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                Friday, September 3, 1999, Vol. 1, No. 149


AMTRAK RACE: Ct. In Columbia Oks Settlement Over Employment Bias
APPLE-RIO: Pregnant Manager Awarded $1.8M In Discrimination Suit
B MCCELLAN: Lawyers Sue Over Post-Dispatch Columnist’s Ref To ‘Robbers’
CARGILL INC.: 9th Cir. Refuses To Reinstate Citric Acid Price-Fixing
CHINOOK FERRY: High-Speed Ferry In Seattle Told To Stop Making Waves

COREL CORP: Settles Suit With U.S. Shareholders Filed In N.Y.
DII GROUP: Defends Securities Suits In Colorado; Trial In May 2000
DII GROUP: Orbit Semiconductor Settles For Securities Suit In CA
DONNELLEY & SONS: Pays $22 Mil. To Settle Postage Fraud Case In Phil.
ED BOARD: Sued For Holding Kids Back From Promotion; Hearing On Sept 14

GIO: Maurice Blackburn Files Securities Suit And Sees $500 Mil Recoup
HOWE: Ap Ct Dismisses Fiduciary Suit Over Managers Broken ESOP Promise
INS: Houston Janitorial Firm Sues Over Raids And Arrest Of Employees
MED WASTE: Faces Securities Suit Filed On June 16
MEDIA GENERAL: Class On TN Roofing Material Barred by Statute of Repose

MESA AIR: Former WestAir Pilots Sue In California Over Severance Pay
MYLAN LAB.: Federal Judge Permits FTC's Antitrust Suit
NORWEGIAN CRUISE: Suit Filed In Miami Over Crash In English Channel
PICTURETEL CORP: Settlement Agreed For Securities Suits In MA Ct.
PLM INTERNATIONAL: Law Journal Relates 9th Cir. Reversal Of ERISA Case

PUBLISHERS CLEARING: Attorneys General Criticize Proposed Settlement
RAINFOREST CAFÉ: Will Defend Securities Suit Filed In May In Minnesota
SELECT COMFORT: Will Defend 7 Similar Securities Suits In Minnesota
SENSORMATIC ELECTRONICS: Fed. Ct. Securities Suits Settled
SILKAIR: Report Says Unlawful Interference Might Have Caused Crash

STOP & STOP: Boston Lawsuit Ends In Refund For Peapod Price Confusion


AMTRAK RACE: Ct. In Columbia Oks Settlement Over Employment Bias
The U.S. District Court for the District of Columbia has given its
preliminary approval to the settlement reached between Amtrak and the
Plaintiffs in a class action lawsuit filed on behalf of African American
management employees and African American applicants for management

The settlement provides for an $ 8 million fund to provide economic
relief to class members, and Amtrak has agreed to implement wide-ranging
changes in its human resources and EEO procedures.

The lawsuit, a proposed nation-wide class action filed in 1998,
contended that Amtrak discriminated against African Americans in terms
of selection for management jobs, pay, promotion, discipline, and
toleration of a racially hostile work environment.

Amtrak and the Plaintiffs voluntarily entered into mediation shortly
after the lawsuit was filed, in an effort to address the concerns raised
by Amtrak's African American management employees and to avoid
litigation costs. Under the terms of the settlement, Amtrak admits no
wrongdoing, but agrees to extensive changes in corporate practices
designed to prevent race discrimination.

George Warrington, President & CEO of Amtrak, stated, "I am pleased that
the Court has moved quickly to approve this plan. We are committed to
the company-wide initiatives contained in this agreement that allow us
to meet the concerns of our African American management employees and
applicants in a cooperative manner. "By moving forward together, we can
showcase the value of Amtrak's workforce diversity and forge an
environment in which Amtrak's customers benefit from our achievement."

Michael Lieder of Sprenger & Lang, lead counsel for the Plaintiffs, is
also very optimistic about the settlement. According to Lieder, "the
settlement provides significant monetary compensation to class members
for injuries that they sustained in the past." With respect to the
future, Lieder adds that "Amtrak has agreed to vast changes in virtually
every aspect of its personnel practices for management employees so as
to better ensure equal opportunity for employees of all races." If
finally approved, Lieder's firm Sprenger & Lang will be monitoring
Amtrak's compliance with the settlement.

The case is pending before U.S. District Court Judge Emmet Sullivan.
Judge Sullivan stayed the lawsuit while the parties worked on reaching a
settlement with the assistance of private mediator Linda Singer of ADR

In addition to the $ 8 million fund, Amtrak has already begun
implementing changes in its human resources and EEO policies and
procedures. It has committed, for example, to hire a consultant to
undertake a company-wide compensation study, after which any disparities
in compensation found to correlate to race will be eliminated.
Substantial changes will also be made in the way that positions are
posted, and in the entire hiring process. Amtrak has also created a new
position, Vice President of Business Diversity and Strategic
Initiatives, and has already appointed Wanda Morris Hightower to the
position. Among other things, that department will develop EEO complaint
and investigative procedures that will ensure timely resolution of
internal complaints. Overall, Amtrak and the Plaintiffs believe that the
value of these changes to the Plaintiffs and class members will exceed
that of the $ 8 million fund during the 4-year term of the proposed
consent decree.

Because the proposed settlement involves a class, a fairness hearing
will be held on October 25th of this year, after which, for the
settlement to become final, the Court must grant its final approval of
the terms. Contact for plaintiff class: Sprenger & Lang Michael Lieder,
202/265-8010 or Washington Lawyers' Committee Avis Buchanan,
202/319-1000 or for Amtrak: Cliff Black 202/906-3855 (The News and
Observer (Raleigh, NC) 9-1-1999)

APPLE-RIO: Pregnant Manager Awarded $1.8M In Discrimination Suit
While channel surfing last week, Duluth attorney Stephen P. Fuller came
upon an omen on the legal comedy "Ally McBeal." In a discrimination case
handled by the title character's firm, the jury awarded the plaintiff
$1.2 million in damages. Fuller, representing a local Applebee's
franchisee in the midst of its own federal discrimination trial,
thought, "Oh, s--; that's what they're going to do" in his case.

Actually, it was worse. A four-man, four-woman jury took three hours to
conclude Fuller's clients must pay $1.826 million in damages for
demoting an employee because she was pregnant. Rau v. Apple-Rio
Management Company Inc., No. 1:97-cv-2345-WBH (N.D.Ga. Aug. 20, 1999).

Fuller sounds unworried that his client, Apple-Rio Management Co. and
other related entities, will have to pay the former restaurant manager a
seven-figure sum. Instead, he says he expects U.S. Magistrate Judge
Gerrilyn G. Brill will reduce the award to $334,000-the $300,000 limit
on compensatory and punitive damages required by federal law, plus
$34,000 in back pay found by the jury.

The plaintiff's lawyer, Nancy E. Rafuse of the local office of Paul,
Hastings, Janofsky & Walker, agrees that the law limits compensatory and
punitive damages to $300,000. But, she adds, "we're going to be over a
million dollars before this is all over."

That total includes attorney's fees from the two-year-old case and
$325,000 in back pay, front pay and interest-all to be decided by Brill,
says Rafuse.

Rau's lawyer also says her client's claims that she was forced out of
her job have yet to be litigated. This "constructive discharge" claim
could bring a similar award, Rafuse says, especially since a jury has
already found for her client on discrimination and retaliation claims.

Rafuse's client is Janet M. Rau, who says in 1996 she was demoted from
her job as general manager of a local Applebee's restaurant because she
was pregnant. According to Rau's pre-trial summary of the facts, her
problems began soon after she informed her co-workers, including her
bosses, that she and her husband were planning to start a family.

One of her superiors, Stan Klaus, allegedly told another restaurant
manager, "Talk to Janet about this baby thing and talk her out of it."
A few months later, Rau was pregnant and a doctor ordered her not to
work because of a pregnancy-related complication. The doctor cleared Rau
to return to work a week later, but she was demoted two months later.

Rau's immediate boss, Steve Smith, says in court briefs that she was
demoted to a second assistant manager at another restaurant because her
restaurant was underperforming. But Rau claims her restaurant's
performance was consistently the highest or second-highest in her
five-restaurant district.

The day after Rau was demoted, she claims, Smith told another employee,
"Janet will realize this was the best thing for her right now during her
pregnancy and the problems with her pregnancy."

Fuller says that statement was denied by Smith and the employee.

Rau claims her attempts to compare her restaurant's financial results
with others in her district resulted in a call from Fuller, who
regularly represents the companies. "Fuller was aware at the time of
this contact that Ms. Rau was represented by counsel," Rau's brief
reads, "but, nonetheless, improperly proceeded to question Ms. Rau about
her demotion."

Fuller calls that statement "an absolute lie." He says he was asked to
look into Rau's attempts to see other restaurants' financial data but
"nobody knew she was represented by counsel" at the time. Fuller says
Rau told him she wanted to compare her restaurant's data with those of
others in hopes of understanding her demotion. Fuller adds that he told
his clients they should explain in writing why Rau had been demoted but
before any letter could be sent, Rau had retained a lawyer and sent a
demand letter.

Neither side will confirm Rau's original demand but Rafuse says it
included "an absurdly low offer" to settle.

Fuller says he understands how the jury could have found against his
client: "You're dealing with a woman who was demoted while pregnant.
That's a good plaintiff." But he adds that Rau was demoted because of
her restaurant's financial performance. In that same time, he adds, two
other pregnant employees were not demoted.

Rafuse and Paul, Hastings partner William B. Hill Jr. represented Rau at
the eight-day trial. The Applebee's franchisees were represented by Paul
Oliver of Wimberly & Lawson, says Fuller, while he assisted. Oliver
could not be reached to discuss the case. (Fulton County Daily Report

B MCCELLAN: Lawyers Sue Over Post-Dispatch Columnist’s Ref To ‘Robbers’
Two Belleville lawyers have sued Post-Dispatch columnist Bill McClellan
and the newspaper over a tongue-in-cheek column that likened them to
bank robbers. Judy Cates and her brother, Steven Katz, filed the suit
alleging libel Monday in federal court in East St. Louis. It seeks $ 1
million in damages.

The two lawyers represent clients in a class-action suit against
Publishers Clearing House that accused the company of misleading
consumers into thinking that subscribing to magazines would improve
their chances of winning sweepstakes jackpots.

A proposed settlement of $ 10 million was announced in July.
Cates, Katz and another lawyer, Douglas E. Sprong, are seeking $ 3
million in attorneys fees and expenses to be paid out of the $ 10

McClellan's column on Aug. 27 said Cates and Katz "represent the modern
version of the James gang" who descended on Publishers Clearing House
and "robbed the bank there and rode away."

Richard K. Weil, executive editor of the newspaper, said the suit was
without merit. "Bill McClellan's column was a legitimate commentary
about legal fees in class-action suits," Weil said. (St. Louis
Post-Dispatch 9-1-1999)

CARGILL INC.: 9th Cir. Refuses To Reinstate Citric Acid Price-Fixing
Cargill Inc. set prices for citric acid at the same levels as
competitors who took part in a criminal price-fixing plot, but there's
no substantial evidence that Cargill was a conspirator, says a federal
appeals court.

In a 3-0 ruling, the 9th U.S. Circuit Court of Appeals refused to
reinstate a damage suit against the Minneapolis-based agribusiness giant
by purchasers of citric acid that was dismissed by a federal judge last

Four other companies have admitted criminal antitrust violations and
settled civil damage suits by the same bottlers and processors that sued

One of the four, Archer-Daniels Midland, pleaded guilty in 1997 to
conspiring to fix prices of citric acid and lysine, an animal food
additive, and was fined $100 million, then the largest criminal
antitrust penalty on record.

The other three companies are Haarman & Reimer, Hoffman LaRoche and
Jungbunzlauer. A number of employees have been prosecuted, including
three senior ADM executives who were sentenced to prison in July.

Of the companies that admitted fixing prices, "none identified Cargill
as a co-conspirator," said Judge Diarmuid O'Scannlain in the court's
ruling. He said evidence offered by the bottlers and processors failed
to rule out the possibility that Cargill had acted on its own.

Citric acid, with worldwide sales of $2 billion to $3 billion a year, is
used to extend the shelf life of soft drinks, canned fruits and
vegetables, detergents, drugs and cosmetics. The four companies admitted
agreeing between 1991 and 1995 to divide the market and raise prices by
limiting sales.

Cargill entered the market in the late 1980s and gained a 20 percent
U.S. share by the mid-1990s.

The suit, a class action by Varni Brothers Corp. and the 7-Up Bottling
Co. of Philadelphia, accused Cargill of joining the conspiracy in 1993
when it joined the European Citric Acid Manufacturers Association, a
group to which the other four companies belonged.

The suit noted that Cargill had announced in early 1992 that it planned
to double its citric acid production capacity but said in late 1992 that
it would increase capacity only 50 percent. The suit also cited an FBI
report in one of the criminal cases that quoted Barrie Cox, an ADM
employee, as saying he had frequent discussions with Cargill's national
sales director about citric acid bidding prices in 1995.

But the appeals court largely discounted Cox's statements, saying they
showed, at most, "sporadic price discussions" two years after Cargill
was alleged to have joined the conspiracy.

Cargill's scaling back of its expansion plans, and its posting of prices
that largely mirrored those of its competitors, were not evidence of a
conspiracy, O'Scannlain said. He said Cargill's expansion of its U.S.
market share came largely at the expense of ADM and Haarman & Reimer,
and quoted an H&R internal memo in 1993 that expressed frustration at
Cargill's aggressive marketing.

Therese Stewart, a lawyer for the companies that sued Cargill, said the
court had disregarded an earlier antitrust decision and made it
extremely difficult to get a price-fixing conspiracy case to trial. Even
"evidence of actual agreement between an admitted conspirator and the
defendant on certain bid prices" isn't enough, she said, referring to
the FBI's statement from Cox.

But Richard Favretto, a lawyer for Cargill, said Cox's statements were
never corroborated and were considered by the federal government in a
four-year investigation that cleared the company. The ruling is "a
further vindication of our position," he said.

The case is In re: Citric Acid Litigation, 98-15344. (San Francisco

CHINOOK FERRY: High-Speed Ferry In Seattle Told To Stop Making Waves
One of the biggest things to happen to commuting in the Seattle area
since the travel coffee mug has lost a little of its excitement.

A new high-speed ferry that whisks commuters to and from Seattle has
been forced by a judge to throttle back its four 650-horsepower
waterjets to a poky 14 mph along one stretch because of complaints from
well-to-do homeowners that the boat's wake is tearing up the exquisite

Some of the thousands of commuters who were thrilled with the speed and
convenience of the Chinook are fuming. "We're being held hostage by a
handful of residents -- a whole county," grumbled Bob Sawade, who
commutes from Bremerton to Seattle, where he works at a printing

The passenger-only Chinook, which debuted more than a year ago, is the $
9.5 million star of the state's fleet and represents a big improvement
over the 26 other ferries, most of which are crowded, breakdown-prone
vessels that lumber through western Washington's network of islands,
inlets and channels at 20 mph.

Operating at a top speed of 39 mph, the Chinook was a nautical hot-rod,
shaving almost an hour off what was a two-hour round-trip journey on the
heavily used Bremerton-Seattle route. And the Chinook did it in style:
The twin-hulled, 143-foot vessel is a sleek, gleaming-white craft with
plush upholstery and ample legroom. It carries 350 passengers.

But about 60 Kitsap County shoreline residents complained the Chinook
produced a bigger, harsher wake that battered their beaches to bits.
"When its waves hit the bulkhead it sounds like someone's hitting it
with a baseball bat," said Jackie Rossworn, who lives along Rich
Passage, a channel that at its narrowest point separates Bainbridge
Island from the Kitsap Peninsula by only three-quarter of a mile. Homes
along the Bainbridge Island side of the passage start at $ 500,000.

Rossworn and four other property owners filed a class-action lawsuit
against the state ferry system last spring. Superior Court Judge Glenna
Hall ruled in their favor Aug. 13, marking the first time a vessel was
made subject to the state Environmental Policy Act.

Hall ordered the Chinook to slow from 39 mph to 14 mph through Rich
Passage a six-mile segment of its 16-mile route -- until an
environmental review is conducted. The one-way trip now takes 15 minutes
longer. (The Detroit News 8-27-1999)

COREL CORP: Settles Suit With U.S. Shareholders Filed In N.Y.
Software developer Corel Corp. said it will settle a U.S. stockholder
class action lawsuit that alleged the company misrepresented its
financial position -- legal action the firm had earlier warned could be

The Ottawa-based company, hit with the suit in late February 1998, did
not acknowledge any wrongdoing nor did it disclose the financial terms
of the settlement.

The settlement will not have a material adverse impact on Corel's
operating results for the fourth quarter, or any subsequent period, said
the company, which closed its third quarter Tuesday. "While Corel
continues to hold that this action was without merit, we believe that
proceeding now to eliminate any uncertainty posed by this litigation is
in the best interests of Corel and Corel's value to its shareholder,"
said Chief Financial Officer Michael O'Reilly in a statement.

Corel is uncertain when a decision will come from the Eastern District
Court of New York on settlement terms submitted along with Great Neck
Capital Appreciation Investment Partnership and others on behalf of a
class of shareholders.

Details will be announced when supporting material for the memorandum of
understanding is filed in the coming months, Corel said. The settlement
consolidates three other U.S. suits alleging violations during the same
time period.

"This is not a trivial lawsuit. What was alleged in the lawsuit was, in
fact, relatively serious. Therefore if they are settling, it means that
relatively serious charges are not being not quite admitted to, but not
contested," said Duncan Stewart, fund manager at Tera Capital in
Toronto. "This is significant," he added, "but we just don't know what
the significance is yet."

Other analysts disagree. "I don't pay too much attention to those suits
frankly," said Jean Orr, analyst at Nutmeg Securities in Connecticut. "I
really view most of these shareholder suits as nuisance suits that are
filed for the lawyers to make money."

Corel warned in March 1998 in a filing to securities regulators that
defending the suit could cost it "material amounts of funds and may
require a significant amount of management's time and resources."
"We're going to be surprised if the court doesn't approve the settlement
because both parties have come to the agreement and both parties think
it reflects the true value of the litigation," said Corel spokeswoman
Nicole Sanford.

The action, open to investors who bought shares between March 26, 1997,
and January 20, 1998, named Chief Executive Michael Cowpland and former
Chief Financial Officer Charles Norris as individual defendants.

The suit alleged that the defendants "artificially inflated the price of
Corel stock by making material misrepresentations about the company, its
business and financial condition."

On January 20, Corel unveiled a loss of $67 million and restated losses
for the previous three quarters to eliminate $28 million in revenue and
costs resulting from the trade of Java technology with other companies
during the year. That deepened the year-end loss to $3.34 a share versus
4 cents per share.

The suit also alleged that Cowpland, Norris and other senior executives
"had sold millions of shares of Corel stock at artificially inflated

Cowpland sold $20.5-million worth of Corel stock, about one-quarter of
his stake, while Norris sold shares during the time outlined in the
lawsuit valued at C$434,000.

Corel stock dropped 30 Canadian cents to close at C$8.20 on the Toronto
Stock Exchange before the announcement was released. On Nasdaq, the
issue dropped 1/4 to $5-1/2. (Reuters)

DII GROUP: Defends Securities Suits In Colorado; Trial In May 2000
In 1997, two related complaints, as amended, were filed in the District
Court of Boulder, Colorado and the U.S. District Court for the District
of Colorado against DII Group Inc. and certain of its officers. Both
actions were brought by the same plaintiffs' law firm as that against
Orbit Semiconductor, DII Group’s wholly owned subsidiary.

In July 1999 the federal court action was dismissed with prejudice. The
state court action purports to be brought on behalf of a class of
persons who purchased the Company's common stock during the period from
April 1, 1996, through September 8, 1996, and claims violations of
Colorado and federal laws based on allegedly false and misleading
statements made in connection with the offer, sale or purchase of the
Company's common stock at allegedly artificially inflated prices,
including statements made prior to the Company's acquisition of Orbit.
The complaint seeks compensatory and other damages, as well as equitable
relief. The Company has filed an answer denying that it misled the
securities market. A May 2000 trial date has been set and discovery has
commenced. The Company believes that the claims asserted in the action
are without merit and intends to defend vigorously against such claims.

DII GROUP: Orbit Semiconductor Settles For Securities Suit In CA
A class action complaint (as amended in March 1996 and January 1997) for
violations of federal securities law was filed against DII Group’s
wholly owned subsidiary, Orbit Semiconductor and three of its officers
in 1995 in the U.S. District Court for the Northern District of
California. The amended complaint alleged that Orbit and three of its
officers were responsible for actions of securities analysts that
allegedly misled the market for Orbit's then existing public common
stock, and sought relief under Sections 10(b) and 20(a) of the Exchange
Act and Rule 10b-5 promulgated thereunder. The amended complaint sought
compensatory and other damages, as well as equitable relief. In
September 1997, Orbit filed its answer to the second amended complaint
denying responsibility for the actions of securities analysts and
further denying that it misled the securities market. On May 24, 1999,
the Court approved a class-wide settlement of the case, providing for a
settlement fund of $1.7 million. Orbit's contribution to the settlement
fund was $143,000, and the balance was paid by Orbit's insurance

DONNELLEY & SONS: Pays $22 Mil. To Settle Postage Fraud Case In Phil.
In the largest postage fraud case in at least a decade, R.R. Donnelley &
Sons Co. agreed to pay $22 million to settle federal charges that for 10
years it has been skimping on the postage due on thousands of catalogs,
magazines and other mailings.

In a settlement announced by the U.S. attorney's office in Philadelphia,
Chicago-based Donnelley was accused of deliberately avoiding paying the
higher postage due for some of the pieces it mails each day. "We rely on
large mailers to accurately tell us what they are mailing," said
Assistant U.S. Atty. John N. Joseph, who prosecuted the case.

A spokesman for Donnelley, which said it agreed to pay the fine rather
than face a lengthy trial, attempted to downplay the significance of the
case. "Donnelley is a very large printer. Over the 10 years covered by
the settlement we printed more than 61 billion pieces that were
distributed through the Postal Service and paid $12 billion in postage,"
said William Lowe. "The $22 million settlement represents a very small
percentage of the total postage paid," he said.

But Joseph said Donnelley--the nation's largest commercial printer--had
abused an honor system established by the U.S. Postal Service that gives
a discount to volume mailers that agree to pre-sort mailings before
giving the mailing to the service for delivery.

With nearly 200 printing operations in North America, Latin America,
Europe and Asia, Donnelley prints the Sunday newspaper magazines for
many newspapers including the Chicago Tribune, magazines such as TV
Guide, Crain's Chicago Business, Sports Illustrated, and catalogs for
J.C. Penney Co. and others. It is also the world's leading printer of
telephone directories.

The postal inspection service launched the investigation at Donnelley's
Lancaster, Pa., printing plant after employees were observed adding
non-sorted magazines and catalogs to shipments that already had been
processed by on-site postal clerks, according to Joseph, who declined to
disclose other plants where the practice had been found.

This is not the first time the Lancaster facility has been cited in a
federal lawsuit. The operations are a key element of a $500 million
class-action lawsuit in which more than 500 black workers have accused
Donnelley of discrimination when it closed a 1,000-employee South Side
printing plant in 1994. The suit, filed three years ago, charges that
about 99 percent of the 5,765 black employees were laid off, while about
31 percent of the facility's white employees were transferred elsewhere
in the company.

Included in the evidence submitted to support its claims are copies of
derogatory e-mail and photographs of threatening graffiti from the
Lancaster facility. "We believe that suit is without merit," said Lowe.

The fine is the second imposed this year on the Chicago printer. Earlier
this year, the U.S. Immigration and Naturalization Service fined
Donnelley $43,000 for hiring 63 illegal immigrants to work at its
Crawfordsville, Ind., printing plant.

As a result of what the government uncovered at Donnelley, Joseph
indicated that the Postal Service is expanding its investigation of
mailing procedures employed by the nation's commercial printers.

Under the settlement, Joseph said, about $6 million of the fine was for
postage underpayment that occurred since the Postal Service and company
began negotiations, while the remaining $16 million represents triple
damages for postage fraud allegedly occurring prior to that.

Discount mailing privileges afforded Donnelley are not unique, according
to Jim Mruk, a Postal Service spokesman. "Volume mailers get postage
discounts for how fine they sort the mail," he said, noting that some
mailers not only sort by ZIP code, but will even put the mailing in the
order that it will be delivered. The highest discount is offered to
those mailers who also agree to drop ship the mailing to the thousands
of post offices across the country.

Mruk said it is common for mailers to encounter production problems
similar to Donnelley's. "During the production process, some of this
presorted mail gets out of the sequence. When that happens, the mailers
are to put it back in the proper sequence or they have to pay the full
first-class rate for the piece," he said.

As simple as the procedure sounds, Lowe said Donnelley plants had no
standardized system for dealing with pieces that got out of sequence
because of printing problems. "Different plants tried to address the
issue in different ways," he said, noting that neither the company nor
any of its employees benefited from the underpayment.

Mruk said postal clerks routinely work on-sight with large mailers such
as Donnelley. Rather than counting each piece being mailed, clerks
compute the postage due from the number of pallets and the total weight.
"If we tried to physically count each piece, the mail would never get
out," he said. Postal Service officials said they were hard pressed to
think of another large postage fraud case such as Donnelley's. Most of
the cases involve mail fraud or wire fraud, said Mruk. (Chicago Tribune

ED BOARD: Sued For Holding Kids Back From Promotion; Hearing On Sept 14
A child-advocacy group filed a class-action suit against the Board of
Ed, charging that plans to hold back thousands of kids who failed summer
school are illegal. But a Manhattan Supreme Court judge refused to stop
the board, pending a hearing this month.

"The lawsuit alleges that the Board of Education has violated its own
regulations," said Jill Chaifetz, executive director of Advocates for
Children, which filed the suit in Manhattan Supreme Court. "As a result,
children should not be retained this year because they did not get the
notice or the services they were supposed to get."

The suit throws into doubt Chancellor Rudy Crew's ambitious program to
end social promotion, the practice of advancing kids who flunk to the
next grade. The groups went to court seeking to block the board from
holding back an estimated 9,000 to 14,000 kids who flunked summer
school. They said Crew ignored board rules saying kids in danger of
being held back must be warned by Jan. 31 and get remedial instruction
to help them improve.

The suit cites the cases of three parents from Brooklyn and Queens,
identified only by initials. The parents say they were notified for the
first time in June - weeks before the end of the school year - that
their kids were in danger of being held back and had to attend summer
school and pass a test before they could be promoted. Some parents were
told last week their kids would be held back. Others remain in the dark.

The suit says such families will suffer "irreparable harm," but Supreme
Court Justice Phyllis Gangel-Jacob refused to issue a temporary
restraining order against the board. She set a hearing for Sept. 14.

Thousands of third-, sixth- and eighth-graders who scored below the 15th
percentile on the end-of-summer tests could be forced to repeat a grade
- but the Board of Ed has not yet released a number. "We don't know the
exact number because the board doesn't know the exact number - or they
claim they don't know," Chaifetz said. Board spokesmen did not return a
call for comment.

The suit came amid ongoing controversy over Crew's statements last week
that he's tempted by an offer to head a training institute at the
University of Washington and couldn't promise to stay in New York until
his contract expires in June. Board of Ed President Bill Thompson said
he wants to offer Crew a one-year contract extension to June 2001, but
board member Jerry Cammarata said he's "lost confidence" in Crew's
truthfulness and called for a search to begin immediately to replace
him. Cammarata said he's afraid Crew will leave New York in a lurch -
like he did Tacoma nearly four years ago when he came to the Big Apple.
Crew repeatedly assured that city he would remain as school
superintendent, then went back on his word. Thompson said he believes
Crew will stay until June and there's no need for a search committee.
"I believe there is a majority on the board that would offer him an
extension," Thompson said, adding that stability in the chancellor's
office is key to improving the school system. (The New York Post

GIO: Maurice Blackburn Files Securities Suit And Sees $500 Mil Recoup
National law firm Maurice Blackburn Cashman has launched a class action
on behalf of GIO Australia Holdings Ltd shareholders against the
insurance company, its directors and consultants Grant Sameul &

Maurice Blackburn Cashman partner Bernard Murphy said the case could
recoup up to $500 million for shareholders and is the biggest legal
action of its type undertaken in Australia.

"We have issued this case against GIO because tens of thousands of
Australians, many of whom had invested their life savings in this
company, have suffered significant financial hardship because GIO was
more interested in survival than its responsibility to shareholders," Mr
Murphy said.

He said in defending the hostile takeover by AMP, the directors of GIO
presented a misleading picture of GIO's performance to shareholders that
they either knew or should have known was incorrect at the time.
"The predicted a $250 million profit when, in fact, they were headed for
a massive $750 million loss," Mr Murphy said. "In doing so, they failed
to properly protect the interests of around 68,000 shareholders who have
so far seen their GIO shares drop by $2.70 a share."

Mr Murphy said the naming of GIO directors and Grant Samuel as
respondents will have significant implications for company directors and
consultants around the company.

He said more than 600 people wanted to joint the class action, which the
Australian Shareholders Association last week urged members affected by
the fallout of the AMP takeover to join. (AAP Newsfeed 9-1-1999)

HOWE: Ap Ct Dismisses Fiduciary Suit Over Managers Broken ESOP Promise
A company's broken promise to sell stock to its employee stock ownership
plan (ESOP) during a leveraged buyout does not support claims for breach
of fiduciary duty under the Supreme Court's seminal ruling in Varity
Corp. v. Howe (U.S. 1996), according to the Sixth Circuit U.S. Court of
Appeals. Lower et al. v. Alpert et al., Nos. 97-CV-2122 and 97-CV-2123
(6th Cir., July 20, 1999).

Under Varity, a company acts in a fiduciary capacity if it makes
misrepresentations about an employee benefit plan. The Sixth Circuit
held that no misrepresentation occurred because the promise was not the
sort of detailed plan information covered by Varity.

In 1992, the owners of Brown Corporation, Richard and Joseph Brown, sold
the company to its top management for $20 million in company stock in a
leveraged buyout.

The top mangers -- David Alpert, Peter French and Robert Netherton --
were all fiduciaries of the company's ESOP and discussed letting the
plan "get in on the ground floor" by selling it the shares they had
purchased from the Browns. That alleged promise was never fulfilled.

The plaintiffs, former Brown Corp. employees and ESOP participants
Daniel P. Lower and Joseph D. Stewart, later filed a class action
against Alpert, French and Netherton alleging that the top mangers had
violated their fiduciary duties under ERISA by failing to follow through
with the "ground floor" promise. The district court granted the
defendants motion for judgment on the pleadings and this appeal

The defendants argued that their decision not to include the ESOP in the
stock deal was made in their capacity as company managers and not as
plan fiduciaries. The Employee Retirement Income Security Act (ERISA)
allows mangers to make decisions that touch on the employee benefit
plans they also administer if the decisions are made in their management

Varity extends fiduciary obligations to managers acting in their
management capacity if statements they make about employee benefit plans
are made to mislead plan participants. Varity, however, involved
misrepresentations about plan benefits as part of an effort to get
participants to transfer from one plan to another.

"In the case at bar, by contrast, the statements regarding the ESOP's
ability to 'get in on the ground floor' did not relate to benefits under
the plan and did not represent the sort of detailed plan information
intended to help participants determine whether to remain in the plan,"
the appellate court said.

In denying the plaintiffs appeal, the Sixth Circuit also found that the
defendants decision to not sell stock to the ESOP had been made in the
management capacity, and that the district court had not abused its
discretion by denying them leave to file a second amended complaint. The
appellate judges said the plaintiffs' complaint had been properly
rejected because the plaintiffs had failed to submit it before the
pleading amendment deadline. (Pension Fund Litigation Reporter

INS: Houston Janitorial Firm Sues Over Raids And Arrest Of Employees
A Houston janitorial firm has filed a lawsuit alleging the Immigration
and Naturalization Service wrongfully arrested and detained employees in
raids without a warrant.

The INS conducted a "fierce" six-month investigation into the company
beginning in January 1998, said Don R. Blanz, Pritchard Industries'
executive vice president. The federal lawsuit was filed this month.
Agents took 33 of 90 employees into custody in handcuffs at three
properties May 7, 1998, the lawsuit stated. Thirteen were illegal
workers and actually deported as a result of "counterfeit" documents,
including employee I-9 forms required by INS for immigrant workers.

The company was "needlessly deprived" of the other 20 legal employees
"who were essential to the proper completion of the labor" contracted,
the lawsuit stated.

In addition, the 13 had counterfeit documents so well done, the lawsuit
said, that agents had to run each Social Security number through the INS
computer system to determine their validity. "It was impossible to
distinguish the counterfeit from valid documents on their face," the
lawsuit stated.

In one meeting with INS agents and Pritchard management on April 20,
1998, the company was informed that the INS wanted to conduct a "site
survey" at Greenway Plaza, one of Pritchard's "largest and most valued
client accounts."

In another meeting May 1, 1998, Pritchard asked agents that the INS site
surveys be conducted at three more suitable locations. On May 7, 1998,
the INS conducted the site surveys in three other office buildings.

"Despite numerous requests from plaintiffs' legal counsel, no warrants
were obtained by the INS prior to the site surveys," the suit stated.

INS agents met again with Pritchard management on May 8, 1998, and May
12, 1998, when the agents "expressed disappointment that their INS
quotas" of 50 arrests had not been met, the lawsuit said. The agents
asked for another list of new employees who were hired between Jan. 24,
1998, and May 12, 1998.

Agents said if employees were found without proper identification, they
would have to be terminated within 24 hours and Pritchard would be fined
$ 2,000 per day for every violation, the suit said.

After hiring additional temporary staff, including file and data entry
clerks to gather the requested information, Pritchard received a letter
dated July 17, 1998, from the INS stating the company was in full
compliance with the law.

The company suffered "losses in revenues and gross profits as a direct
result" of INS actions. "These losses do not include the additional
administrative and massive overtime labor costs incurred by the
plaintiffs to meet the unreasonable and threatening requests by the
defendants," the suit stated.

Although not commenting about the details of the pending litigation, INS
Houston Director Richard Cravener said, "I welcome the opportunity to
present our case in court."

INS spokesman Tomas Zuniga, in the Dallas regional office, said such
lawsuits are rare. "We try to do everything by the book and even notify
the businesses on when we're coming," Zuniga said. (The Houston
Chronicle 8-26-1999)

MED WASTE: Faces Securities Suit Filed On June 16
On June 16, 1999, a complaint was filed against Med Waste Inc., and
certain former officers and directors. The Plaintiff seeks to certify a
class action against the Defendants for the purported securities

Specifically, the complaint seeks relief for violations of Section 10(b)
of the Securities Exchange Act of 1934 and Rule 10(b)-5, promulgated
thereunder, as well a purported violations violation of Section 20(a) of
the Exchange Act. The complaint alleges that the Defendants purportedly
issued false and misleading statements as to the Company's results of
operations and that, specifically, earnings and earnings per share of
the Company for each of the quarterly reports issued for the first,
second and third quarters of the 1998 fiscal year were fraudulently
misstated. Plaintiff seeks to recover damages on behalf of himself and
the putative class he represents purportedly sustained as a result of
the violations of the securities law alleged in the Complaint. Plaintiff
also seeks to recover attorney's fees and costs incurred in the
litigation. No discovery has commenced and the size of the plaintiff
class is not yet determined. Accordingly, the Company and counsel are
unable to predict the outcome of this case.

MEDIA GENERAL: Class On TN Roofing Material Barred by Statute of Repose
A Tennessee farmer's proposed class action over allegedly defective
roofing material is barred by the product liability statute of repose, a
state appellate court has found. Damron et al. v. Media General Inc. et
al., No. 01-A-01-9805-CV-00251 (TN Ct. App., May 25, 1999).

The Tennessee Court of Appeals rejected the farmer's contention that a
fraudulent concealment exception to the state's Product Liability Act
enabled him to file suit outside the 10-year limitations period.

In the fall of 1979, Giles Damron, a Lincoln County farmer, bought
approximately 5,300 square feet of Onduline roofing material to roof a
pig barn. Before he completed the roof, he noticed that water collected
on its underside and dripped on the barn floor. This problem turned out
to be persistent and, despite Damron's efforts to correct it by painting
the underside of the roof and installing a ventilation system, the roof
continued to sweat.

Three years later, the roof developed cracks and started to leak. Damron
patched the roof with roofing cement, which temporarily stopped the
leaks. Over the next two years, however, additional cracks appeared and
Damron finally covered the roof with tin.

Damron filed suit in the Circuit Court for Lincoln County in March 1996
against three defendants that allegedly manufactured and distributed
Onduline roofing materials. Damron, in addition to seeking damages for
strict liability and breach of contract, also sought to represent a
class of plaintiffs that had been damaged by the failure of Onduline

Defendants Media General Inc., NES II Inc. and Garden State Paper
Company Inc. moved for summary judgment, alleging that Damron's claims
were barred by the product liability statute of repose. The circuit
court overruled the motion, however, and granted Damron's request for
class certification.

In reversing this decision, the state appellate court, in a decision by
Judge Ben H. Cantrell, agreed with the defendants' contention that there
is no fraudulent concealment exception to the Tennessee Product
Liability Act of 1978. An exception is not found in the statute itself,
the three-judge panel said, and the choice to not include one was
"deliberately made by the legislature."

The panel also rejected Damron's reliance on King-Bradwell Partnership
v. Johnson Controls Inc. (TN Ct. App., 1993), as authority for the
proposition that fraudulent concealment will toll the products liability
statute of repose. In that case, the panel said, the court did not
address the question directly. While assuming that fraudulent
concealment would toll the statute, the court found that the facts in
the case were insufficient to support a finding of fraudulent

The panel added that even if Damron were permitted to go ahead with his
lawsuit, he could not represent a class of Onduline purchasers. "By
defining the class without respect to any particular time period during
which the members of the class purchased the Onduline product, by
alleging the various causes of action, and by seeking damages to
property other than the product itself, the plaintiff has ... created a
class where each claim will have to be tried separately," Judge Cantrell

Raymond W. Fraley Jr. of Fayetteville, TN, argued for Damron.
Robert E. Cooper Jr. and Samuel L. Felker in Nashville, TN, argued for
the defendants. (Mass Tort Litigation Reporter, August 1999)

MESA AIR: Former WestAir Pilots Sue In California Over Severance Pay
In February 1999, a complaint was filed against 2 subsidiaries of Mesa,
WestAir Commuter Airlines, Inc. and Mesa Airlines, Inc., in Superior
Court of California for Fresno County, by the former WestAir pilots,
seeking severance pay in the amount of $1.2 million plus economic and
punitive damages as a result of WestAir's termination of airline
operations, following United's non-renewal of the WestAir agreement.
Mesa does not believe that the pilots will prevail on their claims and
intends to defend this matter vigorously.

MYLAN LAB.: Federal Judge Permits FTC's Antitrust Suit
The Federal Trade Commission may proceed with an antitrust suit, seeking
$120 million in fines, against Mylan Laboratories Inc. that alleges the
generic drug maker caused the prices of two widely prescribed
tranquilizers to increase dramatically. FTC v. Mylan Laboratories Inc.
(New York Law Journal 8-13-1999)

NORWEGIAN CRUISE: Suit Filed In Miami Over Crash In English Channel
This week's collision of Norwegian Cruise Lines' (NCL) Norwegian Dream
with a container ship in the English Channel will keep the cruise ship
out of commission until October 11 and lead to losses of between $1.2
million and $7.9 million for the year.

The collision between the Norwegian Dream and the Panamanian cargo ship
Ever Decent occurred in a busy shipping lane off the coast of southeast
England. Most of the 1,726 cruise ship passengers were Americans.

NCL Holdings ASA, the world's fourth-largest cruise-line operator, said
the company is fully insured both for damage and cancellations. The
company posted a profit of $7.45 million in the first half of 1999.

The Miami law firm Leesfield, Leighton Rubio & Mahfood filed a class
action complaint in Miami-Dade Circuit Court against NCL on behalf of
John and Mary Hutton of Las Vegas, who were aboard the Norwegian Dream
at the time of the accident, and all other passengers who were also on
the ship.

According to the lawsuit, the Huttons and other passengers suffered
"physical injuries, pain, shock, fear, emotional distress and a variety
of other physically manifested illnesses" as a result of the crash. It
accuses NCL of not operating the ship in a safe and reasonable manner.

After the accident, NCL offered a free cruise to all passengers and
50-percent discounts on cruises to passengers who were booked on the
ship's next three voyages, which were canceled. The ship will re-enter
service with a cruise through the Black Sea and the Greek Islands, the
company said.

PICTURETEL CORP: Settlement Agreed For Securities Suits In MA Ct.
Since September 23, 1997, seven class action shareholders’ complaints
have been filed against the Company, Norman E. Gaut, Director and former
Chairman of the Board and Chief Executive Officer, and Les Strauss, the
former Vice President and Chief Financial Officer, in the United States
District Court for the District of Massachusetts. The plaintiffs filed a
consolidated complaint on February1, 1998.

The original complaints were filed following the Company’s announcement
on September 19, 1997 that it would restate its financial results for
the first quarter of the fiscal year ending December 31, 1997 and the
last two quarters of the fiscal year ending December 31, 1996 and were
amended when the Company announced on November 13, 1997 that it would
also restate the second quarter of the fiscal year ending December 31,

The consolidated complaint alleged that PictureTel and Messrs. Gaut and
Strauss violated Sections 10(b) and 20(a) of the Exchange Act and Rule
10b-5 promulgated thereunder, during the period from October 17, 1996
through November 13, 1997, through the alleged preparation and
dissemination of materially false and misleading financial statements
which artificially inflated the price of PictureTel Common Stock. The
consolidated complaint seeks to recover an unspecified amount of
damages, including attorneys’ and experts’ fees and expenses.

On April 7, 1998, the Company filed a motion to dismiss the complaint.
On October 28, 1998, the motion to dismiss Norman E. Gaut was granted
and the motion to dismiss PictureTel and Les Strauss was denied.

On June 17, 1999 the Company announced that it had entered into a
settlement agreement with the Plaintiffs. The Settlement provides that
the claim against PictureTel and Mr. Straus will be dismissed. In
agreeing to the proposed settlement, the Company and Mr. Strauss
specifically deny any wrongdoing. The settlement provides for a cash
payment of $12 million by the Company, plus interest, after the
settlement is final. More than 75% of the settlement amount will be
covered by the Company’s insurance. Accordingly, the Company recorded a
liability for the litigation settlement of $12 million and an insurance
recovery receivable, of approximately $9.5 million, which are included
in the consolidated balance sheet at July 4, 1999.

The settlement is subject to certain customary conditions, including
preliminary and final approval by the United States District court for
the District of Massachusetts, and notice to the class. Once the court
gives preliminary approval to this settlement, formal notices with
details of the settlement will be sent to the purported class members by
the Plaintiffs’ counsel.

In May 1999, the Company was informed that the Securities and Exchange
Commission (SEC) had initiated a formal investigation of matters related
to the Company’s 1997 restatement of its earnings. PictureTel has been
cooperating with the SEC and will continue to do so. The Company
expresses no opinion as to the likely outcome. The Company believes that
the investigation will not have a material impact on the day-to-day
business, nor the present or future prospects of the Company or its

PLM INTERNATIONAL: Law Journal Relates 9th Cir. Reversal Of ERISA Case
Former Employee Can Bring Whistleblower Suit Under ERISA. Although no
longer a "participant" of his employer's benefits plan, a former
employee had standing to maintain a whistleblower claim under the
Employee Retirement Income Security Act.

The plaintiff worked for a company that offered an employee stock
ownership plan (ESOP), and was a member of the employees' ESOP
committee. Pursuant to a plan to terminate the ESOP and convert the
employees' preferred shares to common shares, the employees' committee
wrote a letter to the Department of Labor, requesting that it consider
the effects of the employer's plan. The employer was distressed by the
committee's action and offered to pay for outside counsel to review the
plan, if the committee would withdraw its request to the DOL. Over the
plaintiff's objection, the committee agreed. Three weeks later, the
plaintiff was terminated for insubordination. He then received a lumpsum
distribution of his benefits based on the stock value in the proposed
plan. The plaintiff sued under ERISA's whistleblower provision, 29
U.S.C. @ 1140. The district court, however, granted the employer's
motion for summary judgment, ruling that the plaintiff had no standing
to sue, as he was no longer a beneficiary under the retirement plan.

The Ninth Circuit reversed. The court found that measuring ERISA
standing at the time an action is filed is a judicially created
requirement "which is appropriate for most circumstances," but not this
one. "To hold otherwise would allow an employer, simply by wrongfully
firing a whistleblowing employee and then terminating the plan,
wrongfully or otherwise, to deprive that employee of the right to sue
the employer for retaliation prohibited by ERISA." The position advanced
by the employer, the court reasoned, would allow it to evade
accountability under the statute. McBride v. PLM International Inc., No.
97-15433 (June 4). (The Corporate Counsellor July 1999)

PUBLISHERS CLEARING: Attorneys General Criticize Proposed Settlement
Attorney General Bob Butterworth denounced as a "scam" a proposed court
settlement with customers of Publishers Clearing House, whose cleverly
marketed "Prize Patrol" sweepstakes pitches were used to boost magazine

Butterworth joined attorneys general from Connecticut, Indiana and
Washington state in criticizing a proposed $10 million class-action
settlement as a good deal for the publishing house and for the lawyers
in the case, but bad for consumers who may have been ripped off by
direct-mail promotions.

"Individual consumers would get pennies, while a relative handful of
lawyers would get millions of dollars," Butterworth said. "More
importantly, the agreement does not go far enough in telling Publishers
Clearing House to clean up its act."

The proposed settlement of $10 million includes up to $3 million in
legal fees and up to $3 million in administrative and investigative
costs, Butterworth said, leaving as little as $4 million to pay off

Butterworth said he'll ask a Florida judge to exclude all Floridians
from the proposed settlement, and will accuse Publishers Clearing House
of violating Florida laws prohibiting deceptive trade practices.

Butterworth's action came a week after Connecticut Attorney General
Richard Blumenthal took similar steps, by calling on his state's
residents to reject the settlement because it is "a mere drop in the
bucket" compared with how much consumers have spent in response to
Publishers Clearing House's promotions.

A federal judge in Illinois has tentatively approved the proposed
settlement of a lawsuit against Publishers Clearing House that accused
the New York-based giant of deceiving consumers in the past seven years.

Without admitting wrongdoing, the company has agreed to the settlement,
and has promised to emphasize in all future mailings that no purchase is
necessary to enter the sweepstakes or win.

Under the settlement, some consumers who have purchased magazines from
the company would get a number of automatic sweepstakes entries and
would have, in some cases, the opportunity to cancel purchases or obtain
a refund if they purchased magazines or merchandise under the mistaken
impression that this would increase their chances of winning.

"Publishers Clearing House believes the proposed settlement is
substantial, comprehensive and fair," said Christopher Irving, the
company's director of consumer affairs. He said none of the company's
mailings have deceived the public, and that the "Prize Patrol" has in
fact awarded $135 million in prizes since 1967. "We believe our mailings
are very clear," Irving said.

Steven Katz, a Belleville, Ill., lawyer who is representing customers,
said Butterworth was wrong to conclude that the $10 million fund
wouldn't be enough. Katz said the exact number of claimants won't be
known until mid-October. "I don't think he can know that. He doesn't
know what the claims are," Katz said. f my assumptions are wrong, the
judge will crash the settlement, but nobody can predict accurately what
the claims will be."

U.S. District Judge G. Patrick Murphy in East St. Louis, Ill., has given
consumers all over the country until Oct. 18 to submit damage claims
under the class-action lawsuit. Consumers can find the proposed court
settlement on the Internet at www.pch.com, and consumers who got a
notice of class action and want to be excluded from the proposed
settlement can write to Class Counsel, P.O. Box 4310, Fairview Heights,
Ill. 62208. (The Miami Herald)

RAINFOREST CAFÉ: Will Defend Securities Suit Filed In May In Minnesota
Rainforest Café Inc. and certain executive officers of the Company are
named as defendants in a purported class action complaint, Emanuel
Massing vs. Lyle Berman et al., alleging violations by the Company and
such executive officers of certain Federal securities laws.

The complaint was filed on May 3, 1999 in the United State District
Court for the district of Minnesota. This action is a follow-up action
to the previous shareholder action, In Re: Rainforest Cafe, Inc.
Securities Litigation, which was dismissed without prejudice on December
21, 1998. Like its predecessor case, the new complaint alleges that the
defendants violated Federal securities laws by making misrepresentations
and omissions regarding the Company's performance and future prospects
during the class period while individually selling the Company's Common
Stock. The complaint purports to seek relief on behalf of a class of
plaintiffs who purchased the Company's Common Stock during the period
between October 20, 1997 and January 6, 1998. The Company believes the
action is without merit and intends to defend this claim vigorously.

SELECT COMFORT: Will Defend 7 Similar Securities Suits In Minnesota
Select Comfort Corp. and certain of its current and former officers and
directors have been named as defendants in seven essentially identical
lawsuits seeking class action status filed on behalf of Company
shareholders in U.S. District Court in Minnesota. The named plaintiffs,
who purport to act on behalf of a class of purchasers of the Company's
common stock during the period from January 25, 1999 to June 7, 1999,
charge the defendants with violations of federal securities laws. The
suits allege that the Company and the named directors and officers
failed to disclose or misrepresented financial information concerning
the Company during the class period. The complaints do not specify an
amount of damages claimed. The Company believes that the complaints are
without merit and intends to vigorously defend the claims.

SENSORMATIC ELECTRONICS: Fed. Ct. Securities Suits Settled
During the first six months of fiscal 1996, a number of class actions
were filed in federal court by alleged shareholders of Sensormatic
Electronics Corp. following announcements by the Company that, among
other things, its earnings for the quarter and year ended June 30, 1995,
would be substantially below expectations and, in the later actions or
complaint amendments, that the scope of the Company's year-end audit for
the fiscal year ended 1995 had been expanded and that results for the
third quarter of fiscal 1995 were being restated. These actions were
consolidated. The consolidated complaint alleged, among other things,
that the Company and certain of its current and former directors,
officers and employees, as well as the Company's auditors, violated
certain Federal securities laws.

The Company has settled the above-referenced consolidated class action.
The settlement agreement, requiring payment by the Company of
approximately $53.5, was approved by the Court and has been fully
performed by the Company. The Company has recovered a portion of the
settlement amount and related expenses from its primary directors and
officers liability insurance policy, which has a policy limit of $10.0,
and has also been paid $10.0 by one of its two excess directors and
officers liability insurers. Subsequent to June 30, 1998, the Company
also reached an agreement providing for the payment of $6.25 by the
other insurer. A pre-tax charge of $53.0, with an after-tax effect of
$37.0, was recorded by the Company for payments made in connection with
this settlement in the first quarter of fiscal 1998. Subsequently,
during the third quarter of fiscal 1998, the Company also recorded a net
estimated insurance recovery of $7.3 ($5.1 after-tax).

SILKAIR: Report Says Unlawful Interference Might Have Caused Crash
Indonesian investigators have concluded that ''unlawful interference''
may have caused the mysterious crash of a Singapore jet in December 1997
that killed all 104 people on board, the Singapore government said.

The finding, contained in a new report by the official Indonesian body
investigating the crash, is the closest authorities have yet come to
confirming persistent rumors that pilot suicide might have been the
cause. It will likely have a significant bearing on the class-action
suit that relatives of dead passengers are reportedly preparing against
the airline, SilkAir, the regional unit of Singapore Airlines Ltd.

All 97 passengers and seven crew aboard the SilkAir Boeing 737-300 jet
died when the plane, which had been recently serviced and was only 10
months old, plunged from sky in good weather into a mangrove swamp near
the Indonesian town of Palembang while on a routine flight from Jakarta
to Singapore.

The Singapore government said it had been advised by Giri Hadihardjono,
the communications minister of Indonesia, that the team investigating
the ill- fated flight had ''found indications raising suspicions that
unlawful interference may have been a factor in the accident.'' The
police in both Indonesia and Singapore have been informed, the
government said.

The Indonesian update on the investigation released Wednesday said there
were indications that in the last seconds on the cockpit voice recorder,
the pilot, Tsu Way Ming, ''was in the process of, or intending to, leave
the cockpit.''

The report also said there were indications that at the time, Mr. Tsu
was ''facing financial problems, and had experienced several company
disciplinary actions.''

It said that wreckage investigation and the flight data recorder
indicated that when the jet struck the ground, ''the horizontal
stabilizer had a nose- down trim which was different from the last known
trim setting for cruise flight.'' This, the Indonesian investigators
concluded, ''could indicate a manual input from the cockpit,'' although
they added that they were not yet able to establish who was responsible
for this action.

Mak Swee Wah, the general manager of SilkAir, said in a statement that
the reference to financial difficulties, and to an unknown person
setting the horizontal stabilizer to point the nose of the aircraft
toward the ground, were new to the company. ''We were not aware of this
until now,'' Mr. Mak said. ''SilkAir is saddened and disturbed to learn
that human intervention may have caused the crash of MI 185.''

But the airline confirmed that Mr. Tsu had been reprimanded for breaches
of flying procedure three times in the 10 months before the fatal crash.
As a result of one of the breaches - for deactivating the cockpit voice
recorder before takeoff so that his conversation would not be recorded -
he was demoted from the position of line instructor pilot to his
previous rank of captain.

In another incident, Mr. Tsu made an unsuccessful landing approach but
did not file a report. After SilkAir subsequently learned of this, it
said it had instituted an inquiry - but did not say what the outcome was
or whether disciplinary action had been taken.

In the third incident, Mr. Tsu encountered power deficiency in one of
the engines of the plane he was flying and correctly returned for a
landing - but again did not file a report, for which he was ''counseled
verbally and in writing,'' SilkAir said.

''These three incidents should be judged in the context of Captain Tsu's
otherwise satisfactory flying record, '' Mr. Mak said. ''The incidents
did not give reason to take more severe action, such as grounding
Captain Tsu. Deactivation of the cockpit voice recorder is not a safety
hazard and therefore the aircraft was not in any danger.''

The Ministry of Communications and Information Technology of Singapore
said that it was not aware of these disciplinary incidents as they did
not infringe safety regulations or warrant action by the Civil Aviation
Authority of Singapore against the pilot.

SilkAir said that it had reviewed its recruitment and handling of Mr.
Tsu, who had joined the company as a first officer in 1992 after 17
years of service with the Singapore Air Force where he had a ''good
record'' as a highest-level instructor and a member of the elite Black
Knights aerobatics team.

''Captain Tsu was a skilled and experienced pilot,'' Mr. Mak said. ''He
passed his regular medical checks and competency tests. By the best
standards in the industry, he was fit to fly.''

The co-pilot on the flight, Duncan Ward, had also passed his regular
medical examination.

Mr. Mak drew attention to the fact that the Indonesian update report had
noted that ''both pilots were properly trained, licensed and qualified
to conduct the flight,'' and that there was ''no evidence found to
indicate that the performance of either pilot was adversely affected by
any medical or physiological condition.'' (International Herald Tribune
(Neuilly-sur-Seine, France) 8-26-1999)

STOP & STOP: Boston Lawsuit Ends In Refund For Peapod Price Confusion
Stop & Shop Supermarket Co. said that it will reimburse customers of its
Peapod home-delivery service who believed incorrectly they were being
charged the same prices as in-store shoppers.

The company blamed the confusion on inaccurate information that appeared
on the Peapod Web site. Officials described the amount of money involved
as minor and said the problem was confined to Peapod's distribution
center in Watertown, which serves customers in Watertown and several
nearby communities including Arlington, Medford, Cambridge, and

Stop & Shop's decision to reimburse customers came one day after a
Boston law firm filed a class-action lawsuit against the chain over its
home-delivery pricing practices. The lawsuit was based on a consumer
column that appeared in Boston Globe.

The column reported that Peapod's Web site for the Watertown area
promised free home delivery for orders over $60 and prices that would
match in-store prices. It also reported that Peapod customer-service
representatives had told the Globe the same thing.

But without providing any notice to customers, Peapod at the start of
this year created a separate, marked-up price list for most Stop & Shop
groceries delivered through Peapod. In the Globe's survey, for example,
a 20-ounce box of Cheerios cost $3.79 at the Watertown Stop & Shop store
but $4.49 if bought through Peapod.

Peter Phillipes, general counsel for Stop & Shop, said the Peapod Web
site for the Watertown area was changed at one point to reflect the
pricing change but somehow got changed back to the old wording. The old
wording stated: "You'll get the same Stop & Shop prices, flyer sales and
loyalty card savings." The new wording, now appearing on the Web site,
is identical except the word "prices" was dropped. "If the Web site had
been changed, we wouldn't be talking," Phillipes said. Phillipes
stressed that home-delivery customers served by Peapod's other four
distribution centers in Abington, Walpole, North Reading, and Framingham
still pay in-store prices for all their purchases. Peapod has
approximately 100,000 customers in Massachusetts.

Thomas Evans, the attorney with Cohen & Fierman who filed the
class-action lawsuit, said the deletion of one word on a Web site was
hardly adequate notice to customers of a major pricing change. He noted
Peapod promotes the service to busy people with no time to shop, yet
expects those same busy people to learn of a major pricing change by
noticing a word has been deleted from the Web site. "It still would have
misled people, I think," said Evans.

Phillipes acknowledged that Stop & Shop and Peapod could have done a
better job of communicating the change. He said the company is working
to reimburse customers served by the Watertown distribution center.

As for the lawsuit, Phillipes declined comment, other than to say:
"These types of lawsuits are not uncommon. The lawyers here may not be
aware the amount involved is relatively small."

Evans said Stop & Shop's decision to reimburse customers did not
necessarily mean he would withdraw the lawsuit. He noted that
intentional deception by the companies might warrant greater penalties.
Evans said Peapod customers affected by the pricing change in Watertown
should contact his office at 617-523-0505.

The Globe's consumer column noted that, with the pricing changes in
Watertown, Peapod's prices went from being the lowest of the major
home-delivery services to the highest. But Phillipes said the market
basket selected by the Globe was too narrow.

Phillipes said Watertown-area customers get in-store prices for
perishable and on-sale items; only nonperishable items got marked up. In
broader market-basket comparisons conducted by Stop & Shop, he said,
Peapod still beats competitors such as HomeRuns and Streamline. (The
Boston Globe 8-27-1999)


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