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              Wednesday, May 26, 1999, Vol. 1, No. 79


ALLSTATE INSURANCE: Agents Treated as Employees, Not Contractors
BELL ATLANTIC: Yellow Pages Advertisers Sue for Delayed Delivery
CREDIT CARDS: Issuers Impose Arbitration to Avoid Class Suits
HAWAII CSEA: Class Status Granted for Delayed Support Recipients
JOHNS MANVILLE: Building Owners Claim PFRI "Eating Away" Roofs

KOS PHARMACEUTICALS: Florida Shareholder Litigation Dismissed
MCKESSON HBOC: Facing Lawsuits, Fraud Allegations & Regulators
SEARS ROEBUCK: Battery Buyer Got $8500, Lawyers "Took a Bath"
SECURITIES LITIGATION: Volatility Keeps Web D&O Insurance High
SUN ENERGY: Three Kerr-McGee Suits Settle, Units Up $1.23

TELECOM: Down-Under, They Call "Repetitive Stress" "OOS"
TITLE INSURANCE: Escrow Fees Sought in Reverse Class Action
WEST GROUP: Employees Claim Sex Discrimination in Stock Awards
WESTON, FLORIDA: Reimer & Rosenthal Seek Refund of Interim Fees
WORLD ACCESS: 22 Complaints Consolidated, Another Suit in GA


ALLSTATE INSURANCE: Agents Treated as Employees, Not Contractors
The Business Press Ontario (CA) reports that three Allstate
Insurance Co. agents filed a lawsuit charging that the company
treats them as standard employees while calling them independent
contractors. Since converting its agents to independent
contractors in May 1996, the insurance giant has escaped paying
benefits and withholding income taxes, and has failed to
properly reimburse the salesmen for expenses, according to a
class-action complaint filed April 30 in U.S. District Court's
Northern District of California.

While enjoying those advantages, the lawsuit alleges, Allstate
"has treated plaintiffs as employees, exercising a degree of
control over plaintiffs' activities that prevented them from
enjoying true independent contractor status."

The plaintiffs are listed as Richard Christie of Canyon Lake,
Alan McNabb of San Jose and Charles Gibson of Anaheim. But the
action claims as many as 1,500 Allstate agents are members of
the class damaged by Allstate's actions. Online directories show
more than 75 Allstate agents operating in the area. Representing
the three plaintiffs are the very attorneys litigating claims
for more than 280 Allstate agents in the same U.S. District
Court. The lawsuit was filed by Gregory F. Wilson of Wilson &
Quint LLP and Alan Berkowitz of Schachter, Kristoff, Orenstein &
Berkowitz LLP, both in San Francisco.

Neither attorney could be reached for comment. Nor could
Allstate media representatives. Reached at his Canyon Lake
office, Christie referred a reporter to the Allstate regional
office. "I'd rather not comment at this time," he said.

Seeking unspecified general and specific damages estimated at
more than $100 million, the lawsuit alleges:

  * Allstate controls the manner and means by which agents sell
the company's insurance products to such a degree that agents
are, in fact, employees under California law.

  * Allstate breached the agents' contracts, which promised them
full control of their time and the right to exercise independent
business judgment as to the time, place, and manner of
performing their duties as Allstate agents.

  * Agents are entitled to restitution for expenses that
Allstate improperly shifted to them by misclassifying them as
independent contractors rather than employees, including
business expenses, interest and attorney fees.

"Allstate has failed to honor its promise to give plaintiffs
full control of their time and the right to exercise independent
business judgment, and has otherwise failed to treat plaintiffs
as true independent contractors," the suit states. "Instead,
Allstate continues to exercise a degree of control over
plaintiffs' business activities that is utterly inconsistent
with the promises in the R3001 contract." Effective May 1, 1996,
plaintiffs were required to sign a contract prepared by Allstate
known as the R3001 exclusive agency agreement in order to sell
Allstate insurance. The contract purports to establish an
independent contractor relationship between Allstate and
plaintiffs. "Plaintiffs have been denied the entrepreneurial
freedom enjoyed by true independent contractors, while at the
same time assuming all of the financial burdens of self-
employment," the suit claims. "By converting plaintiffs to
independent contractors in name only, Allstate avoided paying
plaintiffs the wages and benefits plaintiffs enjoyed as
employees and evaded its obligations under numerous state and
federal laws," it said. (Business Press Ontario CA; 05/24/99)

BELL ATLANTIC: Yellow Pages Advertisers Sue for Delayed Delivery
Newsday reports that a lawsuit is making its way through the
courts brought by four Yellow Pages Directory advertisers,
including two law firms, against Bell Atlantic, NYNEX
Information Resources and Reuben H. Donnelly, the publisher of
the directory. If it's successful, it could result in millions
of dollars in treble damages from a class-action suit covering
all directory advertisers in New York State over the past six
years, says the plaintiff's attorney, Gary C. Fischoff, of
Garden City.

His firm, Fischoff & Associates, is not one of the plaintiffs.
In their suit, filed May 14, 1998, the four advertisers - a
Garden City law firm, Silberstein Awad & Miklos; a Forest Hills
law firm, Uvino & Vasilopoulos; a video services firm in Albany,
and an Albany automotive service firm-said they had advertised
in the Yellow Pages for six years. They claim that NYNEX
breached the terms of their contracts because the directories
were not published and distributed at the beginning of the one-
year issue period set forth in the agreements and the
distribution did not reach the entire contemplated market. Other
business advertisers who complained about the delay were on
occasion given credit by NYNEX, now called Bell Atlantic, they
said. But they were not notified of the delays in the
distribution of the directories, they said, and when they
requested similar credits or refunds, they were refused. The
phone company's conduct, they allege, constitutes
misrepresentation, unfair and deceptive business practice. They
are seeking a refund or credit for delayed publication and
distribution and seek compensatory damages.

In papers filed by Bell Atlantic this month, the company denied
all of the allegations. A spokesman for Bell Atlantic also
denied the phone directories were late and said, "We will
vigorously oppose the actions of the plaintiffs in this case. We
believe the case is totally without merit."

What makes the suit interesting is that State Supreme Court
Justice Ira Gammerman of Manhattan refused to throw the case out
on a motion by NYNEX and Bell Atlantic. And he hinted that the
case may be worthy of a class action but added that "the class
hasn't been certified." Fischoff said he was working on a motion
for certification of a class action. The motion will be filed in
June, he said. In the papers already filed, the advertisers said
that "NYNEX has been aware for years that the directories have
been routinely delivered late or not delivered at all ... No
refund has been made to any plaintiff or to similarly situated
members of the class because they did not complain to NYNEX."

Fischoff said the class will cover all the Yellow Pages
advertisers in New York State for the past six years who paid
for a full year of advertising. He estimated that if an award is
trebled because of the class-action suit, the damages could
exceed $100 million. NYNEX reported that in 1997, there were
175,000 yellow page advertisers in the state.

Gammerman seemed to suggest the scope of the possible class
action by saying, "The defendants do employ standardized forms
of contracts that are not subject to negotiations, so that any
other consumer of advertising space in the directories are faced
with the same conduct that plaintiffs are objecting to here." In
his decision, Gammerman ruled that the motion to dismiss the
case was "premature" and turned it down. He did, however,
dismiss a portion of the contract claims against Donnelly,
saying Donnelly had no obligation to make any distribution of
the directories. (Newsday; 05/24/99)

CREDIT CARDS: Issuers Impose Arbitration to Avoid Class Suits
USA Today reports that more credit card issuers are requiring
arbitration to keep cardholders from going to court.

American Express, which has 28 million cards in the USA, began
notifying customers last month that the company or the
cardholder can choose to resolve a dispute by arbitration. The
other side must abide by it and cannot sue or join a class-
action lawsuit. The company says everyone benefits. "Arbitration
has gotten a favorable reputation for settling disputes faster
and less expensively," says Amex's Judy Tenzer.

Consumer advocates disagree. "I don't think arbitration is the
best road to justice," says Ed Mierzwinski at U.S. Public
Interest Research Group. "If a bank is going to take advantage
of thousands of small customers, the best redress is a class-
action lawsuit."

Cardholder agreements generally are subject to change at any
time, says Robert McKinley of CardWeb.com, a card tracking firm.
"As class-action lawsuits become more of a threat, card issuers
will push for mandatory arbitration."

Among the cardholder suits:

  * Lawyers in San Francisco filed an unfair business practices
suit against Providian bank Friday on behalf of cardholders.
Providian said Monday that it couldn't respond because it hasn't
seen the complaint. Among other things, the complaint alleges
Providian did not credit payments in a timely manner and failed
to correct improper charges.

  * In March, Sears Roebuck offered to pay $36 million to about
3 million customers to settle a class-action suit that claimed
Sears violated an agreement not to raise interest rates on
credit card balances that existed prior to 1997. Sears says it
acted properly but agreed to the settlement because some
customers may have misunderstood its notices.

  * In February, Trial Lawyers for Public Justice sued Chevy
Chase Bank, claiming it failed to provide required notice when
it moved its home office from Maryland to Virginia in 1996 and
raised interest rates above the 24% permitted by Maryland. The
bank didn't return calls seeking comment.

  * Advanta agreed last year to pay $7.25 million to settle
class-action lawsuits that alleged the card issuer had violated
a guarantee not to raise rates on its SmartMove card.

  * In April, Dallas lawyer Britton Monts filed suit claiming
First USA, second-largest card issuer after Citibank, delayed
crediting payments, so cardholders got hit with $29 late-payment
fees and penalty interest rates up to 26.99%. First USA says it
doesn't discuss pending litigation, but notes that in 1997 it
added an arbitration clause to card agreements, barring class-
action lawsuits. (USA TODAY; May 25, 1999)

HAWAII CSEA: Class Status Granted for Delayed Support Recipients
From Honolulu, Hawaii, USA Today reports that a judge has agreed
to grant class-action status to a lawsuit filed by Ann Kemp
against the state over late child-support payments. The ruling
means Kemp's lawyers can act for other people who failed to
receive timely child-support payments from the state.

According to the report, the Child Support Enforcement Agency is
required to provide checks within two days. However, Kemp
reported that the agency took two months to process her check.

JOHNS MANVILLE: Building Owners Claim PFRI "Eating Away" Roofs
The law firm of Gilman and Pastor, LLP, filed a lawsuit in
federal district court in Boston alleging that a roof insulation
product which was popular in the 1980's and early 1990's has
been found to leach acids which can corrode steel roof decks and
the metal components of roofing systems. The plaintiffs have
filed a motion which seeks to certify the lawsuit as a class
action. The plaintiffs' motion seeks to certify a class of
building owners in the United States whose roofs contain
Phenolic Foam Roof Insulation (PFRI) manufactured by Johns
Manville Corporation of Denver, Colorado and Koppers Industries
(later acquired by Beazer East, Inc.). The motion states that
hundreds of millions of square feet of PFRI were installed in
buildings across the country between 1981 and 1992.

Kenneth Gilman, one of the attorneys for the plaintiffs, stated
that the motion to certify the case as a class action was filed
because "we believe that there are thousands of building owners
who do not know that they have PFRI in their roofs. PFRI was
installed in thousands of high-occupancy and commercial
buildings, including over 1,000 schools in the United States and
Canada, as well as office buildings, condominium and apartment
buildings, manufacturing facilities, restaurants, shopping
plazas and malls." "We are particularly concerned that according
to our investigation, many building inspectors are not aware of
this problem," Gilman said. "Unfortunately, many building owners
will not discover that PFRI is eating away at their roofs until
it is too late to prevent serious damage."

The Plaintiffs are requesting that Manville and Beazer be
required to publish and mail a comprehensive notice regarding
the corrosive effects of PFRI to all affected building owners.
In addition, the Plaintiffs want Beazer and Manville to pay for
independent inspections of all roofs installed with PFRI, the
removal of all PFRI and the repair of all roofing systems and
roof decks damaged by PFRI. Building owners may be able to
determine whether they have PFRI in their roofs by examining
their roofing system warranties or the original roof
specifications to determine what type of insulation was used,
said Gilman. PFRI was sold in the United States under the brand
names "Exeltherm Xtra," "Rx," "Ultraguard Premier," "Weathertite
Premier," "Insul-Base Premier," and "InsulShield Premier."
However, PFRI was frequently substituted in place of the
specified insulations, such as polyisocyanurate insulation.
There are reportedly other methods for detecting the presence of

KOS PHARMACEUTICALS: Florida Shareholder Litigation Dismissed
A class action complaint, filed in August 1998, alleging
violation of federal securities laws by Kos Pharmaceuticals,
Inc., was dismissed with prejudice by Judge Donald M.
Middlebrooks of the United States District Court for the
Southern District of Florida. In his thirty-three page opinion,
Judge Middlebrooks stated that the plaintiffs' claims were
inadequate and that they could not support their claims.

Kos, represented by Holland and Knight LLP, filed a motion to
dismiss the complaint in January 1999. The court, in dismissing
the complaint with prejudice, denied all other pending motions
and declared the case closed.

"Naturally, we are pleased with the Court's decision to dismiss
this complaint in its entirety," said Daniel M. Bell, President
and Chief Executive Officer. Kos Pharmaceuticals, Inc. is a
fully-integrated specialty pharmaceutical company engaged in
developing and commercializing proprietary prescription
pharmaceutical products, primarily for the treatment of chronic
cardiovascular and respiratory diseases.

MCKESSON HBOC: Facing Lawsuits, Fraud Allegations & Regulators
Barely one month after McKesson HBOC Inc. admitted to improperly
recording its revenue, the mighty San Francisco corporation is
fighting off a barrage of lawsuits, allegations of financial
fraud and questions from federal regulators, according to a San
Francisco Examiner story. McKesson, the nation's largest drug
wholesaler, shocked investors April 28 when it said a year-end
audit found $42 million in sales that were improperly recorded
by HBOC, a health care software firm in Atlanta that McKesson
bought in January.

In its bombshell announcement, McKesson said the accounting mess
would force the company to restate its earnings over the past
four quarters and lower its profit outlook for next year. The
bad news crushed McKesson's healthy stock, which plunged 50
percent to $35. Within hours, the Fortune 100 company lost $9
billion in stock market value - one of the most devastating one-
day losses for a company in Wall Street history.

Since then, dozens of shareholders' lawsuits have been filed in
federal court in San Francisco and San Jose against McKesson.
The class-action suits allege that top executives knowingly or
recklessly manipulated the company's finances and software sales

One suit charged that McKesson Chairman Charles McCall, the
former chief executive of HBOC, and McKesson director Jay
Gilbertson, HBOC's former president and chief financial officer,
schemed to "deceive the investing public" by inflating revenue
figures. That led to the artificial boosting of HBOC's stock
price before McKesson bought their firm, the suit alleges.
Because the merger was a $14 billion stock transaction, the two
shareholders "had a motive to misstate the company's financial
results," alleges the lawsuit filed by attorney Justice Reed of
Schubert & Reed in San Francisco. In November, shortly after the
deal was announced, McCall owned 4.6 million shares of HBOC
stock and held options on 3.6 million HBOC shares that could be
cashed in upon the merger's completion, according to the
lawsuit. Also in November, Gilbertson bought 384,000 HBOC shares
to be exercised as stock options, according to the suit.

Several securities attorneys said the legal storm for McKesson
will worsen. "Without question, the accounting shenanigans are
rising to the level of securities fraud," said William Audet, an
attorney at Alexander, Hawes & Audet in San Jose who represents
investors in one lawsuit. "When they admit they "improperly
recorded' revenue, those are industry buzzwords for "Oops, we
screwed up, and someone may have been cooking the books.' "

McKesson executives declined to comment to the San Francisco
Examiner on the fraud allegations.

McKesson - founded as a drugstore in New York City in 1833 - is
also facing the scrutiny of regulators. The U.S. Securities and
Exchange Commission recently contacted the company to discuss
the accounting problems, a McKesson executive confirmed
Thursday. "We have received inquiries (from the SEC), and we're
responding to their questions," said Larry Kurtz, vice president
of corporate communications for McKesson. Kurtz would not
confirm or deny the precise details of the SEC's inquiry.

But legal and government sources close to the SEC said that
regulators have met with attorneys from Skadden, Arps, Slate,
Meagher & Flom, a high-powered New York law firm that represents
McKesson. The sources, who requested anonymity, said the SEC
asked for corporate financial papers, merger documents from
McKesson's acquisition of HBOC, audits of HBOC by Arthur
Andersen & Co. and audits of McKesson by Deloitte & Touche LLP.
In addition, the Pacific Exchange in San Francisco is
investigating the options trading in McKesson stock during the
weeks prior to the McKesson / HBOC merger, according to Dale
Carlson, a Pacific Exchange spokesman.

In late April, the New York Times reported that huge volumes of
put contracts in McKesson stock were traded in the six weeks
before the merger. Buyers of put options are betting that a
stock's price will fall. Carlson also said the exchange's
attorneys have been in touch with federal regulators to discuss
the case. "Our compliance people have an investigation under
way," Carlson said, "and we will file a report with the SEC if
we find anything that warrants further attention."

In the meantime, McKesson is conducting its own investigation.
The company has hired Skadden Arps and forensic accountants at
PricewaterhouseCoopers to go over its books and accounting
procedures. McKesson hopes its internal investigation will be
done by June, but it could easily stretch beyond that date,
Kurtz said.

As the lawyers gear up for battle, Wall Street experts believe
that McKesson's $9 billion drop in market capitalization was one
of the highest one-day losses ever. "It may not be a record, but
it's way up there," said Joseph Grundfest, a Stanford University
law professor and a former SEC commissioner. By one estimate, at
least 14,000 shareholders lost money in the market carnage.
"They're genuinely in a state of shock," said Joseph Tabacco, an
attorney at Berman, DeValerio, Pease & Tabacco in San Francisco.
"They're pretty outraged over this."

One investor, 73-year-old Sal Caravetta, lost $2 million in the
debacle. Caravetta is the retired chairman of US Servis, a small
health care firm in New Jersey that HBOC bought last year. When
his company was acquired, Caravetta traded his US Servis shares
for HBOC shares. Then, when HBOC was sold to McKesson, he
exchanged his HBOC holdings for 60,000 McKesson shares.
Caravetta was relaxing at his Florida retirement home the day
McKesson HBOC executives announced their accounting problem. A
friend called Caravetta with the bad news. "My heart sank," said
Caravetta, who hasn't decided whether to join one of the
lawsuits. "What can you do? I just sat there and stared straight
ahead. I had no hint at all that this might happen."

There appeared to be few danger signs. Wall Street analysts were
high on McKesson's earnings outlook and stock performance.
McKesson had enjoyed several strong fiscal quarters. McKesson's
financial advisor, Bear Stearns, and HBOC's advisors, Morgan
Stanley and Arthur Andersen, all signed off on the deal.
"Nothing in our due diligence for the merger suggested there
were any problems," said McKesson spokesman Kurtz. "We were
assisted by investment bankers, accountants and legal counsel,
and we were satisfied the due diligence we conducted was

At least one research firm, though, flagged problems at HBOC
well before the merger. The Center for Financial Research &
Analysis Inc. in Rockville, Md., warned investors in 1998 and
1997 that HBOC was using a legal but risky accounting method of
posting cash receipts from customers before HBOC actually got
paid. "They were booking revenue on software sales when they
hadn't collected the cash yet," said Christopher Teeters, the
center's analyst who followed HBOC. "And they were getting more
and more aggressive at it."

Analysts and securities lawyers also said that McKesson had been
dying to make a big acquisition that would strengthen its
dominant position in the health care services field. And HBOC, a
fast-growing software vendor and a high-flying stock on Wall
Street, seemed to fit the bill. "McKesson is a pretty
conservative company with a sound reputation, and they acquired
a company in the health care software industry, where there's a
lot of fast and loose accounting," said attorney Reed at
Schubert & Reed. "It's a cultural clash, and it really blew up
in their faces."

It'll take a lot, though, to shake McKesson. The corporate
behemoth posted $31 billion in sales last year and employs
20,000 people worldwide. The company does business with
thousands of hospitals, pharmacies, doctors' groups and medical
manufacturers. For sure, the legal storm will take months or
years to resolve, securities lawyers predicted. The class-action
suits - more than 30 at last count - will be combined this
summer into one or two cases in U.S. District Court in Northern

"This may be one of the more serious securities cases to come
down the pike in quite a while," said Steve Sidener, an attorney
at Gold, Bennett & Cera in San Francisco who also has sued
McKesson. "We're watching it closely." (San Francisco Examiner;

SEARS ROEBUCK: Battery Buyer Got $8500, Lawyers "Took a Bath"
The Fulton County Daily Report says the plaintiff's lawyer
called the case against Sears, Roebuck & Co. "huge": ex-
employees accused the retail giant of passing off millions of
old car batteries as new, giving heft to the case filed in U.S.
District Court in Atlanta. Florida's attorney general launched a
separate investigation. Dateline NBC aired an expose catching
Sears in the act.

But earlier this month, after three years of occasionally ugly
litigation, the plaintiff in the Atlanta case settled for a mere
$8,500. For the plaintiff's lawyers, "Financially, we took a
bath," says Ralph I. Knowles, who once predicted a big case. Not
so, however, for the plaintiff, Gary Poe of Anniston, Ala. For
the purchase of a $66.99 Sears battery, he gets $8,500. "That's
not bad," Knowles told The Fulton County Daily Report. "We feel
fine about the results" for Poe.

In 1997, the case seemed bigger than Poe, who was looking to
become the lead plaintiff in a nationwide class action against
Sears, which sells five million batteries a year. Knowles, whose
case covered four years, gathered witnesses set to testify that
as many as one-fifth of the batteries sold as new were really

But expectations of a huge class of plaintiffs vanished when
U.S. District Court Senior Judge Robert L. Vining Jr. refused to
certify the case as a class action because states have different
ways to measure the fraud and negligent misrepresentation claims
made by the plaintiff. In addition, Vining wrote, the
plaintiff's lawyers had not shown a viable method for figuring
out which Sears customers, if any, had purchased old batteries
sold as new.

Indeed, Knowles said much of the "ton of money" the plaintiff's
legal team spent on the case went to computer experts who tried
to figure out how to manipulate Sears' data into identifying who
bought the batteries. But the experts' work was in vain, says
Georgiana Rizk, Knowles' co-counsel and partner at Doffermyre,
Shields, Canfield, Knowles & Devine. "We never got the
documentation that would help us identify who the injured
customers were," she says.

Lisa M. Raleigh, a Florida assistant attorney general who worked
on the Sears case there, says she understands Rizk's problem:
"There was no possible way to find everybody." Still, Raleigh
and her boss, Florida Attorney General Robert A. Butterworth,
were able to force Sears into paying $985,000 to settle the
charges last month. The difference between Florida's
investigation and the Atlanta case was simple, says Raleigh:
"We're a regulatory agency and they're not." Accordingly,
Raleigh adds, she was able to threaten Sears with unfair-trade
actions that require losing defendants to pay $10,000 per
violation. Had Sears not settled, Raleigh says she was prepared
to claim more than 1,000 violations, backed by testimony from
eight Sears employees from eight stores saying the company sold
used batteries as new.

Florida didn't locate ripped-off consumers to make its case.
According to an investigator, the state's claims were based on a
statistical analysis estimating the number of suspect batteries.

In Florida as in Georgia, Sears admitted no wrongdoing and said
it was settling to avoid more litigation costs.

But the November 1997 episode of Dateline echoed charges made in
the Atlanta and Florida cases, showing ex-Sears employees saying
they recycled batteries as a way for stores to save money.
Dateline also showed a reporter marking a Sears battery she had
bought, used and drained. She returned it to a Washington-area
Sears store, only to find it back on the shelf a week later. On
the show, Sears' auto division president called the Dateline
incident isolated and not "a systematic plan" of Sears stores
around country.

Charging one of America's most venerated retailers with fraud,
Knowles says, he expected a hard fight. He also acknowledges it
got "ugly and nasty."

As the sides were battling over class status and discovery, an
ex-Sears employee claimed two Sears lawyers from Chicago's
Winston & Strawn coached him to lie in depositions. The
disclosure led Knowles, for the first time in his then-27-year
career, to seek Rule 11 sanctions against the Chicago lawyers
(Daily Report, Sept. 26, 1997).

An investigation by Sears' Atlanta counsel at Powell, Goldstein,
Frazer & Murphy determined the accusations of the ex-employee,
who had been fired from a Sears store, "unequivocally false and
slanderous." Steven F. Molo, a Winston & Strawn partner, also
vehemently denied the charges on behalf of his two colleagues.

In April 1998, U.S. District Court Judge Richard W. Story-who
had taken over the case-denied Knowles' motion.

Story wrote that whether the witness, who had been fired from a
Sears store, "was encouraged to give false testimony ... is a
credibility issue that must be determined by the jury."
"Therefore, the Court concludes defense counsel did not present
a pleading or motion for an improper purpose ... or engage in
any other conduct in violation of Rule 11 or any conduct
warranting the imposition of sanctions," he wrote. Poe v. Sears,
No. 1:96-cv-358 (N.D.Ga. order April 22, 1998).

"There were a lot of intense feelings," says Powell, Goldstein's
E.A. "Bud" Simpson Jr. He says that from some point early in the
case, "the lawyers never trusted each other."

Knowles and Rizk make a point to say their problems were with
Winston & Strawn and not Powell, Goldstein. "We have no gripes
with them whatsoever," Knowles says.

Winston & Strawn's Molo said last week he stands by what he said
in an April interview: "We did absolutely nothing wrong."

Despite the sound and fury of the case, Vining's denial of class
status reduced the Sears case to plaintiff Poe's single purchase
of a $66.99 Sears battery. Poe thought he'd been duped by Sears
when he showed a battery he'd just purchased at Sears to a
salesman at a competing battery store. The salesman, who later
became an investigator for the plaintiff's lawyers, pointed out
marks on his battery indicating it had been used.

The firms on the case were Doffermyre, Shields; Hare, Wynn,
Newell & Newton in Birmingham, and The Alexander Law Firm of San
Jose, Calif.

Knowles won't say how much the plaintiff's lawyers lost, beyond
confirming it's more than $100,000. He says Poe will get to keep
the $8,500, while plaintiff's counsel will eat the losses.

Simpson, Sears' local counsel from Powell, Goldstein, says, "If
I had a $70 battery and got $8,500, I'd be tickled to death."
(Fulton County Daily Report; May 24, 1999)

SECURITIES LITIGATION: Volatility Keeps Web D&O Insurance High
From Fort Lauderdale, FL, the Sun-Sentinel reports that stock
prices aren't the only thing soaring for "dot-com" initial
public stock offerings; so are the premiums that directors and
officers must pay for liability insurance coverage. The reason
is that many of these hot IPOs tend to swoon just as quickly as
they've risen. The volatility has caused a spike in both the
number of shareholder lawsuits that blame a company's
executives, and the settlement costs resolving the suits.

"Everyone is scared" about the prospect of costly litigation
stemming from the ups and downs of fledgling Internet-related
stocks, says Kevin LaCroix, president of Genesis Professional
Liability Underwriters in Beachwood, Ohio, part of Berkshire
Hathaway Inc.

Some greenhorn Internet-related companies face paying $40,000,
or even more, per million dollars of coverage -- three or four
times what they would have paid only a few years ago, according
to insurance brokers. Diana Eglin, a senior vice president at
insurance broker Willis Corroon Corp., says a recent dot-com-
named client with $7 million in revenue, planning a $62 million
IPO, faced rates of $32,400 per million dollars of coverage for
the first $5 million of coverage, the costliest piece of the
insurance package, more than 60 percent higher than comparable
clients paid a year ago. Ultimately, the company, which she
declined to identify, struck a deal amounting to $17,900 per
million in a three-year package for $30 million in coverage, up
58 percent from the $11,300 per million that Eglin estimates
such insurance would have cost last year.

Such price increases are "kind of the price of playing poker,"
says Dean Johnson, chief financial officer of Value America
Inc., an online retailer that went public last month. He
estimates he paid 30 percent more for his company's liability
coverage than he would have a year ago, although he won't reveal
specifics. "I'm none too happy about it, but you've got to have

Data collected by National Economic Research Associates, a unit
of insurance broker Marsh & McLennan Cos., back many of the
insurers' concerns about proliferating litigation: The number of
securities cases filed in federal courts seeking class-action
status has risen 50.3 percent since 1995, to a record 266 in
1998, while the average cost to settle jumped nearly 40 percent
last year to almost $ 11 million, from $ 7.8 million in 1997.

In particular, insurers are raising the stakes for companies
likely to attract lots of investor hoopla but whose business
practices indicate there could be lawsuit-baiting stumbles out
of the IPO gate. (Sun-Sentinel May 24, 1999)

SUN ENERGY: Three Kerr-McGee Suits Settle, Units Up $1.23
Kerr-McGee Corp. (NYSE: KMG) and Sun Energy Partners, L.P.
(NYSE: SLP) have entered into an agreement to settle the three
class action lawsuits relating to the previously announced roll-
up of Sun Energy Partners. Pursuant to the settlement, which is
subject to court approval, the price for each of the 7,543,100
publicly held limited partnership units in Sun Energy would be
increased from $4.52 to $5.75 per unit, and the merger agreement
for the roll-up will be amended to eliminate certain rights of
Kerr-McGee to terminate the agreement.

The initial $4.52 amount will be payable upon the consummation
of the merger, while the additional $1.23 will be payable,
together with interest from the date of the merger, upon final
court approval of the settlement. An Information Statement
regarding the transaction will be distributed to all holders of
limited partnership units. Completion of the transaction is
anticipated by the third quarter of 1999.

Kerr-McGee Corp. is an Oklahoma City-based energy and chemical
company with worldwide operations and assets of $5.5 billion.

TELECOM: Down-Under, They Call "Repetitive Stress" "OOS"
The Sunday Star Times reports that a former Auckland telephone
operator who says his job gave him occupational overuse syndrome
(OOS) is among a group of 77 former Telecom staff preparing to
sue their employer. Four former Telecom Directories Ltd workers
are also part of the claim. The former workers claim that
Telecom's success has cost them their health. The class action,
seeking damages totaling about $22m, is due to be filed this

Jeff Simpson, who is part of the class action, said he started
getting neck and shoulder pain on the job in 1991. He also
noticed tingling sensations in some of his fingers. "The job
involved keying in information on a computer. The conditions of
the chairs were not the best. They were lopsided. There wasn't
any education or anything at that time (on OOS)," said Simpson,
who was made redundant from Telecom last May. He moved to a new
international exchange building in 1995 which had new equipment
and work stations. "But there were still problems there because
we didn't have adjustable keyboards and the workload was
intense. As soon as one call finished, another one came straight
in," said Simpson. "We never got a chance for a break --
although after some time they did introduce a 10-minute break
every hour to do exercises. The problem was the workload kept
getting worse and worse."

The former Telecom workers' Auckland lawyer, Brett Cunningham,
said the group would not base their claim on the injuries they
had suffered. Rather, the grounds would be that Telecom failed
to provide a safe working environment. Other grounds included
wrongful dismissal, failure to provide fair and reasonable
treatment, and prejudicing of employees' future job prospects.

Telecom external relations manager Clive Litt said Telecom
rejected criticism its past handling of OOS was inadequate. The
number of people involved in the pending class action was also
tiny compared with the thousands of people who had worked for
Telecom. He said OOS was a relatively recent medical condition
and knowledge about it had been evolving rapidly. It was unfair
to apply current knowledge to the past to knock Telecom. Telecom
had striven to minimize the problem, within the bounds of
existing information on OOS. Given Telecom's investment in
training, its obvious objective was to have a healthy, happy and
productive staff. (Sunday Star Times; 05/23/99)

TITLE INSURANCE: Escrow Fees Sought in Reverse Class Action
California State Controller Kathleen Connell filed a class
action lawsuit on behalf of consumers against California's title
insurance and escrow industries for numerous illegal actions in
the administering of escrow accounts from 1970 to present. The
lawsuit alleges that as much as $500 million is owed to
Californians for the mishandling and diverting of escrow funds
to industry profit. The historic lawsuit is the first to target
an entire industry filed by a California controller.

"This lawsuit contends that California's escrow and title
insurance companies intentionally stole and pocketed hundreds of
millions of dollars from unsuspecting home buyers over a 30-year
period," said Connell. "I'm filing this consumer lawsuit on
behalf of all home owners in the state who were cheated out of
their own money -- money that escrow and title companies used to
pad their own bottom line."

Citing widespread and systematic illegal business practices, the
suit alleges that escrow and title companies illegally held
dormant and unclaimed escrow funds, retained fees charged to
home buyers for services not rendered and retained interest on
deposited escrow funds that should have been returned to their
customers. As defined by state law, escrow and title companies
are supposed to only "hold" funds in accounts as a neutral third
party and a fiduciary. At no point do they ever own the funds,
as the money in escrow accounts always belongs to others.
Therefore, escrow and title companies have absolutely no claim
to any of the money or interest proceeds that accumulate while
the funds are being held in escrow.

"I hope this lawsuit serves as a wake-up call to title companies
nationwide," said Connell. "An escrow account should be at zero
when the account is closed, with all charges and costs accounted
for. Any remaining funds should be immediately returned to the
buyers and sellers, and not commandeered as corporate income."

Under California's Unclaimed Property Act, the majority of the
escrow funds must be immediately escheated to the state to be
reunited with rightful owners. This act requires financial
institutions to send to the state all assets that have been
dormant for three years. The act also applies to the funds left
unclaimed in escrow accounts. The State alleges that escrow
companies devised schemes with banks to receive interest
"earnings" on deposited escrow funds. These earnings were based
on negotiated rate fees ranging from 60% to 100% of the bank's
net earnings on the deposit. It's estimated that within the last
four years alone, escrow companies received tens of millions of
dollars in illegal interest from these banks.

"What is particularly troublesome about this practice is that
these companies knew exactly what they were doing. For decades,
escrow companies knew these activities were illegal. Yet they
deliberately continued, turning illegal actions into standard
practice in the industry," Connell added.

The Controller's Office is currently auditing various escrow and
title companies. Connell indicated that: "Audits of these
industries will be substantially expanded to encompass all
escrow and title companies operating in California. We will
mount a massive audit effort to ensure that home and business
owners recover every cent owed to them."

In addition to asking that the funds be remanded to the state,
the lawsuit is seeking maximum damages allowable under law, all
costs of the action including attorney fees and court costs,
interest on illegally held funds, and civil penalties.

The class action was filed in Sacramento County Superior Court
on May 19.

The Los Angeles Daily News reported that California Attorney
General Bill Lockyer filed the suit on behalf of the office of
the state controller, insurance commissioner and people of
California. The state Controller's Office is a plaintiff because
it administers the state's unclaimed property fund. The state
insurance office is named as a plaintiff because it regulates
the industry.

The LA Daily News noted the action is being taken against an
industry that has largely been overlooked by regulators but is
an essential part of all real estate transactions. Escrow
companies serve as repositories for money that changes hands
while a sale is being completed and title companies make sure
the property being sold is in fact owned by the seller and not
encumbered by any liens or judgments.

Officials at both the Attorney General's Office and the
Controller's Office told the LA Daily News that it is too soon
to speculate on how much money might be owed to consumers.
Nathan Barankin, a spokesman for Lockyer, said this is the first
time regulators have taken a close look at the title and escrow
industries. "After you have done 99 percent of the work, you
walk into some office and sign a bunch of papers, and you never
see them again. Maybe you will get a check back from them," he
said. "It's an aspect of the finance experience that is often
overlooked and ignored." The suit claims that consumers who
bought real estate have been dinged in a variety of ways. One
example would be escrow and title companies charging a $10 fee
for delivering documents when the actual cost was a lot less.

Barankin told the LA Daily News that the suit is historic
because it is a "reverse class- action" - the defendants are
considered the class. At the end of a real estate sale, the
escrow account is supposed to have a zero balance. But the suit
claims that escrow companies sometimes did not disburse all of
the funds in the account and kept the money instead, collecting
interest. For example, if someone was issued a check drawn on
the escrow account but never cashed it, the money remained in
the account, the suit said. It should have been turned over to
the state.

Barankin has some advice for consumers now in the process of
buying real estate. "Anyone purchasing or selling their house
ought not to be afraid to ask detailed questions of their title
and escrow companies assisting them," he told the LA Daily News.

WEST GROUP: Employees Claim Sex Discrimination in Stock Awards
The USA Today reports that a federal judge certified a class-
action lawsuit by female managers who say they were awarded far
less stock than their male equals. The Tampa lawsuit may be the
first class-action equal pay case involving stock compensation.
Salaries varied little at West Group, a company known throughout
the legal community for its $1.4 billion in annual sales of
legal books and electronic libraries of case law. But when West
Group was bought by competitor Thomson in 1996 for $3.4 billion,
151 male managers cashed in an average $20 million in stock,
while 28 women received an average $ 1 million, says the women's
lawyer, Guy Burns.

The case will be watched by technology and other high-growth
companies that reward workers with stock and options. Many
companies, such as Starbucks and PepsiCo, offer options to
almost all employees.

"This is a huge sleeping giant," Burns told USA Today. "There
are hundreds of stories about companies that have a market cap
of $100 million, and a year later are worth $1 billion. This
could create a huge disparity (between men and women)."

In a statement, West Group says the case is without merit and
promised an appeal. It said the judge found no harassment or
hostile work environment.

Lead plaintiff Cynthia Silianoff, who was in charge of setting
up databases, received no stock. Men who did similar work
received stock worth millions, Burns says.

New York lawyer Eric Wallach, who has no connection to the case,
says equal-pay lawsuits are difficult to win because women must
show equal education, tenure and job performance as higher-paid
men. Wallach says he was surprised that a class-action case was
certified when so many such comparisons must be made. (USA
TODAY; May 25, 1999)

WESTON, FLORIDA: Reimer & Rosenthal Seek Refund of Interim Fees
A class action lawsuit was filed by the Hollywood, Fla. law firm
of Reimer & Rosenthal LLP, against the City of Weston in the
Circuit Court of Broward County, Fla., seeking a determination
that the City of Weston's Interim Services Fee Ordinance is
unconstitutional, and seeking refunds of all fees paid by the
class. Weston's Interim Services Fee requires all property
owners to pay a fee for city services to the city from the date
that a Certificate of Occupancy is issued until the date that
the improved property is listed on the County tax rolls on Jan.
1 of the following year.

The suit, filed on behalf of Fernando N. Lopez and Mallory
Lopez, for themselves and all other Weston property owners who
either directly or indirectly paid the fee to the city, follows
the recent ruling by the Florida Supreme Court in a similar case
which held that Collier County's Interim Governmental Services
Fee was an unconstitutional tax. The Florida Supreme Court held
"special acts or local ordinances that impose taxes that are
unauthorized by general law are unconstitutional."

The Interim Services Fee at issue in the Class Action suit
against Weston is similar to ordinances in existence in Sunrise,
Parkland, Pembroke Pines, Miramar, North Lauderdale and Coral
Springs. No trial date has been set.

For more information, contact Alex Rosenthal at 954-893-9800.

WORLD ACCESS: 22 Complaints Consolidated, Another Suit in GA
Following the announcement by WORLD ACCESS INC. in January 1999
regarding earnings expectations for the quarter and year ended
December 31, 1998 and the subsequent decline in the price of the
Company's common stock, 22 putative class action complaints were
filed against the Company. The Company and certain of its then
current officers and directors were named as defendants. A
second decline in the Company's stock price occurred shortly
after actual earnings were announced in February 1999, and a few
of these cases were amended, and additional similar complaints
were filed.

The 22 cases were consolidated pursuant to a court order entered
on April 28, 1999. The Company expects that an amended
consolidated complaint will be filed in May 1999. The court has
deferred ruling on a pending motion regarding the appointment of
lead plaintiffs and lead counsel.

Although the 22 complaints differ in some respects, the
plaintiffs, generally, have alleged violations of the federal
securities laws arising from misstatements of material
information in and/or omissions of material information from
certain of the Company's securities filings and other public
disclosures, principally related to inventory and sales
activities during the fourth quarter of 1998.

In general, the complaints are filed on behalf of: (a) persons
who purchased shares of the Company's common stock between
October 7, 1998 and February 11, 1999; (b) shareholders of Telco
who received shares of common stock of the Company as a result
of the Company's acquisition of Telco that closed on November
30, 1998; and (c) shareholders of NACT who received shares of
common stock of the Company as a result of the Company's
acquisition of NACT that closed on October 28, 1998. Plaintiffs
have requested damages in an unspecified amount in their

Although the Company and the individuals named as defendants
deny that they have violated any of the requirements or
obligations of the federal securities laws, there can be no
assurance the Company will not sustain material liability as a
result of or related to these shareholder suits.

In addition to the proceedings described above, on March 18,
1999, plaintiffs Craig Illausky, John Ufkes and Steven R. Mason
filed an additional putative class action complaint in the
United States District Court for the Northern District of
Georgia. The Company and certain of its officers, directors and
former directors were named as defendants. The complaint is
similar to the complaints filed in the proceedings described
above, alleging violations of federal securities laws arising
from misstatements of material information in and/or omissions
of material information from certain of the Company's securities
filings and other public disclosures. The Company expects to
file a motion requesting that this action be consolidated with
the other pending cases.


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. Peter A. Chapman, Editor.

Copyright 1999. All rights reserved. ISSN XXXX-XXXX.

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