Monsanto argues this is core of the patentee's rights
and is a legitimate award of "the patent monopoly," and so the notion of
an excessive royalty rate or licensing fee is legally meaningless.

But according to Cronise, the question of whether Monsanto's actions are
protected by patent laws is one for the court, and there is ample
precedent to conclude it is not.

"The argument Monsanto makes-that if they have the patent, they are not
subject to any antitrust liability for whatever they do with that
patented product-is simply not the state of the law today," she says.

Cohen, Milstein filed the Higginbotham case in Washington, D.C., in
December of 1999. A similar case, Blades, et al v. Monsanto, was filed in
the Southern District of Illinois in February of 2000. The cases were
consolidated, and plaintiffs' attorneys from both cases are on the case,
with Cohen, Milstein as the lead firm.

There is also a third case, one that could prove a blessing in disguise
for Monsanto. That case, Massey, et al v. Monsanto et al, was filed in
federal court in Mississippi in November of 1999. The plaintiff, a
Coahoma County, Miss., farmer who had purchased Roundup Ready soybean
seeds, alleged antitrust and RICO violations, as well negligence, fraud
and deceit, breach of implied warranty of merchantability, and breach of
implied duty of good faith and fair dealing.

Monsanto argued that this case was in essence a contract dispute between
Monsanto and a grower, arising out of the technology agreement that
Massey signed when he purchased the seed. Consequently, according to
Monsanto, it was empowered to invoke a forum-selection clause in the
contract. That clause designates the U.S. District Court for the Eastern
District of Missouri, Eastern Division (or state court in St. Louis
County), as the exclusive forums to hear all disputes arising out of the
technology agreement.

The U.S. District Court for the Eastern District of Missouri, Eastern
Division, is in St. Louis, Monsanto's corporate home. The judge agreed
with Monsanto, and in June the case was transferred to St. Louis.

So now there are two venues and what were three cases: Higginbotham,
Blades and Massey. Higginbotham and Blades have been consolidated in the
Southern District of Illinois. The Massey case, its scope radically
diminished, is in the Eastern District of Missouri, and Monsanto would
very much like to get Higginbotham there, too, if it doesn't succeed in
getting it dismissed.

Cronise maintains it would not be appropriate to transfer the Cohen,
Milstein case to St. Louis. "The heart of this case is not a contract
dispute. This is an antitrust case and an environmental case. The
contract is only one small element of the antitrust case."

Moreover, according to Cronise, the Massey case itself has been
transformed as the result of a motion by the plaintiffs' attorney and
granted by the court, from a wide-ranging antitrust and environmental
case to a simple defective- product claim.

By early October, according to Hausfeld, a vast amount of information had
been obtained through discovery, most of which would remain sealed during
the trail.

But ironically, the firm didn't need discovery to obtain an important
document that appears in its complaint: Monsanto's 1996 "Maize Protection
Plan." "It was admitted into evidence before, in litigation between
Monsanto and one of its co-conspirators," says Cronise.

According to the complaint, the Monsanto plan "outlined a strategy to
monopolize and restrain trade in the genetically modified seed market by
licensing both YieldGard and Roundup Ready technologies to independent
seed companies that would otherwise be competitors of both Monsanto and
each other."

The allegations that most reflect the arguments of the activist critics
are those that invoke a failure to adequately test products which have a
potential to disrupt existing ecosystems. But according to Hausfeld, the
allegations in this lawsuit are far short of a wholesale indictment of
the industry.

"We are not saying that genetic engineering should never occur, or that
it will never produce products that could be extremely beneficial," he
says. "What we have said is that when you genetically engineer a basic
food product, it should be sufficiently tested to determine by the best
available science at the time that there is no foreseeable risk. Clearly
that was not done with corn and soy beans."

Monsanto argues that its products met U.S. regulatory requirements, and
that plaintiffs don't try to claim otherwise. Instead, according to
Monsanto, they imply some higher standard without specifying what it is
or "what, precisely, this Court should require Monsanto to do."

The motion to dismiss is scathing. The plaintiffs "concoct
failure-to-test claims and denominate them in terms of public nuisance,
consumer fraud, breach of warranty (a contract claim, and formless,
unrecognized concepts of customary international law-all surrogate for
the negligence claim they cannot bring," it reads.

"This is an exercise in legerdemain, and obviously is designed to hide
the gaping holes in plaintiffs' allegations. As a matter of fact,
plaintiffs cannot allege that Monsanto's testing has fallen short of any
standards imposed by statutory, tort or contract law, or that Monsanto's
products have injured anyone. In short, no breach of any legal duty has
occurred which has caused injury to a single plaintiff." (Corporate Legal
Times, January, 2001)


MONTREAL: Jewelry Designer Sells Pins to Appeal in Parking Ticket Case
----------------------------------------------------------------------
The legal meter is running again.

Quebec Court of Appeal on January 8 granted Paolo Vena permission to
challenge a lower-court decision denying him a class-action lawsuit
against the city of Montreal for its parking-ticket fees.

"Finally, something positive," Vena said, following the decision by
appeal-court Judges Pierre Michaud, Andre Rochon and Louis Rochette.
"Paolo (Vena) is a good witness, but he's never been heard," said his
lawyer, Charles O'Brien, who argued the case before the tribunal. That
probably will change at a Quebec Superior Court hearing, likely about a
year in the offing.

Armed with another opportunity to request the right to proceed with a
class action and "a second-wave approach," O'Brien added: "I feel all
right about this."

Lawyers for the city and the provincial attorney-general's office argued
that Vena's attempt to launch the suit was "dilatory" and "frivolous." He
would be the lead plaintiff, representing the thousands of motorists who
have received parking tickets in Montreal since 1996 and paid what
O'Brien says is an excessive administrative fee, in addition to the
fines.

Vena wants to fight the fee, officially known as the tariff of court
costs in penal matters, on the ground that it is an illegal tax. Fees
often far exceed the actual costs incurred by the city to process them,
Vena and O'Brien have said.

In September, Justice Francois Belanger denied the motion for a class
action. O'Brien said Belanger erred in both fact and law in rendering
that decision.

Vena, a jewelry-designer, has sold almost 30 sterling-silver pins -
featuring miniature parking meters and tires with Denver boots attached -
that he created to raise money to finance the appeal. The pins cost $20
each. (The Gazette (Montreal), January 9, 2001)


NORTHWEST AIRLINES: Settles Suit on 1999 Flight Changes Due to Snowstorm
------------------------------------------------------------------------
Northwest Airlines announced it has reached an agreement to settle a
class action lawsuit involving more than 7,000 passengers affected by
delays and canceled flights during the 1999 New Year Weekend snowstorm in
Detroit. The class will receive a total payment of just over 7.1 mln usd,
which after payment of attorneys' fees and other costs will be
distributed to class members as ordered by the court, Northwest said in a
statement. A final hearing is scheduled on April 24, 2001. It added,
however, that the settlement is not an admission by Northwest that its
actions during the storm were inappropriate or that the alleged claims
had legal merit. Northwest determined that a long and arduous legal
battle will take time, personnel and resources that are better directed
toward serving its customers, introducing innovative travel technology,
and maintaining its operational performance. (AFX European Focus, January
9, 2001)


OAKWOOD HOMES: Announces Dismissal of Shareholder Lawsuit By NC Ct
------------------------------------------------------------------
Oakwood Homes Corporation (NYSE: OH) reported on January 9 that the
Federal District Court of the Middle District of North Carolina has
dismissed with prejudice the consolidated amended shareholder lawsuit
naming the Company and certain of its present and former officers and
directors as defendants. The lawsuit was filed in November 1998, and
later amended in June 1999, on behalf of purchasers of the Company's
common stock for various periods between April 11, 1997 and July 21,
1998. The time for filing any appeal from the court's ruling has expired.
This resolves all shareholder action against the Company and its officers
and directors.

Oakwood Homes Corporation and its subsidiaries are engaged in the
production, sale, financing and insuring of manufactured housing
throughout the United States. The Company's products are sold through
approximately 376 Company-owned stores and an extensive network of
independent retailers.


PRUDENTIAL: Canada Ct Denies 1st Ever Cert. Motion Re Vanishing Premium
-----------------------------------------------------------------------
For the first time in Canada, a contested certification motion involving
"premium offset" or "vanishing premium" whole life insurance policies has
come before the courts. Certification was denied.

Two actions were commenced as class proceedings. Plaintiffs Rosel
Williams and Sehdev Kumar sought certification under the Class
Proceedings Act (CPA) on behalf of purchasers of participating whole life
policies from agents of the defendant Prudential Assurance Company
Limited. (Prudential was acquired by The Mutual Life Assurance Company of
Canada in 1995, and Mutual's name has since changed to Clarica Life
Insurance Company.)

Participating whole life policies are permanent and may generate
dividends to the policyholder's credit. They pay a death benefit when the
insured dies, and have a cash value if the policy is surrendered before
death. Because they are "participating" policies, the policyholder is
entitled to dividends in any year in which the company has declared them.

Williams and Kumar each signed whole life insurance contracts stipulating
that the annual premiums are payable for the "duration of contract,"
meaning until death or surrender of the policy.

Plaintiff's counsel Joel Rochon, of Rochon Genova in Toronto, said that
"Dr. Kumar was presented premium offset illustrations, which showed he
would have to pay a large premium for a set number of years, and what
happened is he became aware after paying the premiums for a period of
time that he would have to pay well into the future beyond the crossover
date.

Although there was an ambiguously worded disclaimer, it was categorically
against the principal representation." Williams was told "essentially the
same thing, you pay for say nine years, then you don't pay any more."
Rochon added, "One was given illustrations, one was not.
But the common thread is that they both received representations, one
orally and one in writing. The message was the same, that you pay for X
years, then you don't pay."

One of many common issues in this case, said Rochon, could have been
whether the insurance company had "a systematic program in place with
respect to premium offset.

Did head office work to develop a common strategy or a strategy to put
forward the premium offset sales concept when they knew, or ought to have
known, that this would be seen as misleading to the public?"

In the Ontario Superior Court, the plaintiffs asserted several causes of
action, but put forward just one common issue: "Did the use of
illustrations and/or any representations, in writing or verbal, create an
obligation on the part of Prudential with respect to a specified offset
date despite the terms of the policy and the terms of any illustration?"

Approximately 242,800 Prudential policies were sold by some 2,000 agents
over the subject time period, including an estimated 120,000 whole life
policies.

In his judgment, Justice Peter Cumming said: "There is no evidence before
the court in support of the plaintiffs'bald allegation of uniformity in
Prudential's sales techniques and materials over the 1980-1995 period.

Not all agents used illustrations and there were marked differences
between those illustrations that were utilized.

"Section 5(1)(c) of the CPA requires that there be a common issue of fact
or law as a prerequisite to certification,"Justice Cumming continued.
"Both plaintiffs assert several causes of action.

The plaintiffs assert that a common issue arises from the allegation of
negligent misrepresentation by Prudential directly and through its agents
in the sale of participating whole life policies with a premium offset
feature.

"Negligent misrepresentation is a cause of action that is very
problematic in seeking certification of a common issue for class
members." Its outcome "depends upon a myriad of individual evidentiary
factors."

Citing Queen v. Cognos Inc., [1993] 1 S.C.R. 87, Justice Cumming
described five factors that must be proven to establish liability for
negligent misrepresentation:

* a special relationship between the parties which gives rise to a duty
   of care;

* that a representation was made to the claimant by the defendant that
   was incorrect;

* that the agent made the representation to the claimant in a negligent
   manner in breach of the standard of care that was owed;

* whether the prospective policyholder reasonably relied upon the
   representation considering all the circumstances;

* that the claimant suffered damages because of his or her reliance upon
   the representation.

Although "the causes of action are asserted by all class members,"said
Justice Cumming, "the fact of a common cause of action does not in itself
give rise to a common issue. I find that the claims of the class members
do not raise common issues." He added: "Even if there were to be a viable
common issue, a class proceeding is not the preferable procedure for its
resolution. The criterion of s. 5(1)(d) of the CPA has not been met."

Justice Cumming refused to certify the class proceedings and dismissed
the motions for certification.

Lead counsel for the defendant, F. Paul Morrison of McCarthy Tetrault in
Toronto, said the case is "similar to other actions and claims to actions
that have been brought as proposed class actions against just about every
major life insurer in the country.

"In the proposed class action, the motion for certification is a rather
pivotal event. This was the first contested motion for certification to
be heard and decided in Canada. "It undoubtedly has an impact on all of
the other similar actions that are pending in these cases right across
the country. "Although this was the first case in Canada, there were a
number of cases that have been heard as motions for certification
involving similar allegations against life insurers in the U.S.,"Morrison
added, "and, with only a very few exceptions, the U.S. cases have come to
the same result."

Rochon is appealing the decision: "The case came out about a week before
the Bre-X decision was released on negligent misrepresentation, and the
Bre-X decision in our view opens this entire area up,"he said.

"In addition, the Divisional Court will be faced with the task of
determining whether or not a certification motion needs to examine an
extensive evidentiary record as one may do in the case of a summary
judgment motion or whether the statute should be interpreted as a
procedural statute,"said Rochon. (The Lawyers Weekly, January 12, 2001)


SECURITY CAPITAL: Hotel Employees Union To Oppose Bid for SC-U.S. Realty
------------------------------------------------------------------------
The Hotel Employees and Restaurant Employees International Union
announced on January 9 that the union will oppose a proposed transaction
by Security Capital Group (SCZ) to combine with SC-U.S. Realty (RTY).

The union's 7-page counter-solicitation is being distributed to
shareholders of U.S. Realty. "The offer on the table significantly
undervalues US Realty's contribution to the combined company at the same
time that shareholders will be giving up substantial ownership rights,"
said Nick Weiner, a research analyst with HERE. "Based on our analysis,
the proposed deal is not in the best interests of US Realty
shareholders," Weiner added.

Based on the concerns raised in the counter-solicitation, HERE urges
shareholders of Luxembourg-based US Realty to vote no at the special
meeting on January 16, 2001. Since the agreement requires two-thirds
approval of US Realty shareholders, shareholders have an opportunity to
insist on a more generous offer and address corporate governance concerns
by voting against the proposed agreement.

The counter-solicitation identifies several reasons why the proposed
transaction will be detrimental to US Realty shareholders if it is
approved in its current form. First, shareholders will inherit Security
Capital's poor corporate governance structure. The transaction
significantly dilutes shareholders ownership rights.

While US Realty shareholders will own 33.1% of total shares outstanding,
they will only be entitled to 16.4% of the total vote. "Under the terms
of this deal, U.S. Realty's shareholders will be all but disenfranchised
from the governance oversight of the new company," Weiner said.

Second, the 1.15 exchange ratio does not fairly reflect US Realty's
contribution of Net Cash Flow from Operations and Earnings Before
Depreciation, Amortization and Deferred Taxes (EBDADT). While the
proposed transaction will provide US Realty shareholders with 33.1% of
the shares of the combined company, they will provide a disproportionate
share of net cash flow and EBDADT.

Third, Security Capital shareholders will disproportionately benefit in
net asset value (NAV) accretion versus US Realty shareholders. US Realty
shareholders' NAV increases only 1.7% while Security Capital's NAV
increases 12.7% as a result of the proposed transaction.

Fourth, the offering price as a multiple of US Realty's net cash flow is
significantly below the average multiple for comparable transactions.
According to the fairness opinion produced by Goldman Sachs - the
financial advisor to Security Capital - Security Capital's offering price
is 8.4 times estimated net cash flow for the year, 36% below the average
net cash flow multiple of 11.4 for similar transactions.

Security Capital has previously been accused of undervaluing affiliated
companies for the purposes of stock buyouts. In April 2000, Homestead
Village minority shareholders filed four class action lawsuits alleging
that Security Capital's offering price of $3.40 per share in cash was
unfair. In negotiations, Security Capital subsequently raised its offer
to $4.10 per share.

Moreover, the connections between US Realty's board of directors and
Security Capital raises questions about the "arms length" negotiations
between U.S. Realty and its largest shareholder, Security Capital.

Despite the close relationship between the two companies, the directors
of U.S. Realty still have a fiduciary obligation to seek the highest
possible price for US Realty in a transaction that will maximize
shareholder value.

HERE is a member of the Council of Institutional Investors and is active
in shareholder corporate governance issues and has researched Security
Capital in connection with an organizing drive at one of its affiliated
companies, InterParking.


TOBACCO LITIGATION: Opening Arguments Under Way in W. VA Trial
--------------------------------------------------------------
Cigarettes have killed more people than America's five major wars, and
manufacturers should pay for medical tests that could detect future
deaths sooner, lawyers for smokers said during opening statements in a
class-action lawsuit trial Tuesday.

The lawsuit involves 250,000 West Virginians who have smoked the
equivalent of a pack a day for five years since 1995, but who do not
currently have a tobacco-related illness.

The smokers want a six-person jury to order the creation of
court-supervised and industry-funded medical board so they can get free
tests to detect illnesses such as lung disease and emphysema.

The plaintiff smokers say the two kinds of tests could save or prolong
lives, and want the jury to declare that medical mnitoring is a
reasonable way to detect lung disease and emphysema.

The tobacco industry, which was scheduled to make its opening statements
Tuesday afternoon, has said medical monitoring tests could cost them up
to $500 million.

Tobacco industry's lawyers have argued that smokers have knowingly and
voluntarily exposed themselves to a risk that has been publicized on
warning labels for decades.

The plaintiffs, however, say manufacturers were negligent in disclosing
the extent of the health risks associated with smoking, which they say
are far greater than an ordinary consumer would expect.

The smokers also maintain that warning labels are inadequate, that
cigarettes have a design defect, and that manufacturers have failed to
incorporate changes that would make their products safer.

West Virginia's case is the first class-action medical monitoring lawsuit
against a tobacco company to make it to trial in the United States.

The cigarette manufacturers named in the lawsuit are: Philip Morris,
Brown and Williamson, R.J. Reynolds, Lorillard, and Liggett Group.

Four of the five defendants collectively have 96 percent of the U.S.
market share: Philip Morris Inc. of New York; Brown & Williamson Tobacco
Corp. of Louisville, Ky.; R.J. Reynolds Tobacco Co. of Winston-Salem,
N.C.; and Lorillard Tobacco Co. of New York.

Also targeted are industry turncoat Liggett & Myers Tobacco Co. of
Mebane, N.C., whose top executive is expected to be a key witness for the
smokers, and two West Virginia distribution companies, McClure Company
Inc. and Anchor Tobacco Co. (The Associated Press State & Local Wire,
January 9, 2001)


WINDSTORM UNDERWRITING: FL Suit Seeks to Block Rates Arbitration Ruling
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Five South Florida residents are asking a Florida court to declare a
state-mandated arbitration panel unconstitutional in the hope that the
ruling could void rising windstorm insurance rates.

The lawsuit was filed as a class action in Leon County Circuit Court last
week and seeks to block an increase that could be more than 200 percent
for some area homeowners.

Legislators created the arbitration panel in 1997 to settle rate-increase
disputes between insurance companies and the insurance commissioner in a
speedy manner. Proponents of the panel have argued that it takes power
out of the hands of the commissioner.

The three-member arbitration panel granted Florida Windstorm Underwriting
Association an average 96 percent statewide increase early last year,
overturning a decision by then-Insurance Commissioner Bill Nelson to
block the increase.

This isn't the only court case involving the windstorm association.
Nelson last summer filed a lawsuit that is still pending with the First
District Court of Appeals, contending that the panel took too long to
make a decision.

According to the latest lawsuit, the wind pool association's recent rate
increase and the constitutionality of the arbitrators who approved that
increase are "in doubt and in need of judicial declaration." The lawsuit
asks the court to consider the validity of the rate increase and the
approval process. It also asks for refunds and for the association to pay
attorney's fees.

The arbitration panel consists of one person selected by the insurance
company, one chosen by the Department of Insurance and a third selected
from a list of people nominated by the American Arbitration Association.

The wind pool, listed as a defendant, has not received any information
about the suit, said spokesman Ron Natherson.

Wind pool rates started to rise 20 percent last July. Premiums will
increase 30 percent this year and 40 percent in subsequent years until
the new rate is reached. Some South Florida residents will have a while
before the final tab comes due because it could take five to six years
for the whole increase to kick in.

Paul Zimmerman, an orthopedic surgeon from Miami, is listed as a
plaintiff on the lawsuit. He is a windstorm association policyholder and
owns homes on Miami Beach and in the Keys. "I just feel it's unfair and
inappropriate to have raises that are a factor of two or three times what
your rates had been previously without there being scrutiny by the
state," he said. He's been with the wind pool for several years, after
being dropped by his previous insurer. Zimmerman said he was "angered"
when he heard about the wind pool increase. "I felt that I had no
representation on the side of the insurers," he said.

Already, a handful of bills have been introduced in the state Legislature
to ban or restructure the arbitration panel. But what impact that will
have on the wind pool association's rate increase remains questionable
because it's still unclear if legislators will actually take up the
matter. About 431,000 homeowners statewide are with the wind pool; South
Florida represents 65 percent of the total.

Current Insurance Commissioner Tom Gallagher has also said he will work
to abolish the panel.

Sam Miller, spokesman for the Florida Insurance Council, said insurers
are willing to do without an arbitration panel as long as they still have
a "fast, fair and final" avenue to appeal. "Commissioner Gallagher, like
Commissioner Nelson, is very much opposed to the arbitration panel," he
said. "However (Department of Insurance officials) have indicated, that
if we have to go back to court as our avenue of appeal, they might look
for ways to speed that (process) up."

Before the arbitration panel was put in place, insurers would appeal the
commissioner's decision through the courts. The process could take two to
three years. For insurance companies, that lengthy process could mean
years before they get the extra cash to cover losses. (Sun-Sentinel (Fort
Lauderdale, FL), January 9, 2001)


ZARING NATIONAL: Sued over Mold Related Issues in OH Luxury Home Sites
----------------------------------------------------------------------
During 1999, the Company became aware of certain moisture and mold
related issues in certain of its luxury site-built home communities in
Mason, Ohio. The Company says it has vigorously pursued various
remediation initiatives in an effort to address the various homeowner
concerns.

In March 2000, a purported class actions suit was filed by a homeowner
which claimed compensatory damages of more than $25, treble and punitive
damages and other costs. The Company intends to vigorously defend this
matter. However, given the preliminary nature of this case, the
uncertainty relative to the potential costs of remediation and the
uncertainties relative to the scope of insurance coverage available, the
Company is currently uncertain as to the magnitude of the potential
uninsured liability associated with the case.


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

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

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

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