CAR_Public/010207.MBX                C L A S S   A C T I O N   R E P O R T E R

              Wednesday, February 7, 2001, Vol. 3, No. 27

                             Headlines

AMERICAN EXPRESS: Sets Aside $215M for Insurance And Annuity Sales Suit
AVENTIS: StarLink Lawsuit Filed in Iowa Court; Fd Suits Filed in IL
BOSTON SCHOOL: Judge Ordered to Step Down from Student Assignment Case
CENTRAL EUROPEAN: 2nd Cir Affirms Dismissal of Suit Re Trading Discount
CREDIT CARDS: Retailers Defend Class Status in Visa, MC Case in Ap. Ct.

HYGRADE FOOD: Judge Denies Class Status for Race Bias Suit
INMATES LITIGATION: OK City Corrections Board OKs $400,000 Atty. Fees
KOREAN AIR: Shanghai Court Reaches Compensation Verdict On Crash Damage
MICROSOFT CORP: Lawyer Challenges $27M in $97M Permatemps Settlement
MICROSOFT CORP: MD Judge Throws out MDL Private Antitrust Suits

NSW POLICE: Aussi Business leaders Fed up with Drug Problem Plans Suit
NY CITY: Scenario of Parks Commissioner's Defense and Theatrics
PARAMETRIC TECHNOLOGY: Moves to Dismiss Amended Securities Suit in MA
QUALCOMM: Sues Ex-Workers Transferred to Ericsson for Costs in Lawsuit
SAVINGS BANK: MA Judge Sides with Insurer in 1998 Shareholder Suit

TOBACCO LITIGATION: NLJ Talks about Future of Lawsuits in Bush Era

                           *********

AMERICAN EXPRESS: Sets Aside $215M for Insurance And Annuity Sales Suit
-----------------------------------------------------------------------
American Express sets aside $215 million to pay as many as two million
customers. American Express Financial Corp. is settling a class-action
claim alleging fraudulent and deceptive insurance and annuity sales
practices.

The settlement was approved by a district court in Minneapolis in
September 2000, and class members had until Jan. 29, 2001, to
participate. American Express has set aside $215 million for class
members and will pay up to $28 million in plaintiffs' attorneys fees.

The products involved were issued primarily by IDS Life Insurance Co., an
American Express subsidiary, and sold by reps with American Express
Financial Advisors.

At press time, it was not known how many of the more than two million
eligible customers will apply for relief, according to Brad Friedman, one
of the attorneys for the class with Milberg Weiss Bershad Hynes & Lerach
in New York. The settlement covers policyholders from Jan. 1, 1985, to
Feb. 29, 2000.

The plaintiffs alleged that the firm and its brokers churned insurance
policies and annuities, overstated product performance, misrepresented
insurance as an investment product, and wrongly sold annuities to
qualified plans and senior citizens.

American Express was aware of the churning activity, trained advisers to
encourage replacement and provided sales materials to that effect,
according to the complaint. The suit claims that more than 25% of IDS'
insurance sales were internal replacements.

The firm would not comment on specific allegations, and in settling the
suit, admits no liability.

Class members have three options - general relief, which provides an
accidental death benefit; internal replacement relief, whereby
transaction costs of replacement are restored; or an individual claims
review.

A fairness hearing is scheduled in March to review the response of class
members. American Express expects to pay the claims throughout this year,
according to Tom Joyce, a Minneapolis-based spokesperson for the firm.

"We are pleased that the settlement has been reached and that we can put
this issue behind us," Joyce says. (Registered Representative, February
2001)


AVENTIS: StarLink Lawsuit Filed in Iowa Court; Fd Suits Filed in IL
-------------------------------------------------------------------
A class-action lawsuit has been filed in Polk County District Court on
behalf of Iowa farmers who believe they lost money because of consumer
fears caused when an unapproved biotech corn wound up in the nation's
food supply. The lawsuit filed Monday seeks compensation for farmers who
grew other approved varieties of corn, but believe concern over the
StarLink mix-up led to lower corn exports and prices last year.

Des Moines attorney Roxanne Conlin said the Iowa court system can provide
quicker relief for Iowa farmers than similar lawsuits pending in federal
court.

Federal class-action lawsuits were filed on behalf of non-StarLink
growers nationwide in December against Aventis. One was filed in Cedar
Rapids and another in East St. Louis, Ill. Conlin said the federal courts
could move the class-action lawsuits to any federal court location in the
country, "and the delay that is endemic to that is not going to help Iowa
farmers next summer." Conlin also contends the state court has
jurisdiction because the damage sustained by individual class members was
less than $75,000.

An Aventis spokeswoman declined to comment, citing pending litigation.

StarLink, which was genetically engineered to resist European corn
borers, was never was approved for human consumption because of
unresolved questions about whether a special protein it contains can
cause allergic reactions.

In September, StarLink was found in taco shells and other foods,
prompting a slew of product recalls. Aventis pulled StarLink from the
market. (The Associated Press State & Local Wire, February 6, 2001)


BOSTON SCHOOL: Judge Ordered to Step Down from Student Assignment Case
----------------------------------------------------------------------
A federal appeals court on February 5 ordered a judge to recuse herself
from a case challenging Boston's race-based student assignment plan
saying that she had created the perception she was biased by publicly
commenting on the case.

In a 16-page decision ordering US District Judge Nancy Gertner to step
down from the case, the US Court of Appeals for the First Circuit wrote,
"In so doing, we emphasize that [this] in no way indicates a finding of
actual bias or prejudice, nor does it suggest that the trial judge
abdicated any of her ethical responsibilities."

The appeals court granted a petition to remove Gertner filed by 10 white
children and Boston's Children First, a pro-neighborhood school group,
which filed a lawsuit against the city in June 1999 alleging that white
students were unconstitutionally denied admittance to certain public
schools because of their race.

Attorney Chester Darling, who represents the plaintiffs, accused Gertner
of engaging in "a public dispute" with him after she was quoted in a
Boston Herald article about the lawsuit.

But in an order issued last year, Gertner wrote that she sent a letter to
the Herald to correct several errors in a story about the lawsuit -
including a claim that she had denied a request to allow the case to go
forward as a class-action suit. In fact, Gertner hadn't ruled on the
request.

In her letter to the Herald, Gertner wrote, "The issues raised by the
Boston School lawsuit are among the most important issues that a court
can address. They affect our children and their education. They have an
impact on our city and all the communities of which we are a part. While
one hopes that a newspaper is careful in all of the issues it covers,
surely you would agree that this is an area in which a newspaper must be
especially careful."

Gertner was quoted in a Herald story as saying the school case was "more
complex" than an unrelated case in which she granted class-certification
to female inmates who had been strip-searched at the Suffolk County Jail.

The appeals court wrote that Gertner "understood her own comments as
entirely ethical explanations of the reasons behind court procedures."

Still, the appeals court said that judges must be "particularly cautious"
about commenting on pending cases and it was irrelevant whether Darling
had provided misinformation to the public.

"The issue here is whether a reasonable person could have interpreted
Judge Gertner's comments as doing more than correcting those
misrepresentations and creating an appearance of partiality," the court
wrote. "We feel that, on these facts, a reasonable person could do so."

Darling declined to comment on the ruling, saying, "the decision speaks
for itself."

Attorney Charles Rankin, an authority on First Amendment law, said, "I
think it's an extraordinary decision. It gives a license for the
unscrupulous to lie or distort what happens in court and it hamstrings a
judge's ability to correct the record."

Shortly after the lawsuit was filed, the Boston School Committee voted to
drop race-based student assignments, which were the remnants of the
court-ordered plan that forced Boston to desegregate its schools in the
1970s. (The Boston Globe, February 6, 2001)


CENTRAL EUROPEAN: 2nd Cir Affirms Dismissal of Suit Re Trading Discount
-----------------------------------------------------------------------
On December 23, 1998, a complaint purporting to be a class action was
filed against the Central European Equity Fund, its Manager, Investment
Adviser and its Directors, alleging such parties failed to take adequate
steps to diminish the trading discount of the Fund's shares. On December
29, 1999, the district court dismissed the complaint in its entirety. The
decision was appealed and on October 13, 2000, the United States Court of
Appeals for the Second Circuit affirmed the dismissal. It is not yet
known whether the plaintiffs intend to seek further review of the
dismissal.


CREDIT CARDS: Retailers Defend Class Status in Visa, MC Case in Ap. Ct.
-----------------------------------------------------------------------
A three-judge panel from the U.S. Court of Appeals for the Second Circuit
heard arguments Monday on whether to strip class-action status from the
lawsuit filed by a group of retailers against Visa and MasterCard but
made no ruling.

The judges can issue a decision at their discretion on a ruling by U.S.
District Judge John Gleeson that the case initiated by Wal-Mart Stores
Inc., Sears, Roebuck and Co., and many other retailers should be a class
action.

The retailers are contesting the rules and prices that Visa U.S.A. and
MasterCard International set for debit cards, and they are seeking rule
changes and cash compensation.

Lawyers for the card associations argued that the class that was
certified which includes the four million U.S. merchants that accept Visa
and MasterCard-branded cards, including mom-and-pop stores as well as
Wal-Mart and Sears -- is too large to be manageable and too diverse to
have common interests. The associations' lawyers said that Judge
Gleeson's decision and reasoning were faulty, and that he himself had
acknowledged that there was room to appeal his decision. "When Judge
Gleeson said we could object, I suggest he revealed the analytical error
that he made," said Stephen V. Bomse, a lawyer for Visa.

Visa and MasterCard attorneys said that retailers are affected by
interchange rates differently, depending on whether they handle more
debit than credit card transactions, or vice versa.

But Lloyd Constantine, the lead lawyer for the merchants, said that all
the members of the class face the same problem: The fees that Visa and
MasterCard set for their signature-based debit card products are
significantly higher than those charged by other organizations for
PIN-based debit cards. "All four million merchants signed an identical
contract," Mr. Constantine stressed repeatedly. He told the appellate
judges that "a great degree of deference is due to the district court"
and that overturning its decision would be tantamount to ruling that
"Judge Gleeson seriously abused his discretion."

During the hearing, Judge Sonia Sotomayor interrupted both sides to ask
whether each is fully prepared to go to trial. "You need no more
discovery? You're ready for trial?" she asked Mr. Bomse. He replied,
after some hesitation, "Discovery is complete."

Mr. Bomse told the judges that merchants pay 40 different interchange
fees and that changing two of them -- as the merchants have requested --
would affect the entire pricing structure. "You can't simply change one
part of the world and expect the rest to remain the same," he said.

If the case revolved solely around the "honor all cards" rule and not the
monetary damages, "we'd have a much simpler case," Mr. Bomse said. But
when he suggested that the plaintiffs drop their request for monetary
damages, Mr. Constantine said, "I'm not ready to do that."

Lawyers for Visa and MasterCard said the "honor all cards" rule, which
requires merchants that take Visa and MasterCard credit cards to accept
those brands of debit cards as well, does not stop any merchant from
"steering" a customer to pay with a card the merchant prefers.

One piece of evidence that is likely to be included in the case is a
Wal-Mart employee training video in which cashiers are instructed to
prompt debit card users to type in a PIN, which suggests that the
retailer is trying to discourage signature-based debit cards.

"Steering is widely practiced," said Mr. Bomse, a partner in the San
Francisco firm of Heller, Ehrman, White & McAuliffe LLP. "Visa does not
in any way inhibit steering."

Mr. Constantine said the associations have changed their tune because of
the retailers' suit. Strict anti-steering rules were in force when the
complaint was filed in early 1997, he said, and as the case has unfolded,
the associations "tried to change the record, they tried to rewrite
history."

After the hearing Noah Hanft, MasterCard's general counsel, said Mr.
Constantine had been completely mistaken about the existence of
anti-steering rules. "He knows better than that," Mr. Hanft said. (The
American Banker, February 6, 2001)


HYGRADE FOOD: Judge Denies Class Status for Race Bias Suit
----------------------------------------------------------
A federal judge has refused to certify a class-action race discrimination
suit brought by black workers at Hygrade Food Products Corp. after
finding that Title VII cases are no longer appropriate for class
treatment due to the provisions of the Civil Rights Act of 1991 that
allow for compensatory and punitive damages.

In his 14-page opinion in Miller v. Hygrade Food Products, Senior U.S.
District Judge Lowell A. Reed Jr. found that prior to the passage of the
1991 Civil Rights Act, most Title VII pattern and practice class actions
which alleged intentional discrimination were certified because the Civil
Rights Act of 1964 allowed for very little relief beyond injunctive and
declaratory relief. But now that the 1991 Act has been enacted, Reed
said, "Title VII class certification is much more debatable."

Reed followed the lead of the 5th U.S. Circuit Court of Appeals' 1998
decision in Allison v. Citgo Petroleum Corp. which, he said, called into
question "the general propriety of Title VII classes because of dramatic
effects that 1991 Act has on Rule 23." In a footnote, Reed said he found
"no reported decision where a court within this circuit has certified a
Title VII litigation class since the passage of the 1991 Act," although
one Eastern District of Pennsylvania judge has certified a settlement
class under Title VII. In Allison, Reed said, the court "established a
test for determining when, if both injunctive and declaratory relief as
well as monetary relief are sought, the former would be deemed the
primary relief sought." Under the Allison test, Reed said, "monetary
relief predominates in [Rule 23] (b)(2) class actions unless it is
incidental to requested injunctive or declaratory relief." Applying the
test to the claims brought by the Hygrade workers, Reed found that the
class of up to 200 workers cannot be certified. "Assuming arguendo that
Hygrade operated in a discriminating manner, calculating compensatory and
punitive damages, as opposed to simply back pay, of 200 persons would
prove to be quite an individualized task," Reed wrote. "Presumably, some
members will have needed medical care, while others will not. In some
cases, the family of the members will have been affected, while in other
cases, such a probe will be unnecessary. These concerns represent only a
sampling of the individualized nature of appraising damages."

As a result, Reed concluded that "in the present action, monetary relief
predominates and precludes (b)(2) certification."

In the suit, nine black workers from Hygrade a subsidiary of the Sara Lee
Corp. that employs about 300 workers at its Philadelphia facility where
it produces and packages hot dogs, bacon and ham alleging that Hygrade
has engaged in a continuous pattern and practice of intentional race
discrimination and racial harassment. Their lawyers, Robert T. Vance of
Philadelphia and Cynthia L. Butler of Butler & Spears in Washington,
D.C., specifically allege that Hygrade's employment decisions regarding
discipline, termination, compensation, training, work assignment, hiring
of temporary employees, and promotions are determined in a "highly
subjective" manner at the hands of a "small, virtually entirely
non-black, central group of people." The suit also says Hygrade condones
"a racially hostile work environment."

Vance and Butler sought to represent a broad-based class of all
African-Americans employed at or who were not hired for permanent
employment from a temporary position at the Philadelphia facility from
May 1, 1993, to June 1, 2000.

But Hygrade's lawyers Patrick J. Doran and Howard Rosenthal of Pelino &
Lentz in Philadelphia, along with William A. Blue, S. Craig Moore and
Angela Marie Hubbell of Constangy Brooks & Smith in Nashville, Tenn.
strongly opposed class certification, arguing that the nine workers could
never meet the test under Rule 23 to establish commonality and typicality
of the claims.

To respond, the plaintiffs' team brought in a group of class action
specialists from Berger & Montague including attorneys Stephen A.
Whinston, Jerome M. Marcus, Jonathan Auerbach and Shanon J. Carson.In
their brief, the Berger team urged Judge Reed not to follow Allison. "It
is simply inconceivable that Congress gave Title VII plaintiffs damage
remedies with one hand and at the same time took away with the other hand
the only effective enforcement mechanism the (b)(2) class action. Such an
abrupt turnaround should only be inferred when it can be supported with
specific legislative history," they wrote. Instead, they argued, a "more
logical" reading of the 1991 Act is that Congress was aware of decades of
class action litigation under Title VII and assumed that the new
compensatory damage awards would be handled the same way as back pay
awards. "There is nothing inherently more difficult or complicated in
individualized determinations of compensatory damages that would make
such awards inappropriate under (b)(2) when individualized awards of
backpay are already an accepted procedure," they wrote.

But Reed disagreed, finding that the class could never meet the
provisions of Rule 23(b). In the 1991 Act, Reed said, Congress amended
the Civil Rights Act of 1964 in two critical ways first by adding the
remedies of compensatory and punitive damages for suits alleging
intentional discrimination and second by allowing either side to demand a
jury trial.Under the new law, Reed noted, compensatory damages include
relief for "future pecuniary losses, emotional pain, suffering,
inconvenience, mental anguish, loss of enjoyment of life, and other
nonpecuniary losses." Punitive damages, he said, are allowed where the
employer discriminates "with malice or with reckless indifference to the
federally protected rights of an aggrieved individual."

The 1991 Act caps damages at a maximum of $ 300,000 per plaintiff.Prior
to these amendments, Reed said, Title VII cases only allowed for back pay
and other equitable remedies. "These new remedies translate into a
greater diversity and complexity of the issues to be adjudicated," Reed
wrote. Before the 1991 Act was passed, Reed said, both the liability and
the remedy phases were determined in bench trials. "This amendment
creates potential management concerns as well as Seventh Amendment
problems," he wrote. Under Rule 23(b)(2), Reed said, classes "must be
cohesive, particularly because unnamed members are bound by the decision
with no opportunity to opt-out. In other words, disparate factual
differences can bar class certification." When a class suffers from a
common injury and seeks class-wide relief, Reed found that "there is a
presumption of cohesion." By contrast, he said, "where a class seeks
monetary relief, the class becomes less cohesive because assessing these
damages often necessitates an examination into individual claims." Reed
found that the Allison test has been accepted by numerous appellate and
district courts and holds that "monetary relief predominates in (b)(2)
class actions unless it is incidental to requested injunctive or
declaratory relief." Although a few courts have criticized Allison, Reed
said he found "no court in this land which has created a superior test."

Allison identified three factors that define "incidental" damages that
they should be of the kind to which class members would be automatically
entitled; they should be computable by "objective standards," and not
standards significantly reliant upon "the intangible, subjective
differences of each class member's circumstances;" and they should not
necessitate additional hearings.

At oral argument before Reed, Whinston took the position that because
only injunctive relief would cure the alleged discrimination, injunctive
relief was the primary relief sought.

Reed disagreed, saying "the problem with this argument is that it fails
to create a test which takes the need for cohesion into consideration.
Put another way, even if this court were to adopt the plaintiffs' test,
Rule 23 (b)(2) certification would still be barred because the
individualized damage inquiry creates a non-cohesive class." The
plaintiffs, Reed said, brought claims alleging across-the-board
discrimination in the areas of discipline, termination, compensation,
training, work assignment, hiring of temporary employees and promotions,
as well as a hostile work environment. "The plaintiffs are not claiming
that each worker was affected by the alleged discriminatory practices in
the same manner. Rather, subjective standards will apply as the putative
class includes individuals employed in different divisions, under
different supervisors, for varying durations of time over a seven-year
period."

Whinston also argued that if equitable relief includes back and front
pay, then it can also include compensatory and punitive damages,
especially in light of the statutory cap on damages.

But Reed said "plaintiffs seem to be arguing that if pre-1991 Act Title
VII classes could be certified under (b)(2) despite the fact that the
class was seeking back and front pay, then the added remedies should not
bar certification."

Attorney Lisa M. Rau of Kairys Rudovsky Epstein Messing & Rau, who is not
involved with the Miller case, said she believes Reed's ruling is wrong.

Rau said she has brought several class actions on behalf of workers in
recent years, including one certified under Title VII by Senior U.S.
District Judge Clarence C. Newcomer and two others under the Americans
with Disabilities Act that were also certified and included claims for
compensatory damages. The 3rd Circuit addressed the question in Baby
Neal, Rau said, and held that courts can't use individual damages issues
as reason not to certify a class. Rau said the 1991 Act hasn't changed
anything on the issue of class certification since the plaintiffs still
share enough common questions that the court should use the vehicle of
class action as a method of conserving judicial resources. "It's
important to remember that the primary purpose of a class action is
judicial economy and management," she said. And in reality, Rau said, the
damages issues won't be a concern because, if the court bifurcates the
issues and holds a trial on liability first, the defendant will usually
settle once liability has been established. (The Legal Intelligencer,
February 1, 2001)


INMATES LITIGATION: OK City Corrections Board OKs $400,000 Atty. Fees
---------------------------------------------------------------------
The Oklahoma Board of Corrections voted 4-2 on Monday to pay two Tulsa
attorneys $400,000 in legal fees to end a class-action prison lawsuit.
The Oklahoma Legislature will have to approve the payment to attorneys
Louis Bullock and Thomas Seymour.

The board's action would bring to $1.38 million the state Department of
Corrections has paid to the lawyers in the Battle vs. Anderson lawsuit on
prison conditions, Corrections Director James Saffle said.

Bullock and Seymour had asked for $536,275. The $ 400,000 is for work
they performed since 1999. The lawsuit filed in 1972 alleged in part that
the Corrections Department was deliberately indifferent to medical care
for inmates.

After several hearings on whether prison medical care was inadequate,
U.S. District Judge Michael Burrage ruled Jan. 28 that the medical system
was constitutional. But he also said that without efforts by Bullock and
Seymour, the department's changes would not have happened.

The $400,000 will come from $600,000 the department had set aside to
automate prison medical records. Medical care to inmates will not be
affected as a result of the board's tapping the medical budget, Saffle
said.

Board chairman Randy Wright joined board member Robert Rainey in voting
against the payment. Rainey would not comment on his reasoning. Wright
said he didn't know how he was going to vote until the last minute.

The office of Oklahoma Attorney General Drew Edmondson recommended that
the board pay the $400,000. The board's action would bring to $1.38
million the state Department of Corrections has paid to the lawyers in
the Battle vs. Anderson lawsuit on prison conditions, Corrections
Director James Saffle said. (The Associated Press State & Local Wire,
February 6, 2001)


KOREAN AIR: Shanghai Court Reaches Compensation Verdict On Crash Damage
-----------------------------------------------------------------------
A compensation verdict over foreign airlines' damage to Chinese
residents, believed to be the first of its kind in China, has taken
effect this week, according to the court.

The No.1 Higher People's Court of Shanghai ruled late last year, that the
Korean Air should pay 37 Shanghai residents 80,000 to 120, 000 yuan
(9,639 to 14,458 US dollars) in compensation for damages they suffered in
an air crash in 1998.

On the afternoon of April 15, 1998, a cargo plane of the Korean Air,
leaving Shanghai for Seoul, crashed after going up 1,000 meters, then
crashing down on a construction site in the Minhang District of Shanghai,
killing three workers on the ground and leaving dozens injured. The crew
members all died.

The flying wreckage and shock waves damaged buildings around the crash
site. The plaintiff, the 37 residents living in the Qinyuanchun Residence
Area where the crash and subsequent explosion took place, said in the
indictment that the crash did great harm to their houses and also to
their psyche.

They staged the class suit and asked for a public apology from the
company and a total of 7 million yuan (about 843,000 US dollars) in
compensation.

At a public hearing held by the Shanghai higher court last November, the
plaintiff presented proof of damage.

The representative of the defendant made the apology and expressed the
company's will to compensate for the damages.

The higher court decided upon the verdict that the company pays for the
damages and economic losses the residents suffered due to crash, which
interrupted their normal living and working state.

It is learnt the verdict has gone into effect since both sides have not
made an appeal within the fixed time. (Xinhua General News Service,
February 6, 2001)


MICROSOFT CORP: Lawyer Challenges $27M in $97M Permatemps Settlement
--------------------------------------------------------------------
A lawyer known for intervening in class-action lawsuits is questioning a
$27 million payment to lawyers representing "permatemps" as part of a $97
million settlement with Microsoft Corp.

A hearing is set for Feb. 15 before U.S. District Judge John C.
Coughenour on the challenge brought by Lawrence Schonbrun of Berkeley,
Calif., acting on behalf of some plaintiffs, to the payment to Bendich,
Stobaugh & Strong of Seattle.

"All we're asking is that the court review whether that's a fair figure,"
Schonbrun said.

Lawyers from the small law firm say he is taking advantage of the case.
"This isn't about our payday," said lawyer Steve Strong. "It's about
his." They say the lead plaintiff, Donna Vizcaino of Phoenix, Ariz.,
hired Schonbrun after they refused to give her more money from the
settlement.

Vizcaino stands to receive $65,000. "I said I wasn't getting enough and I
thought they were getting too much," she said. "Maybe I shouldn't have
brought those two things up together."

The case involved claims that Microsoft hired workers as temporaries or
on contract, sometimes for years, to avoid paying benefits that would be
required for employees. As many as 12,000 workers could receive hundreds
to thousands of dollars each in the settlement.

The plaintiffs originally agreed that their lawyers would get 30 percent
of any award or settlement, later reduced to 28 percent. The case was
filed in 1992 and dismissed in trial court, then went to the 9th U.S.
Circuit Court of Appeals three times and to the Supreme Court before
being settled. "We worked on this case for years and years at
considerable risk and expense and achieved a good result," Strong said.
"I find this all more than a little irritating."

Schonbrun was paid $100,000 to drop his appeal in a $500 million
Louisiana Pacific siding class-action settlement in 1996. A 9th Circuit
judge has characterized him as "something of a class-action-settlement
gadfly."

"In an odd way, these kinds of attacks are flattering," Schonbrun said.
"Lawyers will do a lot to hold onto that kind of money." (The Associated
Press State & Local Wire, February 6, 2001)


MICROSOFT CORP: MD Judge Throws out MDL Private Antitrust Suits
---------------------------------------------------------------
Thirty-eight private antitrust lawsuits pending against Microsoft Corp.
in multidistrict litigation were thrown out Jan. 12 because plaintiffs
purchased Windows from computer manufacturers, and not from the software
giant directly (In re Microsoft Corp. Antitrust Litigation, MDL No. 1332,
D. Md.).

Judge J. Frederick Motz of the U.S. District Court for the District of
Maryland relied heavily on the precedent set by Illinois Brick Co. v.
Illinois (431 U.S. 720 [1977]), in which the U.S. Supreme Court
established the "indirect purchaser" rule, by which a party that does not
purchase a product directly from an antitrust violator cannot bring a
treble damages action under the Clayton Act for an illegal overcharge.

                         EULA 'Not Sufficient'

Plaintiffs argued that although they did not buy software directly, the
product they purchased was not software, itself, but an end-user license
agreement (EULA) which directly linked them with Microsoft. Judge Motz
rejected the assertion, however, as not sufficient to make the consumer a
"direct purchaser within the meaning of Illinois Brick."

"The software was installed on a computer prior to purchase, from either
an OEM [original equipment manufacturer] or a retail dealer, and the EULA
accompanied the software at purchase. While the terms of the EULA running
to the consumer are different from those of the license running from
Microsoft to an OEM, that fact is of no present relevance. Whether the
consumer buys software or the EULA, the immediate economic transaction
constituting the purchase occurs between the consumer and an OEM or
retail seller," Judge Motz held.

                           'Squarely' Barred

The question of whether plaintiffs had claimed treble damages for an
illegal overcharge was not as easily disposed of, however.

According to the decision, the damages claimed in the case fall into four
general categories: "supra-competitive prices" for Windows and
application programs Word, Excel and Office Suites; denial of the benefit
of technologically superior products, including alternative operating
systems, application programs and middleware products; increased
restrictions on plaintiffs' EULA rights; and degradation of computer
performance by the tying of Internet Explorer to Windows.

Illinois Brick "squarely" bars plaintiffs from claiming
"supra-competitive prices," Judge Motz found. Plaintiffs lack standing to
argue denial of the benefit of technologically superior products because
"it is merely coincidental that they purchased Microsoft products at
all," the decision states.

"The damage they allege is a generalized societal harm and, under
well-established principles, the suffering of such damage is insufficient
to confer standing upon them," Judge Motz held.

                             'Death Knell'

The third claim for treble damages, increased restrictions on EULA
rights, was deemed the "death knell" by Judge Motz because if plaintiffs
had paid too much for what they received and were damaged as a result,
Illinois Brick presumes that the OEMs and retail dealers from whom
plaintiffs made their purchase likewise paid too much.

"The very purpose of the Illinois Brick rule is to prevent indirect
purchasers, such as plaintiffs, from recovering any portion of a
passed-through overcharge," Judge Motz stated.

Accusations by the plaintiffs that Internet Explorer drained memory,
decreased speed and increased the risk of security breaches was rejected,
as well, because the claim does not constitute "antitrust injury."

"Plaintiffs may have claims sounding in products liability law, but their
antitrust claims go a stretch too far," Judge Motz held.

The 38 cases dismissed by Judge Motz represented 64 class action lawsuits
filed in federal courts throughout the country which were later
consolidated for pretrial hearings. Judge Motz certified the cases for an
appeal to the Fourth Circuit, which plaintiffs are expected to pursue.
Twenty-five cases which originated in states that allow indirect
purchasers to sue for damages were not affected by the ruling. (Mealey's
Year 2000 Report, January, 2001)


NSW POLICE: Aussi Business leaders Fed up with Drug Problem Plans Suit
----------------------------------------------------------------------
Business leaders fed up with Cabramatta's drug problem have begun moves
to launch a class action against the New South Wales Police Service,
alleging community neglect.

Despite a raft of perceived difficulties, Australia's biggest plaintiff
group, Slater and Gordon, has agreed to examine the concept.

Preliminary discussions with the firm happened about a week ago,
Cabramatta Chamber of Commerce President Ross Treyvaud said. Further
talks on the prospects of the landmark case are expected within a
fortnight. "It would undoubtedly be a very tough road," Slater and Gordon
spokesman John Park said. "State laws are in flux at the moment in regard
to suing government departments for neglect." "But we've agreed to
examine some very fundamental points of law and get back to them."

The bid comes as irate shopkeepers threaten to set up their own vigilante
group in the drug-ravaged suburb, according to evidence to a state
parliamentary committee.

Confidence in conventional law enforcement in Australia's heroin Mecca
was at an all time low among Vietnamese residents, the inquiry was told.

"My suggestion is if police are not doing their job properly, the
government should give us the funds so we can get our own private
security," said one lingerie shop owner who gave evidence.

Jenny Tew said crime levels in Cabramatta were now so bad half her
customers and staff had been scared off. Up to a dozen shots were fired
in a carpark at the back of her business February 5 afternoon, she said.
Police duly examined the scene, but the dealers were still operating in
full view as officers recovered the spent cartridges, Mr Treyvaud said.
Along the same strip, up to 20 pushers and their heavies were plying
their trade and threatening retailers on a daily basis, he said.

Fairfield counsellor Thang Ngo said he was opposed to the community
taking the law into its own hands in response. But by the same token, he
noted the frustration which had sparked the sentiment. "While I don't
condone what they're doing ... you have to look at it from their point of
view," he said. "They're getting no satisfaction. "They can kind of
understand that the police have a lot of red tape to go through. "So
they're saying: 'We can deal with that much better and more efficiently
because it's impacting on us and we've just run out of patience'."

While conceding the class action alternative was a long shot, Mr Treyvaud
said there was enough support for the idea to see it through. "We know
we're up against it, but the solicitors have told us they're willing to
have a look to see if we can get a bite," he said. "We appreciate that
policing is such an objective concept but where else do we go? "For way
too long in relation to the drug problem, the police have simply failed
our community." (AAP Newsfeed, February 6, 2001)


NY CITY: Scenario of Parks Commissioner's Defense and Theatrics
---------------------------------------------------------------
Parks Commissioner Henry J. Stern found himself under siege on February 5
as he defended himself in an impromptu, chaotic news conference in the
City Hall rotunda against federal charges of racial discrimination in his
department.

Minutes later, he made his way upstairs and theatrically answered an
unrelated City Council subpoena about millions of dollars donated to his
department. As the television cameras rolled, Mr. Stern had his employees
carry 46 boxes of subpoenaed department financial records into the City
Council chamber.

Mr. Stern clearly took the charge of discrimination, made last week by
the Equal Employment Opportunity Commission and announced February 5 by a
group of Parks and Recreation Department employees and their lawyers,
more soberly. "If what the commission says is true, then we are seriously
at fault," Mr. Stern told reporters. "What we have to do is show you on
the basis of evidence, on the basis of names, positions, process, that
they're mistaken." Mr. Stern said the evidence would be forthcoming.

An investigation by the equal employment commission's New York district
office found that it has "reasonable cause" to believe that the parks
department illegally discriminates on the basis of race in promoting
employees and that the department's "supervisory lines of authority are
almost completely segregated by race and color."

Mr. Stern began his tumultuous visit to City Hall shortly before 1 p.m.,
when he arrived at the front door unshaven and with disheveled hair and a
baseball cap that was dripping wet from the sleet outside. As he walked
through the rotunda to the mayor's office, Mr. Stern was surrounded by
reporters. He made several statements, then disappeared into Mr.
Giuliani's office.

About 15 minutes later, Mr. Stern reappeared, freshly shaven and much
neater, for his hearing before the City Council. When asked what he had
discussed with Mr. Giuliani, Mr. Stern replied, "He told me to comb my
hair."

As Mr. Stern testified before the City Council -- and as Mr. Giuliani's
former campaign manager and close associate, Bruce J. Teitelbaum, took
notes in the balcony -- the mayor vigorously defended his parks
commissioner at a news conference held at the city's emergency command
center at the World Trade Center.

"Commissioner Stern is in my view a legend in his own time," Mr. Giuliani
said. "He's done an absolutely terrific job as parks commissioner." The
mayor added that "maybe there's a desire to kind of focus on him because
he's a little unorthodox in his style."

Although Mr. Giuliani stopped short of saying that the charges against
Mr. Stern were politically motivated, he did note that they came on the
same day as Mr. Stern's hearing before the City Council.

Both the mayor and Mr. Stern said that contrary to the picture painted by
the equal employment commission, the Parks Department had doubled the
number of promotions of members of minority groups since Mr. Stern became
commissioner in 1994. Jane Rudolph, the department spokeswoman, said that
in 1994, 15 percent of parks promotions to managerial levels had gone to
minorities, compared to 30 percent now.

Lawyers for the 20 parks department employees who filed complaints said
they were not aware of the promotion statistic. But Elisabeth Youngclaus,
one of the lawyers, said that there had been "notable promotions" of
minorities since the complaints were filed in March and April 1999. The
department's statistics show that whites received 38 of 53 promotions in
1998, and 46 of 65 in 1999.

Mr. Stern acknowledged that the majority of the managers in his
department are white, but said that in city government "the majority of
managers in every agency are white." He went on to say that the majority
of managers are white in "many other places."

Mr. Stern also said that there were "factual errors" in the commission's
findings, specifically its statement that all managers of parks
department recreation centers are white. Mr. Stern said 18 out of 26
recreation center managers are members of minority groups. Lawyers for
the complainants have agreed that that part of the report appears to be
incorrect.

The next step after a finding by the commission is attempted conciliation
between the two parties. But 11 of the 20 complainants are preparing to
file a class-action suit against the department. In addition, the United
States attorney's office is investigating to determine whether the
Justice Department should join the lawsuit.

Mr. Stern also answered questions from reporters about his "Class of"
program, in which 30 to 40 young, mostly white graduates of elite
colleges are recruited each year and given prestigious positions and
promoted quickly, often, longtime minority employees have said, over more
experienced, college-educated black employees.

"We pay really much less than qualified college graduates can obtain
elsewhere," he said, adding that "we have never turned down a minority
person for the 'Class Of' " program. In a telephone conversation
afterward, Mr. Stern said that the majority of college graduates are
white and therefore he was drawing from a predominately white pool. He
said there was a "substantial minority presence" in the program, but said
he could not provide specific numbers. "Now that we have become
numerically sensitive, we will count them," he said.

At the council hearing, Mr. Stern was asked to show how he spent $5
million that his department has raised since 1994 through mandatory
donations from groups seeking to use city parks. Despite the theatrics of
the 46 boxes, Mr. Stern often appeared bored or pained. He said the
department charged fees for less than 1 percent of events in city parks.

When asked if he had learned anything from the documents, Mr. Stern
looked at his lawyer, laughed and responded: "Well, we've learned how
many events we did not charge a fee for." (The New York Times, February
6, 2001)


PARAMETRIC TECHNOLOGY: Moves to Dismiss Amended Securities Suit in MA
---------------------------------------------------------------------
Certain class action lawsuits were filed by shareholders in the fourth
quarter of 1998 against Parametric Technology Corp. and certain of the
company’s current and former officers and directors in the U.S. District
Court in Massachusetts claiming violations of the federal securities laws
based on alleged misrepresentations regarding our anticipated revenue and
earnings for the third quarter of 1998. An amended complaint,
consolidating these lawsuits into one action, was filed in the second
quarter of 1999, seeking unspecified damages. The believes the claims
made in the consolidated action are without merit, and intends to defend
them vigorously. In the third quarter of 1999 Parametric filed a motion
to dismiss the consolidated action. The company says it cannot predict
the outcome of this motion or the ultimate resolution of this action at
this time, and there can be no assurance that the litigation will not
have a material adverse impact on its financial condition or results of
operations.


QUALCOMM: Sues Ex-Workers Transferred to Ericsson for Costs in Lawsuit
----------------------------------------------------------------------
According to AP Online, Qualcomm is trying to recover $573,527 in legal
costs from former employees who sued the company. In the lawsuit, which
has been previously reported in the CAR, the former employees claim they
were denied stock options when Qualcomm sold a division to Ericsson in
1999.

Gary LeBlanc, Vincent Malgapo and Ron North signed releases assuring the
San Diego-based wireless communications company they would not sue when
they were transferred, Qualcomm lawyers said in a motion filed last week.
In exchange for signing the releases, they received a portion of their
stock options. Later, LeBlanc, Malgapo, North and more than 800
co-workers joined a class-action lawsuit against Qualcomm, saying they
signed the releases under duress. The suit said plaintiffs lost $400
million total in unvested stock options.

LeBlanc, 56, of Cardiff, and now an Ericsson maintenance worker, told the
San Diego Union-Tribune he was stunned at the lawsuit. ''I just wanted my
due. For that I'm being punished. Really, I don't have $500,000 so they
can take what they can get and bankrupt me,'' LeBlanc said.

Bill Sailer, Qualcomm's vice president and general counsel, said the
company is motivated by principle. ''These people agreed not to sue us,
and then did sue us, even after we fulfilled our side of the bargain,''
Sailer said.

The company had tried to appease workers in 1999 with a bonus retention
plan that gave them a portion of their stock options. Although 97 percent
of the 1,100 employees transferred to Ericsson signed releases, most went
on to sue.

Superior Court Judge John S. Meyer granted the suit class-action status
last September. Then, on Dec. 8, Meyer excluded 800 workers, saying those
who signed the releases had ratified the deal by failing to return any of
the money Qualcomm had paid to them. That action, combined with voluntary
withdrawals, reduced the case to just 36 former employees.

Qualcomm is seeking legal fees from the lead plaintiffs, who have since
been dismissed by Judge Meyer from the class-action. Under law, only the
lead plaintiffs, including Thomas M. Sprague, a former Qualcomm vice
president, can be held accountable.

Michelle Ciccarelli, a plaintiffs' attorney, said they will fight
Qualcomm. ''We will vigorously defend against the motion for attorneys'
fees and costs,'' Ciccarelli told the Union-Tribune.

The trial for the breach of contract is set to begin Feb. 16. Meyer will
deal with the matter of attorneys' fees at a hearing on March 9, after
the trial is completed. (AP Online, February 6, 2001)


SAVINGS BANK: MA Judge Sides with Insurer in 1998 Shareholder Suit
------------------------------------------------------------------
A Massachusetts judge issued a summary judgment in a lawsuit against
Savings Bank Life Insurance Co. that favored the insurer, but left the
door open for further legal action by requesting an appeals court review
of his decision.

The 1998 lawsuit, filed by Boston attorney Jason Adkins, alleged that
SBLI allowed its surplus to grow to illegal levels after it changed from
a mutual to a stock company in 1992. The lawsuit demanded that more than
$51 million of accumulated excess surplus be distributed to policyholders
of SBLI (BestWire, June 4, 1998). The suit -- which sought class-action
status for more than 150,000 SBLI policyholders -- was filed on behalf of
participating policyholders Richard Goldstein and Peter Hale. Adkins
claimed SBLI's surplus was $51 million above what the law allows.

Suffolk County Superior Court Judge Allan van Gestel wrote in his
decision that the "issues are of exceptional novelty and seem to have
that cosmic quality that makes this case one of those rare few that is an
appropriate candidate for a report (by the appeals court)."

Peter Lyons, general counsel for SBLI, said the summary judgment accepted
SBLI's two main arguments -- that its method of calculating the surplus,
taking into account millions of dollars in deductions, is valid; and that
shareholder equity must be deducted before distributing any surplus.

Massachusetts law provides that surplus funds or profits, which exceed
12% of a domestic life insurer's reserve, be distributed to participating
policyholders. The policyholders were to receive the mutual's entire
surplus in the form of an "additional annual dividend" over a 12-year
period, beginning with 1992 when SBLI converted from a mutual to a stock
company. the suit said. But since the conversion, plaintiffs and class
members have not received any distributions of surplus, despite the fact
that during the same period of time, SBLI's profits substantially
exceeded the 12% amount, the suit said. This failure to pay constitutes
SBLI's breach of its statutory duty to participating policyholders and is
in violation of the laws of Massachusetts, according to the suit.

The suit further charges, that, as a result of the failure to distribute
its excess surplus, the company's policyholders have been overcharged or
their insurance. "Our raw surplus is about 18%," said Lyons. "But we have
said from the beginning, that because of our odd incorporation, with a
legislatively required conversion to a stock company, that the
shareholder equity is a liability.

The judge agreed with that methodology." Lyons said Judge van Gestel took
the unusual step of referring his decision directly to the appeals court
because he ruled on the methodology used by SBLI, but does not feel
comfortable with the actual numbers. "The likelihood that the plaintiffs
would prevail based just on the numbers is small," said Lyons.

Adkins said the judge's unusual step of setting up an appeal of his own
decision leaves the door open to further action by the plaintiffs. "This
case still survives," he said. "One of the big problems is that he said
something is a liability that doesn't show up as a liability anywhere in
the company's statements." Adkins added that the judge's decision "
jeopardizes uniform reporting standards" for all interested parties like
regulators, rating agencies and consumers by creating new standards for
reporting liabilities. Adkins said he will also continue to challenge van
Gestel's refusal to recuse himself from the case. Adkins said van Gestel
worked until 1996 for a law firm that represented SBLI.

Another lawsuit against SBLI was dismissed by the Supreme Judicial Court
of Massachusetts, which in 1999 upheld a lower court decision that
dismissed the 1996 lawsuit because a three-year statute of limitations
had expired (BestWire, Feb. 2, 1999). That lawsuit claimed that
policyholders were entitled to the full value of the system's statutory
surplus, along with the state's General Insurance Guaranty Fund, which
was abolished and transferred to the commonwealth. The suit alleged that
policyholders were cheated out of 40% of the surplus value because it was
distributed over 12 years as dividends without taking interest into
consideration. The suit said SBLI used the fair-market value of the
surplus to determine the pro rata shares of stock distributed to
shareholding banks. "A three-year statute of limitations bars the
plaintiff's claims," the court wrote in that earlier decision. The suit
also contended that policyholders didn't receive enough notice of the
conversion. However, the court ruled against them, citing notices that
were sent about legislation that allowed the conversion. The financial
strength of Savings Bank Life Insurance Co. is rated A- (Excellent) by
A.M. Best Co. (BestWire, February 06, 2001)


TOBACCO LITIGATION: NLJ Talks about Future of Lawsuits in Bush Era
------------------------------------------------------------------
While the rest of the world was focused on election lawsuits in Florida,
tobacco industry lawyers were following not only that litigation but also
other suits in Florida courts that could cause them serious harm.

Lawyers on both sides of the tobacco wars have long assumed that, if
elected, George W. Bush would put an end to the Clinton administration's
multi-front assault on Big Tobacco, including a pending racketeering
lawsuit, so industry lawyers had a huge stake in the election outcome.

Indeed, Mr. Bush's ascendency may signal the end of a period in which
lawsuits can threaten to put tobacco companies out of business. But for
now, two historic lawsuits are proceeding against the industry in
Florida, long one of the most important battlegrounds of the tobacco war.
Industry lawyers must also deal with other key litigation elsewhere. This
includes recent mistrials in major cases in West Virginia and Brooklyn,
N.Y., and a defense verdict in a second Brooklyn case.

The Justice Department suit, though, is still the big one. Mr. Bush, an
advocate of tort reform, criticized that suit during the presidential
campaign. In nominating former Missouri Senator John Ashcroft, R-Mo., as
attorney general and Wisconsin Governor Tommy Thompson to head the
Department of Health and Human Services, Mr. Bush also chose two
politicians who have been sympathetic to Big Tobacco in the past. Mr.
Ashcroft, who stands to inherit the multibillion-dollar lawsuit against
the industry, is particularly pivotal.

The DOJ case involves civil racketeering claims by the federal
government, which alleges that it was wrongly forced to pay medical
expenses for sick smokers. U.S. v. Philip Morris Inc., No. 99-2496
(D.D.C.). (Washington, D.C., U.S. District Judge Gladys Kessler dismissed
the government's claims under the Medical Care Recovery Act and Medicare
Secondary Payer provisions.)

As on many issues, Mr. Ashcroft has tried, in testimony before the Senate
Judiciary Committee, to round off some of his sharper ideological edges,
including his tobacco views. The Justice Department suit came up only
once, in a question from Senator Ted Kennedy, D-Mass.

"Can you give us any assurance about that case?" asked Mr. Kennedy. "Do
you intend at this time to withdraw it? Do you intend to carry it
forward?"

After assuring Mr. Kennedy that he is "no friend of the tobacco
industry," Mr. Ashcroft said, "I have no predisposition to dismiss that
suit. I would evaluate that suit, conferring with members of the
Department of Justice."

But tobacco control advocates do not consider Mr. Ashcroft a
comrade-in-arms. In 1998, Mr. Ashcroft was the only senator on the
Commerce Committee to vote against the McCain tobacco bill, which
eventually failed in the Senate.

"It would be a big-government travesty at its biggest," Mr. Ashcroft said
at a press conference, "to use the tragedy of tobacco as a smoke screen
to cover the expansion of the nanny state."

Many foes of Big Tobacco are left debating whether the Bush
administration will pull the plug on the federal lawsuit or just choke
off the money needed to pursue it.

The effort is budgeted at $ 23 million for the current fiscal year, says
a spokes-woman for the department. It is scheduled for trial in 2003.

                               Third Way

John F. Banzhaf III, a professor at George Washington University Law
School in Washington, D.C., envisions a third, more subtle threat. The
government may simply settle the case on terms favorable to the industry,
declare a false victory and walk away, he says. A deal might even include
presidential backing for legislation giving the industry the legal
immunity it tried desperately to win in a failed global settlement with
state attorneys general and private lawyers in 1997.

It is also considered very unlikely that Congress, under a Bush
administration, will give the FDA broad authority to regulate tobacco as
a drug. Under President Clinton, the agency claimed that authority and
fought for it unsuccessfully in the U.S. Supreme Court, in cooperation
with the Justice Department.

Wall Street seems to agree that Mr. Bush will go easier on Big Tobacco.
Industry stocks, whose value had been depressed for years because of the
uncertainty of the litigation picture, are up sharply since the election.

In contrast, the day before the election, Miami Circuit Court Judge
Robert P. Kaye ruled on post-trial motions, upholding an unprecedented $
145 billion punitive damages verdict against the tobacco industry in a
state-wide smokers' class action. Engle v. R. J. Reynolds Tobacco Co.,
No. 94-08273 (Fla. Cir. Ct., Dade Co.).

The rulings clear the way for the defendants to appeal the procedurally
intricate case, which was filed in 1994 by the Miami husband-and-wife
lawyer team of Stanley and Susan Rosenblatt. Although many state and
federal courts have thrown out similar class actions, on the ground that
individual claims differ too much to be tried together, anti- tobacco
lawyers are hopeful that Florida's Supreme Court will eventually uphold
the verdict.

Also in November, the Florida Supreme Court reinstated a $ 750,000
verdict won by Grady Carter in a case against Brown & Williamson Tobacco
Corp. Mr. Carter's lawyer, Norwood S. "Woody" Wilner of Spohrer, Wilner,
Maxwell & Matthews in Jacksonville, Fla., has tried several individual
cases.

Still, although there are now hundreds of similar suits pending against
the industry across the country, and despite high-profile settlements
with state governments, the industry has never paid a dollar to a former
smoker on a tobacco product liability claim.

There have been a handful of individual verdicts against the industry in
recent years, but none has yet emerged from appeals.

Grady Carter's case is closest. This month, the Florida Supreme Court
declined to reconsider its decision reinstating his verdict, which sets
up a possible final appeal to the U.S. Supreme Court. Company lawyers say
that they plan to file a petition for high court review.

Still, juries continue to hold smokers responsible for their
smoke-related illnesses in some cases.

On Jan. 16, the tobacco industry won a verdict in a Brooklyn case brought
by the family of a woman who died of lung cancer. Although a six-woman
jury found that cigarettes were the cause of Bonnie Apostolou's death,
they also decided that she had assumed the risk of smoking. Apostolou v.
American Tobacco Co. (N.Y. Sup. Ct., Kings Co.).

Plaintiffs' lawyers in the current wave of tobacco litigation have tried
to avoid the problems of litigating individual suits by aggregating
thousands, even millions, of smokers into class actions.

But besides the Engle case in Florida and a case pending in Louisiana,
almost every class action to compensate smokers for death and disease has
been dismissed on the ground that the claims are too different to be
tried together.

Lawyers have also sued on behalf of entities that were required to pay
the health care costs of sick smokers. But courts have often found the
harm too remote from the cause.

To date, lawsuits by American Indian tribes, foreign governments and
labor union health plans have yet to succeed.

Plaintiffs' lawyers have been most successful when they have able to
couple the prestige and enforcement power of government to their cases, a
strategy that has since been applied to litigation against lead paint and
gun makers.

Most threatening to the tobacco industry were lawsuits brought on behalf
of state governments across the country, which it settled for a total of
$ 246 billion.

Some remaining threats to the industry are pending before federal
District Judge Jack B. Weinstein in Brooklyn, N.Y. Judge Weinstein has
set an aggressive trial schedule for cases brought by Blue Cross and Blue
Shield health plans, union health care plans and former manufacturers of
asbestos.

Although similar cases have been dismissed across the country, Judge
Weinstein has pushed them to trial, one after another, in an attempt --
so far unsuccessful -- to press for a broad settlement of industry
liability.

In the first case, brought on behalf of a trust set up to compensate
injured asbestos workers, Judge Weinstein was forced to declare a
mistrial on Jan. 25, when deadlocked jurors reported threats of violence
in the jury room. Falise v. American Tobacco Co., No. 99-7392 (E.D.N.Y.).

That followed on the heels of another important mistrial in West
Virginia. In that case a state judge declared a mistrial on Jan. 22, in a
class action seeking the cost of medical monitoring for smokers. In re
Tobacco Litigation (Medical Monitoring Cases), No. 00-6000 (W. Va. Cir.
Ct., Ohio Co.). (The National Law Journal, February 5, 2001)


                             *********


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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